Pro Commerce

Category: Business parables

  • Entertaining Gods of Commerce

    Why is the first commercial president so keen on ending warfare?
    Peace

    Before I try to answer that question let me summarize where we are.  Since the late 1980’s I have used the term Pro Commerce for my global view.  My permanent google search for that term turns out about one usage a year, mostly in French.  

    The summary of my life’s work at age 87 is the incredibly strange view that there is a God of humans who interacts in human history.  Earlier this year for similar reasons I concluded that there is a God of the Jews, his interaction with history.

    But why would a God interact with human history? He wouldn’t unless there is something in history that is clearly beneficial for humans and the earth.  Good for humans defines two previous human/God interactions.  Moses’s presentation of the Ten Commandments and his creation of the Jews.

    The third interaction with humans seems to be the infinitely slow creation of commerce.  God loves commerce and has interacted with human history to promote it.  Why commerce?  It is the only social mechanism that promotes human well being.  That is not to say that there isn’t well-being among other species or phyla, there probably is; but commerce is uniquely productive of well being among humans.

    Commerce has always been the one and only social mechanism that brings the total variety of humans together to cooperate.  Other social mechanisms bring some varieties of humans together ranging from mechanisms such as religion to constitutional democracy; but only commerce brings the greatest variety together as an inherent attribute of the mechanism. Cafejpg

    Just sitting, mornings, at my coffee shop in San Francisco I am, every day, astounded by the variety of people (and dogs) that sit together to drink, chat, and to work together as the staff does.  Plus, the incredible variety of people who bring the coffee to me from the entire planet and prepare it, and invest money in the parent global company.  Only commerce does that without dogmas, priests, scriptures or universities, teachers or even people who understand it.  This institution of vitality, neutral caring, universal decency is widely hated, especially by vast multitudes of young people.  Nobody is authorized to speak on behalf of commerce.

    Back to the question of why President Donald J. Trump puts so much effort into creating peace treaties.  Because, unlike the false narrative about commerce by its ignorant haters, war is of no benefit to commerce.  It is fundamentally destructive, promotes arbitrary hierarchy, and wastes resources.  Trump sees the world through the eyes of commerce.  Gaza should be like Singapore, a booming beautiful paradise and a testament to commerce, but it's not, Gaza is a tribal swamp of human hatred.

    America is great because of commerce and God wants America to succeed.  I hope it will.

  • The Best Restaurant in America

    That could be a pretty pretentious label for me to give to any object or business.  But I will defend it.  The restaurant is Greens in San Francisco at Ft. Mason and ‘yes’ it is a vegetarian restaurant. The Best Restaurant in America.

    .

    I don’t have legitimate credentials for saying anything about any restaurant.  But I have great confidence in my own taste. 

    In the first years of the 1980’s I had the finest meal of my life at the Soto Zen founding Monastery of Eiheiji near the North Coast of central Japan. The monastery dates back to the founder, Dogen, in the 1240’s.  Back when the Magna Carta was first written. I was a guest at the monastery becau Greensse of my friendship with the Abbot of the San Francisco Zen Center, Baker Roshi.  The meal was delivered to my room in the early evening and was Kaiseki-style.  About a dozen elegant dishes. 

    The next fine meal I had was in the early 1990’s, Fall 1994 at Thomas Keller’s French Laundry.
      It was so good that I ate there every two months (the earliest possible reservations) for the next six years.  The Saturday lunch started at $50 and climbed into the 100s but it was the only good meal I could get.  Now there are hundreds of Keller quality restaurants in America.  Defined by their many servings of ‘amuse bouches’.

    Before Seasons-of-greensI explain why Katie Reicher’s Greens is the finest restaurant in America, I need to point out three things that influence my choice.  First, I don’t consider desserts important. Butter and sugar combined will always taste great.  Second, no amount of amuse bouches will impress me.  I love them but they are just kisses to the meal, not really part of the meal. And third, a meal without meat is the true challenge for a chef.  Meat is not hard to make taste great, fish outside of Japan is irrelevant.  But to make a main course solely out of vegetables, totally satisfying and exquisite is the work of a true culinary genius.  That is Katie at Greens.

