Trump University: Far from his most amoral venture

About 3 years ago a friend asked me to look into a multi-million-dollar, international, multi-level marketing company that she was considering. She had been recruited by a woman who promised her great things in return for selling bundled utilities at reduced prices. Maybe she trusted my analytical ability or maybe she just knew I had free time, but she wanted me to give her my opinion of it.

I went undercover on this project and was able to meet with a real rep who was trained in the company rhetoric. Assuming I was interested in joining too, she dazzled me with stories of reps who were making millions of dollars a year and had customized license plates on their Bentleys. But when I asked her to explain the formula for revenue she couldn’t do it. When I asked her how much I would make off my sales, my recruits, or the reps that they recruit, she told me that there were way to many variables for me to calculate on my own. She was quick to point out however that she knows another rep who makes so much money that she paints her poodles nails in real gold (OK, I may have made that one up).

Now I’ve created spreadsheets with hundreds of variables. There is no possible formula I can’t model-up in Excel – unless you refuse to tell me what it is! Furthermore, one of the things everyone learns in business school – or in life in general – is that a complicated revenue model is a doomed revenue model. Yet this clown just kept stonewalling on the important questions while playing to my fantasies. It was only when I found a question she would answer that the veneer started to crack. “How many reps fail before making any money?” I asked. “99%,” she responded, but then added quickly – “that just underscores how important it is to be the best and keep recruiting. Because the best…”. That’s around the time I stopped listening.

What she was telling me was that almost all the reps that join, pay the 500 dollar fee, sign up their 10-20 friends, and then drop out never making a dime. Meanwhile the Company keeps all the customers, the revenue, and maintains a steady stream of new recruits who are willing to chase the dream until they realize they can’t catch it, at which point they sulk away quietly, hoping no one notices.

This also suggests that following the introductory period, the Company is likely to raise prices. Without a rep to assist, converting back would be complicated and likely costly, creating a captive audience environment. I called my friend who by this point had signed up many of her family and friends and warned her to check the numbers on her earliest conversions. Sure enough, the promises she had been making to her closest circle were untrue. Prices were not lower, or about the same, but significantly higher.

She hadn’t yet made any money, and now she was faced with the task of calling all her customers, apologizing profusely for the losses they had suffered, and manually switching them all back – one customer at a time, one utility at a time. Drag, man.

The Company is basically honest to its reps – her friends and family were her easiest customers, they may or may not save money but they will switch as a favor to her, and if she can extend her network to additional customers and reps she would make money. What they didn’t tell her was, it is more likely that her peeps will not save money, she is unlikely to extend her market, that the Company makes money either way, and it is very unlikely that she will ever make her initiation fee back.

The Company is publicly aware of its reputation and train their reps to combat it. They have been accused of fraud and operating a pyramid scheme. At least two states have brought cases against them. The Company’s General Counsel states that “[The Company] is aware of the bad press that’s out there on the internet, and we pretty much ignore it.” So how does a company like this continue to exist and even thrive?

The answer – it turns out – is Donald Trump! The businessman who touted playing into people’s fantasies in his book “The Art of the Deal” has extolled the virtues of this Company for years. He has praised the innovation of their business model in YouTube videos and twice featured the Company on his show the Apprentice. According to the Wall Street Journal, this relationship has netted “the Donald” millions of dollars.

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“I know nothing about that Company”  Trump has recently said of ACN

When I researched the Company several years ago, Trump’s picture and quotes were all over the Company’s marketing material. Today however, with his Presidential campaign steamrolling across the country, all reference of him has been removed from the Company’s website and he claims – in typical fashion – “I do not know the company. I know nothing about the company.” Still, YouTube is peppered with videos that demonstrate what a lie this is.

Trump’s attraction to this company isn’t the business model that sells a great product that people want. It is much more likely that he appreciates using the seduction of fantasy to encourage naïve reps to sell a lucrative but worthless product at absolutely no cost to the Company.

Donald Trump may have looked slightly presidential after his win on Tuesday, but his involvement with this sham suggests that he has no moral compass when it comes to business. Companies that do not add value, or prey on their constituents, do not have a place in society even if they can scam some money out of a few people for a few years. People who endorse and profit from such companies are nothing short of greedy hucksters.

