nickshanagher

We sat there for three and a half hours and listened to them talk about the structure of the company and the sale and everything. And I looked over at Jerry Murphy, who is a very, very, very bright guy, and I said, ‘I really don’t understand anything. Am I missing something?’ Jerry says, ‘No. I’m not sure I follow what they’re talking about either.” So this goes on for three hours-and that is a long time for my dad-until the chairman looks at Dad and says, “Well, Alex, what do you think? Are you interested? You think we can pull this deal together?’ And Dad says, ‘I have one question. I asked that question three hours ago and I’ll ask it again: Does this company make money or not? I’m talking about real, green bucks.’ Nobody in whole room would answer. So Dad gets up and says, ‘When you can answer that question, give me a call; I might be interested.’ And we walked out. This story is told by Dean Spanos, son of billionaire Alex Spanos and it is the sort of gold dust that ma...

Pay Unfairly is chapter 10 of Laszlo Bock’s Work Rules! Ever provocative this book shares the thinking behind Google’s people strategy. What is remarkable is that it is 24 times harder to get a job at Google than to get a place at Harvard University. And three million people a year apply for jobs there. Bock is Google’s senior vice president of people operations. The most important rule is to hire great people and people who are better at your job than you are. He devotes two chapters to this subject. Later on we get to the Pay Unfairly chapter where Bock offers four pieces of advice: -          Swallow hard and pay unfairly. Have wide variations in pay the reflect the power law distribution of performance -          Celebrate accomplishment not compensation -          Make it easy to spread the love -          Rew...

There is a correlation between the number of storks’ nests found on Danish houses and the number of children born in those houses, economist Tim Harford wrote in the FT last month. “Could the old story about babies being delivered by storks really be true,” he asked. “No. Larger houses have more room both for children and for storks.” The correlation does not cause the outcome. This distinction is usefully made at a time when retailers in the UK are wrestling with the thorny questions of the benefit of footfall drivers, including the controversial PayPoint service. Is it that users of PayPoint spend more because the service is available in store or is it that PayPoint is convenient to shoppers who were planning to spend more anyway? Surely PayPoint seeks to be located in stores which have the correct location more than those stores with the right locations seek to have PayPoint in their stores. Resolving this distinction is always likely to be determined in favour of wh...

What to make of all these price-match guarantees in the supermarkets? A profit guarantee for the shops offering them, suggests the Economist . In a column last month it says price guarantees were a way of stopping a price war rather than participating in one. This is because when a newcomer offers lower prices it is trying to win your customers. If you promise your customers that you will match these prices then they will stay with you. The newcomer then has to give the price cuts to its existing customers without winning new ones and loses money. In real life it is not as simple as that. However, the Economist says that most consumers believe that price-matching signals genuinely lower prices. The consumer is wrong as it is more expensive supermarkets that are offering to match each other’s prices. The lower prices are at Aldi and Lidl. The response of wholesalers and consumer packaged goods suppliers is to price mark product for independent shops to signal value. There are ...

The answer to every strategic question is “it depends”. The trick is knowing what it depends on. If the answer to a question isn’t “it depends” then it’s not a strategic question. This is Mazzeo’s Law, a business school rule that its author and two fellow professors tested out on independent businesses across the USA in a series of road trips. Their book, The Roadside MBA , aims to provide real world lessons for entrepreneurs, start-ups and small businesses. Michael Mazzeo, Paul Oyer and Scott Schaeffer write up visits to 45 small businesses to provide lessons across 10 subject areas ranging from hiring staff to battling the big boys. The businesses range from a fitness centre for older women to a company that makes air socks and everything in between. The book’s strength is that it is a collection of the wisdom of people just like you, running a small business and making a profit. In Reno, Nevada, they visit Christine Kelly, owner of Sundance Books and Music. How do you comp...

The Financial Times was quick to praise David Cameron for his support of moves to introduce plain packaging of tobacco. “This law - likely to be passed by MPs in a free vote – will be the most significant step in years to boost public health in Britain. It is welcome,” it thunders. This is a remarkable claim. Even supporters for the measure admit the evidence is marginal and the impact expected to be small. Perhaps the newspaper believes there has been little progress on public health in recent years. The letters pages were mainly silent on the FT’s stance. Noteworthy was a response from Britain’s greatest living artist David Hockney. He advised the FT: “ You state that cigarettes will be sold in ‘boxes decorated in an off-putting shade of olive green’. I don’t believe there are ‘off-putting’ colours, especially for a cigarette packet. The colour will be quite beautiful in a couple of weeks.” But I think there is a smarter objection based on the ideas of Adam Smith. In the The...

This is a story about how a man started out with one market stall and 25 years later sold his chain of 1,000 shops for more than £500m to Tesco. But Kevin Threlfall’s book One Stop One Life is more remarkable than that. Any modern convenience store operator wanting to learn about business should read Threlfall’s remarkable life story. You will pick up some neat ideas about how to exploit loopholes and spot profit opportunities. But mostly you should just pick up his zest for life. His parents had a knack for sales and after his dad opened a cut-price market stall in the 1950s they had enough money to pay for Threlfall to get a good education. Knowing how much money could be made from market stalls, he went into partnership with his dad selling special offers and top-up shopping. In competition with the supermarkets, Threlfall made a list of all the “must buy items” and priced them lower, sometimes making as little as a penny per pack. “In being cheapest on known value items ...