Monthly Archives: August 2015

Horrible Boss?

By Lloyd Graff

Jeff Bezos, CEO of amazon.com. Photo courtesy of forbes.com

Jeff Bezos, the CEO of Amazon, is one of the most brilliant, innovative entrepreneurs in the world. In just 20 years as head of the company he founded from scratch, he has built the biggest, most efficient online retailer in the world.

And the New York Times just spent thousands of words on the front page hating on him for being a demanding boss.

Bezos is a zealot about his business. You don’t become a billionaire after being abandoned by your father as an infant in Albuquerque if you’re a pushover. He is absolutely driven and he does not suffer gladly slacker employees who watch the clock. He wants his people to buy into his vision for the company whether they work on the floor at one of the Amazon’s 90 fulfillment centers (enormous automated warehouses) or at its corporate office in Seattle as a software engineer or executive.

The company is remarkable in its ambition. Amazon just unveiled one hour delivery in Seattle for an extra charge, and two hour delivery for no extra charge for Amazon Prime members.

The problem the New York Times has, I would argue, is that it is pro union, pro $15 per hour minimum wage, and pro old school retailer like Macy’s and Lord and Taylor, who buy full page ads (which Amazon doesn’t do). The paper is jealous of Bezos’ success and his tough approach.

My question to you readers is, do you care whether Bezos is a warm and fuzzy boss when you order a Toto toilet, an audio book from Audible, or watch The Walking Dead on Amazon Prime video?

It is not a totally dumb question. If a boss is a racist, misogynist or a traitor it definitely would affect my choice to buy a TV from his company. If the boss was a Mafioso or a werewolf I probably would not buy from him, but a hard ass business guy probably does not bother me enough to shun the Charmin. That is my threshold for a national retailer like Amazon. On the other hand, if in person, I saw a manager of a local hardware store berate a poor kid trying to learn a summer job I might buy a screwdriver elsewhere.

Jeff Bezos is a heroic figure to me as an entrepreneur. I think he rocks. I love that he bought the Washington Post for $250 million, which is pocket change for him but probably a real irritant to its competitor The New York Times.

Jeff Bezos, keep the innovations coming. Maybe one day your drones will deliver my pizza. I wish you were a gentleman and a scholar, but if my Nikes from Amazon fit, I’ll wear them.

Questions: When making a buying a decision, do you care about the behavior of the company’s boss?

Do you judge entrepreneurs solely based their accomplishments?

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A Day to Remember

By Lloyd Graff

Three generations of Graffs at a Cubs game. 2015

The game was over, the Chicago Cubs had completed a four game sweep of the San Francisco Giants at Wrigley Field in Chicago and I was there to witness it with my three granddaughters.

We were walking out and everybody in our group was in the bathroom but me. I paused and shed a few tears while I mumbled a short prayer of thanks, that I was able to share this moment with my family.

My daughter, Sarah, is a Rabbi in California. She and her husband Scott and kids usually come to Chicago once a year. This year she was determined that her children would get the three generation Wrigley Field experience. She studied the schedule and picked out the only day game that would work and bought the tickets online. This was a family, a spiritual and a practical decision on her part, because every year in her most important sermon, the one people literally wait to hear for 12 months, she makes a reference to the Chicago Cubs. It’s part of her signature. She’s been doing it for 13 years, on the most important holiday of the Jewish calendar, Yom Kippur.

My children understand my relationship with the Cubs is a visceral one. They may not feel it with the fervor of their father, but they experienced it at least vicariously enough to sing baseball songs to me when I was in the hospital waiting for heart surgery seven years ago.

My wife Risa is not a baseball fan. She is indifferent to the Cubs, but through our 45 years of marriage she has respected my commitment to the team. She wanted to be at the Wrigley Field game with Sarah and Scott and the kids. (One of the great things about Sarah’s marriage to Scott is that he is from Chicago too and a lifelong Cubs fan, so the kids are purebreds).

The seven of us packed into a rented Ford van and headed to the ballpark. The girls had never been to a Major League park, but the older ones, 10 and 7, understood the game and Orli, the 5-year-old, had some sense of the event from TV experience and going to a minor league game in San Jose.

