November 12, 2007 2:52 pm : Comments 004
I’ve just returned from Toronto, the city where I was born and raised. Although I haven’t lived there for more than 25 years, I go back often to visit my family. While TO still feels like home to me, this trip I noticed just how much things have changed in recent years.
Daily Newspaper Dropping F Bombs
Crazy as it may seem, Toronto has four daily newspapers – not bad for a city of only 2.48 million residents (five million if you include people living in the ‘burbs). As far as city dailies go, they are considerably better than most local U.S. newspapers when it comes to depth and breadth of reporting. Then again, I may not be the most impartial judge; I was once a reporter with The Toronto Star.
In my day, The Globe and Mail, which fashions itself as “Canada’s National Newspaper,” had a decidedly conservative bent. Picture an uptight, pipe-smoking, cardigan-attired, scotch-sipping WASP male sitting in a leather armchair in a wood-paneled study bedecked with a prominent photo of Her Majesty Queen Elizabeth II and you pretty much have an idea of the typical Globe reader, at least in my mind.
Well, either my mental image was way off base or The Globe certainly has dramatically expanded its readership. In a story I admit I don’t quite understand, the newspaper unabashedly drops the F bomb multiple times without the usual ellipsis that most mainstream newspapers use to denote curse words. Granted the word in question is part of the formal name of the organization being profiled (the, ahem, “Fuck Death Foundation”), but I’m pretty sure that the old geezer in the armchair who suffered a major cardiac event after seeing such common crudeness in his beloved paper would argue that’s just splitting hairs.
U.S. Currency No Longer Welcome
For at least the past two decades, stores throughout Toronto gladly accepted – and gave a significant premium – on U.S. currency. The Canadian dollar, or Loonie as it is called because of the bird engraved on the dollar coin, at one point was worth some 35 percent less than the greenback, making Toronto a comparatively inexpensive place for Americans to visit.
But the Loonie has soared like an eagle against the U.S. dollar in recent months, closing the gap that most Canadians and professional currency-watchers had long taken for granted. Last week during my trip, the Canadian currency reached a record $1.10 against its American counterpart. Canadian consumers are understandably euphoric about the shift in currency buying power, and are flocking in droves to take advantage of it. Border crossing waits are reportedly as long as five hours, an added bonus for Canadian travelers. You see, Canadians seemingly derive great pleasure from waiting in line; most do it with great regularity and equally great patience. You could say that after hockey, it’s the national pastime. (Yes, even more so than curling).
Anyway, back to my trip. Obviously, I read newspapers and knew before I went north that the dollar-to-dollar exchange rate was no longer what it used to be and that I would have to take a hit if I stuck with American currency. What I wasn’t prepared for, however, was just how many places would simply no longer accept the greenback. The Loonie has been fluctuating to such a degree that stores don’t know how to calculate prices for people who want to pay with American money.
Perhaps I’m mistaken, but I thought the cashier at the sandwich shop said “thanks, but no thanks” to my U.S. dollars with a particularly defiant and gleeful tone. After years of having their Loonie punishably discounted, I guess it’s understandable if Canadians want to strut a little, but as The Globe and Mail might say, just watch that f*@%ing karma.
Banks No Longer Keeping Banking Hours
Canada is a country not known for the diversity of its financial institutions. There are just five banks holding more than 90% of the country’s financial assets. Growing up, there was no real differentiation among them when it came to pricing, products, and services. Think of it this way: They were about as consumer-centric as your local cable company. Regardless of the name on the door, bank branches were uniformly open Monday through Thursday from 10 a.m. to 3 p.m. and open until 4:00 on Fridays. In hindsight, the only customer-friendly effort they made was to make sure there were never enough tellers to service the long queue of people looking to conduct transactions. Remember, Canadians like lining up.
But apparently that’s all changed. In a story that jolted me more than my Tim Hortons java, I read that banks are extending their lobby hours, with two banks announcing that select branches will even have Sunday hours. Talk about a paradigm shift!
I will bet you ten Loonies to one Greenback that the rest of the Canadian banks quickly follow suit. While other things about the business of banking may have evolved, I’m fairly certain the herd mentality they share is not one of them.