    She has a cook book, if you’re into those things.  It has some of the best writing I have ever seen in a cookbook. The fact that I created Greens forty five years ago, by finding the location and the true creator, Baker Roshi of San Francisco Zen Center, is merely a blessing. Greens is always listed as one of San Francisco’s ten best. But it is really America’s very best.

     

  • The Best Restaurant in America

    That could be a pretty pretentious label for me to give to any object or business.  But I will defend it.  The restaurant is Greens in San Francisco at Ft. Mason and ‘yes’ it is a vegetarian restaurant. The Best Restaurant in America.

    .

    I don’t have legitimate credentials for saying anything about any restaurant.  But I have great confidence in my own taste. 

    In the first years of the 1980’s I had the finest meal of my life at the Soto Zen founding Monastery of Eiheiji near the North Coast of central Japan. The monastery dates back to the founder, Dogen, in the 1240’s.  Back when the Magna Carta was first written. I was a guest at the monastery becau Greensse of my friendship with the Abbot of the San Francisco Zen Center, Baker Roshi.  The meal was delivered to my room in the early evening and was Kaiseki-style.  About a dozen elegant dishes. 

    The next fine meal I had was in the early 1990’s, Fall 1994 at Thomas Keller’s French Laundry.
      It was so good that I ate there every two months (the earliest possible reservations) for the next six years.  The Saturday lunch started at $50 and climbed into the 100s but it was the only good meal I could get.  Now there are hundreds of Keller quality restaurants in America.  Defined by their many servings of ‘amuse bouches’.

    Before Seasons-of-greensI explain why Katie Reicher’s Greens is the finest restaurant in America, I need to point out three things that influence my choice.  First, I don’t consider desserts important. Butter and sugar combined will always taste great.  Second, no amount of amuse bouches will impress me.  I love them but they are just kisses to the meal, not really part of the meal. And third, a meal without meat is the true challenge for a chef.  Meat is not hard to make taste great, fish outside of Japan is irrelevant.  But to make a main course solely out of vegetables, totally satisfying and exquisite is the work of a true culinary genius.  That is Katie at Greens.

    She has a cook book, if you’re into those things.  It has some of the best writing I have ever seen in a cookbook. The fact that I created Greens forty five years ago, by finding the location and the true creator, Baker Roshi of San Francisco Zen Center, is merely a blessing. Greens is always listed as one of San Francisco’s ten best. But it is really America’s very best.

     

  • My Immoral Invention

    Ba‘Back in the day’ I did the marketing research for BankAmericard; now called Visa.  Their problem at the time was a loss ratio of 5%. High for personal loans by banking standards.  My job was to find the ‘bad actors.’

    In those days we had computers but they were fed by punch cards.  So I took several handfuls of good credit customers and fed them into the machine. I took a small handful of the bad credit users and fed them into the machine.  Then I looked for the predictors that showed a difference between the two sets of customers.The bad credit customers had two distinct patterns.  Most didn’t have a home phone; this was back when 15% of the population didn’t have a phone and they also were the ones who used their credit cards at grocery stores.

    Those elements were used to create a credit score.  Low scores could no longer get the BankAmericards or had their cards cancelled.

    With modern day Ai and hundreds of data points to look at, we can expect very fine scoring systems to identify all sorts of qualities that will determine credit, insurance, health treatment, high product returners, and a wide range of controls and restrictions will be put on people.  

    In China, where the scores are public, people with the lowest scores are not even allowed to travel by train.

    Such scoring systems, like the one I created, are immoral.  They assume that people don’t change or can’t change and are therefore permanent life stigmas. The scarlet letter.

