Entreprenural Values and the Real World

Previously published elsewhere 7/20/08

I came at sailing and boat fixing as a choice, a decision about "what to do next." I had a thirty-year career in various entrepreneurial businesses, often in sales positions. My most recent job had been running an aggressive interdisciplinary team formed to take one of my company's inventions to market. We designed, manufactured, marketed and sold a new type of gas control system for semiconductor process tools. No one explains how you should succeed in an entrepreneurial business. It is your job to make it all up out of nothing. Select the team, set up shop, pick your targets and go. The more audacious your choices, the more you can inspire your team, the better you do. Provided you can keep it more or less under control. Provided the economy doesn't roll over on you. You know the odds are against you. You know success in an entrepreneurial venture also involves being in the right place at the right time. But it's exciting and gut wrenching, a real roller coaster. Knowing all this , you take initiative every day and you inspire your colleagues to take initiative. "Better to ask for forgiveness than to ask for permission." Perhaps you will be one of the lucky ones.  

There are rules. You stay within the law and you stay within budget. But your job is to make something extraordinary happen and there is no script for that. You keep everyone moving in the same direction but contributing all the creativity they can personally muster. When it's working at it's best, everyone is looking for ways to improve the outcome for the team, everyone has the power to make decisions. People are expected to make mistakes and there is no penalty for doing so. Just get up and try something else. "If you are not falling down you are not skiing aggressively enough."  

From this I went almost directly to starting up a one-man company to fix boats. I grew up on Lake Michigan, spend a lot of time in the water, but I had never spent much time around boats. I have a good technical background. I can understand and fix almost anything. I have been an electronic experimenter since childhood. Boats looked really interesting and here I was in Southern California, home to tens of thousands of boats. Getting older, I knew I had to become independent of corporate politics. I made too much money not to be a target at some point. Surrounded by MBAs, I had risen well above where my education should have taken me. My company was swallowed up. I didn't like the new guys. A little money became available. I rode my gold-colored parachute out. A golden parachute is a very comfortable financial landing for a high executive. In the acquisition of a small, troubled company caught in an economic squeeze there may be some parachutes for senior staff, but they are only golden colored, like aluminized holiday balloons. But I received a little cushion to ease my way to the next job.  

I have been successful in a half-dozen technical industries. What was stopping me here? There are never enough really talented professionals in any area. I had the chutzpa to believe I could recreate my previous successes in the boat repair business.  

I never suspected the way I was accustomed to doing things would get me into trouble when I started taking sailing lessons. I never suspected I would briefly suffer a reputation as a dangerous person, someone who took too many risks. I knew I had little patience for school, but I underestimated the cultural barriers I'd hit in seeking a part-time teaching position with a local community college. My customer's loved me, by and large. I knew and respected the value of their time. I returned their calls. I showed up. But it is the early cultural conflicts I want to explore here, albeit in the next post. Because there are still people I respect who just don't get how I seemed to have a habit of breaking the china when I started learning about boats.  

Postscript:  

The articles I read now about the entrepreneurial spirit in China and other newly emerged countries only sharpens the contrast I felt in my own life transitioning into boating. As a society we are too timid, too fat, too complacent or too avaricious and predatory, the powerful eating up the substance of the weak. We consume way too much energy per capita to be sustainable. The Regan Revolution has run into a rock wall and we are living the consequences, the fires, bankruptcies and explosions in slow motion. Our government is mostly in denial but the vast majority of citizens know things are not right and will probably get worse. The problems of the future are my grandchildren's to solve. My own children may contribute, but they are nearly half way through their careers. My children are hitting their most productive years. I'd like them to know how I played my cards and continue to play them. Maybe they can learn something from my example.

Stupid Discoveries: the Hat

Originally published elsewhere 7/18/08

As children we long to be adults, to have our act together, to have permission to do what we want. We grow up and find out that yes, we can do pretty much what we want; and that "what we want" includes acts of breathtaking stupidity. A ruined marriage or so and a fistful of substances abused, wisdom makes itself known through its absence. Perhaps in older age we will get our act together.  

I am the last to deny that there are a plethora of acts in which I know now not to engage, although the majority of the more tantalizing are no longer available to me anyway. Still, one hopes for the day when somehow your background level of personal stupidity will drop off and you can at least save the time involved in recovery. Alas, this is not to be. There seem to be items of every conceivable level involved in what used to be called "the human condition." This includes very simple things like discovering that wearing a broad-brimmed hat with a ventilated crown makes working in the sun so much more comfortable. A discovery made, I should add, in my sixth year of working in the sun. The human condition, that utter cluelessness, ineptitude and malevolence in our nature that limit any true accomplishment. Substitute whatever. Situation normal, Fucked Up Beyond All Recognition as my father's contemporaries, that Greatest Generation, were fond of putting it. And Kilroy was here.  

