Starfield: Can this Game Survive?
Bethesda, a now wholly owned Microsoft game development studio division, stands poised to release its new space role-playing game (RPG) entitled Starfield on September 6, 2023.
Starfield’s release has already been delayed once by nearly a year, when it was formerly slated for release on November 11, 2022. Starfield’s nearly year long delay along with being made exclusively available to the Microsoft’s gaming platforms, coupled with its Game Pass inclusion might not signal great things for this upcoming game release. It might not even signal great things for Bethesda as a company. Microsoft is definitely not doing any favors for Bethesda. Let’s explore.
PlayStation 5’s Banner Launch
According to Kotaku, Sony is now seeing banner sales with its PS5. It can be difficult tell what’s boastful speculation around such sales, but one thing is certain, getting your hands onto a PS5 console can still be difficult nearly 3 years after the PS5’s November 2020 launch. For nearly 2 years, the PS5 was almost impossible to find on store shelves. When they did manage to appear, they were gone within hours. Going into the third year, it’s become somewhat easier to find as the demand has somewhat eased, that or Sony has drastically increased production or both. “Somewhat”, doesn’t imply that the PS5’s sales are in any way slowing, however. For Sony, the bristling sales of the PS5 continue.
Because this sales fact means Sony’s console is shaping up to be the banner console of this decade, one has to question both Bethesda and Microsoft’s decision to keep a game like Starfield exclusive to Microsoft’s platforms alone. One thing is certain, cutting off sales to a massively growing gaming segment is probably not the brightest of ideas. For Microsoft, Starfield may not become an overall major problem for Microsoft on the whole, but why intentionally tank part of your company when you don’t have to? For Bethesda, on the other hand, these mounting problems could end this division.
Exclusivity and Sales
Prior to the digital download explosion, the primary way that video games had always made bank was by selling physical game copies. Physical copies would show up at retailers like Amazon, Best Buy and Gamestop. Once the digital download explosion began, not only could retailers sell boxed copies, they could also sometimes sell digital codes for online digital stores.
Because both the PlayStation and the Xbox are the primary two video game consoles on the market for a game like Starfield, this meant sales from both platforms play fully into both the success and the revenue of that video game title. So as not to exclude the Nintendo Switch from this conversation, know that this console also exists and some “adult” style games do eventually make it to the Nintendo Switch console. Whether Starfield would have been tapped for the Switch is questionable. As of Starfield (and likely many future Bethesda game titles), though, producing availability across all non-Microsoft platforms has halted.
Bethesda (likely at Microsoft’s prompting) has made the dubious decision of making Starfield (and likely most new Bethesda games) available exclusively on the Xbox and on Windows-based PCs (Microsoft’s platforms). You might have thought that Microsoft’s Bethesda would have stopped there and just accepted the loss of half of the video game market in revenue, but no. It gets worse for Bethesda.
According to Forbes, the PS5 has also sold the fastest amount of consoles since its launch that Sony has ever sold in its history. That means that the PS5 appears to be on-track to outsell the PS4. Considering that the number of PS4 consoles exceeds 117 million today combined with the over 38 million PS5’s sold so far, that’s a huge number of potential buyers to exclude from a video game’s sales. I did say it would get worse.
Game Pass
For video game players, an all-inclusive monthly game subscription service like Game Pass is a huge win. For video game developers, not so much. Let’s understand why. Video game buyers can, for a relatively small monthly fee, instantly buy into a massive library of games that can all be downloaded and played immediately. A single game that formerly cost each buyer $60 to purchase new, now costs a game player $9.99/mo for 30 days of play! That $10 doesn’t just cover one game, though. That monthly fee covers hundreds or maybe thousands of games available in the Game Pass library all unlocked the instant the subscription starts. No trips to the store. No game discs to scratch up. No wasted plastic. Quick and easy access over the Internet.
Sony has a similar subscription product called PlayStation Plus Essential. It’s effectively Sony’s burgeoning version of Game Pass, with a similarly growing library of games all accessible at a flat monthly rate.
With these subscription services, the monthly costs can be reduced if you’re willing buy into 24 months of Game Pass service. Unfortunately, this bundled deal is only available if you buy an Xbox console at the same time. Still, not a bad deal. If you already have an Xbox console or are looking to extend your existing subscription past the 24 months, the only option is the $9.99 per month deal.
Game Pass versus PlayStation Plus Essential
This article would be remiss without discussing an important aspect around buying into Game Pass versus Sony’s PlayStation Plus Essential. The $10/mo Game Pass plan DOES NOT include Xbox Live Gold, the service needed to play online multiplayer games. This means that in addition to the $10/mo, you’ll need to buy or have Xbox Live separately. However, with Sony PlayStation Plus Essential, this plan offers both access to the PlayStation Network along with a limited library of games. Essentially, Sony’s lowest tier plan is equivalent to having Xbox Live Gold and Game Pass together at Sony’s lowest monthly price tag. While Sony gives you both services together, Sony only allows limited access to games with the Essential tier. You’ll have to pay up into Sony’s larger PlayStation Plus tiers to gain access to more games from Sony’s game library.