And one more thing, I am going to go out on a limb here but a man who in one day publicly makes two references to his penis, one including proximity to Mitt Romney’s face, does not deserve to be President.

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Apple should stand its ground.

Following the San Bernadino shooting a few weeks ago, the FBI bungled the investigation of the shooter’s telephone and now wants the court to compel Apple to crack it open so that their investigation can continue. Apple is refusing as they should. This is an important over reach of the government that anyone with common sense should oppose.

First, don’t believe what the FBI is telling the press. They say it is only for this one phone and it is only five lines of code. Those two statements are contradictory. If it is only five lines of code that need to be written, then either that five lines of code can be reused or edited to work with every other phone. Even if all 5 lines had to be completely rewritten, it’s still just 5 lines! Of course it could be repeated if required and it would be required over and over.

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The new iPhone will have tactile buttons and come in new colors. Security may or may not be included.

Second, Apple has built a phone that offers security to a market that requires it. The government is asking Apple to make the phone do something contrary to this required feature. This is akin to the government subpoenaing Tesla to make straight gasoline powered cars or Boeing to make planes that don’t fly.

Third, it is a dangerous precedent. Once these 5 lines are written for this project, then there are going to be 5 for another project, 50 for the one after that, and more and larger projects to follow – at Apple’s expense. There is nothing to stop the subpoenas once the gate has been opened. Eventually Apple may need to create an entire department to do the FBI’s job for them. In fact, every tech firm may suffer the same expensive requirement.

This is not Apple’s problem and their involvement increases expenses, reduces the value of their brand, weakens important features, and increases the risk that a government – out of their control – will subpoena additional potentially crushing exercises in the future. Instead, the FBI, DOJ, and NSA need to learn how to do their own jobs. We’ve been hearing things about the awesome power of the Government’s computer black ops for years. Assuming that wasn’t a ruse, I am pretty sure they can solve this problem.

Now, you geeky guy over there with the glasses. Go back to your desk, do your job, and stop bothering Tim Cooke. He’s a busy man, and probably working on some new wearable piece of technology that no one wants. Leave him alone.

Donald Trump: a common sense what-what?

Much to the horror of my brand manager, Donald Trump has taken to calling himself, “a common sense conservative.” Well, sorry Donald, in the wild-west world of internet domain land-grabbing I am the de factalg-donald-trump-jpg-300x220o owner of that term and you are going to have to pass some pretty stiff tests before I let you run around stealing my spuriously claimed handle.

Personally, I think Donald Trump is a blowhard and a bully. He’s not the schoolyard troublemaker with the biggest fists, he’s the one with the mouth so fast, that his zingers win the fight before the first punch is thrown. I respected these guys when I was a kid but I feared them too. Like all bullies, they know their skill and use it to belittle others and artificially increase their relative stature. I would really like to see how successful his name calling or water bottle spilling is in a dust-up with Ronda Rousey. (God, will you please let this happen?)

But I suppose a common sense conservative can be a bully and a blowhard. Readers of this blog are learning a few of the things I care about (as am I). But off the top of my head, the list looks about like this.

  1. An instinctual understanding of economics – in particular that smaller governments make healthier companies, healthy companies make better jobs, and better jobs make happier people.
  2. That people are happier earning than being given to.
  3. The recognition that “collective bargaining … cannot be transplanted into the public service” (FDR, August 16, 1937)” and why.
  4. Fiscal responsibility which requires that the government cannot spend more than it takes in.
  5. That no one gets credit for forcing other people to do what they think is right (Penn Jilette) and no one gets credit for spending other people’s money.
  6. The appreciation of capitalist democracy as a free-est form of government and the US’s place in the creation of the 123 that currently exist.
  7. The intention to support civil rights continuing march forward without hindrance.
  8. A commitment to support women’s health issues.
  9. A commitment of inclusion for all people.

Trump does pretty well on this list. He may use rhetoric that we are not used to hearing (or makes our ears bleed), but he understands business, and what companies need to succeed, he understands the benefits of a balanced budget and the consequences of the contrary, he recognizes the importance of a strong and active American military, he supports civil rights – in a common sense way if not an active one, and he has supported Planned Parenthood over and over – not for its abortion component but as a valuable resource to women.

