BORN ON 2ND BASE?

 At one time or another, you probably have heard the term “born on 3rd base.” Although there are several stories about its origin the term is widely attributed to football coach Barry Switzer who once said at a news conference, “some people are born on third base and go through life thinking they hit a triple.” 

Today, we will take on a group a bit further down the wealth scale. I dub them “born on 2nd base” while a long-time reader of MR calls them “the top 19%” who are ruining the chances of many Americans for upward mobility. My frequent MR reader said, “most of us despise the 1% but I really resent the next rung usually referred to as the upper middle class". I responded so you mean people born on 2nd base instead of third? He laughed and said I had captured it well. I found it interesting in that the Federal Reserve has recently released a report stating that as of December 2022, some 18% of American households had a net worth more than one million dollars. Given the rise in both equity and real estate values, we are probably up to 20-21% of total households hitting the now relatively meaningless statistic.

Is this reader alone in his anger? Nope. Over the last 18 months, I have heard from several readers who vented about how the upper middle class is practically building a moat around themselves. Here are some of their gripes:

1) Legacy college entrance—for years, elite colleges and universities tended to favor children of alumni. The time-honored reason was that the family would continue to be generous givers to the institution and the next generation would do that as well. Also, the noveau-riche could land a spot for a son or daughter with a seven-figure contribution. Some of this has gone by the boards as the most prominent institutions have huge endowments and face strong media scrutiny. Smaller colleges continue the practice as they are struggling for cash and are under the media radar that the Ivies and other leading schools face.

2) Upper middle-class parents send their children to SAT prep courses. Others take them on frequent foreign trips that widen their perspective and sharpen their foreign language skills. Most families cannot afford this.

3) Internships—This is generating some noise. An internship at the right firm is a terrific resume builder for a college student. So, Mom or Dad asks a friend to take their child on for a summer and often they will bring the friend’s child into one of their companies. This type of closed loop really occurs. A bigger problem is the coveted internships in NYC or in Washington, DC. Well-heeled parents can put their student up in expensive and safe digs for the summer. People of more modest backgrounds cannot do this. Many internships used to be non-paid. That has changed and some allow for college credit to be awarded for certain jobs. This tends to exclude all but the millionaire plus group if the internship is out of town.

4) Living in neighborhoods or counties with strong public schools

This one does not get a lot of media notice but, over the years, I have certainly heard many discuss it. Once, years ago, at a luncheon, a media rep said that he was moving to a suburban area with great schools. A colleague berated him saying why not stay in your current jurisdiction and fight for better schools. The rep said “why should I use my daughter as an experiment? It may take 10-15 years to turn the current school system around. If we move, we will pay higher property taxes, have a higher mortgage payment, and I will have a longer commute. But, I am giving my child a chance to get in to a top rated school. I make no apologies for that. I love my daughter!” Tied into this is that affluent neighborhoods fight against high density housing entering their domain. Part of may be to maintain strong property values but some could be racist tendencies.

5) Tax policies that favor the affluent—few people except some extreme progressives bring this up. Mortgage interest in the US is largely tax deductible. I have received several e-mails from readers saying that it is unfair to give homeowners such a tax break. Gently, I counter that it would be damn near impossible to strip that rule away with nearly two thirds of American households benefiting from it. Yes, it is not allowed in Canada but our friends to the north have never had this loophole.

Do children of the affluent but not super rich have an advantage over the middle and working class? Absolutely! Yet, they are often the ones reading to their children every night, driving them to soccer games or music class and being deeply involved in their youngsters lives. They are only wanting what is best for their children. This is an integral part of the American dream of having your children living better than you.

Is it unfair? Yes, those born on 2nd base do have advantages that most do not. I simply do not see it as a conspiracy against the underprivileged as some of my angry readers do. 

If you have any ideas on how to level this playing field, please drop me an e-mail.

You may contact Don Cole directly at doncolemedia@gmail.com or leave a message on the blog.

MUSINGS ON STATISTICS

 Author and humorist Mark Twain allegedly once said, “There are three kinds of lies—lies, damned lies and statistics.” It often gets a laugh despite advances in research over the last 150 years.

