Possible Names for New Blog

I've mentioned this in a couple of the comment threads, but I'm going to be moving to a new blog soon. The new blog will probably be on Wordpress with a professionally designed logo and a customized theme, and the content will have a somewhat tighter focus on business and entrepreneurship. Here are three domain names I've purchased and am considering for the new blog:

- HackensackVentures.com

- LaunchingInnovation.com

- SteamCatapult.com

The first name has the tie-in with the name of this blog, of course, and continues the semi-ironic attempt at treating Hackensack as a brand. I say semi-ironic, because Hackensack, for those who are familiar with the place, does connote a certain grittiness and lack of concern about image; to the extent that you can spin that in a substance-over-style direction, that's a positive. It's also an ironic take off on the name of prestigious venture capital firms such as Union Square Ventures¹.

The second name is more straight forward, and describes what I plan to focus on: launching innovative business ideas of my own, and helping others launch theirs.

The last one is a play on the second one: a steam catapult is what launches aircraft off of carrier decks. As the unshaven fellow in the video on the homepage of this naming company, A Hundred Monkeys² says, a name ought to have some "mystery". Steam Catapult would have the most "mystery" of these three names. One downside though is that the Navy is apparently moving toward electromagnetic catapults, so when that transition happens, steam catapults might connote retro, which could clash with the innovation theme -- or not, perhaps, since steam catapults will still have been innovative in their time.

I thought I'd take an informal poll of my small handful of occasional commenters and see what you guys thought. Fire away.

The photo above, of a F-14 about to get launched by a steam catapult from the deck of the USS JOHN C. STENNIS, comes from Wikipedia Commons.

¹When you are attempting to attract wealthy investors, you generally use a name that connotes wealth or sophistication, or a combination of both. Hackensack, of course, connotes neither. I knew a Manhattan-based financial planner who came up with the name for her practice by combining the name of a prestigious prep school and adding the word "hill" to it, because rich people often live on hills, or in towns with "hills" in the name.

²I read about this company a few years ago in the Wall Street Journal. Nice work if you can get it, no? This, as with most public relations and traditional marketing businesses, seems to be made possible by OPM. I can't imagine a scrappy entrepreneur starting off with his own savings of those or his friends and family writing a big check to someone to name his business. But if a business is venture-funded, that's a different story.

Sometimes You're lucky to have Your Business Idea Shot Down

Four or five years ago, I thought I had an interesting business idea: private unemployment insurance. Fortunately, before I spent any time or money pursuing this idea, I was promptly talked out of it in a conversation over dinner with reader S.L., who was kind enough to act as a sounding board. As a seasoned businessman and investor, he spotted the flaw instantly: adverse selection. The people most likely to get laid off would be the ones most likely to apply for private unemployment insurance, which would wreak havoc with your loss ratios.

Yesterday's New York Times featured an article by Ron Lieber ("Good Luck Getting Private Insurance for Unemployment") about an entrepreneur who wasn't lucky enough to run his idea by S.L. before starting his own private unemployment insurance business. The article mentions that this entrepreneur, an insurance industry veteran named John Hartline, started his business in the Spring of 2008, only to have his reinsurers cut him off a year later:

Mr. Hartline said his reinsurance provider, Munich American Reassurance, forced him to stop writing new policies in April of this year.

Why? It turns out that the biggest problem with private unemployment insurance is something that industry insiders refer to as adverse selection. That is a fancy way of saying that the people who take out this sort of policy are the ones most likely to need it.

S.L. could have told him that, and saved him a lot of money and time. Sometimes the best thing a trusted mentor can do is tell us when we have a bad idea.

Update:: Cheryl was nice enough to mention a previous post, "Hedging against Job Loss", in the comment thread of the NY Times article mentioned above.

Another Update: S.L. adds this comment via e-mail:

Munich Re-Insurance Co. is one of the oldest, largest Re-insurance operations in the world.

Amazed that Munich had to wait a year before they took action. Probably after experiencing large losses.

How to Promote an Online Business

Although my sites are still in development, this is something I've been working on. This week I explored a couple of options: hiring a public relations professional and commissioning a short animated clip. The jury's still out on both of those options, but here are some preliminary thoughts.

