Michael Tchong

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T-shirts, Jeans and Sneakers: The Global Fashion Uniform


Have you ever wondered how America became so successful at unifying the world’s wildly diverging clothing fashions? The Cotton Industry reports:

Denim jeans represent an estimated $60 billion global market for retailers. Denim jeans can be found in the wardrobes of 96% of U.S. consumers who, on average, own seven pairs.

The history of jeans is even more fascinating:

In 1853, a Bavarian immigrant named Levi Strauss, an astute merchant in San Francisco, responded to the gold-rush need for tough miner’s clothes. Strauss switched to denim (from serge de Nimes, a twill made in southern France) and had it dyed in reliable, uniform indigo. By the 1860s, Levi Strauss’s blue pants were daily wear for miners and farmers and cattlemen throughout the West. In 1873 he bought, for $69 — the price of the patent application — an idea from a Russian immigrant tailor in Reno for making miner’s pants stronger by riveting the critical seams. They were nicknamed jeans after the city of Genoa, where sailors wore blue cotton canvas.

And how about t-shirts? They were first used by the U.S. Navy during or after the 1898 Spanish American War. Little did anyone know back then that this would become a $23 billion industry.

And then we have sneakers. In 2011, athletic shoes were a $75 billion global market, all thanks to U.S. Rubber Company:

Around 1892, the U.S. Rubber Company came up with more comfortable rubber sneakers with canvas tops, called Keds. By 1917, these sneakers began to be mass produced. (They got the nickname sneakers because they were so quiet, a person wearing them could sneak up on someone.)

All are part of the Casual Living Ubertrend, a wave cascading through life making it less formal, with consumers opting for more convenience over style.

Who Likes Their Jobs. And Who Doesn’t.


The New York Times:

The top 200 chief executives at public companies with at least $1 billion in revenue actually got a big raise last year. Research, conducted for Sunday Business by Equilar Inc., the executive compensation analysis firm, found that the median 2012 pay package came in at $15.1 million — a leap of 16% from 2011.

Meanwhile USA Today reports:

A little more than half of workers (52%) have a perpetual case of the Mondays — they’re present, but not particularly excited about their job. The remaining 18% are actively disengaged or, as Gallup CEO Jim Clifton put it in the report, “roam the halls spreading discontent.”

So, seven out of 10 Americans are unhappy at their job, but you can bet that those $15-million paychecks make CEOs very happy.

Why do you think that 70% of American workers are unhappy? Could it be they’re disenchanted with making essentially the same money as in 1973 — 40 years ago?

According to the Census figures, the median annual income for a male full-time, year-round worker in 2010 — $47,715 — was virtually unchanged, in 2010 dollars, from its level in 1973, when it was $49,065, said Sheldon Danziger, professor of public policy at the University of Michigan.

Overpaid CEOs are draining the lifeblood out of ordinary Americans. But that’s not good enough, so we need to keep shipping jobs overseas.

What’s going to be the spark that blows up this tinderbox?


Is America Becoming Chicken Little?


If you’re wondering about my previous post, which put the vast amount of cash being hoarded by U.S. corporations at $1.5 trillion, here’s more food for thought.

The Wall Street Journal reports:

Americans have long taken pride in their willingness to bet it all on a dream. But that risk-taking spirit appears to be fading.

The Journal cites three underlying reasons that propel this negative trend:

  • Companies add jobs more slowly, even in good times. In the eight recessions from the end of World War II through the end of the 1980s, it took the U.S. a little more than 20 months, on average, for employment to return to its prerecession peak. But after the relatively shallow recession of the early 1990s, it took 32 months for payrolls to rebound fully. After the even milder recession of 2001, it took four years. Today, nearly four years after the end of the last recession, employment has yet to reach its precrisis peak.
  • Investors put less money into new ventures. Total venture capital invested in the U.S. fell nearly 10% last year and has yet to return to its prerecession peak, reports PricewaterhouseCoopers. The share of capital going to new business ventures has fallen even faster and is more concentrated: Silicon Valley took 40% of venture funding in 2012, up from about 30% in the late 1990s. Risk-taking seems more concentrated than years past, by industry and by region. Coastal cities, such as San Francisco and Boston, and college towns like Boulder, Colo., and Austin, boast vibrant communities of entrepreneurs and investors. But this leaves most of the country struggling, since cities with high levels of entrepreneurial activity demonstrate significantly better job growth than those that rely more heavily on existing businesses.
  • Americans start fewer businesses and are less inclined to change jobs or move for new opportunities. In 1982, new companies, those in business less than five years, made up roughly half of all U.S. businesses. By 2011, they accounted for just over a third, according to census data. Over the same period, the share of the labor force working at new companies fell to 11% from more than 20%. The decline in risk-taking is also reflected in U.S. migration: Americans move less often, with rates of interstate migration falling for at least 20 years, according to census data. They also have less workplace wanderlust: 53% of adults last year held the same job for at least five years, up from 46% in 1996, according to the Labor Department. The share of workers who voluntarily left their jobs in a given year plummeted to 16.1% in 2009 from 25.2% in 2006 and remains well below prerecession levels.