It was a perfect day for baseball and we settled into our seats, 20 rows above third base. The game was a pitchers’ duel with the Cubs taking a 2-0 lead early and clinging to it until the 9th inning. Joe Maddon, the Cubs manager, brought his closer, Hector Rondon, into the game. Rondon immediately got into trouble, loading the bases with nobody out. It was the kind of game a fan of the Cubbies knew in his heart of hearts would end badly.

But these are the new Cubs of 2015 and there is magic with this team. Rondon proceeded to strike out the side with no runs scoring and amazingly the Cubs beat the World Champion Giants to sweep the four game series.

Everybody was standing during the crazy 9th inning and continued to sing and sing again, Go Cubs Go, the theme song when they win. It was thrilling and chilling. The girls were enthralled by the sheer energy of the moment amidst 40,000 fans who stayed way past the end. Even Risa got into it and kept saying to us all how much she enjoyed the game.

Sure, it was only a game, an orchestrated moneymaking event, if you want to be cynical, but for the seven of us who were lucky enough to be present at Wrigley that Sunday it was a beautiful moment that would tie the generations together.

I had gone to Cub games in my youth with my Mom who had gone to games with her father. Through the years it became one of our favorite ways to communicate, as we discussed what was happening with the team.

Recently my son-in-law Scott called me at 11pm to rejoice in a Kyle Schwarber game winning homer. One of these days I hope one of my granddaughters will make that call. When the Cubs-Giants game ended and the music stopped, I was grateful to pause and rejoice in the moment. We never get enough special moments like that when three generations weave together in such exquisite joy.

Question: What activity ties the generations of your family together?

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Summer Scuttlebutt

By Lloyd Graff

John Kerry (L) with Iranian Foreighn minister Javad Zarif (R) and others in Lausanne March 26, 2015. Courtesy of businessinsider.com

Seldom have I struggled with a political and emotional issue like I am with the Iran nuclear deal. My gut tells me to be against it, because Benjamin Netanyahu of Israel is so adamantly opposed to it.

My dislike of Obama and John Kerry also pulls me to oppose it, but my sense of the deal, intellectually, is that it is a net plus for the world. I think that Iran would have developed a nuclear bomb capability eventually if they wanted to do it, and there really was no way to stop them. Sanctions punished them over the last few years, but ultimately they would make a bomb.

Obama came to this conclusion five years ago and pushed to get what he thought was the best deal possible. I don’t know if the 10-15 year delay in Iran’s bomb program will permanently stop them from becoming a nuclear power, but Iran has a young and fairly well educated population and there is hope for regime change. So I am siding with taking a chance on the deal, because the other options appear worse. Bombing Iran does not seem like it will work. Defeating the treaty will not mean we will get meaningful sanctions on Iran because the Russians, Chinese and Germans will not go along.

Could Obama have done better with Iran? Probably, but I do not really know. At this point, with what I know, I am reluctantly for OK’ing the deal.

******

The self-driving car seems to be moving ever closer. The three German car behemoths, Volkswagon, BMW and Daimler, just bought Nokia’s mapping software for $3 billion, which they will share. This is a strong signal that they are in the race to be early with an autonomous vehicle but do not want to be at the mercy of a Google or Apple who are investing heavily in what appears to be the next REALLY BIG thing. Google is already building its own cars for testing. You see them all over Palo Alto and Mountain View. When Elon Musk was struggling to keep Tesla Motors afloat four years ago, he almost took his friend Larry Page’s offer of $5 billion plus assumption of debt for the company, but an all out sales effort by Tesla employees averted the sale.

Google doesn’t need Tesla to develop its car, but with Sergei Brin, Page’s co-founder now directly in charge of the autonomous car project it’s clear to me that Google is going to be a big player in the next phase of the automotive world. It scared the Europeans and should scare Detroit.

Uber also made a strong bid for the Nokia mapping software. They must have seen the autonomous car as a logical extension of their freelance taxi business that is valued at $50 billion by the private funding market.

I would imagine UPS, Fed Ex, and Amazon are all watching and investing in the area so they will not be left behind. I think we will see a product on the market before 2020.