First thought: good animation is expensive. If a clip is catchy enough that it gets some viral circulation, it could pay for itself many times over, but that's a lot money to put on one spin of the roulette wheel (e.g, the cost I was quoted by an animator this week for one 30 second clip was almost as much as it will cost to develop one of the programming-intensive sites). I think I've got a clever concept, but it's what everyone else thinks that counts.

Second thought: when looking for a public relations pro (or any vendor, for that matter), try to find one who thinks like an entrepreneur. To put it in military terms, look for a commando, not a REMF. I remembered reading an article a couple of years ago about a commando-style PR guy, someone who generated millions of dollars in sales for his clients through his work alone. I contacted him, but my sites aren't in his sweet spot (he focuses on off-beat household products). He did refer me to a colleague though.

Earlier this week, I had a pleasant conversation with his colleague, who was bright and personable, but no commando. A few days after our conversation, he sent me an e-mail saying he enjoyed our conversation and suggesting some services he could offer me. These were two of them:

Messaging Workshop and Media Materials Development

A messaging workshop will help identify the primary and secondary messages that will help both services further develop their brand and identity. The Messaging Bible we develop as a result of this workshop could also be shared and used by your entire team so you are communicating with one voice throughout all communications vehicles (blog, website, social media platforms, newsletter, bylined articles, etc.). Once these messages are identified we recommend developing a comprehensive online press kit that can help supplement any pitching and marketing efforts.

Fees: $3,500 for a ½ day messaging workshop plus any travel expenses

$1,500 for the initial development and ongoing edits of all materials

Executive Communications & Media Skills Training

Executive communications and media skills training enable your spokespeople to be well prepared to handle media interviews and become a better all-round communicator in your day-to-day life and during speaking opportunities. Such training is based off of the Messaging Bible and allows you to proactively tell your story to existing partners, clients, consumers and especially with the various media audiences while launching both brands throughout the U.S.

Fees: $3,500 for a ½ day communications training plus any travel expenses

He went on to suggest more REMF services in that e-mail. This was what I wrote him in response:

Thanks for getting back to me. It was nice speaking with you as well.

To be candid though, what you've sketched out below isn't what I'm looking for. I'm looking for results, and I'm willing to pay for them. The specific results I'm looking for are getting articles about my online businesses placed in established media. I'm not looking for workshops, boot camps, messaging bibles, etc.

I appreciate you taking the time to speak with me though, and wish you the best of luck with your business. Perhaps we'll be able to work together in some other capacity in the future¹.

¹Offhand, I can't think of a capacity where he and I might work together, but you never know; so instead of burning this bridge completely, I just left it a little charred.

Your Ideas as an Asset Class

This is something I've been thinking more about recently as I've been investing in a couple of my ideas. Before the unemployment rate doubled in the last year, there was a financial pundit or two who suggested that your job could be considered an asset class (I'd provide a link here, but I already wasted ten minutes on search engines only to find articles about Kit Bond, Barry Bonds, etc.). The pundits' point, if memory serves, was to think of your job as a bond, since it pays a regular coupon (your salary) and then invest more aggressively in equities since your job is your fixed income allocation. Of course, unless you are a unionized government worker, your job is probably a lot riskier than the average bond, since those coupons can stop coming at any time.

Investing in your ideas is of course risky too, but can have high potential returns. Perhaps the rough analogue among securities would be a call option: inherent leverage on the upside if events go your way, versus the possibility your investment will expire worthless if they don't. Today I found myself in Manhattan with some free time on my hands, after a business meeting canceled, so I visited a couple of 'call options' that worked out for their investors: Sarita's Mac & Cheese, and Joe.

I'd been to Sarita's Mac & Cheese (S'MAC, for short), a few times before. Sarita and (her husband) Caesar Ekya were both engineers before quitting their jobs and starting S'Mac. You can read more about that in their bios here, but I was fortunate to hear the story from Sarita's mother once. I went to S'MAC a few times the year it opened, and back then, I'd always see Sarita and Caesar behind the counter. One time, while waiting for an order, and older Indian woman sipping coffee at a table nearby said something to me. We started talking, and she explained that she was Sarita's mother, and gave me the scoop behind the place. Today was the first time I'd been to S'MAC in several months, and business apparently has been going well: now they have an additional storefront on the same street, to handle the takeout and delivery business. Here's a short video clip from the S'MAC site of Sarita and Caesar telling their story:



The other business, Joe, I hadn't been to before, but had read about a few years ago in this New York Times article, "Forging a Coffee Chain Just a Few Links Long". The founder of Joe, Jonathan Rubinstein, was, according that article, a talent agent before starting the business. His idea was that a higher-end, local coffee place could successfully compete with Starbucks¹. I actually stopped by two Joe outposts: first, the one on East 13th Street, which was so crowded there was no place to sit, and then the one on Waverly Place in the West Village, which started to fill up after I got there. The espresso at Joe was better than Starbucks -- it had the rich, chocolate-like feel of a well-prepared Illy espresso. My palate isn't refined enough to differentiate it beyond that, but suffice it to say it was good. No WiFi at Joe though, perhaps to discourage customers from lingering too long?


¹This point was also made by letter writer to the Financial Times, as I noted in this post last December.

A Visitor From Redmond, WA

A few days ago, this blog's Feedjit widget showed that a visitor from Redmond, WA (home of Microsoft's headquarters) clicked on this post, "Algebra Challenge". Seeing that, I wondered if someone an interviewer at Microsoft was binging math questions for the company's notorious interview questions¹. I happen to have middling math skills myself, but I think this could be an decent interview question, as long as the interviewer just asked the interviewee how he would solve the problem, instead of requiring him to actually solve it (since, the arithmetic is messy, andas commenter J.K. noted in that thread, the actual formula is heavily rounded). The key insight here would be to recognize that the problem can be stated and solved as a system of three equations.

This raises a question I've wondered about in the past, which is to what extent these sorts of questions actually measure intelligence. Maybe it doesn't even matter though, if the questions test for a similarly valuable attribute other than intelligence.

Consider, for example, a couple of word problems I remember from tests I had to take as part of the application process for jobs in the past. Without digging up the exact text of the two word problems this was the gist of them: The first asked how many of each type of coin you would have if you had a certain amount of money in change; the second asked how far apart two individuals would be if one walked so far in one direction and then so far to the left, and the other did the exact opposite. I remember these two word problems for two reasons: I know I got them right, and I know that my getting them right wasn't a reflection of my intelligence or math aptitude. I got the problems right because I had seen them before.

I knew that the first problem could be solved with elementary algebra (using 25x for a quarter, 10x for a dime, and so on), and the second one could be solved with elementary geometry (adding the hypotenuses of the two resulting right triangles). Although these questions didn't measure my intelligence or math aptitude, my getting them right did demonstrate something else: that I had paid attention in math class, or perhaps that I had studied this stuff relatively recently while preparing for a standardized test needed for a graduate degree. So getting those problems right demonstrated either intelligence/aptitude, conscientiousness, or ambition, or some combination of those attributes; and whichever of these attributes a test-taker had would reflect well on him, as far as the employer was concerned.


¹I was reminded of this by a conference call I had today with an ABD finance Ph.D. who is doing some consulting for me and one of my web developers. My finance consultant created an algorithm for me, and he was going over it with one of my web developers. My finance consultant assumed that my web developer, who has a bachelors degree in computer science, would have had all the math background necessary to understand the algorithm. My web developer noted that he had a minor in math, in addition to his comp sci degree, but he just wasn't familiar with a particular function the finance consultant specified (an infimum function). I hadn't heard of the function before either, and if a comp sci major/math minor hasn't heard of it, I guess a question based on that function wouldn't be a good one for a Microsoft interviewer.

Sonic Discord in Northern New Jersey

In a post a few months ago, I mentioned that one business that seemed to be bucking the recession locally was Food Network chef Bobby Flay's, burger place, Bobby's Burger Palace. A few weeks ago, the first Sonic drive-in opened in Northern New Jersey, on Rt. 17, one of the two main commercial highways cutting through densely populated Bergen County¹. Since then, the place has been jammed. There have been traffic cops on foot directing traffic into the lot, and waiving off cars when the lot is full. We have a lot of people in NJ who love to eat, but we also have, arguably, the most aggressive and most dangerous drivers in the country². Last night, that combination led to one of the traffic cops getting sandwiched between two cars. From the Record:

Several teenagers in their cars at the drive-in heard the crash and ran to the scene, on Route 17 north. They saw a Honda Civic with its front end smashed, facing north, and up against an Acura SUV facing south, both vehicles pinned against the center median in the northbound lane.

They said they saw the officer pinned between the two cars. “The officer wasn’t moving … his eyes were closed,” said Ryan Conlon, 17, of Allendale.

