Reading about Netscape is technology using computers and the internet, which to many of us urban, service orientated people is very exciting and sometimes we forgot about the word technology use of 150 years ago. In one of those small town libraries, which has very interesting books, a book was found about Technology on the Frontier by Dianne Newell, UBC Press, Vancouver, 1986. Ms. Newell  is a History Professor at the university, and she writes about an interesting time. When North America was settled, the obvious places that were accessible by boat were settled. As the economy built, people went into the bush country to see what there was, besides trees. Minerals were discovered in parts, but minerals fluctuate on the commodities market and when prices are high, there is a rush to deliver them. When prices are low, town sites become ghost towns. In the book Ms. Newall focused on after a mineral is discovered, what technologies allowed it to be mined and sold profitably, or at least sold for a while. The mining industry for a long time used the backs of the miners and for some minerals that was good. For others, where great quantities needed to be moved and the cost of the infrastructure factored in,  better methods or technology were needed. The option of investing in better technology or the mines is always a good one. In the time period Ms. Newall writes about the shipping industry came first, then railways were built and to run a profitable railway, profitable ore bodies needed to be found or at least believed to be found.

Linking to dividend paying stocks, while the adventures are exciting to read about, the ideal investment is a mature mine that still has many years of ore to yield. For example salt mines, rather than iron ore mines, although the iron ore mines that feed the ore to steel mills is more sexy. In the 1800’s it did not seem to take great amounts of money to be invested in order to achieve a return, but the land is big and profitable deposits are hard to find.

There are more questions than answers, till the next time – to raising questions

Jim Clark the cofounder of Netscape wrote a book about his experiences called Netscape Time by Jim Clark , St. Marin’s Griffin Press, NY, 1999. Within the book besides the description of how Netscape was founded are important lessons to run a successful business including funding and venture funding, managing companies, use of resources , however to focus on two items – the market and the competition.

Mr. Clark writes – one of the great revelations that comes from the introduction of any new technology is that the users or the market will tell you how the products of that technology are used. The market tells you where the your market is and you better listen. A wonderful example is many know the original use of the Gutenberg’s printing press was to print copies of the bible. If it only be used for that, no communication revolution would have occurred. Once a bible could be printed, leaflets and books could be printed that was the revolution which the market said it wanted. The quality of a measure of how good a product is – and how smart a company is- can be seen in how quickly both adapt to new and unplanned for events. The market drives the market. You have to remember 15 years ago when Netscape came out there was no Yahoo or Google to organize the internet, it was done to give the world the internet and they will figure out what to do with it.

The competition is another theme Mr. Clark talks about in his book and it is Microsoft. If you have a computer, likely you have used Microsoft products, which is why Microsoft is still a dominant player in the software business. Microsoft is not great at inventing things, it is great at buying other ideas and gaining control of markets which in turns allows Microsoft to make a lot of money. In the software industry, if you are not a Microsoft supplier, you worry about the company and how and when it will send its resources into your area. Microsoft, as a late comer to most innovations, it came late to the power and money making possibilities from the internet. In the book, Mr. Clark was always worried about how they would react and could they both companies survive.

Linking to dividend paying stocks, as a company which is sustainable, as an investor you have to watch is how well in tune the company is to the market. In the case of Netscape, the market with the internet changes, what was the establish norms some years ago changed, people can do the same thing through different processes. While the dividend paying company is making money, you have to ensure that the company is well tuned to the market to continue to make money.

There are more questions than answers, till the next time – to raising questions

The world was much different 15 years ago, for it has only been 15 years which most of us had access to the internet. As our lives have changed, it is interesting to look back at before internet was a given in the daily life and the companies which attempted to give us the internet. Back then, the uses of the internet were not seen by the 99.999%, but a few did see something, how they were going to make money off it was an unknown, but a few did see what could be. Jim Clark, the cofounder of Netscape, was one of those people in the .0001% and was the right person in the right position at the right time. He wrote a book about his experiences called Netscape Time by Jim Clark, St. Marin’s Griffin Press, NY, 1999. Mr. Clark was the Chairman of SGI or Silicon Graphics Inc. and was in the process of leaving, although he was a multi-millionaire but not a mega millionaire. He was looking for something else and was alerted to the talents of Marc Andreessen and Mosaic. Most people know the internet was originally a government service with a heavy emphasis on university researchers and defense contractors and run out of the National Center of Supercomputer Applications (NCSA) on the University of Illinois Urban-Champaign campus not far from Chicago. The reason why Silicon Valley is not in Chicago is Stanford University was able to encouraged its people when they had a great idea to set up a company and run with it. Companies that made money gave back to the University and the cycle keeps going. The University of Illinois people felt the company had to go through the University or bureaucracy, which just encourages people to find a better way to commercialize the ideas.