I spent a large part of my career working with numbers and still do. Statistics still fascinate me yet, sadly, I see them misused increasingly in the media and more glaringly in social media.

My first real encounter with statistics came when one of my older brothers took a college course in statistics. We discussed it quite a bit and, as a high school student, I bought a copy of HOW TO LIE WITH STATISTICS by Darrell Huff. The book was published in 1954 and by the time I purchased and devoured it, the year was 1966 and it had sold hundreds of thousands of copies.

Huff was cynical about statistics and stressed how marketers could be selective about what you were shown in making decisions. I vividly remember one effective example in the book. He talked of a survey taken in 1950 regarding the income of Yale graduates in the class of 1924. The average income reported was several times that of the national average. One might say no surprise as many Yale graduates were and are among America’s elite. Huff probed a bit—what of those who did not respond? Were they struggling compared to their classmates? Embarrassed by their relative lack of financial success? This was my first exposure to non-response error, and he did a better job explaining it than any college or graduate school professor that I ever had.

In college, I did fine in Statistics and firmly understood the difference between average and median which many in the media and business world still do not grasp or worse, use the two terms interchangeably.

In the advertising and marketing world where I spent the bulk of my career, the response to any research presented was varied. A wealthy businessman who owned 20 fast food restaurants chewed out a young and earnest member of my negotiation team by saying her buy was worthless as he did not watch the programs on the TV schedule. I had had enough and told him that he was a multi-millionaire, and it was logical that he was watching vastly different programs than his 18-34 target audience. He got red in the face, but his fellow members of the advertising co-op backed me up. Sales moved up nicely and he stayed quiet at the next meeting.

Other clients told me that all Nielsen ratings were nonsense as they had never been in a survey. A primer on sampling theory would have accomplished little.

Over the last 50 years, I have seen good, mediocre and poor studies. Here are a few things to keep in mind:

1) When you see the research, take your own temperature. How do you react to it emotionally? If it is a totally new topic, you are likely to be cool-headed. I have seen CEO’s or senior management bristle when research says consumers have issues with their product or service. “All our customers love us” was a line heard frequently yet their market share was not high. A new CEO was likely to be much more open to hearing bad news than their predecessors as they were there to turn things around. I have seen the same thing with shareholders. If an analyst posts a less than positive forecast for a stock that they own, often the response is that the category specialist is an idiot.

2) Try to separate your personal feeling from what the larger sample is telling you. I saw broadcasters dismiss cable and then digital possibilities as they felt their growth would hurt their livelihood. They were not objective at all.

3) Ask if anything is missing from the data and how was it asked. Most do not. 

4) I realize this is hard for all of us but try hard to keep an open mind and remain curious. Most people are not, and this is deadly in our era of rapid change.

I could not on forever and  provide some colorful examples of reaction to research, but I think it best if I take those stories to the grave.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

The NFL and Private Equity

 In a few days, the National Football League (NFL) season will begin. Millions of Americans are chattering about the upcoming season and getting involved with their fantasy football groups. For a business news junkie such as I, what turned my head was a rule change that will let private equity firms** buy in to NFL franchise ownership.

There are some caveats:

1) A maximum of 10% of any club can be owned by private equity funds. More than one fund can be involved but the total may not exceed 10%.

2) Pension funds and sovereign wealth funds (often foreign governments) are not allowed.

3) The controlling owner of a team still must maintain a minimum of 30% ownership. Additionally, no team may have more than 25 total owners.

4) Private equity will have no voting power. 

5) Personnel decisions of any magnitude will not be made or involve the private equity folks.

6) A private equity fund can invest in as many as six NFL teams but must hold at least a 3% equity position on each team it chooses. Also, the holding cannot be sold for a minimum of six years.

7) A careful review process will be taken to be sure that every private equity group passes muster with the NFL.

Okay, so who cares?

Well, actually this is nothing new in the world of sports. The MLB, NBA, NHL and Men and Women’s Soccer leagues all allow 30% ownership of a franchise by private equity. The NBA, NHL, and MLS also allow a single private equity fund to own 20% of a franchise while the MLB and NWSL limit it to 15%.

