Business Blog: Hoover’s Business Insight Zone

High school dropout and self-made billionaire Ken Hendricks has died at 66 after a fall at his home. He was chief executive of ABC Supply, one of the top makers of roofing materials in the US. For more details on his death, see this Bloomberg story.

Two years ago, Hendricks graced the cover of Inc. magazine. The long feature on him chronicles his improbable rise to fortune, discusses the pros and the cons of his efforts to rejuvenate his hometown of Beloit, Wisconsin, and generally gives an idea of his abundant energy and drive. It’s well worth reading.

Create Jobs, Eliminate Waste, Preserve Value

Those six words explain a lot: Why Ken Hendricks is worth $2.6 billion, how he came to be a walking textbook on identifying and exploiting business opportunities, how he manages to make (relatively) few enemies while treating Beloit, Wisconsin, like one vast fixer-upper–and why he is our Entrepreneur of the Year

ABC Supply now faces a challenge common to companies of all sizes when they lose their prime movers. Where would Apple be without Steve Jobs? Where would Amazon be without Jeff Bezos? Where would your favorite local restaurant be without its owner / manager / impresario? At the same time that they deal with the tragic (and perhaps bitterly ironic) death of their paterfamilias, the members of the Hendricks family also must deal with his death’s implications for the company that so clearly bore his imprint.

NetSuite is looking good so far in its public debut. Soon we’ll be rolling out our year-end IPO Scorecard for your delectation, which will give me occasion to talk more about the IPO market. (Previous IPO Scorecards here.)

For the moment, though, here’s a crack at my basic philosophy about IPOs:

• Insofar as the IPO market is one slice of the overall financial markets, it makes sense to ask questions like “How’s the IPO market doing?” Because of course the financial climate makes it easier or harder for a given company to go public at a given time.
• Supposed bellwethers of the IPO market often aren’t very good in fulfilling the bellwether’s prime function — i.e., telling you where the overall market is headed. Just like a great musician could shine even in a lousy band, or a great athlete could shine on a weak team (case in point), a good company can shine even in a bad market.
• Many supposed bellwethers are, in actuality, “categories of one” — or at least members of very small clubs. So Blackstone’s mid-2007 IPO was far from indicative of the overall market for IPOs, just as Visa’s IPO (slated for early 2008) won’t be a bellwether for credit cards or financial stocks or whatever. Why? Because we’re not talking about Random Company X; we’re talking about Visa.

I try to keep these things in mind whenever I hear somebody talk about Company X being “the next Google” of the IPO world. There won’t be a “next Google.” Google itself wasn’t a “next Netscape,” because conditions changed so much between those two IPOs. Blockbuster offerings like those are often sui generis — they just are what they are, beyond any categorization.

The larger point: well-grounded companies (like, apparently, NetSuite within its particular niche) can make their own weather. So even when the broader IPO market is weaker — as it is now — it can still be a good time for the right company to go public.

I’ve been hard on Delta lately. Maybe I shouldn’t be so hard on them for failing to answer one blogger’s complaints. My Mom, who remains my #1 fan, read my earlier postings on the subject and sent me the link to this story about Delta’s efforts to improve etiquette in the air with a witty series of short “Planeguage” online videos.

Delta offers air etiquette tips

I looked at some of the clips on Delta’s corporate blog, and they’re fine insofar as they go. For that matter, I’m impressed that Delta has a blog — and that they don’t delete (politely worded) blog comments that are critical of Delta.

But the videos still seem too cute by half — and too expensive by far — in comparison with the very small time and effort it would take to respond to legitimate complaints lodged by prominent bloggers. In other words, I’d rather see Delta spend a little less time and money on well-produced animated clips if it meant they could spend a little more time and energy in an open conversation with their customers.

Or maybe I’m just being too critical. What do you think?

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To me, that’s a key philosophical question raised by this post from the environmentalist blog Gristmill:

Throw the book at him

Sickening. Kevin John Moran of Camano Island, Wash., was just convicted of illegally cutting down 27 old-growth cedars on public land. They were between 400 and 700 years old. And they were dry-side trees, even rarer than the Northwest’s west-slope titans. . . .

The blogger, Eric de Place, notes that the maximum penalty Moran faces is 10 years in prison and a fine of $250,000. The charge is “theft of Government property,” there being no specialized penalty — so far as I know — for egregious damage to an ecosystem or the country’s natural heritage.

Now, there are plenty of folks who will read “10 years in prison and a fine of $250,000″ and think that it’s more than enough for cutting down some trees. But at some point, doesn’t a thing stop being a thing that can be valued strictly in economic terms? Outraged or no, de Place seems to be making the point that there ought to be some charge worse than theft — maybe something like “wanton destruction” — to cover offenses like this one.

Economics would say that the oldness of the trees, their magnificience, their role in their ecosystem, or what have you are “externalities” from a financial perspective. The point is that Moran took public property that didn’t belong to him, and that property was in the form of trees. Period.

Yet if the threat of global warming is as bad as many scientists fear, and if deforestation continues around the world as it has done lately, I expect that at some point penalties for wrongfully cutting down trees — especially big and old ones — will run much stiffer.

I’ve railed in the past about the failure of the airline industry to respond to the needs of its customers. Well, a New York state law is about to force the airlines to do something for passengers who get stranded on runways . . . and the airlines, with their brilliant sense of public relations, are going to court to stop it. I wish that someone within the airline industry would step up to take a more enlightened approach, but maybe at this point I should just give up hope.

Joe Sharkey of the New York Times — who you should be reading regularly if you care about what happens in the airline business — has more:

Airlines to Use Courts to Thwart a Movement

[New York state Assemblyman Michael] Mr. Gianaris says of the airlines[:] “They will sit there with a straight face and argue against a law that simply says that someone stuck on a plane for more than three hours is entitled to a drink of water and the use of a bathroom,” Read more

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And not just when it comes to camera angles and CGI special effects.

