A New World, A New Life

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PART 1 of 3

ON AN UNSEASONABLY chilly spring day, the passengers of the S/S California1 stood on the deck while the captain and crew navigated the busy waters of New York Harbor. The misty salt air must have been a welcome reprieve for the majority of the souls on board. Most of the 773 travelers had been traveling in “steerage,” 2 where they had endured at least two and possibly three weeks of existence in the crowded, stuffy, odoriferous, infested bowels of the ship.

The day was Thursday, May 20, 1897. The passengers possessed surnames such as Guiseppe, Pasquale, Luigi, Monaco, Durante, Gallo, Amelio, de Mitro. They had boarded the craft in Napoli (Naples) sometime earlier in the month. They had listed their occupations as shoemakers, carpenters, barbers, spinners, musicians, stone cutters, bootmakers, photographers, housewives, and laborers. 

Among those laborers was one with a surname that stands out for me. It was 28-year-old Fazio Paolini. 

The S/S California was built in 1872 in Glasgow, Scotland. She weighed 3,410 tons and measured 361 feet in length. The hybrid ship had three sailing masts and one smokestack for the steam engine. She could reach 13 knots (15 mph), which would have been capable of traveling from Naples to New York in 15 days at best. More than likely, the trip took closer to 3 weeks.

As the ship’s horn announced its imminent arrival at Ellis Island, Fazio, sporting a neatly trimmed handlebar mustache and sharply dressed in his best Victorian-era style suit, no doubt joined his fratelli in a bit of anxious sight-seeing, as they peered over the railing to catch a glimpse of the Statue of Liberty, now coming into full view on nearby Liberty Island.

The iconic colossus was not even a teenager, erected just 11 years before. And she had yet to earn the nickname as the Green Lady. Her flowing tunic — made of copper — would have still reflected its amber hues. It would be many more years before the moist salt air would oxidize the sheathing into its now-familiar patina.

Fazio "Frank" Paolini
FAZIO PAOLINI

Fazio was just six days shy of his 29th birthday, but at that moment, it is unlikely he had any sort of celebration of this anniversary on his mind. Everything he knew and everyone he loved had been left behind in Italy: his young wife, Francesca Giansanti Paolini, an infant daughter, Consetta, his mother, Vittoria, and brother, Sabatino.

And now, thousands of miles from home in a strange land, unable to speak the language, with little money, no job, no place to live, he would have to quickly find his way and get established. Then, if all went well, he could earn and save enough to finance passage for his wife, his daughter, and his brother.

Family folklore

 

As with all families, there are stories about ancestry, and one I recall my father relaying about his father — Fazio Paolini — was the arduous passage to the New World. It went something like this:

 

Fazio and his father traveled for 30 days on a creaky sailing ship. Upon arrival, Fazio’s father was turned away because he did not have the proper paperwork. So he had to return on that ancient vessel to his homeland.

 

Claude Albert Paolini

As to the description of the ship’s antiquated condition, that is accurate. The S/S California was built in 1872 in Glasgow, Scotland. As the fuzzy image demonstrates, it did have sailing masts, three by all available data that I could find. It also housed a steam engine. By 1897, this vessel, operated by the Anchor Line, also of Scotland, would have been far beyond its prime. The ship was tiny, and the engine was puny by standards of the turn of the century. (The S/S in the name actually stood for “single screw,” meaning the ship had only one propeller.)

It was a slow, outdated steamer at the very end of its lifespan. In fact, Fazio and his fellow passengers that day would have been on one of the boat’s last excursions. It would be decommissioned and then scrapped for its metal and other materials just a few years later.

But other information in my father’s story about Fazio’s sojourn doesn’t add up. For instance, Carmine Paolini, Fazio’s father, could not have been on that journey with his son since Carmine died in 1890, seven years before this event. Now, the S/S California ship manifest does list another Paolini, one Domenico Paolini, age 28. There are several Domenico Paolinis in the family tree, and they can be traced back as far as the early 1700s. None of them were alive at this time, however.

So who was Domenico? And, did he have to return to Italy for lack of paperwork?3 This remains a mystery that warrants further investigation.4

Leaving home

Imagine a bucolic village nestled in rolling, verdant hills, sculpted by thousands of years of farming. Orchards and vineyards, stone walls, copses of deciduous trees frame the landscape. This pastoral setting is nestled between the majestic, glaciated Apennine Mountains and the balmy, turquoise waters of the Adriatic Sea. That fits the description of Cepagatti, located in the province of Pescara, Italy. And by all appearances, it is an idyllic place.

