Apples + Beets = Catastrophe

Perhaps you haven’t heard, but the worlds most glam computer company has purchased a very new company called “Beats.”  What do these two food groups have in common that may signal the coming apocalypse?

Here’s a quick synopsis for those of us who care nothing for business or economy.  Apple is a 30 year old computer company whose products are now wildly successful.  As a result, they have about 150 billion dollars in cash to spend, and their stock is valued very highly.  This means that there is almost nothing they can’t buy.

Beats is a very young company that has created a highly popular high-end product; reinventing the lowly headphone so that it becomes a fashion statement.  No longer a dollar ear-bud, the Beats headphones are hundreds of dollars and can include a new model music subscription service to boot.  Popular celebrities can be seen wearing them, and therefore, by association, your friends can win your admiration by wearing them as well.

And that’s where the catastrophe comes in.  People are valuing things not because they bring value to their lives, but because they bring the appearance of value to their social rank.  We’ve taken the old “keeping up with the Jones’s” moniker to new heights.  Perhaps we should now call it, “Keeping up with the Kardashians.”

We are in the middle of a huge value bubble, one that may have started back in the late 1800s and continues today.  Economic hardships like 1929 and 2008 have only slowed it down, but only for a moment.

So, the next time you take a bite of an apple, or slice a beet, think about what’s really valuable in life.  Then go back to listening to your music.

Because the beat goes on.

 

Listening to Sauce

Legend has it that the Gods of Olympus ate nothing but ambrosia, a heavenly food that mortals would never reach.  Today’s “ambrosia” consists of a few nuts, raisins, and maybe the chocolate morsel or two.  Ambrosia?  Food of the gods?  More like food of the chipmunks!

No, I’m convinced that those gods were eating tomato sauce.  Not any tomato sauce, but with onions, garlic, sausage, mushrooms, some cheese, and the lightest eggiest pasta ever.  That’s why they were so sleepy after meals!

It was recently announced that the Ragu and Bertolli brands were being sold by Unilever to a Japanese firm, Miskan.  Good for them, paying 3.5 times sales!  And with sales of 600 million in the US, that’s a lot of ambrosia.  But what does this say about behavior, and what can the sauce tell us?

Plenty, we only have to learn how to listen!  For instance, at my local high-end grocery store, there are 26 “facings” of these brands on the shelf.  There are probably 200 other facings of competitive tomato sauce, but I’m not worried about them.  Let’s listen to the Ragu.

For Ragu to make 600 million a year in sales, that means each of those 26 facings has to generate almost 23 million each!  That’s a lot of tomatoes!  Here’s where the listening comes in.

How does the Ragu do next to the Prego?  Are they generating 23 million per facing?  Perhaps the company that arranges things on the shelf for the grocery store is doing a better job for Prego than for Ragu!  Let’s compare their sales per facing for the amount of advertising they are doing, also per facing.

Or let’s think time lapse; what if there was a camera that took a picture at midnight every day?  And all we looked at was the distribution of tomato sauce in every frame.  Would we see the Ragu slowly grow over time?  Or would there be a see-saw battle between the Prego and Ragu?

Next time you’re at the grocery, and you’re thinking of eating like a god, think of tomato sauce. Then stand in front of the entire display, and listen.

What are they saying to you?

 

Money Day

We spend a lot of time thinking about money.  As Douglas Adams roughly put it, we spend our lives chasing bits of paper all about the universe to no end.

For something that occupies so much of our lives, I expected that academics would consequently study these areas to exhaustion.  For instance, interviewing for an entry level job.  Or writing up a resume.  What about simply filling out an employment form?

Imagine my surprise when I learned that these aren’t considered areas of ‘study,’ instead these are practical seminars in business school.  These are “survival skills” and not behaviors that should be studied by serious researchers.

It’s too bad.  Imagine if we could make our lives easier so that writing a resume only took a push of a button.  Or if we could be evaluated on what we’re really like, instead of what we look like.

On the other side, what do we expect a company to look like?  We call it a company, but it’s really a collection of people, and do we really want to work with those people?  When we’re young, all we want is a chance to know what it’s like to really work, to have real responsibilities, and to get a paycheck.  Why can’t we find a way to have that company be described to us so that we can really know if we’d want to work there for the rest of our lives, or even just a few weeks?

We’ll start exploring the world of business soon – for it’s an area I know too well.  But we’re going to do it by looking at the behavior of its participants, and not in generic ‘corporate’ terms.  Who knows, maybe it can help you make some money.  Stay tuned!

 

Does Warren Buffett have a good soul?

Winter forces us to hide within modern caves.  Its bone-shattering cold and blankets of ice force us deep into dark places, nowhere to gaze but within ourselves.  Deep within there is supposedly an unchanging essence that defines us as unique entities.  Some call this essence a soul.  Is it real?  Is it eternal?  Can it be rewarded or punished or born again?  It’s hard to say because all of these claims are impossible to prove.  For the moment, let’s accept the idea of a deep essence, and call it our soul.