And Finally… Anne Murray is Not a Lesbian
I’ve never cared much for the music of Anne Murray, but I’ve long admired the singer for not getting caught up in her own press, as the saying goes. Stories about her always left the reader with the impression of a decent, down-to-earth, proud Canadian who never let the fame and fortune swell her head. No doubt it is because of this benign image and reputation that landed her a line in that South Park song “Blame Canada” a few years back. She is deservedly a national icon.
But apparently even Ms. Murray has some skeletons in her closet. She recently confided to a Globe and Mail reporter that, 40-something years ago, she had a two-and-a-half-year affair with a much older married man who also happened to have two kids. She later married – and subsequently divorced – the guy. In the story, she also denied rumors that she is a lesbian. Supposedly these rumors have been circulating for a while, not that I ever heard them. Admittedly, this is hardly scandalous stuff given the current antics of Paris Hilton, Britney Spears, and their ilk, but keep in mind that Anne Murray’s image is deeply, deeply entrenched as that of someone far more squeaky clean and, well, dull. I guess Canada’s songbird wasn’t so innocently sweet after all.
Still, as much as things appear to have changed in Toronto, it was comforting to see some things remain the same. Despite Toronto’s emergence as a world-class cosmopolitan center, liquor and wine can still only be bought at a government-controlled store. Early Saturday night I went to one to pick up a bottle of wine. Estimating a 20-minute wait at the checkout, I decided my sister would get her house warming gift on my next visit. Canadians in general may like waiting in lines, but I do not.
Hmmm… maybe Canada’s not the only thing that’s changed over the years.
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November 7, 2007 10:58 am : Comments 007
Enough already!
In the last two weeks or so, reporters at all the major business publications have prattled at various lengths about their Facebook experiences, including Matthew Rose at The Wall Street Journal, Daniel Lyons at Forbes, and Brent Schlender at Fortune. Even BusinessWeek’s Michelle Conlin, who is typically among the first to identify and write about emerging trends, has blogged about joining Facebook.
I hate to break it to you folks, but you are soooo very late to the party. Facebook has been around since 2004. Three years. That’s a pretty long time when it comes to cultural trends and online innovations. So why the heck are mainstream journalists just discovering it now?
Maybe, like me, they initially dismissed it as a thing for teens and the twenty-something crowd, as it was originally intended. Apparently times have changed; everyone seems to be on Facebook, including political candidates and investment advisors. Curious to see if I was the lone holdout, on Monday I googled “Why I haven’t joined Facebook” to see if there was a kindred spirit out there. The search engine actually tried to correct me, asking “Did you mean: why I have joined Facebook.” Interestingly, I didn’t get the same snarky response when I tried it this morning. (You would think the folks at Google would program their algorithms to say “Did you mean: why I should join Orkut, but I digress).
Frankly, I don’t “get” Facebook’s appeal, but I admit that that could just be me. I’m not exactly a cyberspace kind of guy. I’m quite adept at keeping in touch with my friends – I’ve been doing it offline for years. And I have worked out a pretty good system for meeting new people with similar interests. Ready? I chat to people I find at the places I like to go. I recently met this fascinating photographer named Koren on a hiking trip who, in turn, introduced me to a tech wizard named Brian whose company S&A has since hired. As for hearing from former high school classmates? Whoa – no thanks. I didn’t much like them in the first place.
There are other reasons I resist joining the growing throng of Facebookers. Call me old-fashioned, but I like the idea that my entire life is not completely google-able. It’s unsettling enough when employment candidates rattle off the most obscure minutia from our company’s history to show us that they did their homework. I can’t imagine it will be any more comfortable to have them chat casually about photos they saw of my best-forgotten New Year’s Eve party exploits! And I really don’t need the whole world to know that I once innocently went up to a familiar-looking woman at my local Starbucks and actually said to her “You know, I think I know you from somewhere.” (BTW, Brooke Shields is a very gracious woman).