Farmland in the hills of Cepagatti, Italy, with the Apennine Mountain range in the background. Cepagatti is located in the province of Pescara, in the Abruzzo region on the Adriatic Sea.


It was there that Fazio Paolini was born on May 26, 1868. Both his parents, Carmine Paolini and Vittoria Mirabilio, were Cepagatti natives as well. And Carmine’s family goes back yet another generation, all the way to 1757. So this was indeed the homeland for my ancestors on the Paolini side.

Fazio’s name is recorded in the birth registry in Cepagatti. The date is May 26, 1868.

Why leave?

The home in which Fazio was born. (Photo by Carl Aiello)

The pristine beauty of the place belies the turmoil — both natural and political — that enveloped not only Italy but most of Europe in the period of 1870-1920 when 11 million citizens — 4 million from Italy alone — emigrated to America.5

The ship’s manifest listing Fazio Paolini. Although it might look like the surname is “Pastine,” all available evidence and process of elimination lead me to a near certainty that this is our guy. The age is right, the date is right. The surname “Pastine” does not exist in Italy. Note that the mysterious Domenico Paolini is listed as well.

Fazio and his fellow passengers on the S/S California were undoubtedly motivated to find a new life, away from disease, poverty, political upheaval, and uncertainty. But making that decision could not have been trivial. Imagine what it must have been like for Fazio’s mother, Vittoria Mirabilio Paolini, when she heard the news. She had already lost her husband and a daughter.6 And now her son was leaving her, with the prospect that in a year, he would take Vittoria’s only other son and her only grandchild.

In the coming chapter of this saga, I’ll provide a glimpse of what life must have been like as a passenger in “steerage.”

NEXT: PART 2 THE JOURNEY

 


FOOTNOTES

1 Based on all available data that I could find, the S/S California operated by the Anchor Line is the right vessel. Between 1870 and 1930, numerous ships were christened with some variation of “California.” Perhaps the most famous — or infamous — ship to carry the California name was built in 1903 and was operating in the waters near the Titanic on its fateful day. By all accounts, the captain of that California had the ability to rescue most, if not all, of the passengers but declined to help.

2 Contrary to popular belief, the term “steerage” was not initially a reference to packing people in like cattle. Steerage is the section of the vessel containing the pulleys, ropes, and levers that comprise the mechanics necessary to navigate or “steer” the ship. It was the cheapest place to house those passengers who could not afford first class (sometimes referred to as “saloon”) or second class. Either way, of course, the term is appropriate.

3 Contrary to popular belief, the derisive term “WOP” was not an acronym for “without papers” or “without a passport.” It was actually derived from the term “guappo,” which sounds to the English-speaking ear as “WHOPPO” and roughly translates into “a guy who swaggers.” Italian laborers referred to each other with this term, perhaps much like the term “dude” is used today. English speakers heard the word as “WOP.”)

4 I did find two other Domenico Paolini individuals who roughly fit the time frame, one who lived in Illinois and the other in Massachusetts. Neither, however, seems to fit within the family tree. And so, the Domenico onboard the S/S California in 1897 remains a mystery. There are no other individuals with the Paolini surname in the registry. And, unfortunately, the registration record of Domenico and Fazio at Ellis Island went up in flames only a month after their arrival. So all we have to go on is that document from the S/S California.

5 I could not find reliable data on the actual number of immigrants between 1870 and 1920, which run wildly between 11 million and 25 million, so I’m using the conservative number. But the Library of Congress does estimate at least 4 million Italian immigrants between 1870 and 1920.

6 As noted previously, Vittoria’s husband and Fazio’s father, Carmine Paolini, died in 1890. In addition, Vittoria and Carmine’s daughter, Annunziata, died in 1868, just shy of her 14th birthday and just days before the birth of Fazio.

 

 

 

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George Washington’s buyout offer

ACCORDING TO LEGEND, George Washington could not tell a lie. But, he was not above bribery.

To be clear, Washington was the one making the bribe. Yes, it appears that, in addition to his military prowess, he was an astute businessman who came up with a clever — albeit dubious — twist on what today is known as the “leveraged buyout.”

Washington tried to bribe British officers to quit their posts in exchange for land. The only hitch was that the provisional government didn’t actually have the land to give away.

In the Spring of 1776, fresh from his victory in the Siege of Boston, Washington decided to see whether there might be a more expeditious, non-violent path to victory in the overall war. Although he won that battle in Beantown, it took a staggering 11 months. Soon thereafter, no doubt, he reviewed this hard-fought win and calculated how many more of these engagements would be necessary to achieve independence from England. He concluded that he needed a different approach, which was to appeal to British soldiers and officers with a carrot rather than the stick. The carrot was this: Leave the King’s Army, and the “Rebel Alliance” will reward you for abandoning ship.