Concludes The Journal:

The changes reflect broader, more permanent shifts, including an aging population and the new dominance of large corporations in many industries. They also may help explain the increasingly sluggish economic recoveries after the past three recessions, experts said.

And those large corporations are sucking the life-blood out of America by “streamlining operations” (laying people off), “embracing and extending” (stealing competitors’ ideas), “innovating” (finding new ways to boost profits by cutting corners and reducing quality), and subscribing to the business philosophy of “corbesity” (the relentless quest of corporations to become more corpulent and slower, while, frighteningly, concentrating global wealth).

If this is the wave of our business future, I am afraid we’re in for a very rough ride.

U.S. Companies Awash in Cash


USA Today notes:

Companies overall in 1980 had $234.6 billion cash, adjusted for inflation, according to a paper by Amy Dittmar at the University of Michigan’s Stephen M. Ross School of Business and Ran Duchin at the University of Washington’s Michael G. Foster School of Business. That’s about 12% of assets. Cash holdings grew to $1.5 trillion, or 22% of assets, in 2011.

U.S. companies could cut every single person in America a check for $4,745, if they distributed all that cash today. And remember, that is 2011 data, the figure is probably much higher today.


The Hospital Scam


Ever wonder how hospitals ever deviated so far from their stated goal of helping the sick? We do too. Here’s more data to make you spit up your hospital dinner:

The New York Times reports:

A hospital in Livingston, N.J., charged $70,712 on average to implant a pacemaker, while a hospital in nearby Rahway, N.J., charged $101,945.

In Saint Augustine, Fla., one hospital typically billed nearly $40,000 to remove a gallbladder using minimally invasive surgery, while one in Orange Park, Fla., charged $91,000.

In one hospital in Dallas, the average bill for treating simple pneumonia was $14,610, while another there charged over $38,000.

Data being released for the first time by the government on Wednesday shows that hospitals charge Medicare wildly differing amounts — sometimes 10 to 20 times what Medicare typically reimburses — for the same procedure, raising questions about how hospitals determine prices and why they differ so widely.

And my favorite abomination, complete with sorry excuse:

For example, billing records showed that Keck Hospital of the University of Southern California charged, on average, $123,885, for a major artificial joint replacement, six times the average amount that Medicare reimbursed for the procedure and a rate significantly higher than the average for other Los Angeles area hospitals.

“Academic medical centers have a higher cost structure, and higher acuity patients who suffer from many health complications,” the hospital said.

The hospital added that it wrote off any difference between what it charged and what Medicare paid, rather than seeking to collect it from patients. Centinela Hospital Medical Center, also in Los Angeles and owned by Prime Healthcare Services, charged $220,881 for the same procedure.

Add to that, this report published in USA Today:

U.S. physicians and hospitals are in the digital dark ages when it comes to using the latest mobile devices and Internet services to deliver patient care.

As a result, U.S. hospitals are absorbing an estimated $8.3 billion annual hit in lost productivity and increased patient discharge times, according to a Ponemon Institute survey of 577 health care professionals, released Tuesday to CyberTruth.

What do you think we can do about this? Sound off in the comments below.


Surveillance Is Small Price to Pay for Security


In the wake of the Boston Marathon bombing, a survey finds that Americans are more accepting than ever of continuous surveillance.

Writes The New York Times:

Americans overwhelmingly favor installing video surveillance cameras in public places, judging the infringement on their privacy as an acceptable trade-off for greater security from terrorist attacks, according to the latest New York Times/CBS News Poll.