  • How I Succeeded

    How did I carry out three projects in San Francisco out of many that I will describe in the future?

    *The oldest, most successful high end vegetarian restaurant in America.

    *The beautiful East Bay Bridge.

    * A gorgeous small park.

    The oldest, most successful high end vegetarian restaurant in America is Greens in Fort Mason; already 47 years old and thriving. Always listed in San Francisco’s top ten restaurants.

    That is what I was going to write about and will do so later.  In searching the web I find no real history of the modern Ft. Mason. Ft. MAn important history that is unknown. All I could find was this:

    Fort Mason Center, a nonprofit organization, partnered with 

    the GGNRA and opened in 1977. It was the first conversion 

    of a military base to peacetime use and as such, has served

    as a national model. Each year more than 1.5 millions visitors 

    connect with arts and culture on the historic waterfront campus. 

    Through special events and resident organizations, Fort Mason 

    Center offers musical and theatrical performances, exhibits,

    workshops, and classes that inspire and foster creativity for 

    visitors of all ages. Within the historic warehouses are free

    museums, a bookstore, classes, restaurants, and theaters. 

    It began in 1977 when a mature and attractive woman, Ann Howell, came to me and said that the lower part of Ft. Mason, buildings and wharfs, were going to be made a public facility, part of the Golden Gate National Recreation area, the first military facility in an urban area to become public.  

    #2She wanted to apply for the role as operator. She had gathered the names of 110 non-profits, nearly all the hippy groups that came to a Kohotec celebration that had been held in the Civic Auditorium across from City Hall in late 1973.The Fort was going to be given to a non-profit.  So I told Ann to form a non-profit 501:c3 organization and suggested some prominent names of my friends for the board. Ann did everything I told her to and to my complete astonishment she won the property. 

    The reason a sweet innocent inexperienced woman won the management of Ft. Mason was probably that the man who had to decide, Bill, was beleaguered by the most powerful organizations, the University of California, the U.S. Congress, the U.C. Med School, giant hospitals and City Departments.  He was under extraordinary pressure.  Probably hated it.  So, out of pique and revenge he gave the Fort to Ann and her hippy gang.Ann and her boyfriend moved into one of the three giant empty office buildings and started renting the other spaces to 60 non-profits that she could find on her Kohoutek list. Everyone wanted a 50 cent per square foot rent.

    When it had been nearly filled up, with an eclectic collection, she asked for more advice.  I said then that she needed a center for the entire community to converge on to create a durable and stable community.  A restaurant with a coffee shop, in the mornings, and a copy shop.

    Greenssanfrancisco27She didn’t know how to get a non-profit restaurant. So I said I’d do it.

    I chose a location: the old Army vehicle repair shop.  I went to two dear friends. Dick Baker, the Abbott of the San Francisco Zen Center who ran several non-profit businesses, the most successful being Tassajara Resort. I showed him the site and he was excited to run a vegetarian restaurant in a beautiful location with a view of the Golden Gate Bridge. I then went to Rudy Hurwich, another good friend, president of the non-profit Fort Mason board. He supported the idea.

    Three problems that had to be solved.  First the concrete floor was covered in oil that could never be cleaned. Problem solved by California State architect and friend Sim Van der Ryn, who made a new floor 4 feet up which also gave a view out the windows to every table. Second, a fine diner needs wine. The Zen Center voted to make a beer and wine license an exemption to Buddhist tradition, worthwhile.

    Third, a great chef was needed. Abbott Baker got a great Zen cook, Debbie Madison, to spend a year studying with pre-eminent chef Alice Waters. The first chef, Debbie, published many cook and food books over the coming years. The two successor chefs have been equally great. The current one, Katie Reicher, continues the tradition as a genius.