To get Xbox Live combined with Game Pass for your Xbox, you’ll need to buy into the Game Pass Ultimate edition, which is priced at $15 a month ($5 more than the base Game Pass edition without Xbox Live). However, that’s still a savings of $5 a month when paying for Xbox Live Gold monthly, which is priced at $10 a month separately.
Why is having access to Xbox Live and PSN important? These services are required to allow you to play online multiplayer games. Because many games these days require Xbox Live and PSN to function, buying into the lowest edition of Game Pass alone won’t allow you to play games that require Xbox Live. You’d need to pay up to the $15/mo edition to buy Game Pass Ultimate to enable play of online multiplayer games along with gaining access to the Game Pass library of games.
Having Xbox Live is not required when buying into the Game Pass $10/mo edition. However, without Xbox Live, you will be limited to playing only Game Pass library games that do not require Xbox Live, which consist of offline single player games. There are fewer and fewer of these games released every year.
Subscription Services vs Profits
The one thing that hasn’t been discussed much with these gaming subscription services is exactly how developers will make money. Right now, $9.99 a month is great for a gamer who immediately gains access to perhaps thousands of games, including many day-one releases.
For the game developer, Microsoft cannot afford to hand that game developer $60 for each downloaded game from Game Pass. Same for Sony. This means that developers see drastically reduced revenue from games on Game Pass.
What this means is that for each download from Game Pass, the developer will receive a tiny fraction of money in a monthly payment tallied up for each gamer who downloads a specific game title. No download = No money. Simply because a game has been listed in Game Pass doesn’t mean the developer gets money. Developers are only likely to get paid IF a player downloads and plays the game. Even then, once a player deletes the game after installing it, the monthly revenues stop.
Let’s do the Math
Console Physical Disc Model
If there are 117 million PS4 consoles and if just 10% of those console owners buy a game at $60, that’s 60 * 11.7 million = $702 million in total revenue from that game’s sales. Of course, that’s what the retailers get. The wholesale price for a video game is around $50 paid by the retailer to the game studio. That’s 50 * 11.7 million = $585 million in sales that went directly to the game studio. Clearly, other fees will need to be paid out of that revenue by the developer who might net $200-300 million or so. This revenue windfall occurs within a month of two of a video game’s launch.
Game Pass Model
There is no revenue windfall, at least not for the developer. As stated above, a video game placed into the Game Pass library means drastically lower income. Instead of the $200-300 million windfall in physical disc sales nearly all at once, now developers must live on a much lower fraction of revenue that gets spread out over many months.
If 11.7 million players subscribe to Game Pass, in one month that equates to $10 * 11.7 million subscribers = $117 million per month (assuming that the number remains steady). This next part assumes that ALL 11.7 million decide to download the Starfield game. We know that’s not likely, but let’s assume this anyway.
If a game developer drops a brand new day-one game onto Game Pass, like Starfield, the game’s revenue will be a tiny, tiny fraction of that $117 million per month. Where a game developer receives 100% of the wholesale revenue from physical box sales, subscription based sales might receive 1% (probably way less) in total revenue from the revenues brought in by Game Pass’s monthly subscription fees. Why $1 million? That’s ~1% of $117 million. Keep in mind that $117 million is already fractionally less than the $585 million the developer could have received by selling boxed copies.
Instead of the $200-300 million for boxed sales for a single game, the game’s developer might now receive $1 million in that first 30 days after release, possibly not even that much. Keep in mind that the monthly revenue collected by Microsoft for the monthly Game Pass subscriptions must be shared amongst ALL video games that are being played and downloaded that month. The more games being played, the more developers must share in that revenue. That means that the more wide diversity of games that are being downloaded and played, the less revenue there is to go around to all of these developers. That $1 million mentioned might actually become $100k because of the revenue sharing and the wide diversity of games being played at any given month.
Revenue paid to developers who place games into Game Pass library is only for actively played games. Once gamers play the game fully, then each deletes the game from their console, the revenue stops the instant the game is deleted from the console. The game developer will only be paid as long as the player keeps the game installed and likely only if the game is launched and used periodically. If the game can be beaten in under 30 days, then the developer will be paid for only the days the player has actively played the game. If many players beat the game in 10 days, that’s only 10 days of revenue paid out for each specific player.
What all of this means is that it offers Microsoft ways of reducing payments to developers based on how often and how long a player plays a game. In other words, instead of the pay-$60 model where the revenue is locked in as long as a sale is made, developers are now under a much stricter, lower revenue model. It is also a model that can see Microsoft reduce payments because of revenue sharing and lower use. If two games were the only games played on Game Pass in a month, that means that Microsoft would only need to pay out revenue to 2 developers from that $117.5 million pool of income. If 100 games from 100 different developers suddenly become active, Microsoft must now share revenue amongst those 100 developers from that same $117.5 million pool of income.
