MattMaroon.com

Mark Cuban echoed a lot of popular sentiment about the car industry here that I feel is just poorly reasoned. Every time the beleaguered industry does just about anything anymore, they’re pilloried for it, and it just doesn’t make sense.

First there was flying the corporate jet to Washington, where the Congressmen questioning them asked ridiculous things like “who here is willing to sell their jet now and drive back?” as if you can just put a Gulfstream V on Craigslist and it’s gone later that day. Then they advertised in the Wall Street Journal thanking Americans for the bailout (to which I was opposed, by the way) and they’re criticized for spending on that.

Just because a company is having a hard time does not mean it should stop making efficient investments. In fact, it maybe should make more of them. A corporate jet is not just a luxury to a large corporation whose executives are required to travel frequently. It’s an investment. The cost of an hour of a corporate executive’s time sometimes makes them well-worth it. I’m not sure if that’s the case for Chrysler specifically, and that would have been an intelligent question to ask before suggesting they eBay their entire fleet.

Same with advertising. Advertising isn’t a luxury for a car company, it’s a necessity. When done properly, every dollar in ads amounts to more than a dollar in profits. As an investor in Chrysler, which George W. Bush has essentially made us all with the bailout, the last thing I want them to cut is their ad budget. I’d maybe want them to examine it for cost efficiencies, but cutting it out entirely would be certain death.

Also, an ad calling us their investors is, I think, brilliant. People have been shown to greatly prefer patronizing businesses they own stock in over ones they don’t. If Chrysler can make Americans feel a sense of ownership, it might have some small effect on people when it comes time to buy a new SUV. I don’t know if that approach will work for them or not, but it’s certainly a valid angle.

Worse yet there’s this silly notion that American car companies are losing because they simply aren’t innovative enough. Bullshit. They’re losing because every car costs $2,000 more to build due to higher wages and health care. That’s it. End of story.

You can’t out-innovate $2,000 per unit. It’s not possible. It’s just too much money for an industry that’s become largely commoditized. It’s like trying to compete with Bud Light but being forced to sell at Sam Adams prices.

When every mid-sized sedan is more or less interchangeable, $2,000 is just a tremendous difference, and as a result every American car for twenty years, in order to compete, has had to either cost that much more, or cut back on that much worth of features. They’ve largely chosen the latter, because the former would have destroyed their volume, and as such they’ve gotten a reputation for shoddy quality. They’ve closed the gap a lot in the last 5 years, which is a testament to just how hard they’re trying, and in fact they might be out-innovating slightly, but they just can’t win a battle that’s perpetually uphill.

It’s not as if Americans can’t engineer good cars. Our engineers are just as intelligent and driven as theirs. Our aviation and defense industries prove that. It’s just that their cost basis means they’d have to out-engineer the Japanese by an impossible margin to compete. And the car industry is so massive and has so many companies vying for supremacy that there just isn’t $2,000 worth of slack laying around to pick up. Cost-cutting has, since Henry T. Ford, been the primary focus of the industry, and they’re pretty good at it.

Cuban says they should focus less on reducing costs and instead “figure out what cars consumers want, and how much they need to sell for.” To illustrate just how stupid that idea is, here are the top 10 selling cars in America (source):

1. Ford F-Series

2. Toyota Camry

3. Chevy Silverado

4. Honda Accord

5. Honda Civic

6. Toyota Corolla

7. Nissan Altima

8. Chevy Impala

9. Dodge Ram

10. Ford focus

Looks to me like they’ve figured out what cars Americans want. They’ve got 5 of the top 10 models, including numbers 1 and 3. What more do you want from them? Actually, what you want is for them to make a profit on those proportional to what their competitors do.

Americans don’t just say “I want a mid-sized sedan and I want to pay $25,000 for it.” They decide what type of car they want and then shop around. They want to get what they want and pay the least for it they can. American manufacturers have determined the price they need to sell for, and they’ve been selling at that price. The problem is that price is above the cost for Toyota to manufacture it but below that cost for GM.

Also here’s an interesting line about total profits from a slightly outdated NPR comparison between GM and Toyota:

$4.15 billion loss from North America operations off-set by profits in Europe and Asia for an overall loss of $3.8 billion

Note that in other parts of the world, where their per-unit costs are on par with the Japanese, they actually make money.