*****

The oil and gas market is fascinating to watch these days. Contrary to what the pundits predicted the rig count is not going down, despite the U.S. oil price having fallen to around $40 per barrel. Evidently, the frackers have become so efficient and their wells so productive that $40 is still a price that is profitable. The Saudis keep pumping because their cost is $4 a barrel and they don’t want Iran to take market share.

Meanwhile, the refiners are raking in the dough because there is a limited capacity in America and they always schedule shutdowns to keep a lid on shipments to the gas stations. Refiners have traditionally been the least profitable part of the supply chain, but every dog has its day, and this is theirs.

*****

Where has the summer gone? Business has been cold, but my Cubs have been hot. Football coaches are scolding their players, and who cares if Ohio State has three quarterbacks who can play in the pros? Politics has been ridiculous with Donald Trump looking almost like a potential candidate next to the Republican assortment of wallflowers and Hilary Clinton struggling to move to her left while the press bruises her up about her Internet behavior. I don’t think Hilary will again blow the Democratic nomination, but she did it once to Barack Obama so you never know. Give her hell, Bernie.

Question: Are you for or against Obama’s deal with Iran?

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Cuba Road Trip

By Noah Graff

Center of Havana, Cuba. 2012

Now that United States has begun normalizing relations with Cuba, I get irritated at times when Americans who have never been there give me their predictions about the country’s future.

I’ve been to Cuba twice, both unbelievable experiences, and I will flat out say, you can’t understand what Cuba is like from watching the news. You can only get a good idea of the place by going there and talking to its people.

Both times I traveled to Cuba (illegally) I wanted to blog about my experiences, but we made a judgement at the time that it was best to keep it quiet, as it was breaking the law after all.

But now Cuba is becoming the good guy, so it’s time to give you the scoop.

As of today, Americans can still only go to Cuba legally if they travel with a chartered group, for instance a trip to tour the country’s art work or music, or a humanitarian mission. I traveled to Cuba in April 2012 and January 2014, and did it the cool, fun way. A friend and I flew to Cancun where we then connected to Havana on Cubana Aviación. When we arrived in Cancun we went to an office right next to the Cubana Aviación counter and in 2 minutes bought Cuban visas for $20. When we entered Cuba, customs stamped the visas instead of our passports—so Uncle Sam wouldn’t know. Of course, I’m sure the U.S. government has a record of our flight’s manifest, and I am definitely on a list of perpetrators that would materialize if I were nominated for the Supreme Court.

For my 10 days in Cuba, I brought a money belt with around $2,000 in cash. In Cuba they don’t take American credit cards or ATM cards. You pay for everything in cash, so you better bring more than enough, although if I needed cash there are many Western Unions over there. Once in Cuba a tourist must exchange their currency for CUCs, the Cuban currency for tourists. One CUC approximately equals a dollar. Cuban citizens use a second currency, the Cuban peso, also called a CUP. One CUP converts to around .25 CUCs. For this reason, some goods and services cost a quarter of the price for Cubans than for foreigners.

For tourist accommodations in Cuba there are two choices, staying in hotels run by the Cuban government, some that appear as though they haven’t been updated for decades, or renting a room in a casa particular, a house run by one of the luckier Cubans who inherited large digs following the revolution. I, of course, chose to stay in the warmer but more humble casa particulares, great places to meet Cuban people because the owners have nothing to do but sit around and guard the fort all day. One of the few legal private enterprises in Cuba, casa particulares cost approximately between $15 and $25 per night to rent a room. The owners cook great breakfasts or dinners for lodgers for around $5 a person. Our breakfasts usually consisted of an omelet, amazing fresh pineapple or guava juice, and café con leche. I was told that the casa particular owners have to pay a huge portion of their earnings to the government and have a limit of around $25 that they can charge lodgers. Most sources say that on average Cubans make $20 a month, in addition to some food staples and subsidies from the government. After all the money is taken from the casa particulares for taxes and maintenance, I’m guessing that many owners make only slightly more than the country’s average pay.