Why is this being done? For years, major league sports franchises were often referred to as a plaything of a rich businessperson or family. As the value of franchises have soared, particularly in the NFL, it may be hard to find new buyers. 

As an aside, I have often found people refer to successful people as billionaires. Well, a billion is one thousand million. According to FORBES, there are approximately 2,780 billionaires on earth with the U.S. having just over a quarter. The number floats a bit depending on equity and real estate market conditions. So, there are not that many people out there who can buy a franchise outright. Some have no interest in it, others wish to keep a low profile, and others do not want to sell lucrative business interests or take a huge loan to buy the franchise. 

Also, prices are moving up smartly. Just last year, the Washington Commanders sold for an estimated $6 billion. Other franchisees are easily worth significantly more and several years from now could easily double in value.

Selling off a portion of your club without losing any voting control “unlocks” some value for the franchise owners. Rumblings are that stadiums could get a facelift or facilities could be upgraded. The private equity folks are locked in for six years and, by then, the franchise could be worth much more.

Why get involved without voting rights? Owning a franchise or a small piece of one is the armchair dream of many. I did it myself. Back in the 90’s, the then Cleveland Indians (now Guardians) went “public”, and you could buy shares. As a child, my dad, a Midwesterner, generally only took us to Fenway Park in Boston when the Cleveland ballclub was visiting. It stuck with me. So, as a bit of a lark, I bought a few shares. It felt great even though I was not sent free playoff tickets. About 15 months later, I sold out for nearly triple my money when the club was purchased. I was no longer an “owner”, but it was a great, fun, lucky and somewhat lucrative experience. 

So, some private equity groups may want to participate as voyeurs or for diversification or thinking that the long-term payout could be good when a franchise was sold.

Interestingly, many observers feel that private equity is often unsavory. You read that many are asset stripping operations where they buy a company, sell off divisions or products, pocket some money and employees are left high and dry in a firm that is greatly diminished in size or future prospects. Don’t believe it? Here is what Warren Buffett and the late great Charlie Munger had to say about it at last year’s Berkshire Hathaway annual meeting:

https://www.youtube.com/watch?v=r3_41Whvr1I

Or, for a deeper dive, read the recent book of my favorite financial journalist, Gretchen Morgenson—THESE ARE THE PLUNDERERS: HOW PRIVATE EQUITY RUNS—AND WRECKS--AMERICA.

With the NFL, to me, there is a likely twist. NFL owners are largely tough minded and smart billionaires. Maybe they are inviting private equity players into their tents but the owners may benefit far more you might think.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

**What is private equity? The SEC defines it as “a pooled investment where the investor pools together the money invested in the fund by all the investors and uses that money to make investments on behalf of the fund. …….They often focus on long term investment opportunities that take time to sell with an investment time horizon typically of 10 or more years.

American Wealth Update Plus Global Gini Statistics

 Earlier this week, I put up a post on CEO Compensation. The mail was muted in size but quite passionate. Some said it was an interesting read, others said it made them think, and a few wrote that it made them angry. Others said that is the way of the world, so why mention it? One was a real gem, and I have permission to repeat it here. The tart comments were: “Cole, I always thought you were a free market guy. Now I realize that you are a Bolshevik bomb-thrower.”

Well. Anyone who knows me even a little realizes that I would never toss a Molotov cocktail into the trading room of a hedge fund or the partner’s dining room of an investment banking firm. 

Inequality has always been around and likely always will be to an extent in any capitalist society. In this post, I will address the issue with data in two ways:

1) Recent Federal Reserve figures on Levels of Wealth-by-Wealth Percentile Groups (the clumsy title is theirs, not mine!).

2) Gini Coefficients estimated levels of inequality across the globe. 

1) Let us start in the USA with data released earlier this year from the St. Louis Federal Reserve Bank. I will use percentages as the endless zeros of billions and trillions may confuse some readers.

Here goes:

The top .1% (or one 10th of one percent controls 27.6% of total US assets (wealth).

