Sure Things and the Role of Chance

RAM Chips? Snowmobile Rentals? Can't Miss!

If foxes are so sly, then why do so many get hit by cars?


In the early days of the Desktop PC era, a friend of mine thought he'd play the role of Mr Smart Guy. He owned a walk-in/retail computer sales and repair business at the time, one of the first half-dozen or so in the Albany area. Although he had revenue streams coming in from a couple different directions, he was making easy money --- as in making it without really trying --- in one flukey little aspect of the operation. That business was memory chips.

Here's how it was going down: he'd buy 1MB RAM chips, a dozen or so at a time at first. This was back when your typical new PC might come equipped with 64K or 256K or 512K of core memory, mind you. The power users were quickly hitting the wall with such configurations, and off they would skip to my bud's store to add a megabyte or two. His register rang up consistent and healthy sales as a result. So many people were doing this routine all around the USA that all the hacker publications published the weekly price of 1MB RAM chips in each new issue. A new and highly watched commodity market was suddenly upon us.

So, for example, our boy might pick up the phone and order 1MB chip sets for $25/MB each. Don't shake your head: that was the kind of pricing that existed back then. But by the time it got to his shop and onto his bench to get plugged into a customer's motherboard, the published price in those magazines might have risen $10+ at retail. He was making money just by sitting on inventory for a few days. Who said inflation is a bad thing?

This was all the result of a classic supply and demand dynamic at work: the global electronics supply chain was not yet ramped-up for this tsunami of RAM-hungry PCs now hitting both the business and consumer markets all at once. It was caught with its pants down. The manufacturing infrastructure was not in place, demand far outweighed supply, and it was getting more unbalanced by the day. Too much money was chasing a rare good. Prices went up, and up, and up – eventually to $100/MB. Some of the pen-equipped geniuses out there were even predicting $1,000 pricing.

That was music to the ears of one cetain forward thinker. It was at this very point that our hero decided to go all-in, just like the riverboat gambler he fancied himself to be during our week night poker games at his home alongside the confluence of the Hudson and Mohawk. Yes, sir: it was time to spec-u-late!

He had family money, built up by the family's former eponymous business enterprise that had thrived locally for decades. Along with the cash, the family name also granted him easy credit. So, the next thing you know, the RAM chips weren't showing up at his back door in UPS trucks any more; they were coming by the tractor trailer lot. He stacked their boxes in the back room, plopped his feet on the table, lit a cigar and waited for this rocket ship to keep on course into outer space.

Well......., it didn't quite work out the way he had planned. The chip industry, especially Japan, Inc, preced him by a bit with their own all in moves and cranked up the factories to deliver the goods. The roll-up was incredibly fast, and when combined with parallel R&D breakthroughs which were increasing memory scaling by a factor of X, RAM pricing quickly plummeted – quite possibly at a rate not seen since the Amsterdam Tulip Crash of hundreds of years back.

It bankrupted our pal. Those $100 chips in the back were soon were worth $40, then $20, then $10, and then nothing. 1MB RAM sets? You got any 8" floppies to go with that, ha-ha? Today, RAM is as cheap as water. It likely won't give him much solace, but he wasn't alone. Heck, the Japanese industrial machine made the same bet-the-ranch mistake he did, and that simple fact played a major role in that nation's so-called Lost Decade. Intel, on the other hand, made the opposite bet: it clearly saw this burgeoining RAM commoditization trend and decided early-on that it wanted no part of that game. It thereby shifted its resources into central processing unit chips. It won that poker hand.

This old tale came to light in the past week upon my meeting a sad gent who had just made a similar all-in bet. His brainstorm: buy a fleet of snowmobiles in the Lake George area and get into the rental business. Take their credit cards, hand them a trail map and get out of the way before they run you over. Sure enough, he pulled that trigger last autumn, with a big bank loan delivering a dozen shiny new sleds to his rented garage and its attached properly equipped showroom. A P-G (Personal Guarantee) was required by the bank to make this all happen, of course. But what the heck: he couldn't go wrong. Right?

Well........., he could and he did. Apparently, Mother Nature wasn't on his payroll this winter, and the near non-appearance of the white stuff killed him. He related that he didn't even hit 5% of his revenue projections. When I mentioned the concept of weather insurance, he replied “how's that work?” He's now on the ropes, with his home's equity already eaten up and some real soul searching now taking place under its roof. I sensed his wife wasn't a happy camper, either.