The place where Trump strays from the litmus of a common sense conservative, is this last one – the inclusion of Hispanics. Although his plan to get Mexico to pay for a wall turns out to be slightly less ridiculous than it originally sounded, it still ignores the threat of tunnels, the three other borders, and the inefficacy of physical walls in general. Furthermore, his deportation plan is inhumane and fortunately impossible to carry out. It is very likely that both of these promises will eventually be reduced to metaphors for a secure border, and better documentation of people here illegally.

Last night, following Trump’s super Tuesday victory he held a lively press conference rather than a teleprompter speech. He took a surprising, humbler tone, turned down his insults, and offered lots of praise for his competitors. Megyn Kelly (the biggest winner of this campaign so far), a woman known for telling it straight with respect to The Donald called it “presidential” and “very smart”.

As for a common sense conservative, I am not willing to concede my title, but for the first time ever, I have to admit, I think he looked pretty good.

A referendum on Roe v Wade but then what?

It has been well discussed lately that the untimely death of Antonin Scalia is igniting a fight in Washington with the Democrats and Republicans wrestling over which President gets to appoint a successor. What I think it is more interesting is the impact this series of events will have on the discussion topics during this election cycle. Serious issues of gun control, affirmative action, and abortion will replace the circus of giant-wall building, mass deportation, and who took money from whom.

In fact, some have speculated that the conversation shift will ultimately turn into a referendum on Roe v Wade. Just as Bernie Sanders has made it clear that his nominees would have to commit to overturning Citizens United, every Republican candidate will eventually promise to appoint a justice willing to fight for the rights of the unborn. Eventually the Dems will be dragged into the conversation and will promise to nominate one of the opposite leaning. And for the first time in 40 years’ abortion will be put to the vote.

Following which, absolutely nothing will change.

Republican candidates have built their primary election platforms on right to life promises for decades. Candidate after candidate has sworn up and down that he would be the President to repeal Roe v Wade. Our conservative politicians make promises early in the election cycle to invigorate their evangelical supporters and then forget all about them once they make it into the general election. Following victories, many have nominated justices who should have been able to make a difference. But not a one of them ever even got the ball rolling.  There are many consistently hollow promises in Washington and one of them is “I will end abortion in America!”

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The simple reason this is the case is that overturning Roe v Wade would be nothing short of political suicide for the responsible President and his associated party.

Consider that most of the voters in America are women and most of those women are pro-choice. In general, women vote like men with the economy and jobs as their biggest concerns, but while men don’t have a shared motivating issue that gets them to the polls and puts their check books to work, women’s most important threshold voting issue is abortion. Pro-choice women are likely the most powerful dormant voting bloc in the country.  This army of voters would come out in numbers unlike anything we have seen before. Incumbents from the Executive on down would be run from office.

But the movement wouldn’t stop there. This group also has tremendous fund raising potential. While their male counterparts are already pushed to the limit of their political giving, women currently give at less than half the rate of men and when called on, could raise unheralded sums. These funds would go to pro-choice lawyers and political action groups who would fill the judicial system with lawsuits. Some out of spite, some out of strategy, but all with the intent of creating a new precedent for federally legalized abortion.

No one would want to reinstate Roe v Wade. It’s a well-known fact among legal scholars from both sides of the aisle that it is a terrible piece of legislation. It is poorly reasoned, not grounded in law, and lacks intellectual legitimacy.  Without getting too academic, one of the laws many flaws is that it is based on the constitutional right of privacy which does not exist. Another is that it claims not to opine when life begins, but then forbids states from regulations that place life’s beginning prenatally. A third is that it forbids due process with respect to abortion even though due process is a prerequisite of personal liberty. If, you are thinking, “no way, he must be biased,” I am not.  Try a Google search of “problems with Roe Vs Wade” and read what the legal scholars say.

The legal left knows that Roe v Wade is a specious argument that is ripe for turnover. Meanwhile its sloppy shortcomings are exactly the fuel that keeps the pro-life’s hope furnace burning. And that pro-life movement is already going at pretty much full-steam. If pro-choice America found their reproductive rights seriously threatened, if the Supreme Court actually followed through on the conservative promise to end federally legal abortion, a sleeping dragon would be awake unlike anything the American political landscape has ever seen. Pro-choice voters, vast sums of money, political action groups, and thousands of liberal lawyers would mobilize under the banner of finding a new precedent for federally legalized abortion and creating a new law that was better constructed, based in sound legal arguments, and would stand up to the toughest scrutiny the right could throw at it.

