Thoughts from the Road...

This last week has been spent cycling down the coast of California with some close friends. 

I suppose that when a person spends 6-8 hours on a bike, their minds will tend to wander about...pondering truths, fiction and observations. This week I’d like to share some of those simple thoughts with you.

Being Prepared

Starting out on our third day, one of our riders was having a difficult time keeping his bike in gear. We soon pulled off road and looked at his derailleur and cassette but didn’t see any problems. We then looked at his chain and noticed that one of the links on his chain was bent.

We weren’t carrying an extra chain and we were about 70 miles from the nearest bike store. After some thought, I remembered that I had an extra master link in my tool kit and decided to replace the bad link with a good link.

We broke the chain and tried with all of our might to fit on the new link only to discover (after a great while) that the link was too small for that particular chain. 

Now what?

Well as it happens...I had brought along my old bike just in case we needed some spare parts along the way. Instead of removing the chain on the spare bike (and perhaps ruining both bikes), we decided that it would be best if the stranded rider rode the spare bike until his bike could get repaired.

We encountered a problem (bent chain)...had a possible solution (new master link)...but our solution didn’t fix the problem...

So we needed to go to "Plan C"...

How often in life do we find ourselves in a situation where we have no contingency plan (or a plan that just doesn’t work). Are we resourceful enough to actually have a Plan C or do we try to force a bad solution to work?

Contingency planning is important in business as well as in life.

Entrepreneurs

As it so happens, all of the riders on this trip are somewhat successful entrepreneurs. Some of their businesses are big while others are smaller but growing.
I have found over the years that there are two things that typically contribute to an entrepreneur’s success...being lucky and/or being smart. 

If you ask an entrepreneur who was clearly lucky (being somewhere at the right time with the right product or service)...they will more often than not tell you that they were just smarter than everyone else...

Whereas if you ask a entrepreneur who is clearly smarter...they will say that they were just lucky (or probably say nothing at all).

Pain Relievers

In 1897, Felix Hoffmann discovered aspirin while searching for a treatment for his father’s arthritis. The patent was licensed to Bayer in 1899 and it has been available as an over-the-counter medicine since 1915.

Tylenol (acetaminophen) was patented by David Young while working with Standard Oil at the University of Kentucky. He sold the rights to Johnson & Johnson (McNeil Labs) who began marketing the product in 1955. It has always been an over-the-counter drug.

Advil (ibuprofen) was developed by Dr. Stuart Adam while working for Whitehall Labs in 1969 but wasn’t available as an over-the-counter medication until 1984 (originally sold under the trademark of Advil). Ibuprofen is a pain reliever and anti-inflammatory. 

After ingesting much of these pain reievers this week I wanted to pay homage to the inventors and developers of these wonder drugs. I can’t imagine life before these relatively safe over-the-counter pain killers were available. Most of us take so much for granted in our daily lives; cars, telephones, the internet, airplanes, microwave ovens...it hard to fathom what life must have been like before these great inventions of the 20st century. 

What will people remember about the 21st century?

Bigger is not always better

One night we were forced to spend the evening in a relatively remote location. Unfortunately for us, accommodations in this small town were somewhat sparse and we ended up paying a lot of money for a room that was smaller than some people’s closets and a bathroom that was hard to turn around in. 

Although the bedroom and bathroom were small, they were clean and comfortable. Of course, there was no phone, TV, or wireless internet access in the room but in terms of a good night’s sleep, I can’t complain.

In 1961, the average size house was 1,310 square feet with 3 bedrooms, 1 ¾ bathrooms and a two car garage. It cost, on average, $12,500 (I know this house well...as this was my family’s home as well). 

Fifty years later, the average size of a new home is 2,629 square feet and the average selling price is still $275,700.

Why do we need to live in such big houses?

The following day we rode our bikes down the Big Sur coast. I happened to look up on the hill late that afternoon and noticed the Hearst Castle in San Simeon. Now there’s a big house I thought to myself.

Never mind...question answered.

Thanks for letting me share my random thoughts with you this week...

...and thank you very much for supporting OptiFuse where we don’t know exactly what will come around the next bend in the road but are excited to find out...

Bargain Hunting...

Price is what you pay...value is what you get...

-Warren Buffet

Last weekend I needed to go by the $99 store...er ah...I mean Costco to get a special bottle of wine they sell.  As I walked to the back of the store, I couldn't help but notice the carts passing by me loaded to the brink with 50 lb. sacks of rice, flats of tomatoes, 10 lb. blocks of cheese, 5 gallons of fresh salsa, and sides of beef (I'm exaggerating a bit here...it was only the rib section...so it wasn't a whole side but rather just the middle 1/3 of a side...)

I was absolutely amazed at the sheer volume of food heading to the checkout stand. 