Entrepreneurship is not a game that's played in short pants. Still. the thrill of the sport attracts many of us to it But just like other sports have some players that get washed-out in the low minors --- often for reasons beyond their control such as physical injuryg --- it's a game than many of us feel compelled to play, regardless.



"I'd rather fail at my own enterprise than succeed as the VP of someone else's."



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Broadcast This!

"To traditional corporations, networked conversations may appear confused, may sound confusing. But we are organizing faster than they are. We have better tools, more new ideas, no rules to slow us down." (Cluetrain Manifesto, Theses # 94)


Although pointing out the new rules of engagement between org's and their markets, this gem also highlights how Old Media was so confused by Occupy Wall Street, with their mis-placed clamoring of "what exactly are they demanding and who exactly is behindthis and in-change of it?"

It is no longer all about top-down, broadcast style messaging and command & control systems. But they don't get that.


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Like/Dislike

Great Band Names

Death Cab for Cutie
Dead Kennedys
Milk Carton Kids
Morning Wood
Widespread Panic
Drive By Truckers
Heartless Bastards
Butt Hole Surfers
Vanilla Fudge


Immaturity?
Artists that I disliked at first; but grew to appreciate

Springsteen/E Street Band
Thin Lizzy
Rush
Johnny Cash
Duke Ellington
Mahavishnu Orchestra
Modern Jazz Quartet
Louis Armstrong
Morrissey
Tori Amos
Michael Hedges
Los Lobos
John Fahey
Chet Atkins
Brian Eno
Franz Schubert
Gershwin Bros
WAR



Artists I liked at one time, then it became "WTF was I thinking?"

Grand Funk Railroad
Rare Earth
America
Chicago
Los Lonely Boys
Oasis
Humble Pie
Elton John


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Charter Change Vote is a Go

The Times Union's fine reporter Dennis Yusko seems to be the first to report today that the NYS Appellate Court has ruled in favor of the Saratoga charter change group known as Saratoga Citizen in its fight to get its proposal on a ballot.

Their stated mission now is to attempt a fast-track it and to make that all happen this year, in November.

If all of this REALLY has to happen, then 2012 would be the best year to do it. Being it is a presidential election year, the turnout will be far greater than if it were done in an off-year like 2013. An off-year would draw only the fanatics to the booth, thus giving the proposal a better chance than normal. Something tells me that, despite the bluster of "let's vote now", Saratoga Citizen would actually prefer 2013 for the above reasons.

So, let's put it on the November ballot. Let the war begin



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Soulless Autonama

A trip to Atlanta
Is there a human being on duty here? Anywhere?

- Got Gas @ self-serve pump, swiped card

- Hit the Thruway: paid tolls thru EZ Passs lanes all the way down (slowed; never stopped)

- Parked in Newark Int'l Airport lot: the toll gate machine gave me a ticket

- Took the monorail (no human operator on board) to the terminal

- Checked in via Kiosk: it verified my reservation, I picked my seat, I checked a bag

- Went thru security: I actually semi-interacted with a human; although no words were spoken by either of us. Just an index finger waving me thru the x-ray

- Got a coffee thru a machine; waived my card to pay the $3 charge. It wasn't bad!

- Made phone calls, checked email and did some graphic design work while waiting at gate

- Checked monitors for flight info: on time departure scheduled

- Boarded plane: the first verbal 2-way interaction of the day was a "hi; thank you" followed by a "welcome" from my end. Eyes never met

- Flew to Atlanta: the guy next to me zoned out with his Kindle and ear buds/music; he never said a peep

- I was dozing when drinks were offered; so I never interacted with a flight attendant

- Arrived @ Atlanta: rental car was waiting with my name on the sign in front of it, the keys in the ignition and my paperwork on the seat. I never had to go near anyone. Just adjusted the controls and drove off.

- Checked-in to hotel. Yes, you guess it: automated kiosk verified my reservation and dispensed the room key

- Met a pal later in the 'burbs. She must have thought I'd been an island castaway for a year, given my joy in actually engaging in real life / real world human interaction. If we were counting, we'd no doubt conclude that she directed more words in my direction in her very first sentence than I had received from everyone else combined @ the rest of the day. A day which started in upstate New York!

There's a snapshot of the modern American on-the-go dynamic. I dealt with more machines than I did people.

Of note: the next morning, as I was making my way to my appointment on Peachtree, I had my next human interaction of the trip. A homeless man hustled me up for "breakfast money." Now there's a function that hasn't been automated yet: panhandling!

Maybe it's time for a brain trust retreat, where we can figure out a way to change that?

A Skype conference, of course...


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Just Wonderin'...