Microsoft must also determine which of the Game Pass games deserves a larger portion of revenue than the others so that the most often played games get the most revenue. Meaning, of those 100 game developers some might only see .01% of the sales while some might see as much as 1% or 2% of total revenues from monthly subscribers. As stated, the point here is that $117.5 million in subscriber fees is a mere fraction of money that could have been had using the $60 per disc price.
It only gets worse from here. Microsoft itself also instantly skims revenue off the top of the Game Pass subscriber fees to cover its own service management costs (hosting, managing listings, paying out revenue, etc). Only after Microsoft skims its own Game Pass revenue is any remaining money left over to cover developer game use payments.
Assuming there’s $117.5 million in total Game Pass revenue (as exampled above), there might only be $20-50 million left (after Microsoft skims its expenses) to pay developers for their games. This ultimately means there’s fractionally less than you might think to pay off developers for the inclusion of their games on Game Pass.
For Starfield, this game’s revenue may fare even worse. Because Microsoft wholly owns Bethesda, Microsoft may have chosen Starfield to become a loss leader. In the sales world, that ultimately means that the product is intended to be a “giveaway”. In other words, Microsoft may require Bethesda to forgo receiving any payments from Game Pass. Thus, Starfield may not make ANY revenue from its day one release on Game Pass. Under this loss leader strategy, the only money Bethesda may make would be from the tiny amount of boxed copy sales from stores like Amazon and Best Buy. Considering the price of Game Pass and its current popularity, not many players are likely to opt to pay $60 for boxed copies.
Digital Sales
While you might be thinking that some people might opt to buy the game digitally, like boxed copy sales, a few will opt for this approach. Some don’t want to invest in Game Pass and be saddled with a monthly expense to keep track of. This means that some digital sales will occur. However, the benefit of gaining access to thousands of game titles usually wins when it comes to these types of sales. Like physical boxed copies, digital sales are also likely to be limited and few. I fully expect the vast majority of Starfield players to play via Game Pass (both on the Xbox and on the PC).
Sleazy Game Pass Sales Strategy
One sleazy strategy which Microsoft has used with Game Pass and which attempts to force gamers to buy a game outright is when Microsoft removes a game title from Game Pass library 30 days after its release. This limited time release followed by speedy removal is solely an attempt to prey on the consumer’s wallet. Many gamers do fall for this tactic and opt to buy a digital copy over a boxed copy. Digital purchases offer instant access and allows the gamer to continue playing once the game is downloaded. No trips to the store looking for a physical copy.
This Game Pass sales strategy is extremely sleazy and is also worth noting because Microsoft could pull this stunt with Starfield; tease players with a 30 day Game Pass limited availability, then pull the plug and force all players to purchase the game full price to continue playing. Because of the purported scale and size of the questing within Starfield, a player likely cannot fully complete Starfield within 30 days. Be wary of this sleazy sales tactic when buying into Game Pass. Personally, I’d consider this tactic as a form of bait and switch, which is illegal in the United States under federal law.
If you’re concerned that this could happen with Starfield in Game Pass (it has a reasonably high chance), you should opt to buy the game outright either a physical boxed copy or a digital copy at full price and forgo using Game Pass to play Starfield. This will allow you to continue playing the game should Game Pass decided to pull the game quickly. Of course, you can opt to play under Game Pass until the game is pulled from the library at which point you’ll need to decide whether you want to buy it to continue. If the game is as potentially buggy as I expect it to be, many Game Pass players may choose not to buy it after only a few days of play. This sleazy sales tactic has a high probability of backfiring on Bethesda and Microsoft if the game launches with as many problems as Fallout 76.
Starfield Sales Cannibalized?
Why spend $60 for a single game when you can pay $10 and gain access to perhaps thousands of games, along with day-one releases like Starfield? While a few physical disc sales might be forthcoming, the vast majority of players are savvy enough to realize the usefulness of buying into a large library of games under Game Pass all for $10.
For Starfield, the revenue handwriting is on the wall… and it’s doesn’t paint a rosy picture. Voluntarily cutting revenues by less than half via excluding the Sony PlayStation – fractional amounts of revenue by placing Starfield on Game Pass day one = drastically reduced income for Bethesda. Instead of the potential for nearly a billion in sales by tapping the overall video game market (Xbox + PS + PC + Switch) by forcing boxed sales only, Microsoft has made the dubious decision to reduce Starfield’s potential revenue down to perhaps at most $100 million in Day One Game Pass downloads. That number is if Bethesda is very, very lucky. If Starfield is considered a “loss leader” on release then it will receive zero in revenue from Game Pass.