Eventually, Mr. Clark and Mr. Andreessen thought their great idea was to make a killer app or make it easier to use Mosaic which would open up the internet to the average person and thus companies where money was to be made. Each sector would use the internet to do all sort of things, many of which they were already doing with pen and paper. When Mr. Clark set up his company, there were among the thousands of non descriptive companies setting up in the Silicon Valley area. As investors, it is important to remember, with technology after the idea of what is desired, the most important asset is not the computer but people. Mr. Clark was able to set up  the company – he would use his knowledge gain from building SGI in terms of how companies, processes, people and money come together to form products, while Mr. Andreessen and fellow engineers would concentrate on writing the software. This was the ideal division and many companies which are set up, it simply does not exist. The skill set is different, but must complement each other. One raises money, one spends money; one tries to figure out how to generate revenues, one makes it easy for people to use the software; the bridging between the gaps is very hard for most companies.

Linking to dividend paying companies, instead of thousands of companies in non descriptive offices, dividend paying companies already have paying customers which are sustainable. The products are meeting needs and the company continually tries to make the products and services better. That is a different environment than bringing a new market for new uses as the risk is much higher that the market that is being targeted does not generate the revenues needed. When you buy dividend paying companies the risk is lower, and the return more stable which allows for the long term rise in your investments.

There are more questions than answers, till the next time – to raising questions

This week my travels took me to an art show  – partly it was a fundraiser and partly it was for social reasons. While the intent was not to buy art, it was to help the cause of the evening. In these types of events, there are show stoppers where everyone is suppose to be in awe of what a designer did. While it is very possible to respect the talent, the time, the energy, sometimes asking yourself do you want to see that piece everyday limits the desire to bid on the item. One of the show stoppers took the designer 8 hours to put together which meant another 20 hours to figure out the concept and the rough drafts. Remembering in most art galleries, there is a 3 second rule, in that the average person will spend looking at the art. If they like it, they will linger more and if they love it they will come back to determine why. It means many creative people have many possible strikes against them before they start as they attempt to show it to the right person in the right time in the right moment that is good for that person.

Linking to dividend paying stocks, part of your research is the history of paying dividends and ideally rising levels and you will find there are many fine companies operating. Depending on your expectations you will need to narrow the stocks down to the sectors which you can easily follow. Then pick a company or companies and both dividends and capital gains will enrich you which could allow you spend money on art.

There are more questions than answers, till the next time – to raising questions

For the past few weeks, part of the weekly shopping stops was to look at running shoes. Last fall a pair were bought at a deep discount ( a bargain at the time) and before Christmas the seams were coming apart. By March, the seams were only good if the land was dry and given in the northeast we are finally moving into spring, the shoes had very limited value. Over the years, the styles of running shoes have rapidly evolve to be part fashion and part usage. How much you wish to spend is another part of the equation. A desire for a pair of basic runners with all the wonderful air features was what I was searching for. A determination of price or how much should the total bill be was quickly a concern. Running shoes can be relatively inexpensive but they seem to quickly jump over $100 a pair; although many stores have a special or one coming up.  After a few weeks of looking, a pair of running shoes was found with the desired features at a price point that was considered good (and yes they were on sale).

Linking to dividend paying stocks, similarly with investments taking your time to see the many options that are available is very important. It is also important to determine what features you wish by checking out the marketplace. After you have done your research, a stock can be bought for all the right reasons – in this case the recommendation is does it pays a dividend? Doing it for the right reasons, on your own time, leads to better results.

There are more questions than answers, till the next time – to raising questions.

While most people are good, if you look around you will find someone who is not good. The ones who are not good come from both the rural and urban areas, the goulish ones seemed odd, but outwardly they seemed like nice, quiet people. In the book, Villains, Scoundrels and Rogues by Paul Martin, Prometheus Books, Amherst, NY, 2014 the stories outlined some crimes against people in terms of multiple murders, some crimes against humanity – slave owners; eugenics and sterilization; and hucksters. The hucksters is the interest of blog. One of the huckster was the Yellow Kid Weil who looked upon crimes as opportunities to teach the avaricious a lesson. Every victim of one of my schemes had larceny in his heart. An honest man would have no part of any of my schemes. They all wanted something for nothing.  The problem for the victims was even if they suspected a fraud, it was hard to explain to authorities they were suppose to get rich with an inside deal, which is illegal to do in the first place.