So how's that guy in Delmar, NY doing today? You know, the guy who walked into his local Stewarts and said "gimme $1,000 Quick Picks for the Mega Millions drawing."

Anyone seen him? If not, ya might wanna start making inquiries....


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Did YOU Rock SPAC?

A new project from the Nanoburgh publishing empires's skunk works department....

Help fund this masterpiece by pre-ordering some copies for your library. They will make great gifts!

The early start to this has been fun, in hearing people's (friends and strangers both) stories of their experiences at SPAC. Back in the day and all that.

That's how we're doing this baby; letting peeps contribute. Bands, fans, workers. Feel free to do the same: email us with anything that pops into your head about SPAC. Who knows, it might make the published book!

PS: if you submit a tale but want to remain anonymous, you'd better say so right up front! We have a feeling there will be a whole lot of that!

Visit the Kickstarter page here for more info +/or to contribute/pre-order.


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The End of the Green Movement?

The Money Says: Green is Dead

Natural Gas Trumps Renewables, at Least to Fund Managers


“Just follow the money” is an age old guide when one is trying to get to the bottom of what is REALLY going on in any matter of importance. “Money talks and bullshit walks” is a pretty good one, too. I like them both.

I've lately been in the company of a number of people who chase money on behalf of clients for a living. These are specialists that act as middlemen between a company in need of funding and non-bank funding sources, which can include venture or private equity funds or government and institutional resources. Their job typically goes like this: a) size up the enterprise in question; b) determine if it is, in fact, a good enough story to tell; c) apply lipstick to this pig; tightening up that story to make it more sellable; and d) presenting the case to these outside funding parties with the goal of convincing them to invest in the enterprise in some fashion. It's fun stuff, but certainly not for the feint of heart or weak of mind.

In chatting with these type of folks and inquiring as to what exactly that money flow is telling us, I've reached a surprising – make that shocking – conclusion. I shall put in it universal office correspondence format for easy reading:

Memo

TO: American Green'iacs
FR: This is the Money Talking

Your Green/Renewable Revolution is Over.
(Or at least set back a generation.)

Signed,
$$$$


Yes; you heard it here first. Just like that, with a snap of the fingers, done. Kaput. Turn out the lights, this party's over. It was a nice short run, and the masses were certainly all singing the same tune for awhile about making the big transition to renewable energy sources, weren't they. My, but weren't those glorious days? But those high flying time are rapidly getting smaller and smaller in the rear view mirror as we give up the ghost and get back on the carbon train.

OK, what the hell am I talking about, you ask? Since you asked, here it is:

Renewable energy sector investments (money flow) have dramatically slowed down. What is surprising is just how quickly this new trend has emerged. For the past several years, alt-energy has been the darling of the venture crowd, both private and public sector. If some new firm with the word 'solar' or 'wind' or 'electro' popped up, lines would seemingly form outside their front door (if they even had one yet) to get involved. Now, those same backers seem to be running and hiding. This is true of not only private funds but also government sources, especially at the federal level.

What gives? Two easy answers:
1)Solyndra
2)Natural Gas

Solyndra, of course, was the highly-hyped US new-idea solar cell developer that pooped the bed after burning (at wildfire speed) through $500million of federal boost money. The reasons for demise are complex, but include Chinese currency manipulation, a bad tooling gamble and downward market pricing of competitive energies.

But in this age of dumbing everything down to a bumper sticker level, the Forces of Darkness (aka the Republican party and its motley bed mates) now have handed to them on a silver platter the opportunity to point to something that they can deem as examples of red meat hot buttons ranging from Obama incompetence to the overreach of government to the infeasibility of renewable energy, period. Never mind the reality or the recognition of government sponsored core R&D as being inherently messy and somewhat inefficient. The challenge of basic scientific research requires someone to accept that messiness – and the private sector won't.

The result is that the White House is now playing defense and running scared, exacerbated by the upcoming election and the prospects of millions of sickening sound bites. What used to be loose money being available for new-energy projects is now tighter than a clam, and that's waterproof. That's what I'm hearing, at least.

The we have the natural gas phenomena. Phenomena is a good word. So is the word 'suddenly,' because here it is, suddenly and seemingly out of nowhere, getting pumped from the ground – American ground at that – in quantities that are mind boggling. Plus, it's cheap! Sure, it's not renewable, but some estimates are claiming a 200 year domestic supply. And it's cleaner than coal or oil (please note the last two letters in the word cleaner).

