Author: Gil

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Congress should pass the Patriots Act

Arlen Specter wants to get to the bottom of the Patriots’ spying scandal, which broke early this season. And he’s mad that the NFL erased the evidence that the Pats turned over:

“That requires an explanation,” Specter said. “The N.F.L. has a very preferred status in our country with their antitrust exemption. The American people are entitled to be sure about the integrity of the game. It’s analogous to the C.I.A. destruction of tapes. Or any time you have records destroyed.”

In a certain very literal respect, I suppose destroying those tapes does compare to the CIA’s destruction of tapes. But in most other respects, I don’t think we’re served well when a senator compares the outcome of football games to CIA torture of terror suspects who were shipped to secret prisons.

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In Equity

Speaking of not being able to handle prosperity, the first details of Jerome Kerviel’s testimony have been leaked:

As of Dec. 31, 2007, my gains had reached €1.4 billion ($2 billion), which I had not declared to the bank. At that point I had been overtaken by events and didn’t know how to present this to the bank. It represented undeclared cash of €1.4 billion. No one else had ever realized such a sum, which represented 50% of the total result of the equity-index division of SocGen. I didn’t know how to deal with it, I was happy and proud of myself, but I didn’t know how to justify it. Thus I decided not to declare it, and to hide the sum, I created an opposite fictional operation.

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Bean Crazy

My pal Jon-Eric has brought me along to some NY/NJ Giants football games in the last few years, on occasions when his brother can’t use their ticket. The seats his family has are great: lower tier, 47-yard line, just below the overhang of the mezzanine. It’s a great view, somewhat protected from crappy weather, and we always have great tailgate get-togethers in the parking lot beforehand.

And when the Giants invariably cough up a lead, fumble during a big drive, or call 3 consecutive runs for -2 yards, we are graced with his dad’s signature comment: “They can’t handle prosperity, Jon-Eric!”

We joke about having a betting pool based on what point in the game his dad will utter those words, to the point of one of us handing a $5 to the other after the statement.

Which brings me to Starbucks. Our trip to Seattle last year coincided with Howard Schultz’ publicized memo about how his company had lost its way and needed to rediscover itself. Since, Schultz has reclaimed the CEO position, and is trying to retrench the company.

The story of Starbucks and how it handles “life at the top” echoes Jon-Eric’s dad’s sentiments: they can’t handle prosperity.

One of the aspects of business that fascinates me is this question of how a company copes with being a leader. I find it instructional to look at how businesses try to stay on top, particularly when they’ve established an overwhelming position in their field. Because they never stay on top: an unforeseen competitor shows up and eats its lunch, or the game changes around the market leader and its field is rendered useless, or it engages in dubious business practices that land it in serious regulatory trouble. Or a combination.

In Starbucks’ case, market dominance led to an attempt to diversify its product offerings, with the attendant loss of “romance” that Schultz lamented in his memo. I’d love to see a time-lapse map showing the opening and closing of Starbucks locations in the last 10 years; I bet there’d be a very organic/epidemiological appearance to it.

Here’s an article on how the company is trying to cope, and how local coffeeshops are benefiting as Starbucks closes some of its locations.

I think the upshot of the piece is the discovery that, even if the company is facing upheaval, at least it’s taken a big step in making sure its employees don’t breed:

Geoff Vuleta, chief executive of Fahrenheit 212, an innovation consultancy in New York, said Starbucks had lost focus on the experience that drew customers in the first place by neutering the baristas and by crowding the stores with merchandise, or as he put it, “replacing mystique with relentless commerce.”

Me? I still think their black coffee sucks, and that’s my make-or-break criteria. Maybe I need to try it with some sambuca, the way Jon-Eric’s dad’s pals end our tailgate parties before the Giants’ games. . .

(Update! Starbucks is going to stop selling sandwiches. I didn’t know they were selling sandwiches, but they showed me! The company is also planning to announce “five bold innovations” at its shareholders meeting on March 19. Unless it involves a caffeine IV-drip, I ain’t interested.)