And that’s why the executives are focused on lowering employee wages and benefits. You can’t out innovate $2,000 in a commodity business. And even if you could, doing so should net you $2,000 in extra profit over your competitors, not parity. Forcing them to continually fight uphill will inevitably lead to failure.

All of that is why I’ve never purchased an American car, and why I was against the bailout. They’ve been unable to convince me to buy one because their cars weren’t as good as Toyota’s. It may not be the fault of their engineers, but I’m still not driving a vastly inferior car just so unskilled laborers in Detroit can make $50 an hour flipping switches and pushing buttons.

And they’ve been unable to convince me that the bailout is a good idea unless there were strict guidelines ensuring that changed. They seem to have been unable to convince the Senate of that too, but thanks to Bush being as fiscally liberal as he is socially conservative, they didn’t have to.

Fascinating New York Times article (via Non-Hacker News) about Somali pirates grabbing a Ukraine ship carrying grenade launchers and tanks. Pretty much all you can say about that is, wow.

First of all, if you’re shipping tanks through pirate infested waters, wouldn’t it be worth protecting yourself a bit? All you have to do is put one guy in one of the tanks. I don’t know what those pirates are packing in terms of munitions, but I’d be surprised if it trumps a tank.

Also, how are these guys stealing yachts and such? Can’t our military just go get them back? I mean, you can’t hide a freighter. All we have to do is pull up to their ports and find them.

I think that on the off-chance I ever find myself with more money than I know what to do with, I’m going to solve this problem. I’ll take used yachts, equip them with weaponry, or maybe just explosives, remote control them, and sail them right up the coast of Somalia. As soon as the pirates get close, blammo. I wonder how many pirates you need to detonate before the rest decide to make a living off of 419 scams. Might be a lot, given that death probably isn’t much worse than life for a typical Somalian.

I’m always amazed when I see something in a major publication like the New York Times (even if only on their website) and immediately think to myself “man, that is retarded.”

Take this entry “Why Don’t Hotels Use Roombas?” on the Freakonomics blog. You can get the gist of the article from the title. The author goes on to propose 7 theories as to why they don’t, ranging from social status to powerful hotel maid labor unions.

I have a theory, and Occam’s razor would seem to prefer it:

8. Because to do so would be retarded.

For one thing, Roombas suck. They’re kind of a pain in the ass even for the moderate use required in a home. For a hotel they’d be a logistical nightmare.

They’re expensive, with a good model priced at around $350, which is probably about what it costs to pay a maid to vacuum one room for over a year. How long does sweeping a hotel room take, 3 minutes each time? So every 20 days of maid service costs one maid’s hourly wage in vacuuming. That’s about 18 hours a year. If your maid is getting paid under $20 an hour (and I since I spent almost ¼ of my time in hotels for 5 years and have yet to meet one that speaks English, I’ll assume that’s true) it would take at least one year to recoup just the initial cost of the Roomba if you left one in each room. My guess is it would be closer to two.

And that’s just the initial cost. Also there would be theft, breakages, etc. You won’t get anywhere with customers by trying to charge them for stepping on a vacuum that roams around in its own. And you can try to charge them for theft, but they’ll just tell their credit card company “there was no Roomba when I got there” and the charges will be reversed.

So the maids would instead have to carry them around and set them to work. Roombas aren’t built for long periods of vacuuming. They could do very few rooms without a recharge (an Amazon review I found estimates 3 rooms in one house, and those are presumably smaller than hotel rooms) meaning a hotel with 300 rooms might need 100+ of them, and have to deal with recharging them all daily.

A maid tasked with cleaning 30 rooms is supposed to do what? Take 10 fully charged Roombas with her a and put them in each room after she is done cleaning it? It’d be a pain in the ass for her to change sheets, etc. while that free-wheeling tripping hazard was roaming around, so she’d probably put it in each room after she left, then come back and get it.

They have a tiny storage tank, so it would have to be emptied after each room. Then when she’s done with a room, she has to go back to the previous room, collect the Roomba, and check to see if its battery was depleted. At the end of the day she then has to go put 10 Roombas on charging stations (presumably in a room somewhere that has 100 of them). The life of any rechargeable battery deteriorates over time, and with full use every day that will happen quickly, so there’s lots of maintenance there.