The top 1% which, of course, includes the top .1%, has 44.3% of the wealth.

The top 10% has 62.3% of the wealth.

The 50-90% percentile (often referred to as the middle or upper middle class near the 80-90 range) has slightly less than a third weighing in at 32.1%.

Finally, the bottom 50% have 5.6%.

Source: St. Louis Federal Reserve Bank, 2024

All these figures may bounce a bit depending on equity and real estate markets month to month ups and downs. The trend is clear that a small group, including many of you MR readers, are doing very well while most Americans are treading water, and some are losing ground. Consider that 34% of Americans are renters and approximately half have no equity holdings either directly or in a 401k, Roth, or mutual fund. 

Some say that the next bear market in stocks or real estate will right the ship quite a bit. Yes, if you have a $1 billion and you take a 30% haircut, you have lost on a relative basis, but you are still firmly placed in the .1%. And when markets rebound (as they always tend to do), you benefit while people not in the game are still leading a largely hand to mouth existence. 

2) Okay, how does the good old USA compare to other nations? Well, the data is difficult to compare but I have found that the best RELATIVE yardstick to use is the Gini Coefficient. 

What is the Gini Coefficient? Way back in 1912 Italian statistician Corrado Gini came up with a way of measuring income distribution within a society. It is a fairly simple concept. If one person (family) earned all the money in a country and all others earned nothing, the Gini coefficient would be 1. Conversely, if there were perfect distribution, the statistic would be zero. It is a useful but not perfect measure of income but not asset wealth as the Federal Reserve data is. A couple of problems with using it is that GDP and income data is difficult to ferret out in developing countries. Also, some analysts state that it understates inequality as wealthy folks in unstable countries often have assets hidden in offshore tax havens.

Still, here are some stats from the World Bank.

The least egalitarian places on earth (highest Gini Coefficient) include:

Nation Gini Score

South Africa 63.0

Namibia 59.1

Suriname 57.9

Zambia 55.9

Belize 53.3

Brazil 52.9

Columbia 51.5

Angola 51.3

A score over 50 is looked upon as a danger zone with extreme inequality.

Those with the lowest Gini Coefficient are all in Europe. Some examples are:

Nation Gini Score

Norway      22.7

Slovakia      23.2

Slovenia      24.0

Moldova      25.7

Netherlands      26.0

Belgium      26.0

Iceland      26.1

Several years back, the Scandinavian countries topped the list. Now, only Norway is a clear leader. They put much of their North Sea oil riches in a permanent fund that covers all medical and educational expenses. Income and sales taxes are high, but people live quite well. 

What about the NAFTA countries? The United States weighs in at 40, Canada 32, and Mexico 45. 

In Europe, some prominent names are Germany 31.7, United Kingdom 32.6, and Ireland 29.2. Surprisingly, two small but wealthy countries, Luxembourg and Switzerland are almost tied at 32.7 and 33.1 respectively.

Also, Bulgaria is at 40.5 edging out the 40.0 score of the United States. So, a nation’s size is not a big factor here. 

Nations with low Gini coefficients tend to either offer cradle to grave security with their provider state or are eastern European countries coming in to their own and massive fortunes are rising but are not long standing given former USSR rule.

How to resolve it? Sharply higher taxes that are enforced. This is difficult politically and economically would likely stifle entrepreneurship and growth.

If you read economic history as closely as I have (yes, I am a bore) you will see that other than the period after World War II up to the 80’s, there has always been high levels of inequality.

In 19th century America, the Carnegies, Vanderbilts, Morgans and railroad barons had a sharply disproportionate share of the nation’s wealth. The same was true in Britain during the Industrial Revolution. Go back 100-200 more years and you see that the nobility lived well while the peasantry had a hard knock life. So, today’s skew is not outside of historical parameters. The immediate post 1945 decades were.

Politicians will discuss this a great deal this year across the globe. My hope is to give you some facts to weigh their comments. 

