Nathan Lustig

Is GM’s Failure a Forerunner of America’s Problems?

Category : Political Science & Economics
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“I think it is important to recognize that General Motors is a canary in this country’s economic coal mine; a forerunner for what’s to come for the broader economy. Their mistakes have resembled this nation’s mistakes; their problems will be our future problems. If the U.S. and General Motors have similar flaws and indeed symbiotic fates, they appear to be conjoined primarily by the un-competitiveness of their existing labor cost structures and the onerous burden of their future healthcare and pension liabilities. Perhaps the most significant comparison between GM and the U.S. economy lies in the recognition of enormous unfunded liabilities in healthcare and pensions. Reportedly $1,500 of every GM car sold in the dealer showrooms goes to pay for current and future health benefits of existing and retired workers, a sum totaling nearly $60 billion. The total future healthcare liability for all U.S. citizens can be measured in the tens of trillions.”  –   Bill Gross, PIMCO

Bill Gross is the manager of PIMCO, the world’s largest bond fund, and made a bunch of money predicting the collapse of US housing.  This means that when he speaks, lots of people pay attention.  In a recent interview with Bloomberg, he predicts, among other things, that the dollar is in trouble and that Americans’ standard of living is probably going to fall, much like I did in a previous post, but the quote above really caught my attention.

Gross’ comparison of GM’s problems to the problem’s facing the US is spot on.  GM’s business plan called for new workers to pay for the retirement and health care of old workers.  This plan worked while GM was producing quality cars and growing, but once GM began to lose market share, it became impossible for the company to sustain itself without major changes.  GM did not change fast enough, leading to its bankruptcy.

Social Security and Medicare work the exact same way, but on a much larger scale.  Current workers pay in to support workers who have retired.  It worked when both the population and economy were growing, but it will stop working sometime in our lifetime.

If this comparison is correct, can we learn from GM’s unwillingness to change, which ultimately led to its bankruptcy?  I think we can.  There is still time to fix Social Security and Medicare, but our government has not done much to solve these problems lately.  It seems to me that the US is burying its head in the sand, just like GM did.  We cannot afford to continue down this path.  It will take huge change to fix these problems, but we must act now before its too late and the US government goes bankrupt, just like GM did, because nobody will step up to bail out the USA.

How to Get Taken Seriously Running A Startup When You’re Under 25

Category : Entrepreneurship
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Of all the lessons I learned running a startup, figuring out how to deal with people who did not take us seriously solely because of our age might have been the most important.  Many times, I could tell that the person on the other end of the telephone or across the desk was thinking “who are these kids and why are they talking to me?”  It was obvious that being young hurt our credibility before we even said a word.  We were confident in our idea and business plan and were  usually able to get past any initial credibility issues, but it was a definite obstacle.  In general, other entrepreneurs, VCs and angels were more likely to take us seriously from the start, compared to professionals or employees of other companies.  After a few shaky meetings and calls, we asked for advice from our lawyer and other successful entrepreneurs who had been through the same process.

We realized that many people who were older than us had an image of young people in their heads that was hard to break.  Many older people thought that young people were lazy, lacked direction and would not follow through on a project.  From the beginning, we always were professional, well dressed, on time and prepared, but we realized we had to overcompensate if we wanted to get through to people more quickly. Here’s what worked for us:

  • Do Your Research – We spent hours researching any possible question someone might have so that we would never be surprised.
  • Cut the Humor – In most cases, older people equate younger people with fooling around and not being serious.  Many times, jokes hurt your credibility
  • Schedule Morning Meetings – Many people were surprised when we would ask for meetings from 7-9am, as it shattered the mold of young people sleeping in.
  • Be Persistent – If you want a meeting, keep calling and leave professional messages.  You will be rewarded for your efforts.
  • Articulate Your Goals – We sent short lists of what we wanted to cover during meetings or calls the day before, as it put the person in a serious frame of mind.
  • Talk Less, Listen More – Young people are stereotyped as know-it-alls.  Talk less and listen more and people will take you more seriously.

While most of these are common sense and can be used with any audience whether they are younger or older, its important to remember your audience.  We used these strategies and success followed.  Have you ever not been taken seriously because of your age?  Do you agree that its necessary to overcompensate for youth for specific audiences?   What other strategies have you used?

Mother Finds Missing Son 27 Years Later on Facebook

Category : Technology
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A British woman from Liverpool recently found her now adult son on Facebook after being unable to find him since he was abducted by his father.  The woman was married to a Hungarian man, but they got divorced.  The ex-husband had visitation rights and took the boy to the zoo, but never came back.  The ex-husband took the then 3 year old boy back to communist Hungary and was not heard from for 27 years.

The boy’s aunt and mother appealed to parliement and the Prime Minister, but they were unable to help get the boy back.  Fast forward to 2009.  The boy’s aunt googled his name and the first hit was his Facebook page.  They sent him a message and a phone number and waited.  After two weeks, he messaged back and he was able to be reunited with his mother.

This story shows the incredible power of the Internet and social networks in general.  Its not to see a story in the media about some of the benefits of social networks, rather than stories about the dangers.  I wonder how many other missing children are on Facebook without their parents’ knowledge?

Newspapers’ New Business Model

Category : Business & Advertising
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The Milwaukee Journal-Sentinel recently ran a 5 part series called The Preacher’s Mob: The Rise and Fall of a Milwaukee Crime Boss, detailing Michael Lock’s criminal escapades over a 10 year period.

The series is fantastic.  It provides an in depth view into Lock’s rise, his criminal exploits (including murder, drug dealing mortgage fraud and prostitution) and the investigation that ultimately led to his conviction and sentencing to life in prison.  As a huge fan of HBO’s series The Wire, I love hearing the real life versions of the show.  For fans of The Wire, Lock’s rise and fall is similar to Season 1 and 2’s Avon Barksdale and Stringer Bell.

This series is a perfect example of how newspapers must change if they want to survive.  Currently, the only news source that I pay money for is The Economist.  Otherwise, I get my information from free online newspapers, blogs and videos.  The Journal-Sentinel’s series on Michael Lock is news that I would be willing to pay for.  Long term, local, investigative reporting is the niche where newspapers can not only survive, but thrive.

Newspapers have to realize that people are not going to read them for breaking news.  We have the internet and tv to tell us about stock quotes, sports scores, who won an election and who was shot the night before.  Newspapers that report this information are simply rehashing what people already know from real time internet and tv sources.  The old business model will no longer work.

Newspapers should focus on investigative reports that take more than a day to research.  They should provide analysis of the situations, but with limited or no political bias.  In depth stories about gangs, schools, political corruption, environmental lapses and corporate greed will sell newspapers.  Positive stories about people and causes will increase paying readership.  Newspapers could cover these types of stories with decreased staff and decreased stories that are already duplicated in other sources.

Even if this solution does not work, it would be better than sitting around waiting for the papers to go bankrupt and would be more interesting to see than the current information that is in newspapers.