This Summer is not less hot than the last several. It is my discovery that wearing a hat makes mid-day more tolerable that is new. What new continents will I drift to next? Siesta?  

Knowledge and experience are very different things. You can know the truth of a proposition because it is part of your cultural package, education and all. But it is experience that teaches you to invoke that knowledge in time to save yourself yet more discomfort. It takes more than one second degree burn to remind you to avoid touching hot things. Alas, experience never seems to catch up with knowledge. If there is any convergence it is well beyond senescence and death.  

I have explained to novice sailors, embarrassed over their clumsiness, that the only thing that really separates us is that I have made every conceivable mistake any number of times. So get on with it. Mess up. You gain sure-footedness by stumbling. There are an infinite number of ways to stumble, both large and small. They are only variations on how gravity taught you to walk. The sea will always find some way to knock you to the deck.  

My oldest son asked me for a new holiday gift suggestion this year and in a burst of originality I asked for a hat. I had something in the line of a pith helmet in mind. What I received was not simply a hat but a selection of hats. Shopping on the internet uncovers variety which defies choice. I have been wearing the $4.00 straw-and-canvas model I picked up at Wal-Mart, of course. But I have worn the others sailing and can testify to their grace and utility. Perhaps once they are properly beaten up I will wear them for work, when I most need them.

 

One's act never comes together. It may get good enough to gain the respect of amateurs over some limited range of activities, but it will never fool another professional. And it will never be up to your own standards. Your baseline aptitude for simple error will remain intact. Like our humble boats, we operate at the limits of our capabilities.

Writing Into the Void

Previously published elsewhere 7/13/08

What is writing all about if you have no readers? To blog but receive no visitors, no comments? Well, it did not seem to matter to Kafka, who was not published until after his death, if I have my facts straight. No, something about writing is not necessarily about readers. Would you write and throw each piece in the fire as you finished it? Not personally, but I've heard of it happening.  

I write because I like to write. I write because it organizes my mind. I write because doing so I can avoid taking out the garbage. I write so I can stay up way past my bedtime and feel like I've accomplished something. I am not part of the blogosphere. I'm like the person on Facebook with one friend. I do not debate the issues of the day. I do not advance engage other authors. My work is not subjected to statistical analysis along with another million people to divine the true mood of whatever. The true mood of people with lots of time on their hands.  

It's not quite as bad as if the NSA could transcribe the telephone conversations of the entire country and then feed them through some unimaginably powerful computer filter. What would they have? Gossip? Banality? Garbage? I suspect so.  

People have always talked, well, for 60,000 years or so. Thank God we do not have a transcription of every conversation. Can you imagine the size of God's memory assuming God exists and knows everything? Pretty boring, I'd think. A decent mathematician could estimate the size of God's memory in, say, bits given a few assumptions about how many people and how many words per day. But who knows, maybe the first humans were like Trappist Monks, silent unless it was absolutely necessary to talk. I doubt it. I doubt it because flattery does not come in a condensed version. And flattery, or the attempt to curry favor with a more powerful person, is as old as the race. So my bet is everyone was jabbering along unless enemies were near, in which case you had to be quiet.  

So what we have now is a world full of people with time on their hands who talk with their fingers and whose output is dutifully recorded on magnetic media because storage grows exponentially. Or something like that. Will any of it make a difference? Will some social scientist working for Google make a brilliant discovery by sifting through a pile of data just slightly smaller than infinity? I doubt it. The signal to noise ratio is really, really bad. And consider spam. I read that spam takes up a frightening percentage of internet bandwidth. Google is not all that good at filtering out African "you just got a fortune" scams. So maybe he concludes it's all a scam, the whole internet. Doubtful. People have been getting radio signals through incredible amounts of random noise for a hundred years. But do the collective opinions of bloggers amount to anything? Beats me.  

It is fairly clear that the best University educations do not produce the wisest legislators or administrators or anything else connected with functioning government. You could argue that the best educations create the smartest, most successful criminal class and stand a prayer of defending the argument. So do the collective opinions of slackers with keyboards stack up any better? I doubt that too. Oxford and Cambridge have educated England's elite for hundreds of years. What effect did that have on colonialism? Well, I suppose it could have been worse. But that good old "we're better than you are, so you should listen to us," has been repudiated throughout the past century. Iraq was an inherently unstable British invention created in the aftermath of World War I. It took a generous amount of ruthlessness to keep it glued together. And we went for it. It is not the lack of the right answer that screws thing up so badly. Experts were describing the politics of southeast Asia in 1960, quite accurately it turns out. Describing the consequences long before we got really serious about Vietnam. Debunking the Great Communist Conspiracy. Warning against picking sides in a civil war. Of picking up after the French got their asses kicked out. No, we went for it anyway and 60,000 young people of my generation were killed. Plenty of experts knew how to do things more effectively reconstructing Iraq. Did the Administration listen? No. They sent inexperienced people in to manage things after the war with only "Republican" as a qualification. How can any sane, educated person do that?  