If this is a revelation to you, join the club. I certainly don’t remember hearing or reading about this in any history class.

But it was front-page news in 1776. This proclamation, signed by Washington, was printed in newspapers throughout the country starting in March of that year. The image below was published in the Hartford Courant July 8, which, of course, was just four days after the Declaration of Independence was ratified.

The type is a bit hard to read, but here are some salient points:

— Washington reaches out directly to the British soldiers, presuming their “reluctance” to partake in this “odious” war, which is “in support of tyranny, against the rights and privileges of their American brethren …”

— For those willing “to quit the King’s service and settle in this country,” Washington is bequeathing land — lots of land — from 200 acres for a lowly private to 10,000 acres for “every” field officer.

— One minor detail is that, in order to give away this terra firma, Congress must first buy it “from the Indians.” As to what price Congress would pay and whether this was an offer the Native Americans “couldn’t refuse,” we do not know. Nor is it clear why anyone would have agreed to accept Continental Currency, since in most cases the money wasn’t worth the paper it was printed on.

Perhaps I’m reading too much into this, but it seems significant that Washington would offer funny money to the “Indians,” but he did not make such an offer to the British soldiers, who most likely would have scoffed at the currency and hence the whole deal.

Mount Vernon, George Washington’s estate in Virginia, was just one property he owned.

But land, on the other hand, was something real and tangible. Nobody understood this better than Washington, a former surveyor and a man who made land speculation a serious avocation. In his lifetime, Washington amassed 52,194 acres in Virginia, Pennsylvania, Maryland, New York, Kentucky, the Ohio Valley and what is now West Virginia.


BUT, I SUPPOSE, this legal if somewhat questionable entreaty to the Native People was better than stealing the property outright, which, according to University of Georgia History Professor Claudio Saunt, is exactly what the U.S. government did between 1776 and 1887, to the tune of 1.5 billion acres. That’s “billion” with a “B.”

So, the “Indians” would have had every right to question this proposition. But imagine being on the other end of the deal, as a British officer, reading this offer. In his eyes:

  1. Washington is Enemy No. 1 to the British Crown.
  2. Enemy No. 1 is informing you that he is in charge of the country that your boss (the King) says is his.
  3. Enemy No. 1 is enticing you to quit what you’re doing in exchange for remuneration in the form of property.
  4. The only minor detail is that Enemy No. 1 doesn’t actually have the acreage to give you at the moment. You’re just going to have to trust him to work with his rag-tag team of rebels to acquire the property from “Indians,” who, by the way, aren’t all that amenable to losing more of their hunting grounds to invasive White People.

As to how many British soldiers or officers took Washington up on this offer, we do not know. It’s also unclear whether there might have been an additional set of Ginsu knives for those who “acted now.”

It’s also unknown whether there was an expiration date on this deal. It might have come in handy for Benedict Arnold, who had played a decisive role in aiding Washington to win the Siege of Boston and then, a few years later, infamously, switched sides to aid the British.

Nonetheless, this episode is a fascinating piece of trivia on this most revered of American holidays.

George Washington’s letter to British soldiers and officers, offering them land if they would quit their jobs and settle in the colonies.

The open office is shut down for good

IN THE EARLY ’90s, I joined the world of high-tech, working for a computer company in Silicon Valley.

I had quite a commute from the East Bay over to Palo Alto, so I was only too eager to join a task force that was proposing a work-from-home (or what we called telecommuting) policy at the time.

This company had a slogan: “The Network is the Computer,” and so it couldn’t have been a more propitious time, given the Internet as we know it today was just going viral.

The head of HR was somewhat dubious, but he gave us the green light to move ahead with a pilot program. I was one of the first to test it out, and even with a measly modem and only one land line in the house (no cell phones yet, let alone smart phones), I was able to get everything done in my job.

Over the years, I rose to executive roles and switched companies innumerable times (the average lifespan of any role in Silicon Valley is +/- 2 years).

Invariably, a discussion would arise regarding a remote work policy.

I always found the argument against working from home spurious and amusing. Most of these executives I was with were logging 200,000 miles a year on the road (more accurately, in the air). Many were out of the office more often than in.

Of course, they still had to run their staff meetings, report in to their bosses, and do all the other things they had to do in the office. They were working remotely.

Now, of course, given the pandemic, we are required to work from home. Will we ever go back?

I doubt it. What we have learned is that the office has been an anachronism for a long, long time.