“We heard, like, a screech, and then a loud thud … it sounded like somebody hit something heavy,” said Conlon, who was at the drive-in with two friends, Brandon Neuburger, 18, of Allendale, and Nicole Piazza, 18, of Ho-Ho-Kus³.

[...]

One customer, P.J. Montevirgen, 29, of Hackensack said he had to circle up and down the highway to try and get a spot, and saw an Acura SUV trying to get a spot and a police officer telling the driver the lot was full. The Acura driver suddenly floored his vehicle in front of the officer, jerked to the left, and disappeared behind some car. Moments later, Montevirgen said, he heard a crash.

“It’s a real popular spot. … I’ve been hearing about it [the drive-in],” said a 50-year-old Ramsey resident who declined to give her name. She said she had circled on the highway five times before she pulled into the drive-in. “People jockey to get position in the right lane to get in.”

As she pulled in, she spotted two police officers directing traffic and blurted to herself about the position of one of them, “That cop is going to get killed.” Five minutes later, she said, she saw all the commotion.

I dedicate the footnotes below to the memory of David Foster Wallace.

¹According to Wikipedia, there are about 900,000 of us tucked into the little corner of Northeastern NJ comprised by Bergen County. In contrast, Sussex County, which is situated in the Northwestern corner of NJ and covers twice the land area of Bergen County, has only about 150,000 residents. My mother owns a small horse farm in Sussex County, and when we drive there Cheryl and I pass the "Welcome to Sussex County" sign, which features that county's slogan, "People and Nature Together". We've joked that the slogan for Bergen County ought to be "People at each other's throats".

²I say this based my experience driving in a number of different parts of this country. Los Angeles, for example, has lots of traffic, but when I've driven there, I've never seen the kind of nonsense I see here. I don't see it driving in Manhattan, for that matter either (with the possible exception of the taxi drivers).

³As densely populated as Bergen County is, the northern end of it includes some scenic, rural parts. Ho-Ho-Kus is up in that area. One bit of trivia: Ho-Ho-Kus was mentioned in an episode of Sex and the City ("Sex and the Country"), when Carrie Bradshaw drives into NJ from her boyfriend's cabin in New York state to get a burger. According to IMDB, this scene was actually shot somewhere in Long Island though.

Small Businessmen Prefer Windows XP

Last week I got a packet of coupons in the mail, triggered somehow by my recent formation of a limited liability company. One of them was from Dell's small business group, and since the computer I'm typing on now dates back to the last century (I added some RAM and installed Windows XP a few years ago), I figured I'd finally buy a new desktop. The deal came with Windows Vista Home standard, and the flyer mentioned the option of upgrading to Windows Vista Business for an extra $99. Having seen Windows Vista in action on a friend's computer last year, I asked how much it would cost to downgrade to Windows XP. That was $99 as well. So I told the Dell sales rep to ship it with XP and, out of curiosity, asked him what percentage of his clients asked for a downgrade to XP. He said about 90%-95%.

Costco Takes an Interesting Tack in Responding to the Recession

We noticed something new at our local Costco last weekend: USDA Prime steaks. Previously, the butcher section of the Hackensack Costco only carried the lower grade, USDA Choice. We picked up some Prime-grade rib eye steaks for $8.99 per lb. After marinating them in a little red wine (a drinkable $4 dollar bottle of Chilean Shiraz from Costco's liquor store), Worcestershire sauce, olive oil, and steak seasoning, I threw them on the outdoor grill for ten minutes, flipping them once half way through. Cooked medium rare, they were excellent. With a Choice steak, there's usually 10% or 20% of it I don't want to eat and I end up feeding to the dog; with this one, he just got a couple of tiny pieces.

Interesting tack for Costco, going upmarket a little in a recession. It probably makes sense. Last summer, Ruth's Chris offered a special dinner for two for $89, and, today I heard a radio commercial for a similar $90 deal at one of Manhattan's upscale steakhouses, Ben Benson's. Upscale steakhouses are going a little down market, and Costco's going a little upmarket: they're both competing for customers who want prime steaks but don't want to pay prime prices for them.

The image above, of the Prime-grade rib eye steaks, comes from Costco's website. According to the site, these are 1855 Brand steaks, packaged for delivery. The steaks we bought were cut by the in-store butchers and were less expensive.