You might be saying, “But what about physical disc sales?” What about them? With the Starfield game being released onto Game Pass day one, what incentive is there to run out and buy a physical disc copy at $60 when you can save $50 and instantly sign up for Game Pass at $10, download and play the game on release day sans disc? For that matter, what incentive is there to buy a digital copy at $60? Sure, Starfield may see a smattering of physical box and digital sales, but the total revenue for these sales might not even exceed $10 million. Game Pass is most definitely cannibalizing boxed and digital video game sales. This Game Pass idea is actually one of the strategies that Microsoft wanted prior to the introduction of the Xbox One; basically, an all digital universe of games. Microsoft is moving in this direction rapidly, clearly at the expense of the developers.
Keep in mind that subscriptions can be cancelled at any time. This means that a player can pay $10, play and beat the game in 30 days and then cancel their Game Pass subscription. Instead of paying $60 to own the game, they’ve now paid only $10 to play the game. That’s a whopping $50 savings for the gamer and a massive amount of lost revenue for both the game developer and Microsoft.
While the release of Starfield might see a temporary boost in Game Pass subscribers and in Xbox hardware sales (this is the hope Microsoft has for Starfield), that boost still won’t be any where near enough for Microsoft to cough up the nearly $1 billion in revenue that Bethesda could have had by including all consoles and by releasing only boxed copies day one. Instead, Microsoft has relegated Bethesda’s Starfield to becoming one of the least profitable AAA game titles to be released by a major developer.
Revenue over Time
Subscription models gain revenue slowly over time. You might be thinking that maybe Bethesda can reach the $1 billion revenue mark in 12 months. Video game sales don’t work like that. Video games see a surge in play until many players play the game out. One the game has been played out, it’s dropped and forgotten. The only games which can see continued revenue models are massively multiplayer online (MMO) style games like Call of Duty, Fallout 76, Fortnite and even Destiny. Even then, these MMO style games see dwindling subscribers over time until eventually there aren’t enough playing to support the game financially. When that happens, the MMO game shuts down.
Starfield as an MMO?
We don’t yet know enough about Starfield to know if it even contains an MMO component. Only when the game is released will we know if Starfield is designed like Fallout 4, a completely offline single player experience… OR if it is similar to Fallout 76, a completely online MMO. Maybe it’s like Grand Theft Auto and offers both an offline gaming experience and has a separate online MMO map. Until the game releases, there’s also no way to know if Starfield has been built to support an ongoing revenue model.
It’s clear, the sales revenue for Starfield (as a game) will not be had by day-one game sales. That means that Bethesda must make up for the severely cannibalized day-one game sales by compensating for that major loss in revenue in some other way. With Fallout 76, that’s done by using the Fallout 1st subscription and the sale of Atomic Shop “Atoms.”
For Starfield, I’d expect Bethesda’s team to make up for that loss in day one game sales by forcing an in-game monthly subscription plan. This separate in-game monthly subscription will likely unlock downloadable content (DLC) and other required add-ons. With Fallout 76, Fallout 1st is not required to play the game. However for Starfield, Bethesda may be forced to make this change. Starfield might offer up a very basic and limited gaming experience included in the base price, then require paying into a monthly subscription plan to unlock the entirety of the game. At least, this is one avenue that could be taken. Even the $60 full disc buyers might be forced to pony up for these extras to continue playing.
This avenue may end up the primary means that Bethesda utilizes to make back the amount of lost revenue required to cover its multi-year game development expenses when producing Starfield. As described above, Game Pass revenue alone will not be enough to cover these incurred expenses. Keep in mind that Starfield had been in development before Microsoft bought Bethesda. After Bethesda was purchased, Microsoft has seemingly tied Bethesda’s hands by forcing exclusivity to the Xbox and PC and by also forcing Bethesda to release the Starfield game through Game Pass on day one. It’s possible that Microsoft might rollback the decision of a day one Game Pass release for Starfield. It’s also entirely possible that to play the game via Game Pass, a separate second subscription might be required.
For Bethesda, that means that once each player enters the Starfield game world, revenue will need to be found separately by Bethesda inside the game… and that likely means a separate monthly subscription for Starfield itself. It may also mean paying for a separate currency, like Atoms, to unlock in-game features, spaceships, outfits, consumables and so on. If you buy into Starfield, expect to be hit in the wallet at every turn within the game’s universe.
Can’t progress? Pay up. Can’t fly into a new solar system? Pay up. Need a special outfit to complete a mission? Pay up. Even though Microsoft has seemingly tied Bethesda’s hands for how the game gets sold initially, Microsoft likely can’t tie Bethesda’s hands once the gamer enters the game’s universe.