That was why the office perquisites got more elaborate as time went on. We went from stale, weak coffee in styrofoam cups to fusion cuisine, laundry services, massages, hair cuts, car washes, beer bashes.

But, as the saying goes, there is no free lunch. Those freebies came at a cost: your time. They were there to entice you to work longer hours in the office, sitting at your open cubicle, trying to block out the drone of your neighbor negotiating with her mother-in-law (personal calls? Never!), or the obnoxious office gossip guy who hovers from cube to cube.

Do I need to mention the windowless, overcrowded meeting rooms, reeking of fried onions from the previous meeting, where you are trapped for a couple hours to discuss a matter that easily could have been handled in email?

And then there is the commute. Sure, working from home has its drawbacks. Kids. Crumbs. The neighbor’s gardener’s leaf blower in the middle of your presentation. But that commute from the kitchen to the converted bedroom is sweet.

The pandemic has taken the doubt out of whether or not we can survive remote work. It has proven that we will actually thrive in the long run.

And if this trend continues, it has some significant implications for the Silicon Valleys of the world, where the average 1,500 square foot home on a postage stamp size lot demands a figure in the seven digits.

If we don’t need to commute, why not live some place affordable? Already, we are seeing multiple listings for jobs that specify they are remote only. Just do a search on Glassdoor and you’ll see this list is growing daily.

It’s a brand new corporate world. There is no going back. And that’s a good thing.

You don’t know what you’ve got ’til it’s gone

IT’S BEEN SAID that the first cases of lung cancer detected in humans goes back to our cave-dwelling days. Makes sense, when you think about it. Breathing all that smoke in a room without adequate ventilation can’t be good for you. But who knew back then? The heat felt good on a wintry night.

This is the essence of the human condition. We’re constantly looking for ways to improve or change our surroundings. And then we suffer the unintended consequences.

Sometimes, it reminds of being a teenage boy. We’d try some stupid stunt. If it didn’t kill us, we’d try something else.

It seems as though we can’t help ourselves in this species-wide endeavor. Of course, with over 7 billion people on the planet, this is starting to get to a be a serious pursuit.

Climate change is real. The decimation of species of all kinds is real.

It’s been said that alien civilizations have likely never reached us because they have self-destructed before they became sophisticated enough to venture this far.

I sometimes wonder if we are not only the smartest species on the planet, but the dumbest parasite.

Even lowly organisms that suck blood or other nutrients from their hosts know better than to kill the source of their sustenance.

Before and after the Pandemic

It was the year 1973 that in many ways shaped my disposition on life. I was 18, just graduating from high school. In my senior year, we scrapped reading the history books as we watched it unfold real time on live TV. The Nixon administration — our government — was crumbling. There was the very real prospect of having my “number” be called for Selective Service. (The Vietnam War was still raging, but fortunately, the lottery draft ended in December 1973.) And then the Oil Crisis hit, as OPEC flexed its muscle by limiting supplies and causing shortages and gas prices to skyrocket. All this, unsurprisingly, led to a recession.

And that’s how my first year of adulthood started.

But here is the thing: my generation — the Baby Boomers — had it easy.

We knew we had it easy because our parents — the Greatest Generation — who went through the Great Depression and World War II, would never let us forget how much they sacrificed for us. And they were right.

Yes, our lives were shaped by those crises of confidence in our government, the realization that we did not control the world’s energy and hence didn’t have quite the dominance or independence we we thought we had, and, of course, by the quagmire in Vietnam. All these events and crises were significant. I still look at gas prices and I don’t even own a car. It’s a habit.

But those events, and the effect they had on my generation, are a mere pittance in comparison to how Corona Pandemic will shape the generation coming of age today.

This crisis is far from over. But I predict, that when it is, when we have survived and reflected and assessed what went wrong and what to do to prevent it again, the Boomers will be in their proverbial rockers.

The generations that follow — especially the Milennials and others who were old enough to remember this event and what life was like before — will have had their collective psyche altered.

And these generations will speak to their children and their grandchildren about it. They will have the stories to tell, for the rest of this century.

Car Wars and the Fate of Tesla

Another episode in the great consolidation of the shifting giants of automobile manufacturers has begun.

Fiat-Chrysler is proposing a merger with Renault to create the No. 3 automobile manufacturer in the world, behind VW and Toyota. This will knock General Motors into the No. 4 slot.

Tesla is more than a car company. This makes it unlikely an auto company will acquire them. So who is a likely buyer?