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

 

Earlier this week, I put a post on CEO Compensation. The mail was muted in size but quite passionate. Some said it was an interesting read, others said it made them think, and a few wrote that it made them angry. Others said that is the way of the world, so why mention it? One was a real gem, and I have permission to repeat it here. The tart comments were: “Cole, I always thought you were a free market guy. Now I realize that you are a Bolshevik bomb-thrower.”

Well. Anyone who knows me even a little realizes that I would never toss a Molotov cocktail into the trading room of a hedge fund or the partner’s dining room of an investment banking firm. 

Inequality has always been around and likely always will be to an extent in any capitalist society. In this post, I will address the issue with data in two ways:

1) Recent Federal Reserve figures on Levels of Wealth-by-Wealth Percentile Groups (the clumsy title is theirs, not mine!).

2) Gini Coefficients estimated levels of inequality across the globe. 

1) Let us start in the USA with data released earlier this year from the St. Louis Federal Reserve Bank. I will use percentages as the endless zeros of billions and trillions may confuse some readers.

Here goes:

The top .1% (or one 10th of one percent controls 27.6% of total US assets (wealth).

The top 1% which, of course, includes the top .1%, has 44.3% of the wealth.

The top 10% has 62.3% of the wealth.

The 50-90% percentile (often referred to as the middle or upper middle class near the 80-90 range) has slightly less than a third weighing in at 32.1%.

Finally, the bottom 50% have 5.6%.

Source: St. Louis Federal Reserve Bank, 2024

All these figures may bounce a bit depending on equity and real estate markets month to month ups and downs. The trend is clear that a small group, including many of you MR readers, are doing very well while most Americans are treading water, and some are losing ground. Consider that 34% of Americans are renters and approximately half have no equity holdings either directly or in a 401k, Roth, or mutual fund. 

Some say that the next bear market in stocks or real estate will right the ship quite a bit. Yes, if you have a $1 billion and you take a 30% haircut, you have lost on a relative basis, but you are still firmly placed in the .1%. And when markets rebound (as they always tend to do), you benefit while people not in the game are still leading a largely hand to mouth existence. 

2) Okay, how does the good old USA compare to other nations? Well, the data is difficult to compare but I have found that the best RELATIVE yardstick to use is the Gini Coefficient. 

What is the Gini Coefficient? Way back in 1912 Italian statistician Corrado Gini came up with a way of measuring income distribution within a society. It is a fairly simple concept. If one person (family) earned all the money in a country and all others earned nothing, the Gini coefficient would be 1. Conversely, if there were perfect distribution, the statistic would be zero. It is a useful but not perfect measure of income but not asset wealth as the Federal Reserve data is. A couple of problems with using it is that GDP and income data is difficult to ferret out in developing countries. Also, some analysts state that it understates inequality as wealthy folks in unstable countries often have assets hidden in offshore tax havens.

Still, here are some stats from the World Bank.

The least egalitarian places on earth (highest Gini Coefficient) include:

Nation Gini Score

South Africa 63.0

Namibia 59.1

Suriname 57.9

Zambia 55.9

Belize 53.3

Brazil 52.9

Columbia 51.5

Angola 51.3

A score over 50 is looked upon as a danger zone with extreme inequality.

Those with the lowest Gini Coefficient are all in Europe. Some examples are:

Nation Gini Score

Norway      22.7

Slovakia      23.2

Slovenia      24.0

Moldova      25.7

Netherlands      26.0

Belgium      26.0

Iceland      26.1

Several years back, the Scandinavian countries topped the list. Now, only Norway is a clear leader. They put much of their North Sea oil riches in a permanent fund that covers all medical and educational expenses. Income and sales taxes are high, but people live quite well. 

What about the NAFTA countries? The United States weighs in at 40, Canada 32, and Mexico 45. 

In Europe, some prominent names are Germany 31.7, United Kingdom 32.6, and Ireland 29.2. Surprisingly, two small but wealthy countries, Luxembourg and Switzerland are almost tied at 32.7 and 33.1 respectively.

Also, Bulgaria is at 40.5 edging out the 40.0 score of the United States. So, a nation’s size is not a big factor here. 