Then there is Facebook’s Bill Gates connection. Even though Microsoft only owns a smidgen of the company, you know it’s just a matter of time before the site is plagued with all sorts of technology problems and outages. As far as I’m concerned the value of Facebook actually should have gone down simply because Microsoft bought into the company. I know that sounds a bit melodramatic, but Microsoft’s products speak for themselves. A more even-keeled Facebook-blogger cites other reasons why its future may not be so bright.
Still, I realize I’m in the minority here. Facebook reportedly is signing up more than four million “friends” a month, so it’s only a matter of time that holdouts like me will be forever banished as online pariahs or social outcasts. Given that even lepers were given their own colonies, perhaps Facebook CEO Mark Zuckerberg might consider creating a companion site for the unfortunate few who are lacking an online community of “friends.” I’ve even given it a name and created a beta site: Lonerbook.com. (back off Facebook lawyers – it’s just a parody!!)
The rules would be wonderfully simple. You can post your name, but nothing else. No photos, no lists of likes/dislikes, no lists of affiliations, no “poke” buttons to enable complete strangers to give you a cyber pinch on the butt. It’s just an opportunity to announce one’s overall social resistance or rejection.
I think the idea has promise. If nothing else, it at least would give some mainstream journalists some “news” to write about.
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November 6, 2007 8:41 am : Comments 001
Unlike most people who prefer to sleep in on the weekends, I’m an early riser – especially on Sundays. Rain or shine, my Sunday mornings have fallen into a comfortable, predictable routine. I wake up, turn on the coffee pot, open the front door, grab The New York Times, and then settle down on my favorite couch with a few pounds of newspaper and a freshly brewed cup of joe. But as they say, all good things must come to an end.
Over the last few months, I’ve opened my front door at the usual time to see nothing lying there but carpet. I called customer service to complain, but was told that the newspaper wasn’t technically late yet as Sunday delivery has a later delivery time guarantee to “…give our delivery people some extra time because of the size of the newspaper.”
Fair enough, but reading the newspaper is rarely the only thing on my Sunday “To Do” list. Even if I was so inclined, it would be impractical to expect that I could always rearrange my day to accommodate the Times’ delivery schedule. With no other choice, I cancelled my Sunday delivery. The Starbucks one block away sells the Times, so I’ll just go there now and buy it (and save some change in the process as there is an extra charge to have the newspaper delivered in New York).
Still, I suspect there are people who aren’t quite so loyal and simply don’t read the Times if they can’t get it when they want it. The Audit Bureau of Circulation yesterday reported that the Sunday circulation of The New York Times plummeted nearly eight percent in the past six months. Though a price hike was cited as partially to blame, I can’t help but wonder if late deliveries might be a contributing factor. After all, not everyone is going to get dressed and head down to Starbucks to buy it when they can read it in their pajamas online for free.
The Times has never been known for its city coverage, so maybe the folks in circulation don’t fully appreciate that New York really is a city that never sleeps. If the newspaper is looking to staunch its circulation erosion, perhaps it should consider delivering it a tad earlier than 8:30.
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November 5, 2007 12:00 pm : Comments 001
Bear Stearns CEO James Cayne has become yet another textbook example of why executives at the top of their game should never regard journalists as their friends. Just 18 months ago, The Wall Street Journal characterized Mr. Cayne as being “renowned at Bear for his hands-on approach.” Bear’s fortunes have changed since then, and so has the Journal’s reporting of Mr. Cayne’s leadership.
It turns out Mr. Cayne might not have been quite as “hands-on” as the Journal’s readers were initially led to believe. The paper reported last week that Mr. Cayne was hitting the links or playing bridge during much of the summer while two of the firm’s hedge funds were badly imploding. Regardless, Bear president Alan Schwartz insists that Mr. Cayne remains fully engaged.
There are some top business strategists who would argue that good leadership is all about delegating authority, even at times of crisis. Indeed, one of the savviest PR executives I know once chose to remain on vacation when his company became embroiled in a crisis. When I later asked him why he didn’t feel compelled to return to the office, he matter-of-factly replied, “I surround myself with good people and I knew they could handle it.”