What’s driving the consolidation? According to reports, there are two things: the industry has to achieve economies of scale. Go big or go home. The other is the rapid acceleration (pardon the pun) toward electrification. The costs for moving to EV production are not insignificant.

And that raises an interesting question about Tesla, the little auto company that upset the entire industry by producing the first truly successful EV. Can it survive? Will it be acquired?

It is unlikely it will be acquired by another auto manufacturer. The numbers don’t work for car companies, because their market value — the price of their stock times the outstanding shares in the market place — doesn’t give them enough leverage to buy such a small company for such a hefty price, especially a company that is losing money.

Tesla’s stock has been sinking as of late, due to dire news reports that Tesla is running out of funding. But even still, the market cap for innovative California concern is $33 billion. By comparison, Ford is $12.8 billion.

Perhaps VW could pull it off. With a total market value of $73.4 billion, it has the market cap to make it work. But then, one might ask, “why bother?”

VW is planning 27 new electric vehicles in the next three years (by 2022). It has the economies of scale to crank these vehicles out at a much cheaper cost than Tesla.

It could be for the battery technology. Tesla has invested heavily here.

Or it could be for Tesla’s long lead in autonomous driving. Tesla has innovated far beyond any of the other manufacturers in “crowd sourcing” data from its drivings and from sensors on those vehicles on the road. Using AI (artificial intelligence) and machine learning, it is able to provide over-the-air continuous improvements to the vehicles, and, perhaps of more significance, it is able to use that data to develop improvements in its autonomous driving capabilities.

VRBO

As I have written earlier, I believe an Apple acquisition makes more sense. Apple has the market capitalization and cash on hand to swallow Tesla whole without making a dent in its reserves or market value.

I have taken some heat for these comments, mostly along the lines of: “Apple knows nothing about manufacturing cars.”

True. And this could be to their advantage. It knew nothing about the retail industry before disrupting that entire model with the Apple store. It knew nothing about phones before disrupting that entire industry with the iPhone.

Apple knows how to hire the right talent to move into a new industry, in my view.

And Tesla is not just a car company. It is into distributed energy storage (Powerwall), which is an ideal “vehicle” for Apple to get into the home (where it has failed to date against Amazon’s Alexa and Google’s Nest) and to do so by “leapfrogging the competition,” rather than just following them.

Uber’s über IPO fiasco

This will be one for the business textbooks for years go come. Unfortunately for Uber, it’s initial public offering (IPO) is the perfect case study for all the wrong reasons:

  • The company waited nine years before its IPO. If it had delayed in order to achieve some level of a true business model, that might have been one thing. But in this case, all signs of that being achievable are vague at best.
  • In fact, the company showed no signs of a roadmap to profitability, now burning $1.8 billion a year and a staggering $10.7 billion in losses over the lifespan of the company.
  • CEO Dean Khosrowshahi was handed a compensation package tied to an inflated valuation for the company at the time of IPO. If the company reached a $120 billion in market value at IPO and remained there for 90 days, he was to be awarded $100 million. 
  • Much of the stock was in private hands already, through a network of investors, many of whom included those who were expected to buy again at the market price when the company went public. They weren’t thrilled about it, to say the least, which is why the IPO price dropped from $45 to $42 at the last minute.
  • Even the underwriters were wary of the price and were shorting employing “naked shorts,” a highly questionable tactic, which in most cases is illegal and in this case was detrimental to the overall IPO.
  • The market is souring on the Unicorns, companies with $1 billion+ valuations that emphasize gaining market share over profitability.
  • Lyft, which itself had just gone public and is Uber’s main competitor, had only days before Uber’s IPO posted less than favorable “earnings” (i.e. losses) statements.
app-2941689_1920

Can Uber survive this?  Buried deep in its S-1 prospectus, the company makes this rather pointed statement:

“Our business would be adversely affected if Drivers were classified as employees instead of independent contractors.” 

Uber S1 filing with the SEC

What this means is that Uber, which is paying a median rate of $8.55 per hour to U.S. drivers, with female drivers making on average of $1.24 an hour less than their male counterparts, is essentially admitting it cannot stay in business if it must act like a regular, grown-up company.

Days before the Uber IPO, Lyft and Uber drivers went “on strike” by turning off their apps, to protest their low wages. Driver turnover will be a main concern. If Uber is not able to address this, it could ultimately affect user experience. 

And now that the company is public, the pressure will be on. Under the glaring spotlight of earnings reports, Uber must continually convince shareholders, analysts and pundits that it is on the path to a sustainable business.

