The Mayflower’s Beneficiaries

Last year we went to visit my wife’s grandmother and extended family outside of Boston. We took a day to do something I have always wanted to do, visit Plymouth Massachusetts, and in our case it took on special significance because my wife’s family descends directly from the Mayflower, the Ashley and Whitman families.

I was terribly excited to visit Plymouth and while not disappointed I do remember feeling let down that the sign on Plymouth Rock goes to great lengths to remind you that it isn’t the actual rock but an approximation picked out some time later. Furthermore, you are reminded that the Mayflower was actually heading further south to the mouth of the Hudson River, it’s almost like a “hey they actually didn’t want to stay here but got stuck” account of the history. I could not understand why a town that sits on the most consequential rock in American history would want to downplay it.

I was very disappointed that little of the Mayflower Compact was enshrined in the accounts of the history on the monuments or on the tour of the Mayflower II. This is really quite an extraordinary piece of history, because the Mayflower Compact represents the first government “by the people, for the people” in the New World. This document established a governing body without specific authorization from Britain. Indeed the Compact was superseded by the 1621 Peirce Patent a mere year later, which established a government based on the explicit authority of the King of England.

John Quincy Adams later referred to the Mayflower Compact as the foundation for the U.S. Constitution, most likely a symbolic foundation as the Compact itself probably didn’t even exist in written form by the late 18th century. The Compact established a government of equal and fair laws, written by the very people who would be governed by them. It also established that covenants between man and God could not be infringed upon, which is interesting to think about because 156 years later the Declaration of Independence take the notion of inalienable rights that all men are born with, not granted by government to a whole new level and gives birth to a idea that later becomes a nation.

EDIT: actually, after reading this last sentence I decided that I need to restate it because the Declaration did not result in a nation, what the Declaration did was to firmly assert the Mayflower Covenant principle of unalienable rights which when later included in the Constitution became a nation. It’s important to recognize that American history is wrapped by two revolutionary ideas, the first being what the Mayflower Compact started, that truths exist between man and God and are irrevocable by government, and the second being that government exists to serve the people.

The Mayflower pilgrims in 1620 were not the first settlers in North America, but they were the most successful because they recognized the importance of forming a government and having a sense of “covenants between men” as the basis for laws. We all benefit from the Mayflower, even if the Rock is just a rock.

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Airports almost empty day before Thanksgiving

Aside from the economy being a central issue, airlines and airports have done everything humanly possible to ensure that you simply don’t want to fly unless unavoidable. Overbooked flights, bag fees, no food, dirty airplanes, and surly employees all add up to “hey let’s drive, gas is $1.94 a gallon!”.

Bay Area airports were eerily empty for much of what traditionally has been among the busiest travel days of the year.

[From Airports almost empty day before Thanksgiving]

Case in point, we are talking about taking a family vacation to San Diego early next year (look out Kedrosky!) and decided that renting a minivan and driving down would be cheaper than flying and less hassle to boot. It’s a lot of time behind the wheel but no worse than trudging through an airport pissed off about having to pay $150 to check bags.

The Perversity of Government Mandates

Anyone who thinks that the government should be using tax policy and legislative mandates to change consumer behaviors would be wise to consider the example of ethanol. Over a year and a half ago the Heritage Foundation urged Congress to not expand the mandate for corn based ethanol imposed by the 2005 Energy Plan, suggesting that aside from doing little to decrease dependence on foreign oil, the reality is that it was artificially inflating food prices.

The new ethanol mandate is perhaps the most dis­appointing program in the Energy Policy Act of 2005. Since taking effect in 2006, this measure has increased energy and food prices while doing little to reduce oil imports or improve the environment.

[From The Ethanol Mandate Should Not Be Expanded]

Not only has this happened but the law of unintended consequences kicked in with disastrous results, and now that oil is relatively cheap there is a wholesale collapse in the ethanol market as new investment dried up and expansion with it, and companies like Verasun, who were essentially living off the teet provided by the government, collapsed under the weight of existing debt maintenance, inability to access credit markets to roll over their debt, and the economic reality that ethanol is uncompetitive with cheap oil.

