Monthly Archives: April 2012

Lomography – Analogs Having Fun in a Digital World

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“Lomography, an Analog Company Surviving in a Digital World” is a blog article by Jenna Wortham in the April 26 New York Times in the Technology section.  I was struck by the title of a subject area I live in – Analog people coping and growing the Digital World, but I was totally unfamiliar with Lomography.  As a consultant, I work with organizations to help integrate their people “Analogs” with their new digital surroundings and processes.  I also work on guiding companies to bridge to our old Analog world and their adoption of digital strategies.  Sometimes I feel like a luddite, but then I’m really a geeky nerd of the lower-high level order.  I like digital things, but I like people more.  Making them play well in both worlds is how I earn my living as a consultant now.

I am a child of two worlds, both the analog, now code for human side of things, and the digital, which is where the world is rapidly moving.  Often the two worlds don’t mix well together, especially for boomers like many of my friends and associates.  Having purchased one of the first iPhones (day 2) I am a card carrying geek, and that is how many of my friends, and family saw me.  The gadget king is at it again.  Now everyone in the family has iPhones, iPads and we Skype on the weekends with our family in Texas.  We’re bought in!

Though I have all the digital tools I earn my living by helping others integrate them into their lives, their businesses, and help them survive a  dark side of digital implementation…distraction, and a sense of loss of real human interaction.  The question of personal productivity and multi-tasking is also now open for discussion.  Not every gadget or digital process really makes us more productive research is recently finding.

That is why I loved this article by Jenna Wortham.  It captures the true sense of ‘surviving in a digital world by humans/analogs.  In 2008 my 20 year consulting practice branched in this arena and I became the Analog Sherpa.  My tagline was, and still is…”An Analog Sherpa for a Digital World.”  Now you can see why this article impacted me so much.

With the  bankruptcy of Kodak recently the challenge of surviving a digital onslaught is high, just ask daily newspapers – or the USPS whose volumes are about to send them down, at least for a re-tooling.

Where did Lomography come from? Lomography started 20 years ago in Austria, by a group of photographers and artists who stumbled across a cheap Russian camera called the Lomo that used 35-millimeter film. The Lomo camera produced unique and charming photographs that often contained artsy blurry streaks and were oversaturated with color due to the camera’s body design and construction.

Matthias Fiegl, one of the artists who went on to found the company started smuggling Lomo cameras back from Russia to Western Europe in the early 1990s and sell them among his friends and then host exhibitions to celebrate the art photographs.

In the age of skype, cheap digital video cameras Mr. Fiegl found something different – sharing actual prints with all of their unique flaws from the film and cheap cameras.  Retro was back, and suddenly it was different and cool.  People got hooked.  Now a large Facebook community is organizing Lomographer meet-ups around the world.  Instant is out, and unusal is in.  Waiting is a part of the attraction for the Lomographers.

They still use digital cameras and the iPhone – instant is not verboten, but the fun of seeing something later, and not perfect is even more cool.  The digital world and the analog world can co-exist side by side…and be cool at the same time.  There is hope for the Analog Sherpa in this digital world…and I’m still cool to boot.  Cool!

Sam Zell…First in Our Hearts and Last In Line for $$$

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The following article ran on April 2, 2007 in the Media Bistro under a byline by Kate.

 Sam Zell – Tribune’s New Owner

Sam Zell, the new owner of the Chicago Tribune Company, has quite a reputation as a motorcycle-riding, cowboy booted swashbucker who came up the hard way.

He’s on the Board of Directors of Equity International.

He likes to take risks, according to Forbes and he’s #52 on the Richest list.

He’s the biggest landlord in America or was, in 2004.

He’s called the “grave dancer”.

He’s “salty to the point of crass”, according to the CJR.

He owns, at least in part, two baseball teams.

So what does this mean for the LA Times? Got any predictions? Send ‘em our way.

After a short run in which he fleeced nearly everyone in sight, including the employees of the Los Angeles Times where he used their money in an ESOP to fund a major portion of his purchase – Sam has finally met his match.

Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del. ruled that Sam Zell should be the very last creditor to get money in any payout from the Tribune bankruptcy proceeding. The judge found that “Mr. Zell’s investment ranked dead last in the Chapter 11 payment priority competition, ‘at the bottom of Tribune’s capital structure,’” the Wall Street Journal reports.

Ouch…but it couldn’t have happened to a more deserving guy.  We wish you well Sam.  No, actually we don’t!  Go away and don’t come back again.  You will forever be the poster child for all those who hastened the demise of U.S. newspapers.

AT&T Exits From the Yellow Pages – check it out on Yelp

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It was announced this week that AT&T has agreed to sell a majority stake in its Yellow Pages business to Cerberus Capital Management. The price was reported to be $950 million dollars, for a declining business that AT&T was happy to jettison and get on to more important areas of their business.

The deal was for primarily cash with AT&T receiving 750 million in cash, with a 200 million note on the backend. AT&T will maintain a 47% stake in the business, but Cerberus will handle all day-to-day operations. Cerberus has pulled a number of rabbits out of their hat in the past, but this one looks to be particularly difficult.

During its heyday through the 1990s the Yellow Pages franchise, which included AT&T and a number of other telephone companies, and even a number of independent publishing companies, had a wildly profitable business. Recently the business, as a print operation, has become a boat anchor.  Revenue was down 30% in just the last two years.  The goal for Cerebus is to help turn the business into a digital operation that will compete with a number of newer players including Google and Yelp.