And while it is doing this, it has to bet big (via R&D investments) on autonomous driving, in the hopes it can do an end-run around (no pun intended) its driver problem. But it is highly unlikely that this is going to come soon enough. There are myriad regulatory hurdles, not to mention technological and social acceptance issues.The company claims it is modeling its business on Amazon, which focused on gaining market share and ran at a loss for 14 years before turning a profit. But Amazon started very, very modestly compared to Uber. (Amzon’s S-1, by comparison, had the goal of being “the bookseller to the world.”)

Also in Uber’s S-1 filing, the company states:

“We do the right thing, period.”

I guess we’ll see what that means in the coming months.

Sources:

[https://www.washingtonpost.com/b…

[Uber’s growth slowed dramatically in 2018

Uber’s I.P.O. Flop May Be Wall Street’s Worst Ever

Dara Khosrowshahi hasn’t yet earned his $100 million-plus stock bonus for when Uber hits a $120 billion valuation — but there’s still time for him to do it

Uber’s Top Investors 

Lyft’s First Results After I.P.O. Show $1.14 Billion Quarterly Loss

https://www.npr.org/2019/05/08/721333408/uber-and-lyft-drivers-are-striking-and-call-on-passengers-to-boycott

Eight reasons for Apple to buy Tesla


VRBO

I have never been a big fan of mergers and/or acquisitions. What looks good “on paper” invariably ends in a much-less-than ideal situation. I can count on one hand the mergers I have seen or been involved in that had a semblance of success. I can’t calculate the number I have seen fail.

So, with that disclaimer, let me lay out the reasons I think it is a great time for Apple to buy Tesla.

  1. Tesla is a consumer technology company. Apple is a consumer technology company. Both companies are making high-end gear that has comparatively high profit margins. It’s a perfect fit.
  2. Tesla needs a White Knight. Elon Musk is a character and has done what no other human could, single-handedly changing the automotive industry and focusing the world’s attention on renewable energy as the future for transportation. But, as is the case with many founders, he has reached his capacity to govern. And with myriad other interests (The Boring Company, SpaceX), his attention span is spread thinly. Tim Cook knows operations. He can make Tesla work and make it work economically so that it can scale. And Apple has the deep pockets to make that happen.
  3. Speaking of Tim Cook, he needs a visionary, or at least a vision. Elon has laid it out for Tesla: to accelerate the world’s use of sustainable energy for transportation and the home and beyond. It’s simple, it’s bold, it’s brilliant, it’s do-able. Tim can get it done. And here’s the beauty of this scenario: Tim doesn’t need Elon to make it happen. Tim has already proven that. It has been 8 years since the inimitable Steve Jobs passed away. And Tim has done quite well by the vision that Jobs laid out. The problem is, that vision has reached the end of the road and Tim needs a new one. Tesla would set the company on the right path.
  4. So what is that vision? It’s all about the home. That’s right. Tesla gets Apple in the home. Tesla is much, much more than a “car” company. It’s ultimate vision, with Solar City and Powerwall and Tesla is a system of renewable energy from home to auto and beyond. Apple has been a laggard in getting into the home. Amazon has Alexa. Google has Nest. Apple is a follower in this space. No other company has the holistic view of providing these kinds of technologies to the home owner.
  5. It’s all about the car. OK, so No. 4 was a bit of a click-bait. Yes, acquiring Tesla gets Apple into the world that is rapidly heading to autonomous transportation. This is a no-brainer. It’s exactly the holistic systems approach to a whole new market that Apple needs. It’s way, way behind Uber, Google and others that have been investing heavily in this arena. Apple needs to not only catch up, but leapfrog the competition.
  6. Closed ecosystems. Apple has built the largest consumer tech company on a closed ecosystem. As much as it pains me to say so (coming from the world of Unix and open source), it is a brilliant strategy. By controlling every aspect of its hardware, software and services, Apple can provide a user experience that is unparalleled in the industry. Mind you, I have many, many complaints — as do we all — about shortcomings that Apple needs to fix (iTunes, iCloud are woefully outdated, for starters). But it is showing promise. It’s now on a run-rate with services to be over $40 billion in revenue a year. That’s something like No. 236 on the list of Fortune 400 companies if Apple Services were a stand-alone entity. Meanwhile, Tesla has built its own ecosystem with massive reams of data on users’ miles driven. It can provide over-the-air updates based on Big Data analysis of what customers want and need. It is unbeatable in the automotive market today for continuous improvement. And this gives it a long, long lead in the world of autonomous driving.
  7. Fiercely loyal customers. Ever talked to a Tesla owner?
  8. They are proud, they are excited, they are adamant. Same with most Apple users, although this has dipped as of late. But each company has locked their users into an ecosystem. And the users love it, because the highly-integrated experience it provides cannot be matched by their respective competitors.

