Saving Relationships, One Month at a Time

Brilliant. All joking aside, this is a great concept for an affiliate shopping destination with great integration options to services that would be glad to have the traffic. Everything from gift services to Opentable.

PMSBuddy.com is a free service created with a single goal in mind: to keep you aware of when your wife, girlfriend, mother, sister, daughter, or any other women in your life are closing in on “that time of the month” – when things can get intense for what may seem to be no reason at all.

[From PMSBuddy.com - The free online PMS reminder]

Tesla Saga, Part 937.4

So the City of San Jose is distraught that Tesla pulled the plug on their planned factory in San Jose. Check out their math.

Construction would mean 600 jobs and $40 million in wages, according to an analysis by city staff, and the facility ultimately would employ 525 people with an annual payroll exceeding $100 million.

[From Plans for Tesla auto plant in San Jose appear doomed - San Jose Mercury News]

Let’s look past the construction jobs and focus on permanent payroll… the average employee at the Tesla factory, according to San Jose officials, would earn $190,000. We could speculate on bonus structures and additional taxable compensation components, but at any rate that is a lot for per employee at a car factory, it pretty much puts GM’s $78 per hour cost to shame. Okay, it’s also company HQ and has R&D but that is still a lot of coin.

I also question city officials for the wisdom of basing these projections and plans on a company that has failed to meet any of the original targets they set for themselves in the timeframes made public and to date has delivered a mere 160 cars.

PS- I pulled up behind a Tesla yesterday at stop sign, the car has some wicked acceleration.

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Who Really Gets the D Grade?

The American Society of Civil Engineers comes out with an annual report card on America’s infrastructure and it’s almost always grim… otherwise how would it make news?

This year the ASCE gives our infrastructure a D grade, same as last year except that we are now at a D- instead of a straight D.

Quite honestly I think we are looking at this all wrong. If we consider that the time required to build infrastructure projects remains stubbornly long and spiraling costs actually form the major impediment to retrofitting and replacement, well maybe it’s the ASCE that deserves the D grade.

It’s true that we build structures that are safer and satisfy diverse constituent requirements but at what cost? It is impossible to move the ASCE grade up to a B with the constraints and costs that these projects require; it should be a core mission of the civil engineering industry to find and implement new technologies that not only offer performance advantages but also cost and time to construct advantages.

Let’s take a look at two examples. The Brooklyn Bridge began construction in 1870 and completed in 1883 for a cost of $15.5 million, which adjusted for inflation is about $2.5 billion in today’s dollars. 125 years later it still stands and serves the critical needs of New Yorkers who walk and bike across it, travel by train, and take their cars on a bridge originally designed for horse drawn carriages. A $725 million project, 1/3 of the original cost to build the entire bridge (adjusted for inflation) is underway to replace approaches and repaint it.

The SF Bay Bridge began construction in May 1933 and completed in November 1936, the total cost was $77 million, or $1.2 billion in today’s dollars. This is real progress because in a 60 year span the civil engineering industry figured out how to build a much more complicated bridge than the Brooklyn Bridge, and much larger as well, for half of the cost (again, using very simple inflation adjusting math, which is subject to inaccuracies but used to illustrate a general point) and in a much shorter project time span.

Engineers knew for 30 years that the Bay Bridge was at risk in an earthquake and it was the 1989 earthquake which damaged the bridge that finally brought the issue into public consciousness, almost 20 years ago. After 10 years of study and debate it was agreed that a replacement for just the eastern span would be the best option.

Construction began in 2002 with an estimated cost of $1.1 billion, roughly equal to the original build cost. A significant design modification caused the price tag to balloon to $2.6 billion in 2003 and then skyrocket to $6.7 billion in 2005. The original completion date was 2007, 2 years longer than the original complete build required but as it turns out, a massively optimistic projection as the new scheduled completion data is not until 2013… 11 years from when construction began and only 2 years better than the Brooklyn Bridge required in 1870.

How the hell can we expect, as a country, to invest in large scale infrastructure retrofitting and replacement with these kind of numbers? If we can’t do significantly better in 2009 than we did in 1883, and be massively more expensive at the same time, we can give D grades to infrastructure year over year and little will change. I can think of a few entities that deserve to be graded equally harshly.

Stimulus or Spending Gone Wild

What is in that so-called stimulus bill working through Congress today is mind boggling. This isn’t stimulus, it’s unchecked government spending that takes advantage of a crisis. The Baby Boomer generation is going out with a bang and could well be remembered as the generation that consumed far more than it produced.