Nations with low Gini coefficients tend to either offer cradle to grave security with their provider state or are eastern European countries coming in to their own and massive fortunes are rising but are not long standing given former USSR rule.

How to resolve it? Sharply higher taxes that are enforced. This is difficult politically and economically would likely stifle entrepreneurship and growth.

If you read economic history as closely as I have (yes, I am a bore) you will see that other than the period after World War II up to the 80’s, there has always been high levels of inequality.

In 19th century America, the Carnegies, Vanderbilts, Morgans and railroad barons had a sharply disproportionate share of the nation’s wealth. The same was true in Britain during the Industrial Revolution. Go back 100-200 more years and you see that the nobility lived well while the peasantry had a hard knock life. So, today’s skew is not outside of historical parameters. The immediate post 1945 decades were.

Politicians will discuss this a great deal this year across the globe. My hope is to give you some facts to weigh their comments. 

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

 

CEO COMPENSATON

 You see and hear a great deal about inequality these days. It has become a hot political issue to some, but many seem to take the “I’m doing okay” attitude and ignore what has been going on in recent decades. 

Every year or so, a stream of articles are released across the media about how Chief Executive Officer (CEO) compensation is outrageously high. The statistic that is used most often is that the average CEO of a Fortune 500 company has a compensation package that is 360 times greater (some say 320 times) than the average employee of that firm.

Eye popping numbers such as that certainly get people’s attention and make for good copy. The question few people ask is how did this happen over the past several decades? I have a few theories that I will share with you. Sadly, I do not see a workable solution to the issue. 

If you study annual reports of leading companies, they often give detailed information on the different committees that outside members of the board of directors serve on in the organization. Look closely and two things pop out. First, the CEO of the company often serves on the board of directors of a member or two of his or her own board. Interlocking directorates are a real thing. Dig a bit deeper and you sometimes find that their “friend” who has the CEO as a director in his or her firm is surprisingly often on the compensation committee to determine the salary, bonus and perks of those in the executive suite of the corporation. Or perhaps a CFO or Vice Chairman is on the friend’s board.

So, if you have a buddy or two on the compensation committee, who is also the CEO or senior executive of a company of which you are a director, your compensation will likely not be “light” when it comes time for the group’s recommendation for your next year’s salary or bonus.

If you speak with many people about this apparent conflict of interest, they smile and often say that the problem can be alleviated by hiring an executive pay compensation firm. This, to me, is laugh out loud funny. Think about this for a moment. If a compensation firm continually low balls (translates provides realistic) compensation package for a CEO word gets out and the firm suddenly has fewer clients. They often provide recommendations by “benchmarking” what leadership is getting in companies of similar size or competitive category. So, recommendations of these non-partisan experts often maintain the status quo. The compensation committee on the corporate board do not often enough buck the compensation firm’s recommendations.

An argument that some people use is in defense of lush compensation is that today more is expected of a large company CEO. Yes, the world is more complicated. A CEO must have a better grasp of economics, world events (most huge companies operate globally), and public relations than leaders in the past. They also have need to be media savvy. With the growth of CNBC and Bloomberg, CEO’s have become celebrities and cannot behave in public as some 19th century robber barons did. While this is all true, they have teams of experts around them, and they are better educated than most leaders a generation or two ago. 

For a few decades now, Warren Buffett has told us that when you buy shares in a company take the attitude that you are an owner of the firm (because you are!). As is often the case, I agree with the great Buffett. So, as an owner, read the annual report and spend some on the compensation of those in the executive suite. If the company had a poor or mediocre year, should the CEO receive a lusty bonus? Was compensation tied to stock market valuation of the company and you noticed that the company bought back many millions in shares even though the stock was trading at an all-time high? Does the employment agreement contain an enormous golden parachute that kicks in even if the CEO was fired for poor performance?

If you are an “owner”, read up on your company. People tell me that they only own 100, 500, or 1,000 shares. What can they do? Write a strongly worded letter to the board. Vote against what you deem to be exorbitant pay packages. After all, it is your money.