  9. It’s all about “showing me the money.” Tesla is scrounging for funding, while Apple has a big, big problem to the tune of about $245 billion that it needs to invest wisely. How many stock buybacks can the company do? Investors want to see those funds used to increase their shareholder value. Apple could pay a super premium and purchase Tesla outright for about $100 billion and still have more money than most countries in the world. But more than that, it would be able to, pardon the pun, shine the headlights on the future.

Full disclosure: I own no shares personally in either company. My spouse is a former Apple employee and acquired shares during her tenure. I don’t know how many and don’t care to ask.

eVitamins.com

The Path of Least Resistance Has a Habit of Prevailing

For every action, Newton tells us, there is an equal and opposite reaction. True in physics. Not necessarily so in business.

In another case of a traditional industry reacting in traditional ways to an untraditional threat, we have incumbent Marriott, the largest purveyor of hotel rooms in the world, drawing a line in the sand against that pesky start-up, AirBnB. Marriott is launching its “Homes & Villas,” which is a premium home rental service, very similar to what AirBnB offers with its AirBnB Plus service.

The fact is, in just a few short years, AirBnB, which owns no properties, has turned a software platform into a network that can claim about 5 times as many rental nights as Marriott alone.

The fact is, AirBnB has turned the hotel industry upside down. And the hotel industry is trying to adjust to the new game. But is it enough?

As has been the case with myriad industries, the incumbent struggles with a major dilemma: How to protect its cash-cow-generating machine while cannibalizing that machine to combat the attacker.

It rarely works. In fact, I’m hard-pressed to come up with an example where it has worked.

Uber and Lyft can be annoying to use. But is there any comparison with taking a taxi? Does anyone enjoy a taxi more? At least with Uber and Lyft you know the price, the driver’s name, his/her ratings, the length of the trip, and you never, ever have to worry about being “taking for a ride” for an additional 45 minutes to drive up the fare.

Yes, the auto industry is swapping out internal combustion engines for batteries faster than you can say “rickety-split.” But in the meantime, Tesla has rewritten the rules by amassing millions of miles of user data to be able to provide over-the-air updates to their customers. The other guys aren’t close, at least not yet.

The reaction of Blockbuster to Netflix has become a Business 101 case study. Blockbuster’s reaction to Netflix is a beauty. Blockbuster actually thought customers would enjoy the experience of traveling to the store to pick up a USB drive, vs. clicking a few clicks on a website from the comfort of their own homes.

The list goes on, with Amazon (not only in books and everything else, but in cloud services, an industry it single-handedly created right under the noses of the biggest hardware and software companies in the world). Google did the same thing with online advertising.

The pattern for the challengers is very similar. They enter an existing market orthogonally, usually using technology to rewrite the business rules. Their strategy is to:

  1. Disrupt the market with better, faster cheaper
  2. Go for growth and scale over profits short term
  3. Use that scale to reach a critical mass
  4. Capture the market
  5. Take profits
  6. Expand into new markets
  7. Never stop

Meanwhile, the incumbents react in similar ways:

  1. Ignore the start-ups
  2. Accept the start-ups by offering some low-end solution
  3. Realize the offering isn’t working and then do some soul-searching as to how to truly protect their territory and preserve their cash-cow-machine.
  4. Struggle with their hybrid business model and their legacy infrastructure while the new guys breeze through encumbered.

This pattern has repeated itself multiple times in the past 25 years or so and is documented in the brilliant book “The Innovator’s Dilemma,” by Clay Christensen.

Having just spent the past three months traveling the world and using both AirBnB and VRBO (Vacation Rentals By Owners) for about 80 percent of my nights, I can tell, unequivocally that the value that the challengers are providing to the hotel industry is noticeable. The average nightly cost is about half of what a comparable hotel would cost, and with that you get a kitchen, washer, dryer, a living room area. A hotel’s offering would be a square room with a bathroom and a Keurig coffee maker, if you’re lucky.

Now, I’m a big fan of Clay and the book, but I had the chance to have dinner with him some time back (2006) and I posed the question to the Harvard professor: “Why isn’t your industry (higher education) vulnerable to this challenge?”

He gave me a long, unsatisfying response.

This was long before Kahn Academy, Udemy, Teachable, even YouTube had come along that provide the ability to learn just about anything for free or a small fee. Yes, it’s not perfect by a long shot. But, as with all the other cases, you can see where it is heading.


VRBO

Like it or not, this disruptive force is unstoppable in virtually every industry. If it can be disrupted, it will be disrupted.