    FrdayFinally, I introduced a marketing idea I had first developed 15 years earlier: to create a grand opening and a loyal customer base.  Everyone within range of S.F. Zen Center and friends of friends were invited to a two month crowded opening.  That came to nearly 10,000 people.  Many were given complimentary wine and meals. Greens was full from then to now.

    Abbott Baker was responsible for the aesthetics of Greens. I later contributed the welcoming values to other restaurants and food events, knowing that more food related business was good for Greens.  Business is not competition, it is synthesis.

    Two of my ideas were not adopted by Greens.  One was to give people who wanted ‘left over’ containers, one out of five people, a high quality freezer box with the name Greens on it.  Greens already had enough business. The second was to designate a small room, the Steve Jobs room, where Steve ate regularly and had his wedding night meal.  No one else liked the idea.

    How did I create this historically important exemplar?  

    The most important was my vast network of friends and associates.

    My personal reputation as someone who is good at business as a: former banker, creator of MasterCard, open to new ideas and a receptive non-judgmental listener. 

    Someone who doesn’t seek personal credit for my many accomplishments.

    Retainer of vast collections of trivial information. I stayed awake when I was in the Army and we listened to lectures and saw movies during my reserve duty special trips to Fort Mason from 1962 to 1967. 

    Finally, I pay close attention to how society works.

     

  • Where the Ultra Rich Came From

    The ultra-rich, our billionaires, are in for a great deal of antagonism.  However, only a few hundred people know where they came from and no one seems to have written about it.

    I see two sources, and a combination of the two.  

    BusinessA). One came from the genius of Harold Geneen, who became President of International Telephone and Telegraph Company in 1959. He proceeded to create and run the first genuine ‘conglomerate.’  Within a decade he had bought 350 companies in 80 countries.  He had experience as a runner at the NY Stock Exchange and as an accountant.  Geneen created the corporation market. Corporations are now bought and sold like cars and shoes.

    After Geneen showed it could be done, corporations became marketable objects.  Geneen managed his acquisition by standardized financial statements and careful top- level supervision.

    After Geneen showed it could be done, corporations became market objects just like any other good on the market. Buying and selling corporations and making improvements in the operations became a source of riches for anyone who was good at it. 

    Three lines of development extended from Geneen’s invention.

    1.  First, corporate takeovers. The best known name in this field is Carl Icahn. Icahn began in the early 1980’s. In a corporate takeover, a shareholder buys enough stock and gets enough votes to take over a company and change top management.  With improved share value the company is sold by the takeover shareholder.
    2.  The consulting firm, Bain, founded in 1971, found many other corporations that could be improved but refused to make the profitable changes Bain suggested. Bain then had Mitt Romney and Orit Gadiesh form a company in 1991, Bain Capital, for the purpose of buying corporations and making managerial improvements and then selling the corporations.
    3. The third line of development was the creation of special purpose funds to imitate Bain Capital and raise funds in the stock market. The largest three, called private equity, are BlackRock, Apollo, and KKR. With combined assets worth $2 trillion.

    As can be seen in the examples above, the stock market has been an important source of capital to realize the net gains in corporate value as the corporations improve operating performance.

    B.) The stock market has been a more direct source of gain for the dozen or so entrepreneurs who created giant companies de novo. The unique source of stock market wealth has been the special stock holding status of founders.  

    The lawyers in Silicon Valley who created the corporate structure of many of the extraordinarily successful high-tech companies, made sure the founders and the early investors got an extraordinary proportion of the wealth generated by the stock in these companies.  This modality is the source of many of the extraordinary fortunes of the top founding entrepreneurs.

  • Japanese Think Tank

    I’ve worked for several think tanks around the world.  American, French, Dutch, and Swedish but the most unique and interesting was the one in Japan where I was a partner.  It was called Dynax and there were only two of us principals.  

    ThinktanksFor the first few years, in the early 1990’s, we had a translator since neither Takakawa san nor I spoke the other’s language well. After three years we found we understood each other, he speaking English poorly and me speaking Japanese equally poorly, but slowly we understood each other, perfectly.