So how does it feel to actually be in Cuba? As I walked the streets of Havana, beautiful live latin music bombarded me, talented modern artists pedaled original paintings for a pittance from their studios, and tourists from around the world roamed next to me. I would walk past buildings falling apart surrounded by garbage that may have been abandoned for decades, and then I run into immaculate beautiful plazas that reminded me of those in European cities. But then I was reminded that I was indeed not in a European city when my Cuban private guide I had hired off the street (for $20 per day) was interrogated by the police who demanded to know why he was walking around with American tourists. The hated Cuban policemen roam everywhere, from the streets, to the parks to the beaches, there to make sure the Cuban people know their place, and to protect tourists like myself—one of the most important resources of the Cuban economy. The Cuban government tries to do all it can to please tourists, which is probably why it allows the casa particulares and paladars, family restaurants in people’s homes, the one other common legal private enterprise in Cuba.

I was pleasantly surprised at the calmness of my Dad, ever the worrier, when I told him I was going to Cuba. But as a culturally literate person, he knew that Cuba was one of the safest countries in the world. The safety is a result of Cuba’s ban on all elicit drugs and guns, and the fear of Cuban criminal punishment—I don’t know what it entails, but I’m sure it’s bad.

One of Noah’s hitchhikers in Cuba.

Enjoying our safe surroundings, my friend Al and I picked up a variety of hitchhikers on our 550 mile, 10 hour road trip from Havana to Santiago, the original Cuban city, which I personally preferred to Havana. We picked up all sorts of people along the way, including a lawyer, teenage school girls, and a Guajiro (farmer), who saved our butts when we had driven two hours in the wrong direction. We generally only offered rides to women, thinking that they would be safer, but several times when we asked men for directions, they would proclaim, “I’m going there!” Before we could say no they would literally jump into the backseat.

Cubans are some of the most outgoing people I have ever encountered, they are friendly and always willing to talk. Being from the United States people looked at us like exotic fruit. The U.S. is only 90 miles away, yet its people are banned from visiting. The Cubans wanted to know what the United States was like, women would half jokingly ask us to marry them, and every guy always had a beautiful cousin, or sister, or even fiancé they would offer to call at that moment to introduce us to. Sometimes I found it annoying, perhaps I disliked it because the desperation was so overt.

Some Cubans are outspoken and want to discuss politics, while many are content with talking about very little interesting. They have a talent for sitting around and doing virtually nothing for hours. Not one Cuban I spoke with said they liked their government or communism. They hate that they do not have the rights and freedoms found in Western countries. They hate that no matter how hard they work, they will not receive better pay. People told me that the Cuban newspapers blame the United States for the country’s problems, but they know it’s BS. Information about the outside world is impossible to block today. Tourists from all over the world tell Cubans what it is like elsewhere. Cubans buy bootlegged DVDs and listen to current music from around the world. Internet use there is extremely expensive and slow, but it exists.

People in Cuba told me that there will be a revolution there one day but nothing will change until Fidel is dead, wherever he is. One day soon I think the beauty and simplicity I found on my trips will be diminished. I don’t think the Cuban government is going to sell off the country to developers in the United States tomorrow. Right now a person must be Cuban to own property in Cuba. But things will change, and I hope in the end the Cuban people’s lives are improved. I loved going to a place with relatively few Americans, where I “wasn’t supposed to go.” In addition to enjoying Cuba’s beauty, history and energy, I loved visiting a place where Internet is scarce, 25 percent of cars are antiques, and where some women look at you like a rockstar just because you are from the United States.

But so what. That’s just my own selfish feelings. If the Cuban people will be better off with the United States lifting sanctions and allowing tourists to go to Cuba, then I feel good about it. I just hope that in the end, when the next revolution occurs, the Cuban people end up better off than they are now. To me that is far from certain.

Questions: Would you like to visit Cuba?

Are you happy the United States is renewing its relationship with Cuba?

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A Real Piece of Work

Lloyd Graff

Chicago Public Schools teachers with Chicago Teachers Union President Karen Lewis

Chicago Public Schools are laying off 462 teachers, because the budget is a hopeless mess and the Teachers Union is much more interested in protecting the pensions of incumbent and retired teachers than retaining young untenured teachers. Meanwhile, Charlotte, North Carolina, is desperate for 200 teachers to start the school year, and the suburbs of San Francisco are bending their certification standards to fill their teacher needs.