So what effect will the blogosphere have? Well, it seems to be good at raising money. Perhaps it will be good at kicking the current bastards out. So why do I write when no one is listening? Why not? What difference does it make? And why do you care anyway? Perhaps I'm just another yahoo with a keyboard, the only thing saving me from contributing to the general blogospheric mess is that no one is listening. The future gets to decide. The future beyond our imaginations.

Everything for Boats is so Expensive

Originally published elsewhere 7/11/08

Boaters almost universally complain about how expensive boat parts and accessories are compared to the other stuff they buy in their lives. When they hear what something costs, the experienced shake their heads and bravely say, "its a boat." The increasing cost of fuel doesn't help. This resentment transfers over to boating merchants and craftsmen. I install an inverter system and people wonder if they have just paid me for a long weekend in Hawaii.  

The resentment of the dominant chandlery, West Marine, is palpable. This is especially true after West Marine bought out their only serious retail competition Boat US. Comparing in-store prices against what online merchants like Defender charge sometimes makes it seem like WM uses its dominant position to inflate prices and gouge us boaters. A local sales tax only exacerbates things.  So far internet merchants have mostly escaped paying sales tax. And you wonder why your state is going broke.

I am certainly not an apologist for West Marine, but I have a different perspective on the "high price" issue. Marine stuff costs a lot compared to complex consumer goods like cameras, phones and automobiles. The differences are several. The marine market is comparatively small worldwide. Production runs for parts may be in the dozens for big stuff to the thousands for little stuff. The economies of scale that really kick in when volumes are in the millions rarely trickle down to us boaters. We should be happy that the magic of packing performance onto semiconductor chips does make quite sophisticated electronics available to us.  

It's only that most electronic components are made in the millions, or at least in semiconductor fabs that can produce many variations of product at roughly the same cost. The total volumes are in the millions and we marine customers get to hitch a ride with some programmable general purpose chips to power our chartplotters and radars. Our applications could never support semiconductor factories that cost over a billion dollars each at the turn of the century when I left that business. All those WalMart televisions are subsidizing your fishfinder. Looking to cleats and windlasses and winches and wiring panels, we share no mass production capability with consumer society. If injection molded plastic worked for boat parts we might be in better shape, price wise. New boats cost so much because they are basically hand-built. The suppliers for General Motors and Toyota are not churning out boat parts. They would laugh at the modest quantities we use. No, local machine shops turn out rigging fittings. Our big names like Harken and Lewmar and Maxwell are pretty small as companies go.  

Our resentment is focused at the point of purchase, not at the manufacturer and not at our small market in general. We bitch at West Marine, to say nothing of what you think about guys like me. Consider one additional factor: both the cost and the value of a boat part vary mightily depending on where it is physically in the world. A cleat that costs 89 cents to manufacture at the factory in India is not available to you because that's what it's worth at the factory. Send the part to another offshore company that individually packages the part so it will look attractive on the retailer's shelf and it's worth $1.15. Now import it, make doubly sure it meets quality standards, and warehouse it by the skid box somewhere. Now it's worth $3.00. Ship it to a distributor, who ties up tremendous amounts of capital keeping things on the shelf so they can be shipped in standard packages, 25 say, to a retailer, and now it's worth $6.00. The distributor is only set up to deal with a relatively small number of retailers who always pay their bills promptly. Now the part is finally within your reach, at the retail level. You go to the store and it is hanging in a display. The store might sell a few per month, so they are carrying a substantial inventory. They pay interest on those inventory dollars. The rent on the store is pretty pricey because you want the part within easy driving distance of your boat. So now the part cost you $18.99. And you say, "Twenty dollars for this little plated casting that must cost less than a buck to manufacture. I'm being ripped off." No, the value of the part on the shelf at your local chandlery is way more than the value of exactly the same part at the factory in India. Want to go to India and pick up 5,000 cleats? You can have them at 89 cents too.  

To complete the picture add the cost of the catalog, the cost of giving you a new part when you walk in with a defective one, the cost of having someone able to stock-check all the stores in your area to see where a part might be that you need today because tomorrow you have to go back to your regular life. You can extend the list and do the math.  