    The three most interesting jobs we worked on were for a giant department store chain and a coalition of three giant companies including the Sumitomo Group.

    The chain wanted research on the tastes of 14-16 year-old girls.  We started with in person research at youth concerts but quickly gave that up.  What we settled on was ‘Aunt Suki’ a sign-up program for high school girls in the Tokyo area.  A subject sheet was mailed to the girls each week for them to call in on Monday and Wednesday to share their opinions with Aunt Suki on some specific subject, such as lipstick, bras, shoes or hairdos. Then on Tuesday and Thursday they would call in to get a summary of Aunt Suki’s opinions on the previous day’s calls.  The client got a monthly summary.

    The second research, in the mid-1990s, predicted what was going to happen when computers and communication got so good that most workers could do most of their work at home. We did a few test runs in Yokohama with a few giant company departments.  We had our own version of Zoom.  We saw that all the low-level workers were fairly comfortable for three to four days at home.  Most mid-level workers worked a few days at home, a few days in a satellite office and one day at headquarters.  Management needed to be at the head office most of the time.

    TeamThe third project was the most interesting, for the same group of giant company clients. 

    There was concern among management that many experts and outsiders were used throughout their companies but management felt their expertise was not fully utilized.

    We developed a methodology for deeper understanding of classroom talks. 

    Each student had a handful of 3×5 cards.  As they listened to the talk the students made simple notes.  At the end, with the guest speaker gone, the class walked to the board at the front and put their notes on a large branching tree of the speaker's subject. They were summarizing the talk with their notes, showing the history of what they heard on the board.

    Greater attention, accuracy and understanding were the outcome.  Over months and with different groups practicing the technique, the process got better and better.

  • Spontaneous Commerce

    When Airbnb was first started in San Francisco, I had three friends who immediately got into the business.

    Does that mean anything to you?

    3folkOne was a game developer, no surprise.  He bought three condos and rented them out. 

    The second was a salaryman who bought five houses in New Orleans with the intention of moving there to rent them out. 

    The third was a psychotherapist who rented out her city apartment for $5,000 a month and stayed at her country farmhouse.

    The interesting thing about this event was that two of these emerging entrepreneurs were not the kind of person one expects to start a business.  It says to me that America is a land of millions of potential entrepreneurs who will start a business if they are given the slightest genuine opportunity. This is truly America. Commerce is deeply American.

    The first and third were almost immediately put out of business by the rules San Francisco put in place to make Airbnb unworkable. The first friend soon moved to Los Angeles.  The second was soon put out of business by the city government of New Orleans that made Airbnb unworkable.

    SupervisorsThe CEO of Airbnb is Brian Chesky.  He and his founding partner were both graduates of the Rhode Island School of Design. Neither one had any idea of how politics works. Both immediately conceded to the laws and regulations that the San Francisco government put in place.  Terrible laws that destroyed two-thirds of all the operating BnB rentals in operation.  The anti-business regulations were copied everywhere Airbnb went. The same horrible regulations nearly destroyed similar vacation rental businesses that had been operating for decades, worldwide.

    Three lessons from this: 

    1. Americans are deeply disposed to starting businesses; no matter who they are. Its American.
    2. Government with trivial and irrelevant regulations is the greatest destroyer of business on the planet.

    Travis Kalanick, the founder and CEO of Uber, didn’t start his business until he got a Statewide license to run a limousine business which served as a short-term protection against the politically connected and ferocious taxi cab bastards.

        3. Political skills are vital to innovation in business.  Otherwise governments will destroy you.

  • In the New Revolution, Teach Commerce

    The revolution in higher education is coming.  There will soon be several new and very high quality universities that will protect and appreciate Jews.  It will be important to teach the realities of commerce.