From a purely macro economic POV, this is best be described as a mega windfall for the USofA. Granted, natural gas does not significantly replace foreign oil to the extent its backers claim, but its potential to replace oil heating in the northeast should not be minimized, either. What it IS in is the early stages of significantly replacing is coal, the primary energy source for the non-nuclear centralized plants of the power grid.

But coal is an American resource, too: won't American gas just replace it for a nyet-nyet push? The answer to that is No. Coal will now be one of the nation's most significant exports, as it will go about feeding the emerging world's industrialization. So right there, anyone hoping that gas would at least be “a little better than coal:as far as greenhouse gas emissions can now sulk.

So, given all this, the question becomes: if it was so hard for new-energy alternatives to compete on a pricing-feasibility level a few years ago, how can it possibly be able to do so now with the emergence of King Gas? It's a darn good question. Add to the mix that China's shenanigans in gaming the solar market (via product dumps, currency manipulation and state subsidies) is under the gun and one could conclude that solar retrofit pricing should rise, thereby dampening demand for arrays in the US.

With business plans and revenue models becoming even suspect than they were in the recent past, market-funding sources are also suddenly (there's that word again) looking away from solar, wind, thermal and biomass start-ups and ramp-ups. A better word here might be avoiding.

Where are they looking to invest, then? Well, as they (and school boys) tend to do, they flock around the pretty new girl who just transferred into school. Yes, the money is going into Natural Gas. We're not talking just land rights and drilling here, but also:

Delivery infrastructure (the existing infrastructure is both old and inadequate for the new supply and new demand)

R&D for moving the natural gas influence over to the transportation end of the energy equation, specifically into natural gas-powered and electric autos (remember: electric will now be natural gas at its source end)

Fracking technology. Yes, we knew we'd need to get here didn't we? As we know, the jury is still out on the environmental health and safety aspects of fracking, which is the key means for extraction thru shale. The basic problem is that all sorts of scary chemicals (many of them toxic) are being pushed into the earth, and where they all end up (water? air?) is the Big Q of the times. The rush is on now to find natural and non-toxic ingredients that will serve the same purpose.

There we have it. The money is going into Natural Gas. Yesterday's prom queens are today's washed-up has-been's, and many will soon be starved of the lifeblood of precious funding. Cheap natural gas will get the masses' minds off the “energy problem”, at least as it relates to residential power needs. A successful immersion of natural gas or electric powered transportation will get their minds off the problem in total, because they will accept the “it's cleaner” aspect of gas. Carbon emissions in the US might actually decline as a result, but worldwide carbon will continue to rise at an alarming rate, with much of it done so with US coal.

Given all of this, responsible US policy at this stage of the game might include something like dedicating all the energy savings brought to the table by natural gas to subsidizing both the development and the usage of true renewable technologies and sources. Responsible global policy might include the realization that carbon is a global and not a national issue, and the creation of international governing bodies to go about developing universal standards with that in mind.

But the likelihood of either seeing fruition is nil. A discussion on expanding the State's role in the energy market is impossible to convene at this time. How then, would we even describe the possibility of convening a discussion on a worldwide regulatory body?

Impossible on Steroids, maybe?


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A New Economic Forecasting Model?

As our readers likely know, one of our affiliated businesses produces small and mid-sized live music concerts. It's a strange industry, on both the front and the back end.

Many of our shows are in so-called "music rooms", which are a step above regular hang-out bars yet not seated theater type of venues either. They feature touring, original acts but their business models are still heavily reliant on how much beer, wine & booze gets sold at those shows. We don't own any such venues; we typically rent the room from them on a per-night basis. After that transaction, the venue keeps the bar $, we keep the door $.

Given our good working relationships, venue owners are willing to share their 'bar takes' numbers with us, for both our shows and others. It's interesting, how certain acts and genres generate numbers that can approach $15-$20 per paid admission, while others might fall under $5. Jam bands are on the upper-end, blues and jazz shows on the lower.

Our in-house sharpies have gotten very good at predicting both show attendance and that per-person bar revenue fig for any given show.

An interesting trend as of late: while our attendance predictions continue to be pretty damn accurate, our bar-take predictions have been coming up short lately. People that go to shows are spending more once they get there.

Yes, some argue that tough times turn people to drink. But, this uptick is a recent phenomenon, just within the last couple months. It therefore coincides with improving US macro-economic data in the same period.

Whatcha think: do we have a new forecasting model for the American economy here on our hands? Housing starts? Bl'ah. Wholesale inventory levels? Useless. Jobless claims? N'ah.

It's all about how much beer is being soaked-up at rock and roll shows. We'll call it the Jam Band Index!


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