Inside of a game’s universe, Bethesda has seemingly complete control. It can force subscriptions, microtransactions and a whole slew of other for-pay options to draw in more revenue. As a direct result of Game Pass’s near non-existent revenue, expect Starfield’s game world to be chock full of microtransactions using your credit card almost incessantly. It’s honestly the only way Bethesda can recoup the money it took to develop this game over several years, even if Bethesda can’t control how the game gets into the consumer’s hands.
PlayStation Plus Essential
For all of the reasons as Game Pass above, all of the revenue and low developer payment arguments will apply to the PlayStation Plus Essential service. With that said, let’s hope that Sony will change the PlayStation Plus Essential service name, though. This current naming is completely clumsy and does not in any way state what it is. Even re-using the PlayStation Now brand would have been a better choice in naming for this game library service, as the “Now” indicates instant access.
Bugs, Bugs and more Bugs
One thing Bethesda has not been good at is writing solid, bug free games. It doesn’t matter what game it is, the affectionate moniker of Bugthesda has been given and it is more than just for humor’s sake. This moniker is at once both truthful and problematic. It says that bugs are inevitable with any game released by Bethesda. Bethesda’s Todd Howard chooses to laugh this off as not a problem at all, as if Bethesda’s products are truly bug free. Sorry to disappoint you, Todd. Every Bethesda game I’ve ever experienced has had myriads of bugs and still contain many bugs to this day. Fallout 76 STILL contains day-one release bugs nearly 6 years later!
Starfield won’t fare any better. Starfield will release day-one with a massive number of bugs. That’s not a prediction. That’s a fact. If you go into Starfield on day-one, expect it to be chock full of bugs. Some of the bugs might be minor and cosmetic (lights don’t work right, 3D characters standing and moving in T-poses, weapons don’t render properly, etc). However, there will also be at least one showstopper bug where mission progress cannot move forward. Oblivion had them, Skyrim had them, Fallout 3 had them, Fallout 4 had them and, yes, even Fallout 76 STILL has them.
There has not been a single Bethesda game released that has not had showstoppers. I expect Starfield to have at least one, but probably more than that. I also expect Starfield to have crashing bugs; bugs that see you play for an hour, then the entire game crashes back to the OS… possibly losing progress.
Why mention bugs at all here? Bugs have become the bane of the video game industry. In the 1990s, video game developers took pride in shaking out nearly every single bug before placing their games onto cartridges. When the Internet wasn’t the “thing” that it is today, game developers had to make their games function 100% before sending it out to the consumer. Unfortunately, using the Internet as a crutch, revisionism has allowed video game developers to become extremely lazy. This allows developers to release horrible, bug-laden experiences, then begin shaking out the bugs along the way with one, two or even hundreds of releases… all while using paying players as beta testers.
Unfortunately, games like 2020’s Cyberpunk 2077 initially released to incredibly bad reviews over its horrible bugs. While Cyberpunk’s developer, CD Projekt RED, has ironed out many of the bugs since its 2020 release, that doesn’t make the game’s overall reviews better. Once those reviews are there, they’re there for the life of the game. Those low reviews will remain and taint the review system regardless of whether the developer shores up the game. If you release a bad buggy game initially, your initial reviews stay there to impact the game’s rating long into the future. Those bad reviews, thus, impact that game’s sales forever.
Was Cyberpunk 2077 able to recoup from its initially bad launch? In some small way, perhaps. Maybe through word of mouth, but definitely not via its Metacritic scores.
For Starfield, the first 3 months after its launch will become crucial to its success or failure. Starfield’s release date is set for September 6, 2023. Bethesda’s developers are now all working at a feverish pace to complete this game in time for that September launch date. Yet, we know it won’t be complete even after a year’s delay. If it was delayed a year, that means its bugs were major and the game was as yet unfinished. It is doubtful a year will buy them enough time to fix all of that.
What this means for Starfield is that its initial reviews will make or break it. It also means that game players are becoming intolerant of being taken advantage of by game developers. Game players are not beta testers, yet more and more game studios are treating game players as tertiary beta testers. Instead of hiring actual beta testers, game developers forgo those expenses and expect paying players to report the bugs. Worse, they do. More than ever, this is the wrong choice and it is a choice that can doom a game. We pay to PLAY the game, not BETA TEST it.
Overall
Considering the massive loss in revenue due to Game Pass, the high probability for the inclusion of pay-for-play micro-transaction features, the probable need for a separate subscription, Starfield seems poised to become one of the worst games ever released by Bethesda. Unfortunately, Bethesda has too many “fanboys”; “fanboys” who are willing to buy anything released by Bethesda regardless of its useful state. For the purposes of this article, “fanboy” is used in a gender neutral capacity, encapsulating both males and females alike. For the same reason, Apple has too many of these same “fanboys” type buyers willing to buy anything Apple releases, good or bad. Bethesda’s “fanboys” are just as avid and ravenous and, for whatever misguided reason, believe Bethesda can do no wrong. To them I say, enjoy being exploited.