Some counter that the company has made them rich or comfortable. This is especially true in highly successful tech companies. They do not begrudge the founder or current leader eye popping salaries, bonuses or sweetheart stock options. I get that. Yet all 500 companies have not made their shareholders financially comfortable.

My long-term fear is that if the present trend continues more people will want Congress to set income caps for senior executives in publicly traded companies. Do you really want Senator Elizabeth Warren writing that legislation? I greatly admire how she took down some financial executives after the 2008 debacle. At the same time, I do not want her and fellow travelers interfering with the policies of US companies operating in a somewhat free market. Let the owners decide!

So, if you are a shareholder of any size, study how YOUR company is operating. You may be surprised at what you find.

If you would like to contact Don Cole directly, you may reach him at doncolem

What Is An Entrepreneur, Really?

 Let us begin today with a quick quiz? Name some entrepreneurs. The odds are the top-of-mind names will be some mix of Bezos, Jobs, Musk, Zuckerberg, and Gates. All such answers would be true but, despite what you see and hear from the media, they are only the tiniest sliver of entrepreneurs in both the United States and globally.

The 18th century economist/banker Richard Cantillon** appears to have been the first person who defined what an entrepreneur is. His definition is logical and deceptively simple and hinges on only two facts:

1) They work for themselves

2) They were willing to accept financial uncertainty that is a given in self-employment.

So, an entrepreneur does not have to be a Silicon Valley whiz kid who cashes out for a billion +dollars when his company goes public. A farmer, an owner of a car repair shop, a coffee shop operator are all entrepreneurs even if the media and population at large do not see it. They often live a precarious financial existence and most of their business ventures fail. Some make it but on the third or fourth try.

Today, most colleges and universities have a course or two in some form of entrepreneurship. The bigger universities and some MBA programs have a major or concentration allocated to the discipline. Some, with huge endowments and proximity to large Venture Capital pools, can get students introduced to deep pocketed players in tech. They have a smooth pitch deck at the ready and can last for a long time waiting for a break due to their parent’s affluence. On the other hand, the young dreamer from the hinterlands sleeps on someone’s couch (for a few thousand a month), showers at the gym and tries to have coffee with someone whom he thinks is a “player” in this exciting tech world. Very few of these unconnected people every breakthrough and launch their dream.

Millions of self-employed people do live their dreams. To me, they have always been the backbone of America. They pay their taxes, are involved with their communities and have their feet on the ground. 

They do not fair get coverage in the media. What is a hired worker? They get a regular salary, report to a boss, and operate within clearly and oftentimes carefully defined rules. The bootstrap entrepreneur just “has to be their own boss” and accepts the financial roller coaster ride that they are on in their small business.

I once exchanged e-mails with a professor at a VERY prominent university and told him how much I enjoyed his article about venture capital (VC). He thanked me but annoyed me by dismissing the smaller players when I asked him about the role of the smaller entrepreneurs. Then, he really annoyed me. He expressed open disdain for “lifestyle entrepreneurs” who are not dedicated to their business.

Okay, a lifestyle entrepreneur is an entrepreneur but on their own terms. The business is important to them but is not an all-consuming passion and is generally not how they define themselves. Let me give you a great example. Some years back, I was stuck in a small city working on a major project for a big client. Each day, I would get a morning coffee or a lunchtime sandwich at a small shop near my client’s headquarters. On my last day, I arrived around 2:15 pm as a client meeting ran really late. The lady who owned the shop was leaving. I said something to the effect that it was nice she could leave early. She laughed and said “I leave every day at this time. When I opened this business, I promised myself that I would always be there to pick up my children from school.” She went on to tell me that she work in corporate America for 15 years and hated it and was worried about her health. Now, she rises early and meets her baker to open the shop. Her husband gets the kids up, makes breakfast, packs their lunches and takes them to school. She says that she has a “normal” family life these days and loves it. Her business will never be franchised but she is happy. My distinguished professor does not see that her life is a success yet she is still very much an entrepreneur. There are many thousands such as she and they have my admiration and respect. The pompous professor does not get it.