Here, have some Hobbit.

The prime mover behind the triple-decker blockbuster Lord of the Rings films has settled his differences with (and his lawsuit against, for an undisclosed sum) New Line Cinema. This opens the door for him to bring The Hobbit and a sequel to the silver screen circa 2010 - 2011.

John Scalzi guesses that the timing of settlement — which ends a long-running feud between auteur and studio — may have a little to do with

the very expensive The Golden Compass cratering very badly at the box office ($40 million in two weeks, with a nearly 66% dropoff in the second weekend — not good news when your production budget is $180 million and you’ve sold off the foreign rights). . . . I can’t imagine that Mr. Jackson and friends will not profit handsomely from this either, so well done to him indeed. And all he had to do was wait until New Line needed him more than he needed New Line. Sneaky.

That Jackson is a shrewd one, he is.

If you’re interested about the the voyage of The Golden Compass from explicitly anti-religious book to would-be Hollywood blockbuster, try this Atlantic Monthly feature by Hanna Rosin:

How Hollywood Saved God

. . . Movies that deeply offend Christian sensibilities do get made from time to time: The Last Temptation of Christ, Dogma, and, last year, The Da Vinci Code, a major Sony release. The last one lends credence to Pullman’s idea that a faithful translation of his books could have been commercially viable. It’s possible that New Line’s executives once thought so too. New Line, after all, has a reputation for picking up edgy projects, like Boogie Nights and Se7en. When the studio bought the rights to The Golden Compass, in 2002, it was flush with the success of The Lord of the Rings, and perhaps its leadership imagined making something less anodyne. If so, a more nervous mood has since prevailed.

Apparently, it’s the kind of mood that leads New Line to settle with Jackson so he can get cranked up on another crowd-pleasing Middle Earth epic filmed against New Zealand’s gorgeous scenery. As a fan of the Tolkien books and the Lord of the Rings films, all I can say is goody!

~

In other film news, Will Smith continues his run of box office success with I Am Legend. As we’ve discussed before, he’s pretty canny, too.

Anyone for a game of Monopoly? Or maybe Halo 3?

Whether they’re played on a brightly colored piece of cardboard or an even brighter HD screen, games take center stage for many children over the holiday season. My own kids’ pipe dream of a Christmas gift is a Nintendo Wii system, which is still selling rings around the Microsoft Xbox 360 and the Sony Playstation 3 a year and a half after its release. In fact, the Wii has been so popular this season that Nintendo has launched a “raincheck” program to pacify shoppers who haven’t been able to lay hands on one. (No comment on whether Santa will be delivering a Wii to the Walker household this year.)

Whether their kids receive a big video game console, a handheld unit like the Nintendo DS or the Playstation Portable, or a board game like the new Simpsons version of Monopoly, many parents will find themselves playing games for the first time in ages during the weeks their children stay home from school around the holidays. (If you have children of the age to play Candyland and the weather keeps everyone indoors in this month, you have my sympathies.)

Board Games Regain Popularity

Your options for games to play are endless. After some ups and downs over the past 20 years,* many classic board games that I grew up with are still going strong, starting with titans like Monopoly and Scrabble. (Both Parker Brothers, which makes Monopoly, and Milton Bradley, which makes Scrabble, are owned by Hasbro.) After playing The Game of LIFE at my sister’s house over the Thanksgiving holiday, my kids pooled their money to buy an updated spinoff from the game called LIFE Twists and Turns. In the game, each player gets a faux credit card that is used with an electronic controller that keeps track of debts, assets, and the “Life Points” each player earns for experiences like having children or taking trips abroad.

Video Games Continue to Dominate

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If you read this blog very much, you’ll have guessed at one of my major beliefs about the way we work today: the psychological hangups and gaps in thinking that we face as individuals mirror the hangups and gaps we face in organizations.

Often, it works like this: Individual X fails to focus because Team X fails to focus because Company X fails to focus . . . because Team X fails to focus because Individual X fails to focus. Yes, it’s a tautology — but it’s a real-life tautology that we face every day in the working world.

Individual performance = Group performance.

This outlook leads me to think about how individual lessons from psychology and cognition apply to institutional challenges, and to think about enlightened practices of business organization and leadership apply to personal excellence. These are fruitful veins to pursue, not least because they supply never-ending inspiration for how individuals and organizations can perform better.

Case in point: Marcia Conner’s latest Fast Company post, “More or Less.” Conner’s professional emphasis is on learning, and I would argue that what she recommends for high-achieving individuals applies equally well to high-achieving organizations. Do yourself a favor Read more

This revisits two posts from a couple of weeks back, in which I pointed to Jeremiah Owyang’s even-tempered complaints about Real, Delta, and PeopleSoft. Companies #1 and #3 responded to his post within the day, but Delta . . . has yet to be heard from.

Surely someone at Delta has seen this by now. Jeremiah is a Forrester analyst and enjoys a large online audience. Even if no one at Delta reads his work regularly, surely someone in their p.r./damage-control office has news alerts set up to ping them when a post like his hits the blogosphere. Right? Right?

Or maybe not. Maybe, for the moment, Delta can still get by with ignoring appeals like Jeremiah’s. But the growth of the blogosphere and attendant social media is such that, someday, they will not be able to ignore them. On that day, a complaint like Jeremiah’s will have material adverse effects on their business. When that day comes, I venture to say that they will be unpleasantly surprised. They will find that they have failed in their online strategy much like Hemingway’s bankrupt: gradually, then suddenly.