Linking to dividend paying stocks, one method not to be fleeced is buying profitable companies which return a dividend. In this fashion you can research the number of years of returning a dividend; you can research why the company is expected to pay again the following year (its strategic advantages) and be certain you will be paid. Over time the share price and the dividend will provide a better than average return and you will have your cake and eat it to and its all legal.

There are more questions than answers, till the next time – to raising questions.

The last few blog posts have been about growth and to make changes in a company needs senior management approval. It makes life much easier if senior management actually wishes to make changes. If they do not, you will have to learn how to pick your spots while you either move up or wait for the management to change. If you decide to pick your spots, Rocking the Boat by Debra Meyerson, Havard Business Press, Boston, 2008 is a good book to read as the subtitle is How to Effect Change Without Making Trouble. The idea is you enjoy what you do and want to keep your job but move the organization to something better than it is.

The steps are essentially how to negotiate whatever you want, except in a medium size or large business, processes often move at their pace. Which means having an ear to the environment of the organization. It also means figuring out how to remain true to yourself; how to turn personal threats into opportunities; how to broaden the impact and leveraging small wins into bigger results. Organizations all evolve through many different decisions, some people are better managers, some are bad managers but they were promoted and if you work for them, you likely still want to work for the company and the first method to rock the boat is stay employed. The second method is to get promoted and be a good manager of people. Often times middle management can have the greatest effect because they manage people well and by managing them well can adapt some corporate rules to fit into people’s lives. The adaption will then be noticed by others and soon it will be the new normal, but it starts will people being true to how they are. We are all individuals, but come to work for an organization, some of that individual we leave at home, some of it we bring to the organization.

In many instances the answers which are never black or white, come to how hard should your push? The factors are:

1. Timing – is it a good time to take a risk and pose a challenge?

2. Stakes – is this a fight worth fighting for? how high are the stakes?

3. Likelihood of Success – how promising are the hoped-for results? will people learn?

4. Options – are there better alternative responses to those that oppose a risk to you? are there better ways which you have not explored – committees?

5. Consequences of failure – what are the worst outcomes? do you expect to be promoted? will it happen after the push back?

6. Personal association – why this issue? can you find a third party to help?

7. Doability – does a response feel doable? what outcome do you want?

The above are generic to typical negotiations, the key is to have actually thought about the results and consequences before hand. Many people tend to try to rock the boat, but they have not thought of the consequences and end up marginalized. If you are going to change something or work on something being changed, what outcome you have in mind is a very good first consideration and the outcome has to be in the language or those who you wish to change. An example is you might think of personal reason, the other person thinks does it cost the company money or bring in more profits if you change something? The other person also thinks that going through the ranks to where they are, life had many sacrifices which you do not know about.

Linking to dividend paying stocks, similar to things in life, when you buy company shares at some point time you may run into someone who works at the company. Sometimes it is one of the reason you bought the stock. You have an opportunity to ask on a more regular basis about the person’s work and actively listen. One of the many things is asking about how change works in the organization.

There are more questions than answers, till the next time – to raising questions

According to the book Every Business is a Growth Business by Ram Charan & Noel Tichy, Times Business, NY, 1998. the authors believe there is room to grow in every business. The last portion of the book is a handbook to begin the process for you to examine your company and where it can grow. As a profitable sustaining business you are good at something, better than the rest, which means if desired you could extend your abilities to beyond what you are doing. Most companies are very good at the basic aspect of their business, they may not be so good at the other aspects to run the business and that is where the abilities of your company can be used to solve the needs. Can the pond be bigger? When you see the pond can be bigger, are you willing to make it bigger?

Sometimes the answer is no for example a  number of years ago, the author worked for a medium sized business which owned what its customers thought were 3 competing businesses. The customers would switch some of their purchasing between the 3, never knowing the ownership structure. The owners had little reason to innovate or to grow for they were satisfied with what they had.   Another company which I worked for had some of the best assets in the business, but very little desire to exploit them or use them to meet their customers needs. The company had very loyal and wealthy customers, but with a management structure in which any change needed senior vice president approval and they were content to rest of the laurels of the past. The business was profitable, but it could easily had been a leader; in the end, it was sold to a bigger institution.