A week after the Boston Marathon attack, which was unraveled after the release of video footage of the two suspects flushed them out of hiding, 78% of people said surveillance cameras were a good idea, the poll found.

Meanwhile Fortune reports:

Video surveillance is big business. Expect it to get bigger. After law enforcement used closed-circuit television (CCTV) cameras to help identify last week’s Boston bombing suspects, lawmakers and surveillance advocates renewed calls for increased numbers of cameras nationwide.

A ReportsNReports analysis estimated the size of the smart surveillance and video analytics global market at $13.5 billion in 2012; it’s expected to reach $39 billion by 2020.

The surveillance market is propelled by Voyeurgasm, the “I Like to Watch” Ubertrend.


Facebook Home

After many years of recurring rumors, Facebook today finally opened its kimono to show off a Taiwanese collaborator’s “Facebook phone.” Only it turns out not to be a real Facebook phone but a social layer on top of Android that replaces the app-centric world of mobiles with one that revolves around people.

Facebook with 1.06 billion active daily users has massive clout. Company Founder Mark Zuckerberg explained why the company did not create its own phone: “A great phone might sell 10 or 20 million units at best, but our community has over 1 billion people. Even if we built a really good phone, we’d only be serving 1%.”

While a 1-2% user penetration is minuscule for Facebook, its chosen partner, HTC, relishes the thought of selling 10 to 20 million phones in its battle against arch enemies Samsung and Apple.

Zuckerberg’s penetration estimates are supported by research. Pew reported in December that just half of the population of top social networking countries, the U.K. (52%) and U.S. (50%), use social media. And active use of social networks is very concentrated. Just 10% of Twitter users post 90% of all Tweets, a Harvard Business School study discovered.

Besides the challenge of teaching users how to navigate a people-centric interface, there are other obstacles. GigaOM’s Om Malik worries that Facebook’s repeat offender history “destroys any notion of privacy.”

Dan Frommer, however, believes that casual users who don’t care whether they buy Android or Apple will be a good target for the HTC First or Facebook’s Home app. The Verge also found Facebook Home’s clean design and clever “chat heads” appealing. Like?

Frugality Is the New Reality

You could have guessed the results of this survey, but it’s nonetheless indicative how the U.S. mindset has changed since the recession struck in 2007. The Fidelity Investments “Five Years After” survey reports that the crisis has forced people to regain control of their financial lives.

Here are highlights of a survey of nearly 1,200 investors:

  • 56% say their financial outlooks have changed from “feeling scared or confused” at the beginning of the crisis to confident or prepared five years later.
  • On average, survey households lost 34% of the value of their total assets, with 35% experienced a large drop in income.
  • 49% have decreased their amount of personal debt.
  • 42% have increased the size of the emergency fund they’ve established to meet large unexpected expenses. Among those self-reporting as scared, only 24% have a bigger emergency fund than they had pre-crisis.
  • 78% of those saying they’re prepared and confident said the financial actions they’ve taken are permanent changes to their behavior.

The upshot of this study is that, at least until the economy roars again, most Americans seem to have adopted permanent behavioral changes that require recalibrating the importance of consumer spending in the economy.

What You Need to Spend on Innovation, Michael Dell!

Pointed observations by Roman Stanek on TechCrunch:

I must admit that I nearly spit out my morning coffee when I overheard a rumor that — on the heels of the expectation of going private — that Mr. Dell told his employees: “Welcome to the world’s biggest startup.” After founding three startups, I can tell you with confidence that there is no way Dell has the culture or the ass-kicking visionary à la Steve Jobs that it needs to be even remotely considered a startup.

The problem with Dell is that it doesn’t spend enough money on R&D, the lifeblood of innovation:

For startups, that means easily spending over 50% of revenue just on R&D. Even when they’re out of the startup stage, innovative companies continue to spend roughly 12% of their revenue on research and development. And what’s Dell’s track-record on investing in innovation?

According to its public filings, Dell consistently spent 1-2% of revenue on R&D — this at a time when Wall Street traditionally likes to see that 10% R&D investment. Will Dell suddenly start spending at the levels it needs to? It could, but I’d sooner expect to see a magic unicorn than something innovative from Dell.

Hi Michael Dell, if I were you, “I’d shut it down and give the money back to the shareholders.”

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