Lessons from Brooklyn's New Economy

This week, the New York Times published an interesting article on the burgeoning culinary movement in Brooklyn, one similar to the movement led by Alice Waters¹ and others in Berkeley, California, in the 1970s ("Brooklyn's New Culinary Movement"). There are some broader political and economic issues related to this story that the article doesn't touch on, which I try to touch on below.

The article described how a number of Brooklynites were building viable businesses and creating livelihoods for themselves. Conspicuously absent was the role of formal education in most of this. The butcher learned his trade from an apprenticeship of sorts; the ricotta cheese makers learned that craft on a trip to Italy; the chocolate-making brothers were mainly self-taught, etc. Since education is one of President Obama's three main policy foci, it would be good if he or his aides took note of this, but I doubt they will, for a couple of reasons. The first is because of the extent to which the Democratic focus on education is about feeding the educational industry, and the second is because I doubt many of Obama's aids (or outside advisers) have ever done the sort of thing these Brooklynites are doing: building businesses from scratch. That lack of hands-on experience leads to blind spots among our elites, both in the public sector and in the corporate sector.

That's a thought I had considered writing a post on a few months ago, but I'll make the point here instead. There's been speculation in recent months about how some of the catastrophes that combined into the financial crisis could have happened on the watch of some of America's best and brightest, in big business and government. In a recent New York Times column, Ben Stein, drawing on his experience in the Nixon White House, speculated that most of the best and brightest weren't that bright. He wrote that most of the men he worked with in Washington were B+ types, with the exceptions of two he considered to be geniuses, Henry Kissinger and Paul O'Neil. Others in recent months, including Atlantic blogger and Harvard alumnus Ross Douthat, have blamed the arrogance of Harvard-educated elites. I suspect the lack of hands on experience in closer-to-the ground businesses is partly to blame. Relatively few alumni of Harvard or other elite schools go into these sorts of businesses, as they tend to have lower-risk, lucrative job opportunities in big business, consulting, etc.

Attitudes toward debt and leverage are one example. Most small businessmen I've known are inherently cautious about both². The New York Times article doesn't give much detail on how these culinary-related businesses are financed, but what details it does give suggest an aversion to getting over-extended with debt (e.g., the chocolate-makers paying the designer of their packages in chocolate bars and deciding to let their business "evolve" rather than trying to grow it more quickly). The academic perspective on leverage (at least for public companies), up until recently, was different³, and of course there was no shortage of elite university grads at highly-levered Wall Street firms.

The image above, from the article, gives you an idea of the sort of ethnic diversity you can find in many gentrifying New York City neighborhoods.

¹In doing some research before writing this post, I came across this related essay (which I don't entirely buy) by John Schwenkler: Eat Republican: How an organic movement born in Berkeley exemplifies conservative values.

²In lending businesses, some amount of leverage is necessary, but the owner of a local non-traditional lender for whom I've done some work explained to me that his business is usually levered less than 3-to-1: far less than most commercial banks, let alone investment banks. He also takes a more hands-on approach to asset-backed lending than some of his counterparts in big Wall Street firms, e.g., driving out to a retail property backing a note and watching its foot traffic, etc.

³The academic perspective on this always struck me as counter-intuitive. In an NY Institute of Finance class a couple of years ago, for example, the instructor, a veteran CPA and CFA, lectured that it was a bad thing for a company to have a lot of cash on its balance sheet (because that dragged down returns on equity). He said that a company flush with cash it couldn't put to use ought to use it to buy back its stock, and then lever up and buy back some more stock. Of course, companies that followed that sort of advice in the last couple of years haven't been well served by it, while companies holding net cash may now have some attractive opportunities to put it to use in a depressed market.

A Local Business That Seems to be Doing Well

The NJ location of the Japanese Mitsuwa Marketplace (pictured above) features these specialty shops and restaurants, along with a Japanese supermarket. We stopped in last Saturday and picked up a six pack of Asahi beer, and then had lunch the next day in the food court (which offers a riverside view of Upper Manhattan). The Asahi beer was actually brewed in Canada by Molson, under Japanese supervision (according to the label), but many of the other products sold in the supermarket are imported from Japan. Mitsuwa was packed on both days, with customers queuing up for noodle bowls, black sesame ice cream (which is excellent, by the way) and hot Cream Yakis (also tasty) in different parts of the food court.