Business Blog: Hoover’s Business Insight Zone

Last week I mentioned Sheldon Adelson, head of Las Vegas Sands, in a post I made from the convention floor in Las Vegas. In fact, I slept that night in Adelson’s signature hotel, The Venetian. Now Gary Rivlin of the New York Times offers an insightful profile on Adelson, the ultra-rich, ultra-combative mogul behind the twin booms of Las Vegas and Macao.

When 3rd Place on the Rich List Just Isn’t Enough

Few Americans have made as much money in China as Mr. Adelson, and he is a major donor to the Republican Party. Yet Mr. Adelson may well be the richest American that most people have never heard of. . . .

Certainly people in Las Vegas know Mr. Adelson, a querulous figure who has existed in a near-constant state of embattlement since building the Venetian in the late 1990s. . . . Read more

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That the excellent question that Jeff Bailey explores in this New York Times story:

In the Math of Mergers, Airlines Fail

. . . [C]ountless corporate mergers — in manufacturing, media and financial services, among other fields — have made the leap of faith that the sum would be worth more than the parts. But studies generally show that more than half of such combinations fail to create value.

What special magic, then, might occur to make two big airlines worth so much more together?

Essentially two theories are at work, each a chestnut of the merger-and-acquisition game, and neither of them a sure thing.

The first is simply to cut costs of the combined companies and hope to hang on to all the customers and revenue. . . .

The second theory used to justify airline mergers is that combining would increase revenue because a bigger route system would help take market share from competitors. That makes sense, until other carriers also combine.

Bailey’s points are worth keeping in mind as we await the outcome of Delta’s talks with Northwest and UAL. Maybe a Delta merger would work out, but Bailey’s right to point out the risks. The talk about synergies always has a certain appeal (remember the hype around Time Warner’s tie-up with AOL?) but the reality usually pales by comparison (as the Time Warner/AOL deal also shows).

(For full effect, say that title aloud in your best Charlton Heston / Soylent Green voice of pathos and outrage.)

Myself, I don’t watch horror movies — I’ve always been too squeamish. But even I am intrigued by the marketing surrounding the upcoming monster-attacks-New-York movie Cloverfield, which is the brainchild of Lost and Alias creator J. J. Abrams.

The multifaceted marketing campaign for the movie has included standard fare like thrilling trailers, but it has also broken new ground by using social media methods to create an entire mythology around the movie’s characters.

Now Chris Thilk of Movie Marketing Madness has posted an insightful and highly detailed (= long) piece tracing how the marketing campaign has unfolded. If you’re interested in cutting-edge online marketing, it’s well worth your time.

The Tale of Two Cloverfield Campaigns

. . . The two-pronged campaign certainly was a great decision by Abrams and the studio. I don’t think, even if things had kicked off as they did with that initial trailer, that potential fans online would have been as engaged and enthused if there had just been a poster, trailer and Website just like every other movie out there, no matter how cool the movie looked. It would have been subject to the same level of “insider” reports and spy leaks as every other movie.

But by, essentially, giving the online audience a regular supply of new rawhides to chew on Abrams and Paramount were able to earn their loyalty and turn them from casual or even devoted fans into surrogate marketing agents. The bloggers who write about movies in general or this movie in particular were the ones selling the movie, broadcasting the new material that was given to them all over the Internet.

Some friends of mine who are movie buffs say they’ve heard bad things about the film itself — i.e. that the payoff when you’re sitting in the theater isn’t going to be as good as the marketing campaign has been. But I’ll bet that Cloverfield rakes in the money when it debuts tomorrow.

While I’m at it, let me mention this great video of a talk by Abrams at the TED conference. In it, he talks about how he’s been motivated as a storyteller by the “mystery box” — the conundrums that keep you engaged with a story as it unfolds. It’s worth your time if you do any sort of creative work that must intrigue an audience.

Abrams certainly seems to have succeeded in making Cloverfield a series of “mystery boxes.”

(Hat tip to Geoff Livingston for putting me onto Thilk’s post.)

That’s a question I’ve talked over with several friends lately. So far, $3/gallon gas hasn’t made a big dent in U.S. driving habits, but then again it’s pretty hard to move closer to work — especially in a bad real-estate market — and a lot of people are set in their ways when it comes to driving. Or, to put it another way, for a lot of people, $3/gallon gasoline isn’t expensive enough to get them to change their driving patterns.

Keith Johnson has more on these issues, including links to recent research, in this Wall Street Journal Energy Roundup post:

Pump Prices: Will Drivers Finally Squeal For Real?

When we observe how human psychology links up to economic decision-making, we see some curious things. (This reality is the root of the discipline of behavioral economics, which I plan to talk about much more in 2008.) In the case of gasoline prices, we notice that people tend not to make cold, rational calculations that weigh the dollar cost of gas against the dollar costs of other utilities — things like hanging on to less fuel-efficient cars, keeping the same jobs, keeping the same houses, or keeping the same office schedule instead of telecommuting.

Rather, people tend to trundle along as they’ve been doing until they reach some sort of psychological or financial tipping point– say, when the family gasoline bill passes some round number like $300 per month.

Apparently, $3/gallon gasoline isn’t expensive enough to drive these changes for many people. But if oil prices trend north — if they park above $110/barrel, for instance — the follow-on increases in gasoline prices will start to have much more of an effect. A move from $3/gallon to $4/gallon should have far more impact than the move from $2/gallon to $3/gallon.