The purpose of this article is to call out all of the problems that Bethesda faces with the release of Starfield. Because Microsoft has strongly tied Bethesda’s hands in very specific ways, that leaves Bethesda employing other not-so-favorable options to gain that lost revenue back. As a result, I fully expect Starfield to be a poor gaming experience overall, mostly because of the compromises required for Bethesda to make back the revenue it ultimately lost as a result of Microsoft’s exclusivity and Game Pass release decisions. That and Microsoft isn’t likely to allow Bethesda to delay Starfield any longer. Whatever state Starfield is in come September is how it will launch.
How does this make a difference to me as a gamer?
Good question. For you as a gamer, you might not care much overall. That is, unless you’re really looking for a new high quality gaming experience. Though, while the incessant micro-transactions designed to bilk you for money exist at every turn, the rest of the game might seem still like a benefit to you. Game Pass itself was designed to be a huge benefit to gamers, giving them access to a huge library of games. If you don’t like Starfield, you move on and try another. In the hundreds or thousands of games out there, there may be some that work for you. If Starfield bombs, it will simply be relegated to a game on Game Pass that no one plays.
For Starfield, it doesn’t mean good things. For Bethesda, it means even worse things. For Microsoft, it means great things. Well, maybe not great, but definitely something Microsoft can ignore. If Bethesda is forced to continue down this path by Microsoft, as a developer it may cease to exist inside of Microsoft… ultimately being folded into other game studios. Microsoft doesn’t care about exactly who does what as long as someone does it. Does that mean Fallout or Starfield or other Bethesda franchises disappear? No.
Like Halo before it, Microsoft will hand Bethesda’s intellectual property to another developer to continue building new games under those franchises (or not). Microsoft doesn’t actually care who develops any given franchise as long as they’re willing to do it and what they create sells more of Microsoft’s goods and services. Once a franchise runs its course and it’s done, Microsoft is also willing to shelve the franchise indefinitely, like it did with Fable. If Bethesda as a developer fades into oblivion, Bethesda’s IP may or may not live on depending entirely on Microsoft.
That’s why all of this might (or might not) matter to you.
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Donald Trump indicted?
Yes and this is likely to be the first of many indictments to come. Should Donald Trump be indicted for anything? Clearly, the MAGA Republicans say, “No.” Let’s explore.
Note, I’ve typically avoided political and controversial topics like this one on Randocity. Not because they’re not worth writing about, but because these topics are mostly useless. However, this topic is so urgent that it must be said.
MAGA Republicans
Let’s lead with the elephant in the room. Clearly, these MAGA Republicans are bad for the United States. They’re bad for United States Citizens. They’re bad for the world. Yet, here we are once again. With these MAGA cultists jumping to Donald Trump’s defense, not even knowing if the indictment has merit.
Donald Trump is a sleazy, off-kilter, man-child wannabe politician. There’s no doubting this. The man certainly appears to be successful by all measures, but that’s only because he uses his alleged victimhood to raise money every single time someone acts against him.
Worse, the MAGA Republican base always seems to rally around this man as if he’s some kind of cult leader messiah. Yes, MAGA is literally a cult; the cult of Donald Trump.
Liberal Democrat?
I can hear all of the MAGA Republicans groaning over this article at this point claiming this author is liberal Democrat. You don’t know me. You don’t know my views. As an author, it is a journalist’s prerogative and, indeed, obligation to call out that a duck is a duck. You and Donald Trump can’t waddle your way out of this. Be upset. Fine. But, that doesn’t change the facts above. Donald Trump’s cult IS a cult. There is no way around that.
You don’t see liberal democrats rallying around Joe Biden carrying flags with Biden’s face on it as if he were some kind of messianic figure. Just the opposite, in fact. A lot of liberal democrats don’t like what Joe Biden is doing as President of the United States either and are more than willing to call out each and every fact or action they don’t like. Yet, these liberal democrats also don’t stand on street corners waving flags with Biden’s face when he’s being persecuted. On the other hand, the MAGA Republicans rarely ever speak ill of their messiah, Donald Trump, even when Donald Trump called for people to inject bleach into themselves to rid themselves of COVID-19. A truly medically dangerous suggestion. Yet, they’re so willing to drag out the messianic flags and stand on street corners calling Donald Trump the best President ever. That’s a delusional cultist.
Intelligence vs Not
One of the things that much of Donald Trump’s base has proven time and time again is that they’re far less educated than the average liberal democrat. This lack of education may be what’s feeding the gullible nature of MAGA people, leading them to becoming cultists for Trump. When you can’t exactly think for yourself, letting other people think for you seems like bliss. Sure, as a MAGA Republican, you may think you’re good at trying to make arguments, but most of those arguments end up stupid and don’t work out for you. This is the reason Fox News is so bad at it. They hire moronic TV hosts (and lame piece writers) and then expect intelligence out of each and every one of them. You (don’t) get what you (don’t) pay for. You can’t pay dumb people to instantly become intelligent.