It wouldn’t be all roses for the left. If Roe v Wade were overturned, there would be a period of time when abortions would not be legal at the federal level (they would still be legal in many states). However, the end result would be an environment where a woman’s right to a legal abortion was more strongly protected than it ever has been. What seems like the worst thing that could ever happen to the pro-life movement would probably end up being the best thing that could ever happen for abortion rights.

Consider what I say. If you are woman (or man) who votes only on the issue of abortion rights, you are wasting your vote. Stop worrying, it’s not going to change and if it did it might be for the better.

SCOTUS Battle as important as Cross Town Classic

Or maybe a little less…

The untimely death of Justice Antonin Scalia this weekend has started a partisan battle in Washington. The President is saying that he will nominate someone in due time which probably means about one month. Mitch McConnell, Leader of the Senate, is saying that no nominee of any stripes will be confirmed by the end of the President’s term, and this is an issue that must be left for the next President.

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The world will miss this important, colorful man.

The Republican leadership does a lot of infuriating and seemingly obstructionist things, but is this one Dems should be up in arms about? No, not at all. Whether you are a Republican or Democrat it should make no difference.

History offers very little in the way of precedent. In the last 80 years, there have been only two Supreme Court nominations during a presidential election.

  • The one that was confirmed was Anthony Kennedy but he was the third appointee for a seat that had been open for some time, so it doesn’t really count. Remember the vilification of Robert Bork? I met him a couple times. Nice guy, but comically disheveled.
  • The only true nomination during this period was Lyndon Johnson’s 1968 nomination which was not confirmed.

But it should be noted that during the 1968 hearings, the “Thurmond Rule” was created. The Thurmond Rule, named for long-time senator, Strom Thurmond, states just what Mitch McConnell voiced on Saturday – that no court nominations will be confirmed during an election year. Far more a guideline than a rule, it does still illustrate that the modern historical precedent is on McConnell’s side.

That may be little relief to you if you are a Democrat but there are better reasons to un-knot your knickers. First, just consider the simple mathematics behind it. The President knows that if he can get a candidate nominated before he goes, he has 100% chance of making it a Democrat (or one sympathetic to Democratic positions). If he passes and allows the next President to fill the seat, the uncertainty of the election reduces his odds to 50%.

On the other side of the aisle, the Republicans know that if they can’t hold off an Obama nomination, they stand a 0% chance of getting one of their nominees in place. But if they force the delay until there is a new President, their odds improve to 50%.

Maybe this is obvious, but from a political finagling perspective it illustrates that either side should do exactly what they are doing, and if the tables were reversed, it would be the Republican President promising to shove a nominee through the system and the Democrats promising to block it.

If my Democratic friends, continue to be enraged, here’s my final attempt to talk you off the ledge. Republican Presidents are notoriously rotten at picking conservative judges. To list a few examples, John Paul Stevens, nominated by Gerald Ford, was a leader of liberal jurisprudence at the time of his retirement. David Souter was appointed by George H Bush and is considered one of the most liberal judges on the bench. And most recently John Roberts, that handsome devil and Chief Justice appointed by George W Bush was the deciding vote upholding Obamacare.

So…

In nonpartisan times, I think the Senate would probably have the power to determine which President gets to appoint the next nominee, and in this day and age I think the it’s a foregone conclusion that the Republicans will hold true to their promise – and suffer little damage for it. Still, judges are fair by nature and those who make it to this level should not be feared.  Reserve your emotions for the positions that the candidates can control and don’t worry about the ones that are determined by simple math.

PS. It’s been nearly 8 weeks since I posted. I feel bad about that although my apology is largely directed at myself for getting too busy to do what I care about. I came out of the holidays with a new tutoring responsibility, a short eBook that I wanted to publish on learning multiplication tables without memorization, some 8-Bit Bats to sell, and several friends awaiting my attention on proposed business plans. I am still not caught up, but I am working back toward balance and more regular posts will return over the coming weeks.

Local Senior bests Author

A little more micro fiction because its Friday.