It has been a number of years since my family has kept or used a printed Yellow Pages directory at home. Like so many our tendency today is to simply Google what we are looking for hit the return and we have our answers. If we are looking for additional information, we’ll take the time to go to yelp for additional feedback from users where have actually used the service were looking for. In Orange County, CA where I live, Yelp is helpful but certainly not the powerhouse that I found when I was working in the San Francisco Bay Area. There looking through Yelp was like reading a novel, and I discovered a number of incredible writers who took the time to elaborate on their personal experiences at the various restaurants and shops they wrote about.

AT&T will use the time and the money to help grow their electronic portion of the communications field. With their growing competition this would seem to have been a good move. Cerberus will attempt to do something I that seems impossible, but they have done the impossible before, and I’m confident they have a plan to do it again.  As a private equity firm they don’t have to meet the needs of the market and shareholders and that is critical for them to have the time and hard efforts to pull this off.

Good luck to both AT&T and Cerebus, we won’t hold our breath, but we wish you well. I wonder if Cerberus would also like to buy a few good newspapers, I know of a number that can be had for well under $950 million. In fact they might be able to purchase several former large newspaper-publishing groups for the same figure.  There is one that is headquartered in Orange County (Freedom) that I hear can be had for well less than a billion.

Can Groupon Survive?…and Should It?

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Is the end near for Groupon?

It’s been years since I got my first penalty flag for piling on, nearly 50 years to be exact.  Today I’m getting my next one.  I’ve had more than a few over the years, but this is a ‘fun one.’  Today I’ll take one for the team and talk about Groupon again.  Talk about penalty flags, they are setting records for their first year as a public company.  Like the targeting scandals in the NFL, they could be coming close to getting a death penalty called on them.  Time to stop and reflect on where they are now, and ponder can they save it before someone comes in and takes the ball from them.

Last week they were forced to admit that they had overstated their earnings in the latest quarter.  The CFO fell on his sword and was officially let off the hook by the CEO.  However, the investment industry doesn’t take well to these kinds of ‘mistakes’ and a drumbeat has come up with a chant looking for changes NOW, with a decree that this can’t happen again.

The market came on line at the same time and hammered the stocks on Monday, and yet again today.  The price is now well below the initial offering price, but the overall market value of the company is still strong…too strong actually, and this is the real problem for Groupon.

Groupon was started with a great idea – daily deals that would shake money from the pockets of the public mired in a recession.  They were sitting on their wallets and needed a real reason to open them back up.  Groupon started the ball rolling, created buzz in the market, and produced some amazing results for many of their client businesses.  Consumers fell in love the ‘daily deals’ and a new marketing segment was born.

It started so quickly, and the results were so strong for a number of advertisers, that many thought that this model would be the key driver for local marketing and would overtake all of the other media including daily newspapers.  Investors roared in with loads of cash.  Big money on Wall St. was looking for a place for high returns, and fodder for the mill on IPOs.  The die was cast and Groupon went public in a blitzkrieg not seen since WWII.  But then…the roof fell in, and here we are today.  What happened?

What happened is that the creative spirit that drove the design and initial rollout of Groupon has no depth or maturity.  The CEO Andrew Mason has been shown to have some great ideas, but no real management depth.  A real manager should have been brought in – they needed an adult.

Secondly, the infrastructure to account for all the transactions and dollars is woefully inadequate.  In these deals the money is collected up front by Groupon and then the remainder after the Groupon split, is paid back to the client company as they are redeemed.  So here’s the picture- lot’s of cash rolling in, and slowly rolling back out over time.  Sounds like a big bank that needs lots of financial controls – and there weren’t any, or at least, not enough.  I’ve dealt with this many times in my career in business and consulting, and this always leads to problems.  With all that cash on hand, you just have to feel wealthy and successful, but then the money has to rollout to clients and suppliers and the giddy ‘wealth effect’ sets in.  This is where Groupon is today.

And now the ultimate penalty could be coming.  The SEC, as toothless as they are, is now starting to investigate Groupon for having to restate their earnings.  It doesn’t look good for Groupon, especially in light of the fact that the SEC needs a win to help them in their fight to keep their funding from being cut further by Congress.

If having the SEC on your case is not enough, an influential segment of the blogging community is also coming after Groupon. Rocky Agrawal in his reDesign blog opens with “Groupon was forced to restate fourth quarter earnings, sending its stock down 6% in after-hours trading.  This surprised me as much as my $2 investment in the Mega Millions jackpot not paying off.”  Ouch!

Rocky picks apart the business model of Groupon and that it is neither a coupon or marketing company, but rather a receivables factoring company.  They are a sub=prime lender in effect, living off of one cash stream while they try to meet the spread on the other end.  I think he is spot on in his points here.  One thing for sure is that they are not the saviors of the marketing field, not newspaper killers.  Newspapers have committed suicide over the last several years and needed no one to do the job for them.

So what next.  Enjoy your daily deals.  Groupon or someone else will continue to provide them.  They work for many on both sides of the transaction, but not for all, as many complaints will show.  I think the real issue is that Groupon can survive as a business, just not as a publicly traded one.  A great idea, but a horrible timing in the rush to the public market.  Yeah, they are a sub-prime business and Wall St. yet again was at the ready to make the deals cause they get paid no matter what.

I’d be willing to place a small wager that in this game, like the housing markets they have bets all across the line – win or lose, black or red, and they know how the numbers work.  They will be the ultimate winner in this ‘daily deal’ at the expense of shareholders.