At the very end of the distribution chain, I install a part from the stock in my truck on your boat. I do not bill you for the time it takes to go to West Marine and buy the part because I use a reasonable number of them and bought them ahead of time. I carry maybe $5,000 in parts in the truck, all of them small like switches and fuses. I would not be worth robbing because you can't fence all this varied stuff in one place. I pay for the part when I stock it. Sometimes I guess wrong on what to buy and the part does not sell for years, if ever. For example, I keep a complete stock of all the common navigation lamps so I have what you need when I come to your boat for something else and you say, "Oh, by the way, the stern light doesn't work." Multiply that by fuses and wire and lugs and terminal strips and switches and it adds up. So what is it worth, right there dockside?  

Sure, you could stand by and run to West Marine for the part as soon as I figure out I need it. Assuming they have it in stock, which is a poor bet if you need a half-dozen parts. Which is why I stock things; I cannot depend on any retailer to fill an order for parts 100%. And I need 100% of the parts to do the job. Right now, not tomorrow when the store can have it transferred in. You still going to run for parts for me? Is your time worth nothing? So here is where the part has it's highest value, right at your boat when you need it. How much more can I charge than West Marine? Not much, because I don't have the time to explain all this when you and I are at your boat. And the last thing I want to do is to fight with you over the price of a terminal block. So some of the cost of carrying the part is in what I charge you for the part. Some of it is in the hourly rate.  

At the end of the week I make enough to keep going, mostly. None of us skilled boat craftsmen are even remotely well off. Your local charter captains don't do that well either. And that is the way it is with boats. Get over it.

An Attaboy for West Marine

When I sell and install equipment, then I consider myself part of the warranty chain of support. Something fails during the warranty period, I come out and take care of it all at no charge. It's dead lost time to me, but what I consider a cost of doing business. How to do all this and not get eaten alive by the cost is a problem. West Marine, the giant supplier we all love to complain about, turns out to be a hero backing me up in many of these circumstances.

Unless it's a really big thing like an inverter/charger, I can only afford to make one call to the boat and swap out a good part for the bad part. That is what customer's expect. Considering the time and travel involved, for a relatively inexpensive item, it hardly makes sense for me to pick up the bad part, send it in to the manufacturer to get it repaired, and then come out and reinstall it. That's what I do if the problem is with an inverter or an alternator that needs to be rebuilt. Something big or something hard to get. And I'm selling more new alternators these days because, for a few hundred dollars over the cost of a rebuild, I can supply a new, much higher output alternator. Little stuff does not fail. Wire, connectors, fuse blocks work forever if put in right. Anything with a moving part can fail, as can anything electronic or electrochemical, like batteries. It's the intermediate stuff that is a problem for me. Battery chargers, water pumps with solid-state speed controls, things like that. I bring out a new or refurbished part to swap. What do I do with the broken part?

For some things I sell, the answer is to send the piece back to the manufacturer to get it serviced or replaced. Sometimes I can get them to send out an advanced replacement, but they want to charge me and then credit my account when they get the defective unit. Then they send the repaired unit back to me and I'm stuck with it. Meanwhile, I pay freight for three shipments. If I had wanted to buy a spare to keep on the shelf I would have. By the time I sell it again, it could be a few years old and I may have to give a big discount. This is not the best of all possible answers. What I want to do is get an advance replacement locally, go to the boat, replace the part, then take it back to whomever. Happily, when I buy a part through the West Marine wholesale division, Port Supply, this is exactly what happens. I need to provide the order number under which I bought the part, which is not hard because I keep good records. I may need to call my sales rep to get the paperwork moving. I show up at the closest West Marine store with the part, make the swap on the boat, bring the old part back to the store. Story over. Customer happy. Minimum warranty time on my part. This is good. And my sales rep is very helpful on a whole range of issues.

The whole warranty service problem got worse when customer's started buying things on the internet. In itself, this is OK because then the warranty is their problem. But Internet merchants set customer's expectations for prices. The fact that States have not figured out how to collect sales taxes on most of these transactions puts local merchants another 7 percent behind. So the days when 40 or 50% margins covered up a lot of warranty issues are over. I make just enough on equipment sales to cover my cost of processing the transaction and keeping track of the material until it gets installed.

West Marine and Port Supply do not necessarily offer rock-bottom prices on everything they sell. But they are competitive. They do not offer everything. So I continue to deal with a range of suppliers. However, I am on the Port Supply "van route" and they deliver anything I order to my door for no extra charge. The savings in freight often makes up for the slightly higher price. I can get my sales rep on the phone easily to run internal interference when necessary, no automated phone system. I can fairly easily place orders on the web, which means I can deal with them after other people's normal business hours. The search capabilities on their website suck, so they are not perfect.

In my book all of this makes Port Supply an excellent supplier. Kudos, gentlemen. The service makes the difference.