The above are examples of before any company can decide it wants to grow the leadership must want to lead. In many cases, the leaders say they wish to grow but the internal rules of the company highly suggest that is not what they want. For example, part of innovation is getting it wrong, but the key is to start small, do pilot projects and scale up. In some companies they are adverse to getting it wrong so not doing or only doing innovation at the margin makes a longer career.  If the company decides it wants to grow 4 questions must be answered and worked on.

1. what existing customers believe about the company and its products.

2. what employees think of the company.

3. the company’s real competitive position

4. whether the company was generating enough cash from operations.

Often what people on the outside think and what people in the inside think are two different answers. Bringing them to one answer is the challenge of the leadership.

Linking to dividend paying stocks, companies which pay dividends have a existing profitable market share which is great. The challenge is to maintain it while a great many things change in the marketplace. If the company is not trying for growth but is happy to sit on its past, then the competition will rise up and take its profitable operations for they will offer better. Only if the company is a monopoly and highly regulated one, even though, there are methods around those companies. As a shareholder you need to see the company growing or be prepared to sell your shares.

There are more questions than answers, till the next time – to raising questions

Continuing with the growth theme – at some point in time, the business will be seen as a mature one, where it seems the object is to fight over 5% of the market.  Does that mean the business stops growing? or does it mean there is still room to grow? According to the book Every Business is a Growth Business by Ram Charan & Noel Tichy, Times Business, NY, 1998. the authors believe there is room to grow in every business. They believe if your business is not growing sustainably and profitability, it is dying. The four principles to growing every business are: 1. believe and act on the idea there is no such thing as a mature business. 2. the company’s growth is profitable, sustainable, and capital efficient. 3. companies grow because growth is in the corporate mindset created by the companies leaders. and 4. the mindset starts at the top but must reach the bottom or is at all levels.

Why is this important is one critical aspect of judging a company is the company’s leaders to deliver a profitable sustainable growth.

The crucial points from this book are:

1. There is no such thing as a mature business.  What is your water?

How does it start? the first aspect is looking at the pond you are in, how do you define it? A wonderful example is Coca-Cola. In the 1990’s, the company had a 35% market share which was profitable. However the President Roberto Goizueta asked a question of its executives. What is the average per capita daily consumption of fluids by the world’s 4 billion people? The answer is 64 ounces. What is the daily consumption of Coke? The answer was less than 2 ounces. The competition was not Pepsi, but water. If the competition is water, Coke is a small fish in a big pond, and there were more things that can be done. Coke began its transformation and has continually raised its dividend.

2. Not all growth is good. Good growth is sustainable, profitable and capital efficient. There has been many companies that have increased their revenues because that is what leadership were paying for. In the most recent case of mortgage backed securities, the more that were packaged and sold, the more the financial institutions made. The problem was the quality of the mortgages rapidly decreased and there was no money to repay the mortgages. However before that happen financial institutions were booking profits on revenues and trying to get the mortgages off their books. Unfortunately most ended holding great amounts of mortgage back securities which were written off or not profitable.

3. Growth is a mentality created by a company’s leadership. Leaders must believe and infect the rest of the organization. Change will be tough, but change can be wonderful. In the book, Citibank changed its focus to be the banker of choice or do multiple transactions for its target market. To do this reorganization and the ability to bring in expertise to help their clients and gain the ability to do multiple transactions took time and effort to do, Once it started the pond grew in size.

4. Balanced growth is the key to prosperity in the 21st century. In the end your customers come to you to fill a need. If you focus of solving needs, products and services will come. The four paths are A existing customers with existing needs; B new customers with existing needs; C new customers with new needs and D existing customers with new needs. The challenge is to evolve with your customers and satisfy their continuing needs as the world around them changes.

5. Growing is less risky than not growing. If you are constantly cost cutting, being defensive you will not be satisfying the people in the company or the customers and both will begin to look and go elsewhere.

Linking to dividend paying stocks, often companies that pay dividends are in businesses that have been defined as mature for there are fewer competitors in what is considered an existing pie. The competition is to gain a slightly bigger piece of the pie, but can the pie or pond be enlarged? As a shareholder you want to know what does the leadership of the company think about the pie and its opportunities. Then other decisions can be made.

There are more questions than answers, till the next time – to raising questions