Saying someone is without a soul is normally a great insult, for it means they are evil, doing harm to others, without redemption.  Yet even by our religious standards we know this is wrong.  Everyone has a soul, and it’s that soul which is judged to be good, or evil.

As I sit here by the fire, watching another layer of snow blanket my yard, and sip on an extremely good IPA, my thoughts turn to a well-known tycoon.  This tycoon is Warren Buffett, whom many call the “oracle of Omaha,” but whom we will call simply, WB.  WB appears before me an a regular basis because of his popularity in the business media.  A recent Bloomberg article profiled one of his newest, and youngest, trusted advisors.  This advisor was making news because she’s only 29 years old.  She started working for WB at the ancient age of 25, and within four years already holds the Chairman position in several companies in the WB empire.  Her name is Cool.

Now Cool earned her way to this position, and has worked an extremely hard and focused life.  Under her guidance weak managers have been replaced and companies that would have been ignored or jettisoned are now being properly attended to within the WB empire.  The article quotes WB saying certain companies wouldn’t have been bought if it wasn’t for Cool.  The WB empire is now comprised of many dozens of companies with a total annual revenue of 160 billion dollars.  Almost any way you look at it, this is a large company.

But I’m not here to discuss the business empire; we’re here to study behavior.  The behavior of large groups are normally most meaningful, but we can learn something by taking out the microscope and putting the occasional individual on the slide.

What kind of person is obsessed to the extreme with accumulating wealth, building an empire, and growing only for the sake of growth?  If this person was a cell in our body, we’d be worried.  As a member of society, we laud them as leaders and brilliant meta-managers, even calling them “wealth creators” from time to time.

As we adjust the microscope’s focus it’s doubtful WB or Cool are any of these.  They are popular, but are they of value to society?  A proper evaluation would require an article for another day.  For now, we want to see if we can zoom in on their soul and describe it.

The soul of WB is bent on conquest, is insatiable, and highly focused.  His wealth allows him all his allotted hours to spend with his children and grandchildren.  Yet he chooses to spend time with business associates instead.  He’s near death, and every moment becomes more precious than the last.

Meanwhile, Cool has been blessed with riches, power, and publicity.  This seeming blessing may be a curse, for it puts her on course to value board meetings over board games with her future children.  Even if she chooses to start a family, there’s a good chance she’ll have her children later in life, and fewer in number.  The amount of time she’ll spend with them will be less than average, and there’s a better chance their values will be heavily influenced by material goods, superficial relationships, and an obsession with wealth.

Remember that this site strives to be impartial observers of behavior, of human nature, and unbiased scientists as much as possible.  The above observations and expectations are grounded in evidence, precedence, and experience.  They are not meant to be judgements; for there is no good or bad delineation here.  WB is ambitious, and Cool is his protege.  These are given.  What we want to address is their essence.  Deep inside, once all the trappings of society, technology, and the superficial layers of skin and time are removed, what is it that is left?

Not surprisingly, we are left with a soul reeking of ambition, a soul without empathy, and a soul unconnected to the rest of us.  These souls are rooted in the present, solidly looking to their immediate left and right.  These souls choose to ignore the past as irrelevant to their existence.  They choose to ignore the future they could do so much to create.  And they choose to ignore the other souls around them, not only those of their family, but of their fellow humans as well.

As souls go, these are exceptional qualities, but not uncommon.  Installed in a lesser vessel, souls such as these become psychopaths, embittered divorcees, or worse.  But placed in a healthy body with an extraordinary mind, coupled with a charismatic persona and then given a push by an unpredictable universe, this type of soul has been known to stamp great slices of history with their name.

The greatest of these souls was Alexander the Great of Macedon.  When he began his career he was younger than WB, even younger than Cool.  He charmed both his army and even the conquered across the known world.  2,350 years ago, this 20 year old sought nothing less than world domination.  He would have achieved it as well, but for an errant arrow he met somewhere in today’s India.  Part of his charm was that he led his men into battle, being up front where they knew he was working as hard as they were, taking the same risks.  Had that unlucky archer known, he would have missed Alexander.  Had he missed, his city would have been conquered, an older Greek soldier would have become his Governor, and life would have continued under a new master.

As it was, this archer may have smiled for a moment as he watched the dreaded Alexander fall from his wound.  What he didn’t see coming was the power of the soul within Alexander, a soul that had bound his legions both in duty and love.  That archer awoke the monster of vengeance within the army, and not a single defender or citizen survived.  There was no life to continue under any master, and that city was lost, known to us only as Alexander’s farthest reach East.

And what does the soul of Alexander, one of our greatest military leaders have in common with WB?  They are the same.  Nothing could stop Alexander or his army, errant arrows included.  WB has not stopped his quest for growth.  Which sounds more impressive?  Owning a large portion of a holding company whose portfolio includes companies with a combined annual revenue of 160 billion dollars?  Or conquering the world from the Mediterranean to India?  There is no city named after today’s tycoon, WB.  Alexander founded at least 30, many of which still survive, and at least one still bears his name.

So what of the soul of WB?  Is it good, or evil?  Would he have been an Alexander if he’d been born 2,300 years ago?  Is what he is doing good for humanity?  These are all questions for another day.