Electricity, it is said, follows the path of least resistant. That might a more apropos “law” for business than any of Newton’s.


Luxury properties. VRBO Vacation Rentals.

Links to products are on a referral basis, which means the author receives a commission — at no cost to you — should you decide to purchase using the link. You have the ability to bypass and go directly to any online retailer of your choice or your local book store. Regardless, it’s a great book!

The Apple Has Fallen Far From the Tree

It’s all about services. That’s the message from Apple Inc. these days. It’s a good line and it should be true. It’s the perfect opportunity for the world’s most recognized consumer technology brand.

But if this is a true pivot, then the best place for the company to start is with its mission statement. This is the sentence or two that should describe what a company’s vision, goals and aspirations are. Here’s Apple’s today:

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App store, and is defining the future of mobile media and computing devices with iPad

Notice anything strange about that statement? To begin with, it’s not a mission statement. It’s about what Apple does today, not about what it wants to become. It doesn’t even mention services, at least overtly. And what’s with the bragging? Who needs that? How does that inspire any employee, customer or partner of this massive conglomerate?


Let’s look, in contrast, to the mission statement Steve Jobs put out in the 1980s:

“To make a contribution to the world by making tools for the mind that advance humankind.”

Whoa. Notice the difference? This isn’t about what they do but about what they desire to be. It’s positive, inspirational, aspirational, passionate, clear of purpose and bold.

And therein lies the difference between the “Steve Jobs” Apple and the “Tim Cook” Apple.


Tim seems to be a nice guy, a decent guy. He has done an admirable job keeping the engines running. So I wouldn’t go as far as to say Apple has lost its way since Jobs’s death; it has simply drifted aimlessly. It has no vision. It has no focus. It has no passion about making a “contribution to the world.”

Don’t get me wrong: Apple is an amazing company. It has amazing products. I use many of them every day. I am probably the best example of an Apple customer: loyal to a fault. I appreciate quality over price. I appreciate ease of use. I want everything to work seamlessly together and I’m willing to pay for that, too. (I am a musician and Apple makes the best tools for producing music today.) I have nearly every Apple product or service.

But what has the company truly done since September 2011? It has grown its user base of iPhone customers to 1.3 billion. It has launched Apple pay, the watch, Air Buds, acquired Beats, launched Apple Music. It has amassed $235 Billion in cash on hand. It’s still making money hand over fist.

With Jobs gone, Tim Cook has focused on running the company, that Jobs built. Meanwhile Jony Ive, the design genius, has gone off the deep end with form over function. Every product that Apple makes these days requires a handful of expensive dongles to make it work. But boy, are those products pretty to look at. So sleek, so simple.

What’s clear is that neither Tim Cook nor Jony Ive know where to go next.

With a closed ecosystem of 1.3 billion users, millions of app developers, and a fully integrated set of technologies, the obvious answer is services. Yes, it has built services into a $10 billion business over the past 10 years. That’s admirable. But it’s not nearly enough.

iCloud is dated, outdated even. While DropBox and Box innovate and create new offerings, iCloud still offers a measly 200 Gb of space and for that you have to pay. Every iPhone or Mac or iPad user ought to get this for free. And have you tried using Photos or iTunes and dragging and dropping files between those apps and iCloud? It’s a mess. Speaking of iTunes, it is even more of a mess. The user interface is completely unintuitive. And this is the umbrella product for TV, for apps, for music that you buy, but NOT for streaming music. Oh, no, that’s a different service.

Apple is supposedly relaunching a TV service. But Netflix, the preeminent video streaming service, isn’t playing along. Apple’s also trying to consolidate news organizations, but, again, not everyone wants to join. It has massive clout to make things happen. It is giving Spotify a run for its money, for instance. But it is still rudderless and these seem like toe-dipping exercises compared to what it could do with such a massive, locked-in user base.

And what about totally new markets? Autonomous vehicles? Virtual or augmented reality? Internet of Things? Well, they may or may not be working on these things. Apple is a very secretive company. But consider this: Right now, Amazon is spending about $23 billion in research and development. That’s about twice Apple’s budget. Twice the budget of a company that prides itself on making the “best personal computers in the world.”

Meanwhile, Amazon has launched several new products and services, including Kindle for reading and voice-activated digital assistants (Alexa). And it launched an entire new industry with Amazon Web Services for cloud computing. Love them or hate them, Amazon is focused. And guess what, they have a mission statement that reflects that focus:

“Our vision is to be earth’s most customer-centric company, to build a place where people can come to find and discover anything they might want to buy online.”