For me, the Journal’s most startling disclosure in that story about Jimmy Cayne was not that he is a master at delegating or that he allegedly likes to smoke a little marijuana from time to time. Rather, it’s that talk-show host Maury Povich is one of Mr. Cayne’s golf partners. For those who are not particularly familiar with the underbelly of American culture, Mr. Povich is host of the daytime chat show called “Maury.” The show isn’t quite as exploitive as “The Jerry Springer Show,” but it’s pretty close. One of their favorite shticks is to have women drag current or former husbands, boyfriends, and one-night-stands on to the show to take paternity tests. In manners as dignified and sympathetic as the show itself, more than a few guys have pranced around the stage to hear Mr. Povich deliver his signature lines: “The results of the paternity test are in. With 99.7% accuracy, you are …NOT the father!”
That said, Mr. Cayne could teach Mr. Povich a thing or two about exploiting – err, I mean leveraging – a situation. According to “King of the Club“, a book by Charlie Gasparino about former NYSE head Dick Grasso, Mr. Cayne spotted an opportunity in the immediate aftermath of 9/11 that would be to his company’s competitive advantage and took it. Mr. Gasparino reports that when the operations of the NYSE and several brokerage firms were impaired after the collapse of the Twin Towers, Mr. Grasso wanted to hold a meeting of Wall Street’s top executives at the Exchange. Mr. Cayne, however, convinced Mr. Grasso to hold the meeting at Bear’s midtown headquarters.
As reported on page 157 of Mr. Gasparino’s book:
“It wasn’t long before it became clear why Cayne was being so accommodating. Bear Stearns’s competitors, all representatives of the top securities firms, began filing into the large conference room, many with stern looks on their faces as they realized they would have to hold a meeting not on neutral ground at the NYSE but on Cayne’s turf. They knew that Bear would get publicity as being one of the few Wall Street firms open for business following the attacks.”
Mr. Gasparino said that Mr. Cayne wanted to hold a follow-up meeting at Bear’s headquarters, but then SEC chairman Harvey Pitt nixed the idea.
“The official reason given for the change in venue was a series of bomb scares near Bear’s offices. But the real reason was much different. Pitt was blown away by all the Bear Stearns signs that appeared in the media room where the press conference was televised.”
They say things happen in threes. With two prominent Wall Street CEOs already shown the door in recent days, I can’t help but wonder if Bear’s board is pondering a similar fate for Mr. Cayne. If that turns out to be the case, maybe they should do it live on “Maury.” I can hear it now… “Mr. Cayne, the results of the Board are in. With 100% accuracy, you are … NOT the CEO!”
In the interest of full disclosure: S&A represented Mr. Grasso and I’m mentioned in the body of Mr. Gasparino’s book and in his acknowledgments.
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November 1, 2007 8:59 am : Comments 003
I recently attended a private business briefing where a management consultant from one of the major firms gave an extremely impressive and insightful presentation on global business trends. During the cocktail reception that followed, the speaker was asked by the co-head of a buyout firm if he did a lot of work with private equity firms. “I try not to,” the consultant said. “With due respect, most of the people in your business are real @#$holes.”
While it may be unfair to tar and feather the individuals of an entire industry in one broad stroke – trust me, I know about that first-hand being in the PR business – there’s more than a little truth to the old adage “nice guys finish last” when it comes to the leadership of companies owned by some private equity firms. Fortunately, there are exceptions. Indeed, the executive who questioned the management consultant is a former very senior executive at a Fortune 100 company whose résumé boasts an impressive litany of career accomplishments. He also happens to be one of the fairest and most decent business leaders I’ve ever met.
The cover story in last week’s issue of BusinessWeek touches on this topic. Emily Thornton’s compelling “Perform or Perish” article reports on the increased pressure LBO firms are placing on the executive management of acquired companies to generate better returns on faster timetables. To quote Ms. Thornton, “The toughest CEO jobs in America just got tougher.”
She cites work done by Steven Kaplan, a professor of finance and entrepreneurship at the University of Chicago’s Graduate School of Business, and Geoffrey H. Smart, head of a management assessment/recruiting firm, on common proficiencies and character traits found among 150 private equity CEOs:
Only the most tenacious executives can survive private equity’s rigors… Kaplan found that CEOs who bring “hard” qualities such as aggressiveness, persistence, insistence on high standards, and the ability to hold people accountable are significantly more likely to succeed. Those who offer primarily “soft” skills that are often effective at public companies – like listening, developing talent, being open to criticism, and treating people with respect – are unlikely to work out. Says Smart: “Successful private equity CEOs are cheetahs.”