It’s quite clear that Laura Ingraham, Sean Hannity and Tucker Carlson check their education at the Fox News’ door every day on the way in, even though all three claim to be college educated. If I worked at the colleges where these three allegedly attended, I’d summarily revoke their degrees. Of course, these three aren’t required to have an education to work at Fox News. A comb, a suit and a dusting of makeup in the makeup artist’s chair and they’re good to go. The teleprompter and remedial reading skills do all of the rest. You don’t need a college education to read from a teleprompter.
It’s sad that Fox News has had to stoop to such (uneducated) lows to try to gain (and retain) its ratings… ratings, I might add, that come from the bottom 10-30% of the uneducated percentile of the United States.
Once again, I can hear the MAGA Republicans groaning. Stop groaning and go get an education. That or stop reading and go listen to your (sym)pathetic “friends” over at Fox News or News Max so you get today’s fix of unreality.
Donald Trump Indicted in New York
Donald Trump formerly lived in New York and has operated businesses in and out of New York while living there and since departing the state. It’s actually relatively recently that Donald Trump moved out of New York state, first to be President when he lived in the White House and then later to Florida to live full time at Mar-a-Lago. Simply because Donald Trump WAS President at one time and just because he now lives in Florida does not mean Donald Trump didn’t perform illegal activities while residing and operating businesses in New York prior to his Presidency.
Clearly, since the Manhattan District Attorney, Alvin Bragg, has brought an indictment, Bragg (and a grand jury) believes that there is sufficient evidence of wrongdoing on the part of Donald Trump.
Donald Trump claims it’s all a political witchhunt and all politically motivated, but Trump knows what he has done both prior to and after leaving New York. Because nearly every single person who is indicted of a criminal offense initially pleads “Not Guilty”, that doesn’t mean that they truly are innocent. Only a trial will uncover if this is true.
Considering that there are 30+ charges pending under Donald Trump’s New York indictment, that sheer volume doesn’t say “petty misdemeanor.” If there had been one or two charges, a petty misdemeanor might sound more reasonable, but 30 or more? No. 30+ charges definitely says something larger is at work… something that can only be decided via a judge, courtroom and jury.
Yes, it’s entirely possible that Donald Trump could be acquitted of all charges, but we won’t know that until or unless the charges and the evidence have been presented and a trial jury has decided.
Trial by Jury
One thing that Donald Trump and his cult following (including cult members Kevin McCarthy and Lindsay Graham) have continually put forth is his innocence. More than this, they have put forth that the DA has “weaponized” the judicial system against politicians, or more specifically, against Donald Trump as a politician. Again, I say, “No.” Instead, I’ll strongly counter that Trump has weaponized his cult following against the United States’ sovereignty.
A District Attorney’s job is to find wrongdoing and prosecute it. Clearly, Trump has at least left a trail of wrongdoing that has now been uncovered… in part with the help of Donald Trump’s former attorney and now convicted felon, Michael Cohen. Regardless of Cohen’s conviction and release, and regardless of Cohen’s disbarment as lawyer, that doesn’t discredit or discount his statements as to what Cohen did for and while in the employ of Donald Trump… especially when those statements can be fully corroborated using physical evidence.
Trump conferred many, many of his own personal and legal matters onto Cohen as his attorney. Trump then threw Cohen under the bus to serve prison time over those very same matters. What did Donald Trump think would happen after? Did Trump think that Cohen would step out of prison and jump right back into Trump’s good graces? No. Cohen is doing what anyone who gets thrown under the bus does. Whistleblow. Cohen just so happened to whistleblow right into the Manhattan DA’s ear… and clearly Bragg has listened intently. Cohen has likely managed and presided over many, many shady dealings with Donald Trump’s affairs, not just the Stormy Daniels “affair.”
You don’t see 30+ charges (and request to see Michael Cohen 20+ times for testimony) over of a single night’s affair requiring one single hush money payment to porn star Stormy Daniels. There’s a whole lot more that’s been uncovered about Donald Trump’s New York affairs than a single hush money payment. Clearly, Michael Cohen has been spilling the beans about everything with Trump’s dealings while Cohen was Trump’s attorney.
This extensive situation must be resolved by using a trial with a jury. There is no other way to resolve this. However, time always seems to be on Trump’s side. Meaning, Trump can delay, delay, delay until a later day. Trump also hopes that that later day is much more inconvenient for Bragg, or better, a day when a Republican appointee has taken office and these charges can be dropped against Trump. At least, that’s what Donald Trump is hoping. This situation sucks for the United States, but it is our legal system (not) at work.
Were this any person other than Donald Trump, these legal shenanigans would not work against a DA. However, Trump seems to be able to slip out of these situations with all due ease (wielding time, loopholes and his MAGA cultists as weapons).