As I was driving home, I began to wonder what drives a family to purchase food in such large package quantities.  Are their families really that large?  Are they hosting a large dinner party?  Are they commercial caters?

A few days later, I found myself discussing my recent foray into social anthropology with some friends.  One of those seated around the table agreed with my observations and commented how his wife purchased a lot of their family's food from a warehouse supermarket only to throw away much of the perishable food several weeks later (they are only a family of three after all). 

He once asked his wife why she continued to shop in this manner (buying great quantities and later throwing away the spoiled food).  Her reply was that the food was so inexpensive at the warehouse store, that even throwing away a portion of the unused food still made the entire purchase a true bargain. 

To me this just sounds just wasteful and not really a bargain at all especially once you add in the additional storage and/or refrigeration.

Are all bargains really such a good deal for consumers?

A deal is only a deal if you truly need or want that product or service.  If not...then it's really just becomes a waste of money and/or resources.

It's not just the "big box" stores that offer up the deals.  Manufacturers and retailers have used the concept of the coupon for decades (maybe longer).  The idea behind the coupon is to get consumers to try and use a product or service that they would not ordinarily purchase by offering the purchaser economic immediate incentives.  Manufacturers hope that consumers will try a new product, like the product and continue to purchase the product at full-price.  Many brands have been launched using the free or low-cost offers.

A few months ago, I moved my place of residence.  As I went through my pantry, packing food items, I noticed that there were dozens of old unused items on the shelves.  I wondered whatever possessed me to purchase these items and thought back to the coupon that I may have clipped out of the Sunday newspaper many years ago.  These food items, that were such a bargain at the time, were now being disposed of as the "use by" dates on the packages were long since expired.  They don't seem like such a bargain now.

Bargain shopping is not limited to food items.  Department stores, furniture retailers, and clothing outlets seemingly have a different sale each week so the "deals" are almost perpetual and ongoing.  Typically, the original prices for their merchandise have been so highly inflated so that they can offer 70-80% "savings" to their potential customers.  

The advent of the Internet and reality television has created an entire subculture of extreme shoppers.  These people are constantly scouring a multiple of sources to find the very best deals. 

Companies like Groupon, Amazon, and restaurants.com offer their subscribers significant savings.  Like supermarket coupon marketers, the actual providers of goods and services are hoping that by offering customers a sample of their wares, they will create awareness and continued patronage by those consumers.  This is rarely the case.

I have a friend who used to own a day spa.  She paid several services, like Groupon and the Entertainment Book, several thousands of dollars to feature her spa in their advertising.  In addition, she offered the consumer a one-time service, at or below her actual cost, in order to entice the consumer to try her spa (for example a 60 minute massage for only $20 whereas she was paying the masseuse $30 per hour). 

After the publication, a steady stream of new customers walked through her door to redeem their deal.  She dutifully recorded their contact information in her database and tracked the repeat business.  After one year, she realized that virtually no one who used the original coupon had returned to her salon despite her best marketing efforts.  It finally dawned on her that the people who came to her spa were now visiting another spa armed with another coupon.  Those people were never potential clients for her spa, they were bargain hunters.

She has since changed her business model to discriminate against those same bargain hunters and create more of an exclusive environment for her clientele.  Her salon is doing much better financially since adopting this model and her existing clients are experiencing a better class of personalized service.

Perhaps it is a reflection of the times, but the notion that a "deal" is a good value just because it carries a low price is nonsense.  A bargain is only a bargain if the goods and/or services provide you with something valuable that you will actually use.  Other times, I've paid for an item or service, only to watch it expire and become worthless.

Yes...there are some very good examples of low-cost providers who may give their customers value (think Southwest Airlines or E-Trade)...but they have low prices only because they have commoditized their services into a "one-size-fits-all" mentality (originally pioneered by the likes of Henry Ford who told his potential customers that they can have any color car they want so long as it was black).

A low price doesn't necessarily guarantee value...value is created when there is actual worth to the buyer.

Thoughts to consider as we do our shopping this weekend...

Thank you very much for supporting OptiFuse where we hope to deliver value to our customers...not just a low price.

A Lifetime of Friends...

1961 was a decent year I suppose.  It was the last year that can be read the same way - upside down or right side up - until 6009 that is. 
             
That year, the United States inaugurated a new president, John Fitzgerald Kennedy.  Construction of the Berlin Wall began.  The cold war was in full bloom.

The average salary was only $5,300 but the average house cost $12,600 (less than 2 ½ times the average salary).  Then again...the average house was only 1100 square feet...no gated communities...no air conditioning...no swimming pool.

Russian cosmonaut, Yuri Gagarin, was the first man in space.  TWA showed the first in-flight movie.  Pampers disposable diapers were introduced. 