    Shinjuku_GyoenThere is no such thing as ‘capitalism.’ There is only ‘commerce.’ ‘Capitalism’ is a term that comes from Karl Marx who had an erroneous theory of labor as the source of prices.  Simply, the cost of goods sold is equal to the labor input to the goods and services plus a payment for capital, plus whatever the ruling class can force on to the top of the cost.  That explains virtually nothing in commerce, which is why the labor theory of capital was never taught anywhere in economics.  It doesn’t explain rent, the prices of land nor anything else. The market prices of commodities vary continually as do the price of equities. No relation to labor.  

    ‘Commerce’ on the other hand is not a homogeneous entity.  It has three separate components. Trade, Clientry, and Industry.  

    Trade is usually a single proprietor often with hired workers.  The trader buys goods and marks up the price for sale based on the various costs, the volume of sales expected and the amount of lending needed to make the sales happen, plus a markup to keep the business running over time. A flower shop or a small bakery are good examples.  The French and the Overseas Chinese are masters of ‘trade.’ There are flower shops and bakeries anywhere there are French.  There are stalls or storefronts with single categories of goods wherever there are Overseas Chinese.

    Clientry is the form of commerce that is designed to provide goods or services for the lifetime of the buyer.  A barber or dentist are good examples.  The price of the good or service is based on the market price and the level of skill of the seller. Clientry is based on a lifetime of service as the horizon for pricing. Surprisingly banking is a clientric business, with the intention of the seller or lender to maintain a long-term relationship with the customer, but bankers seldom have the sense of devotion to the customer found among lawyers and architects.

    ConsultIndustry is the type of business designed to maximize economies of scale. It is found wherever multiple stores, or large capital investments are operating.  Every chain business is designed to benefit from economies of scale as are all the entities we call industry; railroads, steel companies, airlines and McDonald’s.

    Commerce thrives in societies that value markets, societies that restrain the power of government, and societies that are open to individual initiative.  

    Government bans are a great restraint on the nature and quality of business.  Government’s absolute bans on silver restoration, cleaning solvents, and metal plating are a tiny example of the tens of thousands of businesses that are foreclosed by unreasonable and disproportionate government restrictions.

    TeamCommerce is 98.3% cooperative. The very nature of commerce is that hundreds, thousands, and sometimes, millions of people cooperate with each other daily. They cooperate within businesses, between businesses as suppliers, and as renters, advisors and colleagues.  

    Yet the popular image of competition is the paramount mode of thinking about business. Commerce is cooperation on the grandest scale known to humans.

    Lastly, commerce thrives where diversity of opinion, diversity of experience, and diversity of values are allowed to work together.  Merit is the milieu for commerce that creates vigor and innovation.

    Someday more people will understand commerce and the world will be a better place.

  • Don’t Do What You Love

    There has been a recent flurry of articles on the subject ‘Don’t do what you love.’  This is pretty much in response to an unattributed popular phrase ‘Follow your passion’ or its earlier version ‘Do what you love and the money will follow.’

    Don'tAs the father of this idea, I feel compelled to comment.  I introduced this idea to the world in my 1974 book The Seven Laws of Money.  The first law is ‘Do it. Money will follow if you’re doing the right thing.’

    I wrote this theme in response to all the people who were coming to me soliciting help in raising money for their project.  Mostly hippies. It was the right response to the subject at the time.  Most of the thousands of projects I saw needed to be tried in the real world to know if there was a market. Simple, clear advice.

    It promptly morphed into the ‘Do what you love and the money will follow.’ Which is a mystical statement that I couldn’t support. That morphed into Nike’s ‘Just do it.’   A very American sentiment.

    Frankly, as advice for the corporate world it is nonsense.  Most people enjoy their work, because of its sociability and its challenges, but doing it as a passion is probably rare. For owners and top managers the business world is hard and stressful.  That is a reality.

    If you are just starting out in the world and are a highly competent person, I would always encourage you to do what you love, but be prepared to do it for a long time without much monetary reward.