As we sit here in November of 2008 amid a shattered global financial market, it is increasingly evident that a sharp rise in CPI for food and energy represented a tipping point for U.S. consumers who pulled back to accommodate price increases in two core product categories. Business investment decisions were also distorted by energy inflation, no doubt contributing to the economic shock that precipitated the financial markets collapse.

It was precisely the segment of the market most vulnerable to food and energy price spikes that triggered the mortgage meltdown, subprime borrowers. In the future it would be wise for Congress to recognize the catastrophic consequences of distorting markets through legislative mandates.

More on this topic (What's this?)
Energy's Ripple Effect Or Is It A Tidal Wave?
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Read more on Ethanol, Energy, Oil at Wikinvest

eBay: It Ain’t Rocket Science

My wife is a power seller on eBay but lately not so much, in fact she’s even been getting phone calls from eBay asking why. She continues to express amazement that they don’t seem to get the message.

eBay’s (EBAY) core business continues to fall apart. Some of the decline is likely the result of the declining economy. The rest of it is likely the result of the trends that have been clobbering eBay for the past two years: competition, overpricing, and the deterioration of eBay’s value proposition. eBay’s efforts to turn around this business do not appear to be working.

[From eBay Traffic Plummeting (EBAY)]

Memo to eBay: you screwed up when you raised seller fees, started “nickle and diming”, and nobody, I mean nobody, is happy with PayPal. Traffic has dropped in each month of 2008, except for March, and coincides with the timing of the fee structure changes.

If there is one business that should do well in a recession, I would think eBay should be it.

Blockbuster Decides Online is the Future After All

First they said they wouldn’t be rushed to market with a download service, but it turns out Blockbuster was rushing after all. You have to buy the set top box and then $2-4.00 a movie, and their is a requirement you start the movie within 30 days then then finish it in 24 hours. BTW, this mimics iTunes terms but I would not point to iTunes as a smashing success when it comes to movie downloads either, and Apple TV has not been Apple’s most shining moment either.

Blockbuster is the first major customer to deploy the MediaPoint digital media player from San Jose’s 2Wire. The service will give the video retailer a chance to compete in the growing video-on-demand market against companies like Vudu and Apple. Unlike Netflix’s deals to bring movies to TiVo boxes, DVD players and the Xbox 360, Blockbuster will not be a subscription model. Users will pay $99 for the MediaPoint box, which will include 25 movie downloads. After that, movie downloads will be as little as $1.99 for standard-definition rentals.

[From Blockbuster bringing movies into the TV]

Basically they are subsidizing the set top box with 25 free downloads, which could be worth $50-100 depending on what movies you download. It’ll be interesting to watch how this plays out considering Blockbuster’s well publicized fiasco with unlimited rental times which actually were limited for DVDs the last time they tried to compete head on with Netflix.

It’s clear that nobody has nailed the movie download service model yet. Amazon’s service has been a non-event, Netflix is probably the furthest along in terms of adoption and their Tivo announcement certainly boosts them, Apple is lagging here when compared to their other segments, and this Blockbuster announcement is a little too little to get excited about.

Network Bailout or Blow it Up?

With all of the attention focused on newspapers and their troubles, few have noticed that the 4 broadcast networks are in pretty bad shape as well. Their share of consumer television time is dropping at the same time advertisers are cutting back on their TV ad spend budgets as those dollars shift to new media marketing programs.

Some executives are now talking about something dramatic, the idea that it’s not necessary to have an affiliate network supporting local regions and cities as part of a broadcast network. This is exactly how cable channels operate, they sell their feed to cable operators and bypass local presence altogether.

Meanwhile, should one of the nets decide their hefty broadcast infrastructure no longer makes sense, they could go for the most drastic idea of all, one that then-NBC honcho Bob Wright first dangled more than 10 years ago: Dump the network model entirely and turn your broadcast network into a cable one.