The top grossing movie in 1961 was the Disney animated film "101 Dalmatians" raking in a cool $68.6M as compared with the second place film "West Side Story" with a paltry $19.6M (although West Side Story did win the Oscar for the best picture of the year).  Tossin’ and Turnin’ by Bobby Lewis topped the music charts all summer long.  Westerns were all the rage on television...Gunsmoke, Bonanza, and Wagon Train ruled the Nielsen rating that year.

1961 was also the year that several of my friends were born into the world...a world where a sitting President urged people to build bomb shelters in their backyards, attempted to invade Cuba, and had a nuclear stand-off with communism but yet also founded the Peace Corps to help the less fortunate of the world.

I was driving to work this week thinking about all the people I know who are celebrating the 50th anniversary of their birth in 2011.  I began to wonder about the hierarchy of people who populate our lives and attempted to order their significance.  The people are neatly arranged in a pyramid with only a small handful of people on the top and billions of people on the bottom.  Now I’m sure that there are other ways to categorize people...but here’s my way:

1. Best Friends Forever - These are the people we attended Kindergarten with 45 years ago...went off to summer camp with...double dated with on prom night...joined the same fraternity while away at college...were in each other’s weddings (at least your first weddings), babysat our kids when we needed a quiet night out with our spouse and helped us to tend for our aging parents (those same parents who were perhaps our Little League coaches or Girl Scout leaders).  These are people you played with in the morning, fought with in the afternoon, and laughed with until your mom told the both of you to "be quiet and go to bed".  They know us sometimes better than we know ourselves.  These are the same friends who will someday give the moving eulogy at your funeral...they’re with you for the entire cycle of life.  Forever.
2. Friends - These are the people we have many common interests or years of shared experiences with.  They are people whom we care deeply about and try our best to remain in contact with despite our busy schedules.  These are the friends we play poker with a few times a year...watch our favorite sports teams with on a Saturday afternoon...and drag to the local tavern to sip a few beers on a "boy’s night" out...with them, we reminisce about past adventures and/or old mutual friends that you just ran into at the airport.  These are people who helped us to create great memories.  These are the people who weave seamlessly in and out of our lives. These are the people who help us to celebrate life and death.
3. Acquaintances - These are people we know...but really don’t spend much time with, other than perhaps seeing them at our kids’ Christmas pageant or waving to them as they drive past our house.  It isn’t that we dislike them...we just don’t have the time to give them much thought.  They are typically really nice people but we never really made a connection with them, created any memorable adventures, or had a lot of shared experiences (other than perhaps the experience of sharing the driving duty in the morning carpool).  We feel uncomfortable asking acquaintances for favors.  We knew these people in the past but our lives have now separated. 
4. ??? - These are people who we know of...but we really don’t know.  They may be known to us because of their celebrity such as a movie star or local sports hero.  They may be people that our other friends talk about (which I suppose is another form of celebrity).  We may have read about them and the lives that they lead in a book or newspaper.  We might read their blog each week.  They may be that person who’s name we see on the guest register - the one that rests on the receptionist’s desk of a local manufacturing company - as we ask ourselves..."who is this person who is always visiting all my customers?".  We don’t know them...but would be open to perhaps meeting them if the opportunity presents itself.
5. Strangers - These are people we don’t know and who do not know us.  Strangers constitute the overwhelming majority of the people in the world.  There are approximately 6 billion people who inhabit the earth and if you combine all of the people in the above 4 categories...you may be able to estimate that they represent perhaps no more than 50 thousand people (these are all the people you’ve ever met or have a certain familiarity with over the course of a lifetime)...this leaves us some 5,999,950,000 strangers still to meet (although I believe that roughly a third of those people do have a Facebook account).

I’m somewhat unsure as to what to call the people in between acquaintances and strangers.  Those people you know of...but haven’t met yet.  In preparing for this blog, I actually wrote to the folks at the PBS’s radio show "A Way with Words" trying to see if they had a good word for these people.  Unexpectedly, I received no response...nothing...nada.  Oh well...I guess one day I’ll need to coin a new word for this group of people (drop me a note if you know of such a word).

The group of people that I didn’t include in the above but who could be dispersed equally in all five categories are relatives.  These are people who share our DNA.  They may be our BFF twin sister or a simply a far distant relative that you didn’t even know existed.  Placing relative in the pyramid is tricky.

Each and every day I feel blessed to have so many great friends and acquaintances.  They came from blood, school, work and the neighborhood.  With them, I’ve built a lifetime of memories all within only a "half-a-lifetime" time period (or at least I hope so).

It makes me happy to be invited to toast their milestones and celebrate friendship this year.

This weekend, I hope you’re spending your time with the people who bring you joy and happiness whether at a 50th birthday party or just sitting around doing nothing.
           
Thank you very much for supporting OptiFuse where we hope to be counted as one of your friends one day.