Noted economist Joseph Schumpeter stated that much progress in a market economy came from a term he popularized dubbed “Creative Destruction.” Innovation crowds out the status quo and old habits are dropped as new ways to do business and make things emerge. 

I have no argument with the reality that Bezos, Jobs, Zuckerberg  and Gates have changed our lives in largely positive ways. Please do not forget (even though most media have) the millions of gutsy people who have gone out on their own and changed their little corner of the world. They, too, are entrepreneurs.

If you want to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

**Richard Cantillon was a fascinating character. Irish born, he was a successful speculator and banker in Paris. Then he got in involved with world class swindler John Law. He left Paris and moved to London. Angry people who said that he owed them money burned his house down. He was said to perish in the house. Others claim, a man looking very much like Cantillon popped up in remote Suriname sometime later calling himself Chevalier de Louvigny!

THE STEALTH MEDIA PLAYER—ANTENNAS

 Some 50 + years ago, I was a graduate student. One day, I received a call from my father. He asked when I was coming home and I said that weekend, for sure. He responded, “Great. We are having trouble with reception on the Boston stations (my parents lived in Rhode Island) and we need you to go up on the roof to adjust the antenna.” I said sure thing but when I hung up the phone, I thought about it. The last time I was on the roof he was with me, and we got the job done quickly. This time I would be alone as he was too ill to make the climb. I got it done and he only had me shift the antenna twice before all Providence and Boston stations had significant clarity. My big problem was dealing with getting off the roof, but I made it without incident. After I descended, I vowed never to climb the roof when I owned my own home. Rabbit ears would have to suffice.

Well, over the years, I have cleaned many a gutter but have stayed off the roof. When cable came to my jurisdiction, I eagerly signed up and let the provider scale the roof.  Antennas tended to be a bit passe as cable hit 70% of US households and satellite covering as much as 10% of (mostly rural) households.

Now, to the surprise of many, antennas have somewhat quietly been making a strong comeback in US TV households. Relax, young people. Your parents will not be asking you to take a precarious perch on their rooftops. Close to 70% of antennas sold in the states today are indoor units. They are fairly compact, square discs that are attached to a wall in reasonable proximity to the TV. You will not get cable channels but these little dynamos will deliver over the air (OTA) broadcast signals. You will receive ABC, CBS, NBC, and Fox. In many cases you will also obtain a fistful of “diginets.”

Why do people get the antenna? I asked my panel members and some acquaintances and here are some verbatim responses:

“I am not a huge sports fan, but I like golf and tennis and can see the major events on over the air tv. The antenna is great for me. I am currently watching the French Open Tennis Tournament. NBC’s coverage is enough for me.”

“I like NFL football and can get my fill on CBS, NBC, Fox and ABC. The Super Bowl also, of course.”

“As you know I live in a tiny media market (ranked between 180-200 according to Nielsen). I am on the city council, so I need to watch the local news all the time and the antenna allows me to do that.”

A few people said they liked it for local weather, but you can get that online almost everywhere.

The other big plus is savings. One MR loyalist wrote to me and said, “I used to spend $185 per month for cable and streaming. With my antenna, I have cut my bill to roughly $50 per month! My kids have taught me how to cancel Netflix and then get it back a few months later. Amazon TV comes with my Amazon Prime subscription. I also get Acorn and Britbox as I love the British fare and much of it goes back decades. I was paying for over 200 cable channels each month but only watched 7-8 at best.” It appears that this person is not unusual.

Over the last few years, estimates are that some 8 million US households have added antennas in both 2022 and 2023. This will not save over the air TV over the long pull as an advertising medium but will definitely wound cable.  Projections are that some 20 % of US TV households now have an antenna.

Finally, some of you are sure to be asking “what the hell are diginets?

There are 35-40 of these channels that are ad supported. Entries include Court TV, Bounce MeTV, Cozi TV, TDB, Dabl. They are positioned to advertisers as low-cost classic TV. They are actually old and sometimes very old reruns.

Americans are often good shoppers. In an inflationary environment, the humble antenna is saving money for millions and enhancing viewer satisfaction.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.