Ms. Thornton laces her story with examples of the seeming callousness and unmitigated ruthlessness it takes to be a CEO these days of a portfolio company of some buyout firms. Jeff Clarke, CEO of Travelport, a travel services company owned by Blackstone Group and Technology Crossover Ventures, is one of them.
Let’s just say Mr. Clarke clearly isn’t vying to make anyone’s list of “Best Bosses to Work For.” In response to rumors that Travelport was thinking of taking its Orbitz unit public, Mr. Clarke told his staff that “private equity ownership generally is not a long-term proposition. The day will come when our [owners] will decide to take Travelport public, sell off individual businesses, spin off groups of businesses, or pursue some other exit strategy.”
Yes, there are some advantages to providing such a blunt assessment of the company’s future from a “communicating organizational change” perspective. But there is also something to be said for not destroying employee morale in the process. And what about Travelport’s customers? I’d welcome hearing the inside story as to why WestJet Airlines opted to take a $30 million writedown rather than continue developing a computer reservation system in partnership with Travelport.
Ms. Thornton also shares tales of Gerald Storch, who runs Toys ‘R’ Us for Kohlberg Kravis Roberts, Bain Capital, and Vornado Realty Trust. Seeking “to administer shock treatment” and eradicate “victim thinking” among employees who seemed to have lost their drive, Mr. Storch fired virtually all the senior managers he inherited, intentionally replacing them with outsiders. Whether out of fear or forced corporate rah-rahism, rank-and-file employees are said to now walk around with badges pledging that they’re “Playing to Win”.
While there’s no debating Mr. Storch’s quoted comment that poor performers will become store managers’ biggest problems if they don’t cut them loose, the badge-wearing idea brings to mind that “Seinfeld” episode where Kramer was hunted down for not wearing an AIDS ribbon while participating in an AIDS awareness walk. Will otherwise enthusiastic, productive employees get demerits if they refuse to wear the badge? Scott Adams, please take note!
Another CEO cited is Mary Petrovich of AxleTech, who demonstrates that gender plays no part when it comes to a list of America’s most demanding and punishing CEO taskmasters. Once in office, her first move was to slash union wages and benefits by 33% in their new contract. Managers in a quarterly review of projects in the works were expected to report that they are exceeding expectations, not just meeting them. Those who reported less than 100% success were given one minute to explain their challenge and one additional minute to say how they would overcome it. Ms. Petrovich later told Ms. Thornton they would be given just one quarter to get the project back on track.
To be fair, Messrs. Clarke and Storch and Ms. Petrovich are fighting for their own survival. An Ernst & Young study cited by BusinessWeek found that buyout firms replaced CEOs or CFOs at 17 of the 23 companies they sold or took public last year. The danger, however, is not learning from the misguided “profit-at-any-price” philosophy of executives that came before them. Remember “Chainsaw Al” Dunlap? Enron’s Jeffrey Skilling? They had similar damn-the-torpedoes approaches that came back to sink their own battleships in the end. The ever-escalating pressure to do things faster, cheaper, and with better returns all too often becomes unbearable and corners start getting cut. It’s little wonder that many CEOs are secretly grappling with suicidal depression, as Philip Burguieres has warned.
One of the major benefits of taking once-public companies private was supposedly to free top managers to focus on long-term performance rather than quarterly earnings. There are private equity firms that are adhering to that principle and creating value for their shareholders and their workers as well. But these firms typically are smaller than the Blackstones of the world and generally prefer to keep a lower profile. Instead, the public perception of private equity is driven by those who embody the values and ideals of Gordon Gecko and delight in flaunting their stratospheric wealth.
Sadly, I suspect Messrs. Clarke and Storch and Ms. Petrovich are quite proud of their BusinessWeek portrayals. I know what at least one management consultant will think of them if he reads the story.
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