But I doubt many of the Chicago layoffs will quickly pack their bags for Charlotte or the Bay Area. It’s just too hard for most people to make those kinds of quick shifts.

It’s a different story in the shale oil fields of North Dakota, where so many folks have been living in trailers because they couldn’t build homes fast enough last year in the Williston Basin. But few of those folks would pick up their lives to get teaching jobs in San Francisco.

The job market is not really fluid and borderless. The national unemployment rate is supposedly 5.3%, but I think the number doesn’t make sense. There should be significant wage pressure at 5.3%, but the government says there is little.

There are very few strikes these days. The push to raise the minimum wage is politically and ideologically driven without a widespread national clamor. People are still stitching together part-time jobs and the demand for independent contractors rather than full time staff seems to be here to stay despite that bright 5.3% number.

The U.S. workforce participation levels are extremely low by historical standards, 62.6%. The last time we were at that level was 1977 and Star Wars, was the flick of the day. In 1977, 30 million people worked in government and services. Today, 80 million plus are in those fields. In 1977, 19 million people worked in manufacturing. Today, it’s 12 million. Women have jumped into the workforce and men have bailed out. Eight of 10 men were working in 1977, today it’s seven.

One thing has baffled me for years in the machining field. Why does almost everybody tell me how difficult it is to hire people to run machines, when I know there are plenty of able people lurking in jobs that are not their cup of tea or are at firms that are closing or in trouble?

Several months ago we were looking for a screw machine rebuilder with setup experience for Graff-Pinkert. Noah Graff made a study of viable advertising methods and we chose to do a campaign with Career Builder. To my surprise, we found many interesting candidates, some from Chicago and others willing to move. We were offering a liberal wage and health insurance package, but I would not call it a wage disrupter.

What it indicated to me was that many potential hirers are too passive and use pedestrian methods to reach out for employees. There are people out there looking to better themselves.

The Charlotte school system should be calling Chicago for the emails and phone numbers of the teachers who are getting pink slipped and send recruiters to Chicago on the next plane.

But the best teachers may not even be teaching today. My three granddaughters were fortunate enough to be taught in their pre-school by a former marketing person at Bank of America. After he had been downsized out of his job at Bank of America he came to the school to work as a maintenance man, but when the opportunity arose he morphed into a superb teacher of young children.

My belief is that most young people do not have enough life experience to know what kind of work will be fulfilling and financially rewarding for them to make a career choice at an early age. I think one reason for the declining work participation rate, especially for men, is that they feel like they have wasted their work lives in boring work and would rather drop out than take another dead end job. Also, government welfare programs and disability options encourage people to stay out of the workforce. A former employee of ours who says he would like to work part time for us now is paranoid about losing his disability status, so he languishes on his couch as his viable work options vanish.

The U.S. labor market is very hard to make sense out of. I think that if the Federal Reserve decides to raise interest rates in September because the economists think we are near full employment, they will be making a mistake. The labor market is a lot looser and inefficient than that 5.3% unemployment number represents at first glance.

Question: Do unions still work for the working person?

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He Knows Where He Belongs

By Lloyd Graff

Detroit Tigers slugger Mike Hessman slams Minor League Baseball home run record. Courtesy of MiLB.com

Mike Hessman, of the Toledo Mud Hens Minor League Triple A farm team of the Detroit Tigers, hit his 433rd home run this week. He is now the all time Minor League home run king of baseball. He is the Henry Aaron of the Minors. This is sort of like being the King of Liechtenstein or the greatest bubble gum blower in history.

I love the Hessman record because it is life mimicking fiction in my all-time favorite sports movie Bull Durham. Hessman is Crash Davis, Kevin Costner’s journeyman catcher who imparted his hard won wisdom to ‘Nuke’ La Loosh, Tim Robbins wonderful young pitcher.

Hessman has had a “cup of coffee” with a few Major League teams during his long odyssey in baseball, but now he is the beloved 37-year-old slugger of Corporal Klinger’s (M*A*S*H) home team, the Toledo Mud Hens.