In any event, it will be interesting to see what shapes up through the course of 2008. Meanwhile, I’m glad I live within 15 minutes of work.

~

[Photo by racoles; used under CC Attribution license.]

Looking for audience response here: the semi-big Web hosting service DreamHost made a major billing error this week, which resulted in about $7,500,000 worth of incorrect billings. This (potentially / probably) maxed out some of its customers’ credit cards, led to accounts being shut down, and so on.

DreamHost honcho Josh Jones came clean on the issue — and how his own user error caused it — in this blog post:

Um, Whoops.

Hello.. how’s your morning going?

I hope it’s been a little better than mine.

We had a teensy eensy weensy little billing error last night… my first clue something was up when I saw this morning’s daily billing report (so far): $7,500,000.

It turns out due to my excessively fat fingers, nearly every one of our customers has been seriously over-billed in the last 12 hours. . . .

The comments to the post could serve as a sort of primer on customer service, to be filed under either “You can’t please all of the people all of the time,” or “Don’t be a jerk to your customers.” To put it mildly, the opinions of DreamHost customers vary wildly, from “no harm, no foul — and thanks for the update” to “class action suit forthcoming.”

A key bone of contention is Jones’s lighthearted (or flip) tone in the post. Many of his commenter/customers say that it reflects a lack of seriousness about what is a big, bad, major, heart-attack-level issue. Jones himself seems to realize that he may be coming across badly, since the original post includes this:

If the tone of this blog post seemed a little light, I apologize I don’t mean to offend and I realize how serious an issue this is. I’ve been up since 3:50am trying to undo the damage and maybe I’m a little shell-shocked.

Shell-shocked, yes. But is that an excuse for being flip?

I’d love to hear what you think.

The good news for Boeing: record orders in 2007, ahead of Airbus’s (also very good) numbers.

The bad news: the blockbuster 787 Dreamliner project looks to be delayed again:

Another big delay for Boeing’s 787
By Dominic Gates
Seattle Times aerospace reporter

Boeing is expected to announce this morning a further delay to its 787 Dreamliner program of at least three months, an industry source confirmed late Tuesday.

The news, first reported online Tuesday by The Wall Street Journal, could be a crushing blow to the aviation industry’s confidence in Boeing. After earlier delays forced the company in October to push out its production timetable by six months, Boeing’s leadership repeatedly assured customers and investors that it would meet the revised schedule.

What Boeing doesn’t need, if it wants to sustain its momentum, is a reprise of Airbus’s delays-upon-delays history with its blockbuster A380 program. (My take on the earlier delay is here.)

Delays like this seem to be more common — or more commonly reported — in the software industry. Given the complexity of the Dreamliner, it makes sense that the project could slip, but failing to nail down the length of the delay the first time around doesn’t reflect well on Boeing management. At some point, the story becomes less about the project itself, and more about the company’s ability to manage big projects generally.

Given the oohing and aahing over the Dreamliner, all this may be just a blip once the planes go into service. But for now, this new delay is exactly what Boeing doesn’t need.

(If you’re interested in a little rant on social media and its portrayal by other media, read on. Otherwise, please stand by for other programming.)

The title of this post might not quite — quite — be fair to Tom Hodgkinson’s arrant Guardian profile of Facebook, but it’s not far off, either. His question-begging begins right from the off:

I despise Facebook. This enormously successful American business describes itself as “a social utility that connects you with the people around you”. But hang on. Why on God’s earth would I need a computer to connect with the people around me? Read more

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That’s the verdict of Eric Janszen’s provocative cover story in the current Harper’s magazine:

The next bubble:
Priming the markets for tomorrow’s big crash

Online access is limited to Harper’s subscribers, but here are two choice tidbits:

Our economy is in serious trouble. Both the production-consumption sector and the FIRE [finance, insurance, real estate] sector know that a debt-deflation Armageddon is nigh Read more

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(Like yesterday’s post on Howard Schultz’s return to Starbucks, this item is really about confirmation bias. But let’s start with a little refresher on Greek mythology. I promise I’ll make the connection in the end — after some quick detours into the Vietnam War and modern astronomy.)

Procrustes, you’ll recall, was the mythic figure who would measure out his guests on his iron bed: if they were too tall, he’d lop off parts of them; too short, he’d stretch them on a rack. All well and good (for a murderous sadist, anyway) until Theseus ended his career by giving Procrustes a taste of his own medicine. Read more

Lately I’ve been reading some of the work of Professor Mihaly Csikszentmihalyi, who’s most famous for his book Flow. For decades now, Professor C. has researched creativity and happiness; his theory of flow talks about how creative (and happy) people come to enter flow-states. In layperson’s terms, flow equates to being “in the zone” for an athlete. It’s that state when you become totally immersed in what you’re doing, totally unaware of the passage of time.

Which, it occurs to me now, would seem to be impossible in a business day full of meetings. Csikszentmihalyi’s research has shown that it often takes 15 minutes of uninterrupted work in an open-ended session before a person will really sink down into the flow state of full creativity and engagement. And people are less likely to do this when they know they have a pressing obligation coming up — and much less when Outlook pings them about the items crowding their day’s schedule.

Surely I’m not the first person to make this connection, but it bears repeating anyhow: as much as possible, you need to defend portions of your day when you can shut out distractions, forget what time it is, and just work without worry. Meetings — especially scattered throughout the day — can only disrupt this process.

A topic for another time: the toxic, anti-Flow effect of e-mail notifications.

(And yes, this is coming from a Twitter user. Hey, I never said I was perfect!)