And they have trouble with wires or other small things lying on the floor, so they’ll inevitably get stuck on things and ruin customers’ property. All of that to replace carrying one cheap vacuum that is probably used for a few minutes per room?

Hotels don’t use Roombas because it’s a stupid idea.

Is it me, or is this the funniest thing you’ve ever seen? Two women got lost for six days in the woods despite having a compass and a map. Six days!

My favorite quote is this one:

Rangers estimate the women logged at least 20 miles before they were picked up by a helicopter crew outside the northeastern side of the 9,400-square-mile park, Fister said.

In 6 days, they walked a total of 20 miles? While lost? That’s barely over an hour of walking a day. What did they do with the other 15 they were awake? You can infer from the article that they didn’t bother to spend any of them finding food.

“There were steep hills, so we had to get away from them and there was this high brush we had to push through,” she said. “I cried a little bit, but not much.”

I’m no survival expert, but I would think the first thing you’d want to do when you’re lost is go to an area of high elevation, where you can see the land around you and possibly be spotted by a search helicopter. Also, wouldn’t this thought (assuming you’re capable of those) go through your head as you were pushing through high brush? “Hmm, judging from the lack of scratches and torn clothing, I don’t think I went through any thickets on the way here. Perhaps I should turn around and go back the way I came from.”

Flantz, who plans to return to work on Saturday, said she’s not giving up on outdoor adventures — but next time she’ll be better prepared.

I’m sorry, but if a compass and a map aren’t enough, you really can’t be better prepared. Maybe you could bring a GPS and use it to smash open walnuts.

Cool article by Rolling Stone about Facebook’s founder Mark Zuckerberg. I’ve found this story interesting ever since it began popping up. At first, it seemed like most of the digerati dismissed these types of allegations. It’s easy to chalk it up to the idea that now that Zuckerberg is doing well, everyone wants a piece of the pie. The people claiming they’d been wronged were cast as just greedy assholes suing for money they didn’t earn.

The problem is, there’s just too much of it to be ignored. Lots of people run companies that turn into smash hits, often times far bigger ones than Facebook is. But even when they do, there aren’t usually this many somewhat reputable claims of douchebaggery. I’m inclined to believe that the guy’s a thieving bastard just due to sheer volume.

That’s too bad, because in general I would want to be on his side. The principles in the suit against him are Cameron and Tyler Winklevoss. Winklevoss? I’m sorry, but I’m just unable to root for someone named Winklevoss.

You remember the kids from middle school with names like that. They were the ones who you didn’t feel even a little bad for when they got stuffed into lockers. The article tries to spin them as the cool kids, but look at this picture:

Those aren’t jocks (and rowing isn’t a sport). Those are Winklevosses.

I’m still sticking with the Zuckerbot3000 theory though.

A friend told me the other day about a new fad that’s sweeping the middle-aged female segment of the population: Botox parties. Brilliant. Somewhere some genius thought to himself “how can I combine botulism and Pampered Chef?” and a new craze was born.

I’ve been thinking about that business model (a disease and a multilevel marketing scheme) and how I can make it work for me. Unfortunately it’s pretty tough. Most of the combinations just don’t add up to something people would probably want. Tuberculosis and PartyLite? Necrotizing fasciitis and Mary Kay? Those don’t make any sense at all. The only one that sorta did was dysentery and Tupperware, and I think we can all see why that’s a bad idea.

I’m considering hiring some R&D scientists to try to find a strain of bubonic plague that eliminates grey hair, or maybe a malaria mutation that makes boobs stop sagging. Once we’ve got something I’ll let you know and you can join the pyramid at the top.

I love it when people’s own words conflict with each other. Here’s two beautiful, diametrically opposed quips from National Association of Broadcasters CEO in relation to competition in the radio market:

 

 

That has to hurt. (Though I suspect the second quote to be functionally taken out of context. I bet it is followed by a list of ways they will compete, rather than attempting to sound all doom-and-gloomy. There’s a pretty big difference between saying “we have competition” and the implication of this out of context quote, which is “we are being overwhelmed by our competition,” but either way the dichotomy stands.)

