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Opening Foreclosing Day!

During his playing days, former MLBer and steroid abuser Lenny Dykstra explained to a writer that he was totally unwilling to read, for fear it would affect his batting eye. This reached the point where he wouldn’t even look at road signs (presumably, while he was being driven somewhere). So when my boss, a huge Mets fan, said to me about a year ago, “I saw this thing on Lenny Dykstra on HBO Real Sports last night. He’s a financial genius!”, I was more than a little skeptical. After all, last I’d heard about Dykstra, he was running a car wash in California and getting cleared of charges that he was sexually harassing a 17-year-old employee. All of a sudden, he was a stock wiz and the publisher of a magazine for rich athletes.

I concluded that you couldn’t find a bigger sign that we were in a financial bubble than the hyping of Lenny Dykstra as a stock-picking savant.

(Another big sign of that bubble was the New Yorker deciding to commission a lengthy profile on Dykstra around this time. Interestingly, they seemed to choose a writer who doesn’t know much about baseball or finance. Maybe he’s a car wash expert. I can’t find any references to this article in the magazine’s coverage of the global finance collapse and the media’s role in hyping easy money.)

Here’s some of that Real Sports segment:

You’d think Jon Stewart would’ve picked this clip as part of his Jim Cramer beatdown-montage. To quote Mr. Cramer, “I think people don’t think of Lenny as sophisticated. But I am telling you, Bernie, that not only is he sophisticated, but he’s one of the great ones in this business. He’s one of the great ones.”

So how’s that financial empire doing now? Well, the NYPost has just coined the name “Lienny Dykstra,” on account of his default on his $12 million mortgage.

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The 0-fer Intersection

Many years ago, when I was a micropress publisher, the first book I put out had an introduction written by Samuel R. Delany. This was a coup, because Delany had built a significant fan-following over his years in publishing, first in science fiction and then in the high-brow world of literary theory. He loved the short stories that we were publishing and, while his introduction may not have convinced a single person to actually read the stories, I believe his imprimatur did boost sales. I’m not exaggerating when I tell you that having his name on the cover helped us move tens of books. (I keeeed: I was not a good publisher.)

A year later, shooting the breeze in his impossibly book-lined apartment, Chip (as I’d come to know him) asked me what the press’ next book would be. I had no ideas, so he offered me two collections of his letters, one set from 1984 and another from the early 1990s. I looked over both sets of bound photocopies. I thought about the cachet of publishing new work by a guy who’d written some of the seminal science fiction (and fantasy) novels of the 1960’s and ’70’s. I considered the kindness he was bestowing by essentially offering to waive any royalties in order to strengthen the micropress.

And I told him, “Y’know, Chip, I’d love to say yes right now, but I have to tell you: I’ve never read a single book of yours. Given that fact, I’m a little nervous about committing to publishing a book by you.”

He chewed on his lower lip for half a second, reached over to one of the many bookshelves in his apartment, and said, “Well, why don’t you read the Einstein Intersection? It’s quick and somewhat representative of my earlier work. You can read it in a day or two and then let me know if you still want to publish my letters!”

I did, and I did and we published 1984 a year later. (Neil Gaiman gave us a blurb for that one; I’d actually read his work beforehand.)

So that’s our 0-fer of the week: I was once asked to publish a book by someone whose books I’d never read.

I’ve gone on to read a bunch of Chip’s work, including his best-known novel, Dhalgren. I’ve even volunteered to proofread his galleys under crazy time constraints (the all-time craziest being the 30 hours I spent poring over the reissue of The Fall of the Towers back in 2003). Despite my insecurities, we’ve stayed pals long after I closed the press down, and that brings me to the point of this piece: to wish my pal Chip a happy birthday!

Many happy returns, y’hirsute galoot!

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Lost in the Supermarket: Singles 45s and Under

It’s time for our first reader submission to Lost in the Supermarket! Benji C. sends in Spam: the Single!

It’s a pity they registered that “Just rip and tear your way to CRAZY TASTY® town!” slogan! I was gonna use it as the tagline for my site! Thanks, Benji!

Do you think “Single” is meant to descibe the product or the person who buys it?

See the whole Lost in the Supermarket series

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Rufus and the Power-Up

If I described the leaps & twirls Rufus makes when I get ready to feed him, you’d think I was exaggerating. Once I give him one nibble from his food, he leaps in circles as though he’s got his paws on a power-up icon from a Marios Bros. game.

See? I don’t do him justice.

It’s like this every single time I feed him, twice a day.

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Too Big To Fail?

Here’s my From the Editor column from the March issue of my magazine. Enjoy:

Too Big To Fail?

The pharmaceutical industry is experiencing a deepening productivity crisis. The industry’s preferred escape mechanism from this predicament has been to increase investment in current business activities — primarily R&D and sales — to sustain productivity levels or, ideally, to exploit economies of scale. This has been implemented through organic growth of critical resources and/or M&A. The fact that productivity continues to decline after a decade of vigorous growth in investment levels, and against a background of increasing company size, bears testament to the fallibility of this strategy.

We published those words in the June 2002 issue of Contract Pharma, in an article called Networked Pharma, by Jennifer Coe of Datamonitor, which discussed “innovative strategies to overcome margin deterioration.” I cited the passage above in that issue’s From the Editor page, as I argued that “economies of scale” shouldn’t be a compelling reason for $10+ billion companies to acquire $8 billion companies.

A month later, Pfizer bought Pharmacia for $60 billion.

Almost seven years later, the industry is still experiencing that productivity crisis. And Pfizer just bid $68 billion for Wyeth.

I admit that I was naïve in the ways of business and industry back in 2002, but I have to say that my opinions on mega-mergers haven’t changed much. As I wrote then:

My problem with mega-mergers is that, after the pipeline has been temporarily sated (although it remains to be seen whether the original problems with the pipeline are going to crop up again), the buying company is left to integrate tens of thousands of workers, reprioritize drugs in development by both firms, and meet unrealistic sales and savings projections. Typically, this last part is only accomplished by jettisoning a portion of those thousands of workers, creating more short-term disarray.

Sure, it’s possible that the Pharmacia deal would have worked out for Pfizer had Cox-2 inhibitors (like Celebrex and Bextra) not been hammered by Merck’s Vioxx withdrawal, but we can’t prove a counterfactual.

So now, as every major pharma company is slimming down, reducing salesforce, closing or selling off manufacturing sites and shuttering labs, the industry’s biggest player is doubling down by acquiring a competitor that has strengths in small molecule R&D, vaccines/biologics and consumer health, but also faces patent expirations and an R&D slowdown of its own.

There’s been plenty of speculation from analysts and industry figures as to why Pfizer chose to pursue this type of deal, rather than going after small biopharmas and tech-based startups. Is it for the R&D model, the current revenues, the vaccines, the lower-margin-but-more-consistent consumer business? Is it to achieve even greater size? Frankly, I can’t see much value in being able to say, “We’re #1!” at a time when “too big to fail” has become an epithet.

In the acquisition announcement, Pfizer stated, “It is expected that no drug will account for more than 10% of the combined company’s revenue in 2012.” Given that Lipitor, which currently accounts for 25% of Pfizer’s sales, will be falling off the board by 2011, it’s possible they could have achieved this goal without adding Wyeth’s roster of products.

A lot of things have changed since 2002, but I still think that mega-consolidation — in any industry — rapidly transitions from “too big to fail” to “too big to succeed.”

—Gil Y. Roth