Hessman loves to play the game and relishes his role as the Babe Ruth of the International League. Kids come and go in the Minors, but a guy like Hessman reminds me of the great setup man in a job shop or the maintenance person who stays 30 years at a company holding things together, while the young hot shots float from job to job searching for 50 cents more per hour.

Evidently the Detroit Tigers see something valuable in having a Mike Hessman on the Toledo roster. He could be considered the consummate 4A player, with AAA the top level of Minor League ball. Smart teams like to have a few 4A players around to demonstrate professionalism to the prospects and add stability to constantly shifting player rosters.

Bull Durham is my favorite sports movie, but there have been a lot of really good ones like Major League and other Costner epics, For the Love of the Game, and Tin Cup.

Question: Do you think Hessman should have retired long ago?

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Kudos, to the folks who posted on my Monday blog about first summer jobs. I loved every one of them and I recommend them to those who missed any of them. We underestimate the value of those early work experiences, but they shape us as men and women and productive workers. One of the many awful things about living in the big city black ghettos is lack of exposure to viable work opportunities. Missing the opportunity to do something productive out of school is part of a long slog into futility. I’d love to hear your story..

Click here to read Monday’s blog, The Summer of ‘61

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The Summer of ‘61

By Lloyd Graff

Teenagers de-tasseling corn. A traditional summer job in the rural midwest.

Summer jobs for younger people used to be common and highly desirable. Twenty years ago almost two thirds of high school kids found paid summer work. Today the statistics say only one out of three hold summer jobs.

Many factors have contributed to this fading away of summer employment. Unions are blamed for vetoing non-union hires in some plants and offices. Minimum wage increases make summer hires less attractive because employers have to pay inexperienced people more than they deem them to be worth. Wealthier parents often push their kids to volunteer or take enrichment courses or summer school makeups to help kids get into selective colleges. Physical challenges like Outward Bound trips are seen as character building exercises.

But the old fashioned summer job, like unloading a Pepsi truck or testing urine in a lab, or cleaning filthy machines, can be a character builder with a lot of value, especially for young people who have lived in relatively sheltered environments.

I remember my first summer job, when I was 16 years old. I put a $6 ad in the Chicago Tribune classifieds, under “situations wanted.”

I advertised that I had writing and journalism skills, which was accurate, even if it was for the sports department at the high school paper.

Amazingly, I got a call from a man named Hadley who owned a bulletin board publication called the Civil Service News and was trying to build a magazine named “Midwest Ports.”

He interviewed me at his office in downtown Chicago in the building next to the Schubert Theater, a live performance venue near State and Madison. I guess I passed inspection, because he hired me.

The job was an education for me, but not for the journalism. Hadley was a curmudgeon who had a drinking issue. He wore sunglasses in his office. I soon realized that “Midwest Ports” was a boring magazine that nobody was going to read, but the Civil Service News was a sought after rag that people coveted because it carried all the fresh job openings.

Things went quite well for about a month and then suddenly, without notice, Hadley fired me. He gave me no explanation. He just said, “kid, you’re fired, get out of here.”

I was aghast and perplexed. I asked the secretary bookkeeper who had befriended me in the office, what I had done wrong. She motioned for me to leave the office and go down to Wimpy’s restaurant on the first floor where she met me a few minutes later.

She told me point blank that Hadley had found out I was Jewish (how, I don’t know) and fired me “because he hates Jews”.

This was 1961, and I was 16, and my cool summer job was over. Boom.

I had made a few bucks, enjoyed the excitement of taking the Illinois Central train into downtown Chicago, and got a dose of anti-Semitism that I had only known about from my parents’ occasional stories.

I think that kids who don’t do summer jobs, no matter how menial or nasty, miss out on something important. They need to learn how to navigate the work world with its rigors and nasty folks. For the elite kids headed to fancy colleges it is a chance to work with the people they may have to fire one day in a managerial position. It’s part of the critical seasoning process everybody needs to be successful.

Despite it’s rude ending, I cherish that first summer job.

Question: What was your most memorable summer job?

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