[From Needed: Network bailout? – Entertainment News, TV News, Media – Variety]

Lost in the debate about the future of television is the fact that the average American is watching more television than ever, 142 hours per month. Parse those numbers a little more and it’s clear that while Americans are watching a lot of television per month, they are watching less broadcast network television. This shift is not new, broadcast has been under assault from cable for 30 years but now we are seeing what could be the fatal fractures in the broadcast business model just as we saw technology expose the fragile underbelly of newspapers.

The reason I find this interesting is less about the medium and more about the business of news in general. More Americans get their news from television than from newspapers, but online eclipses both of these medium. To be fair, it’s not a zero sum game, we get our news from all 3 sources whether deliberate or not, and much of what is online is coming from newspapers, but when it comes to trust it is online that clearly outshines all others.

A Zogby poll released last week revealed that people surveyed declared the web to be more reliable than television for news by a ratio of almost 2:1, and when it comes to newspapers the numbers are so skewed that it doesn’t even warrant surveying them anymore. This does reveal in inconsistency though because even online people are consuming news from broadcast and newspaper sources, so the reliability factor more likely suggests that people are using the web to multi-source news events rather than relying solely on what the NYTimes or the Tiffany network reports on.

The elimination of local affiliates would essentially drive the broadcast networks out of news altogether, something they make very little money on anyways. However, it could also drive additional investment in their cable networks in the form of local news from multiple sources instead of their local affiliate alone, and it would also greatly enhance the positions of cable operators to be the syndicator of local news much like a bureau or wire service.

In the end, all this could be goodness but the process to get there is going to be painful, ugly, and massively disruptive. We are struggling with a shift in media and audience behavior that comes around once in a lifetime, if not once in a century.

Small is the New Big on the Way to Hyper-Local

The turmoil in financial markets is revealing an interesting truth, “too big to fail” is fraught with public policy and financial risk. Seriously, is anyone really comfortable with the notion of any bank or insurance company having so much scale that our financial future relies on their continued existence? How about an auto manufacturer that is declared immune from bankruptcy and all costs to the taxpayer?

The “Wall St. and Main St.” analogy has been seriously overplayed, but that won’t stop me from using it one more time. Much has been written about the implosion of retail chain stores Linen-n-Things, Circuit City, and Mervyn’s …. but as I make my way through daily errands with local retailers I am not seeing the precipitous drop off in activity that would predict such large scale retail failures.

A very effective way to gauge retail activity at the local level is simply to ask. Most small business owners, store managers, and even retail clerks will be quite forthcoming when asked “how is business” and that picture can be compiled into a picture of overall economic activity in a local region.

There is a drop off in retail activity, clearly, as people think twice about purchases that would previously have been an impulse buy, but it’s not apparent that this is being felt equally by all retail segments (case in point, the store manager at Babies-r-Us told me their sales were up 2% last month).

I don’t think consumers are abandoning mass market retail, certainly not so with the sales and discounts that can be routinely found, but I do believe that local retail is resurgent as consumers stick close to home, and quite possibly value the intimacy of local retail experiences as, for lack of a better word, comforting. Greg Cohn dubbed this an extension of the “slow food movement” in a conversation we had recently.

I have always been a big advocate for local and hyper local but equally fierce in my criticism of local retailers who either fail to offer superior service and believe that it is a forgivable indulgence to charge prices well above what could be found elsewhere. In other words, local retail can’t suck and cost more than national chains just for the privilege of being a locally owned business, in fact the bar for good service is actually higher in local retail because there is an expectation of it born from the business being a member of the community as opposed to simply located there.

There remains a significant opportunity in local search but that window is closing. The big search engines continue to enhance their local search products and local retail is learning how to take advantage of these services. Niche search sites are improving the depth of their search results and in the case of review sites, it’s increasingly uncommon to find businesses and categories that feature no reviews.

Mobile local search is a related topic but that’s one I’m not so bullish on, primarily because mobile search in general is a niche compared to broader web search as a result of device and behavior circumstances. Having a mobile experience to augment a web-based service is a winner in my opinion.

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