Here’s another lu-lu: Congress wants to spend $600 million more for the federal government to buy new cars. Uncle Sam already spends $3 billion a year on its fleet of 600,000 vehicles. Congress also wants to spend $7 billion for modernizing federal buildings and facilities. The Smithsonian is targeted to receive $150 million; we love the Smithsonian, too, but this is a job creator?

[From A 40-Year Wish List - WSJ.com]

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France Bails Out Their Newspaper Industry

whatdayathink? Personally, I think the notion of giving teenagers free newspaper subscriptions to stimulate the newspaper industry is something that could only be invented in French bureaucracy.

France will offer all 18-year-olds a free daily copy of the newspaper of their choice, President Nicolas Sarkozy said Friday, announcing a package of measures to help the beleaguered press.

[From France to give free newspaper subscriptions to teens]

Streaming video cannibalizing DVD rentals

I can sum up my comments with one word: duh.

Netflix says that DVD rentals are down for subscribers who make use of the company’s online streaming service. Though it doesn’t hurt Netflix’s bottom line, the trend certainly spells bad news for physical media, including Blu-ray.

[From Streaming video cannibalizing DVD rentals, says Netflix - Ars Technica]

Newspapers Grow Web Traffic, Still Going Bankrupt

Nielsen reports that newspaper web traffic grew 16% in December. Great news, but it doesn’t matter what their traffic is, the underlying advertising model is broken and it won’t heal itself.

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I wrote about this phenomena back in June last year and NOTHING has changed. More web traffic won’t close the revenue gap to offline and it certainly won’t be enough to sustain newspapers across the country. More significantly, if you look at the traffic spread in just the top 10 on Nielsen’s list, you start to get a picture for how difficult it is for a non-major media market newspaper to grow traffic.

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Relationship Management for Restaurants

Great idea, I still think they should have named it “RuhRoh”.

To do this, he has enlisted the help of a Mountain View startup called BooRah, which is launching a new “reputation management” service for restaurant owners. The 2-year-old company, which started as a restaurant search site, is expanding to create summaries of everything that’s being written about a particular dining establishment. It uses technology developed in-house to analyze the sentiments in online reviews and then generate scores, rankings and summaries.

[From New site gives restaurateurs data on reviews]

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A Tale of Two Companies

McDonald’s kicked ass last year and all indicators are pointing to another solid performance this year. The analysis that people just want cheap food is wrong though, people want value, which is a lot more complex than just having a low price tag, and McDonald’s delivers it in spades. The Mini Meals menu items that they are running right now are about as good as it gets for a full meal in a reduced portion size for $3.

US fast-food giant McDonald’s said Monday its 2008 net profit soared 80 percent from a year, lifted by growing demand from consumers seeking low-cost meals in a deepening global recession.

[From McDonald's posts sizzling 80% profit rise in 2008]

The team at McDonald’s read the cards correctly and put in place several initiatives that are paying returns, the value menu being just one of them. They embarked on an ambitious program to renovate retail stores, which feature comfortable sitting areas, televisions, and a new color palette that is pleasing and warm. New menu items like salads and chicken sandwiches satisfy a broad range of tastes and desires.

On the coffee front they, like Dunkin Donuts, doubled down on plain old drip coffee while adding espresso drinks, which put them squarely in competition with Starbucks, although with a far better array of assets to compete with then Starbucks could muster. In retrospect I think it’s fair to say that drip coffee is a bigger sales driver than many observers would suggest and it is most certainly the case that the quality of the coffee is far more important than other attributes… my purchase decision is not based on whether it’s fair trade or not, but how it tastes and Starbucks drip coffee just doesn’t taste that good.

Starbucks announced that they are making another 1,000 job cuts. This is a classic example of a company that lost it’s way by forgetting that the core competency they had to deliver on was good coffee and not just a lifestyle brand. Starbucks rather spectacularly miscalculated that people went to Starbucks for the atmosphere and the lifestyle brand could be leveraged for (bad) food, music, hardware and appliances, and even extended to the grocery store shelves. As it turned out, Starbucks is one of those disposable brands that you can do without.

On top of the dilution that occurred as they expanded into (bad) food and mediocre baked goods, the retail stores started to look dated and tired. As I wrote above, Starbucks lost their way and with so many things going wrong for them at the moment it is difficult to imagine a scenario where they emerge intact.

Their stock has lost $21b of market cap in a few short years, which puts massive pressure on employee morale, among other things, and their balance sheet is not particularly strong. What is most troubling is their cash flow, which is negative and largely driven by necessary capital expenditures. It’s hard to speculate on whether or not they would be an acquisition target; while the vast majority of the stock is held by institutional investors it really comes down to who would acquire them in this environment with the problems they are confronting.

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