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The East Bank Club outdoor pool

Earlier this year, I was at the gym which has a pool on the roof surrounded by the city. Following my laps I decided to enjoy the view from the hot tub. In it were two bubbes – Jewish grandmothers – passing time before their water-aerobics class. I waded between them, said “hello,” and sat down. They both looked my way pleasantly, but I could tell my entrance had forced a lull in their conversation. Not having anything in particular to say, I asked “So, do you ladies mind is I take off my swimsuit?” One stared in disbelief. The other, smiled wryly, cocked her head and replied in a gravely voice, “I would prefer that.”  Then she added, “But I don’t know if you really want to. You did just get out of the pool.”

Touché Jewish Grandmother!

Is “Share of Box” good for Amazon’s brand?

It used to be that Amazon worked on a very simple and expected principle: customers ordered product, paid for shipping and it arrived a half a week or so later. Prices were comparable to the stores, and users avoided tax, so they could handle to wait a few days for their copy of Braveheart to arrive because they saved a little money and gained convenienceA pile of DVDs.

Then Amazon added Amazon Prime and everything got better. This change allowed users to pay $69 once a year, place their orders, and product arrived the next day. At first there was still no tax, but even after they did away with that, the taxes paid were still lower than they would be at a local retailer. So now customers were saving money and getting product insanely fast.

Initially it was DVDs, CDs and home goods, but people soon realized that this worked for lightbulbs and toilet paper too – things that cost more to ship than they offered in margin. Amazon – and more importantly their competitors – realized that shipping things that had no sense of customer urgency through their regular speedy channel meant they were leaving money on the table.

So Amazon started dabbling with customer-directed shipping alternatives. Some products became add-on items. If you really wanted that $1 roll of tape, you needed to order an additional $10 worth of other stuff. They offered bulk items on subscription where you could only get the lowest price if you promised to buy them every month. And they started offering Prime customers the ability for forego the speedy shipping in return for a $1 credit on digital media –  the one product they offer that doesn’t incur a shipping cost.

But it wasn’t hard to work around the add-on restrictions, users eschewed subscriptions and continued to order their diapers when they needed them, and the whole digital credit thing didn’t appeal to a lot of people. Meanwhile customers continued to place single item orders for dog food or bubble bath continuing to thwart Amazon’s intentions.

And then along came a new company called Jet and with it the concept of “share of box.” Jet is a new start-up taking on Amazon that has reportedly raised $750 million. This is a true incentive to buy the dog food, bubble bath, tape, and diapers all at once and have them shipped together. Where Jet fails, is that they still ship everything separately and from different vendors, their selection is paltry, and they augment prices with the funds they have raised from Investors. A recent order showed that Jet paid $55 to buy products from a third party and sold them for $38. They claim that these practices will go away once they negotiate more inventory from additional vendors but obviously no company can sell product for less than they pay for it for too long.

Amazpdp_img1on has responded with yet another new service called Prime Pantry. Prime pantry charges customers $5.99/box for shipping and then allows users to “fill” the box with as many non-perishable groceries, pet supplies, and sundries as will fit. Each item comes with a price and a percentage number that represents how much of the box it will fill. A bag of dog food may take up 7% of the box where a tube of toothpaste takes up only ½%. Even though inventory limitations currently make it difficult to completely fill a box, this service works well. A few days after placing an order, a single, sturdy, handled box arrives with all the pantry items packed neatly together. Clearly Amazon is also trying to tackle the “share of box” issue and seems to be doing a better job of it.

But what cost is Amazon paying? Returning to my opening points, Amazon used to be simple and Amazon Prime was even simpler. Now customers have to wade through Prime pricing, Add-on items, Subscription services, the Prime pantry store, third party vendors, and Prime Now service (same day delivery). Meanwhile, Prime membership has increased to $100. I appreciate Amazon’s need to remain competitive but I fear that all this effort to gain one more customer, is straining their relationship with core customers.

I don’t have a solution to offer them, but I might suggest they wait and see how this whole Jet things turns out. Jet may be getting a lot of attention and financing, but their business model is spurious, their first major revenue pivot came after only two months of operations, and their value proposition is not yet being delivered. Meanwhile, Amazon seems to be forgetting that simplicity was a big part of the “Prime” brand, and this complicated smorgasbord of delivery options may be costing more in brand erosion than it is gaining in incremental revenue.