(**Edit: Suspicion confirmed.**)

And the death of all of them is coming. It’s called Wi-Max. Soon the nation will be blanketed in wireless broadband. Thanks to EVDO, which is more than capable of streaming radio, it’s already 2/3 of the way there, though the price is still far too high. Satellite radio will have no chance to compete whether they’ve merged or not.

A conversation with a friend today made me think of something I have always wondered about. What the hell is up with mattress prices? They are always on sale, usually 50% off or more, so there’s always a severe discrepancy between list price and the price you’d actually have to pay. Why?

If you go into a store and look at some of the better mattresses you’ll see that the manufacturer’s list is always something like $8,000 but the sale price is more like $2650. The cheaper ones use the same system, just with lower prices. I don’t think anyone ever made a mattress that lists for less than $2,000, but if you look around long enough you can pick one up for $299. What could be the point of that?

I realize that the idea is to make customers think they’re getting a bargain, but this is just overkill. It’s so large of a difference that I’d have to imagine anyone can see what’s really going on. If two mattresses were both some reasonable amount, perhaps 10%, off of list price, I might be inclined to assume the one with a higher suggested retail was better. But if one is marked down to $3,000 from $9,000, and another $3,200 from $8,000, I realize that the list price is just bullshit and basically to be ignored.

I have to assume that this pricing scheme has virtually no effect since no other industry uses it. Corollas don’t have $30,000 MSRP’s. iPods don’t have “$1,200″ stickers on the box. I could understand it if it were just one or two mattress stores selling at a discount, the way Amazon does with books, but it’s all of them. It’s not the exception, it’s the rule.

Is there some reason why this ridiculous gimmick would work on people when they’re purchasing a mattress but not when they’re buying a television? Are the mattress makers really just shrewd businessmen who have figured out this idea themselves? Is this some brilliant scheme that CEO’s all over the world, all of which have purchased a mattress at some point in their lives, still haven’t caught on to?

And if most people really are dumb enough to not realize what’s going on and simply assume that the mattress with a higher list price is a better deal, why do mattress companies set their list prices so low? A mattress marked down from $7,000 to $2,000 looks like quite a bargain, but not nearly so much so as one that was originally $50,000. If list prices are going to have virtually no effect on the sale price but might have some effect on the quantity sold, why not just put some astronomical number there and hope? Stores would love it, they could advertise “Mattresses at up to 99.9% off, this Sunday only.” And customers would go home patting themselves on the back about what a phenomenal deal they got. Maybe that will be my next business venture. Any investors?

I’ve been reading a little bit about our latest school shooting here in the U.S. and I noticed something that nobody else apparently has. The guy who committed the crime was a milk man. A milk man. What year is this?

I realize this is a relatively unimportant question given the gravity of the situation, but this ain’t exactly the New York Times here so I’m going to ask it. Why are their still milk men? I live in Uniontown, Ohio which, if you haven’t been here, is often mistaken for the filming location of the movie Deliverance. And even we got rid of milk men well over 20 years ago. I have quite literally been stuck behind horse-drawn carriages on the road I live on numerous times, but I have at least eight stores that sell milk within two miles.

It does shock me that anyone would do something as horrible as shoot a bunch of innocent girls though, I must admit, our media is doing a bang-up job of desensitizing me even to that. But it doesn’t shock me, when something like this occurs, that a milk man was the perpetrator. If you aren’t crazy when you choose that job you’re sure to become so after a few years of it.

Think about it, life must be pretty hard for a milk man. He gets up early every morning, hops in his rickety old wagon, and delivers pints of overpriced milk for very little pay to a group of people so backwards that they don’t even have gas stations at which to buy it themselves, all the while fearing the encroachment of convenience store technology. Many American workers are currently afraid of losing their jobs to globalization. If you think cheap Chinese labor is scary, try competing against 7-11. A milk man spends his entire life one Circle K away from poverty.

Also of note is the fact that the gun toting milk man told the kids he was killing them because he was angry at God. I find it odd that in a world where so many people kill others because they think God (or, as they usually call him, Allah) would want them to, here is one person killing because he thought God would not want him to. Most people kill to make God happy, this guy killed to make God mad. Only in America.