Further Indictments and Trump’s Future
Let’s hope that Donald Trump’s potential federal trials are not so easily skirted. I’m not fully writing off Bragg’s trial yet, but I’m also not holding out much hope that this trial will land in a court before 2024, the Presidential election year. If this trial lands at any point during 2024, Bragg will likely be forced to postpone the trial until the election is over, pending the election outcome. This means even longer waiting and possibly no trial at all.
Unless Alvin Bragg can bring this to trial before the end of 2023, his hopes of actually seeing the charges in the indictment stick to Trump are fading rapidly. Along side Trump’s false, but very noisy “witchhunt” rhetoric, which is also being parroted by his MAGA cult followers, we could also end up waiting 2 years or longer for a trial to convene. This lengthy wait may even cause the charges to completely evaporate. I’m all for holding people legally accountable, but in Trump’s case, it must be performed as rapidly as possible; from indictment to trial in no more than 3 months. If that’s not feasible, then bringing an indictment might be fruitless because of Trump’s inevitable delaying tactics.
It’s nearly guaranteed that if Trump can delay this New York trial for long enough, the charges are likely to disappear. This is why any attorney seeking to bring charges against Trump must plan to execute not only the indictment and the charges carefully, but they must also weigh the delay games Trump is likely to play. If Trump can successfully delay 6 months, 12 months, 24 months or even longer, it might exceed the statute of limitations and it could allow Trump to retake Presidential office (or see another Republican become elected) to get out of the charges entirely. The longer a trial takes to convene, the less likely Trump is to even see a trial at all. Bragg needs to weigh all of this carefully.
Could Bragg continue to levy these charges if Trump is re-elected as President? Probably not. If Trump is re-elected President, these New York charges along with any federal charges are also likely to evaporate under Trump’s change in cabinet. However, Bragg’s charges could remain, but New York State could be pressured out of existence should Trump’s feds place extraordinary (retaliatory) federal pressure on the state of New York. Thus, forcing the charges to be dropped. Worse, how would it look for Alvin Bragg to bring state criminal charges against a newly elected President?
This is why it’s nearly impossible to run these indictments at this late date. In fact, any Federal indictments should have already been levied by the DOJ in 2021 or 2022 so that Trump could potentially be on trial by the end of 2023. It’s actually too late to levy any federal DOJ charges via indictment against Trump due to the upcoming 2024 election. If a federal indictment were to be levied at this point in 2023, there is likely no possible way a federal trial could occur before November 2024 (the Presidential election). At this point, the feds are going to be forced to wait until after the 2024 election to have any hope of indicting Trump, assuming he’s not re-elected. The prospect of the DOJ indicting Trump actually fades every day that goes by without an indictment at this point. Once 2024 arrives without a DOJ indictment, there very likely won’t be an indictment until after November of that year.
If ANY other Republican candidate takes Presidential office and replaces Joe Biden, all federal indictments (or investigations) against Trump are likely to be wiped away with a single pardon. State charges don’t get wiped with a pardon, but potential federal charges (and federal crimes) do. The Department of Justice likely fully understands this ticking-clock-dilemma, particularly at this late date. At this point, it is likely far too late for the DOJ’s special counsel, Jack Smith, to hand down a Department of Justice indictment over the charges of Insurrection or the classified documents case. The only way these cases would still be possible is if Jack Smith uses his ties to the ICC to levy charges under the ICC, which is entirely separate from and outside of the Department of Justice. This “dual counsel” aspect of Jack Smith may actually be the subtext for why Merrick Garland “hired” Jack Smith as special counsel to handle Trump’s case. Merrick Garland wouldn’t stand in the way of Jack Smith were he to levy an ICC indictment against Donald Trump and then hold an international trial against Trump’s espionage charges at the Hague.
Further, if the United States changes to a Republican led President and even if that newly elected President (assuming it is not Trump) chooses to pardon Trump, any ICC indictments still remain. The ICC acts outside of the United States jurisdiction. The United States is not a current signatory on the ICC, but that situation acts entirely in Merrick Garland’s favor, even if Garland ends up ousted from office as the DOJ’s head. For all of the jurisdictions that are signatories to the international court, they may have enough pressure over the United States to force the US to hand over Trump for an ICC indictment and international trial regardless of Trump’s present political office held (or not).
In other words, with Jack Smith as counsel, all may not be copacetic for Donald Trump even after the 2024 election ends. By Garland allowing Jack Smith to deep dive into Donald Trump’s DOJ investigation, this may see the ICC weigh in on Trump’s legal situation after the DOJ is unable. Garland knew the stakes of Trump’s situation and it appears that Garland may have used Jack Smith as an ICC insurance policy if the DOJ is unable to bring a proper indictment timely.
Republican Readers
If you are a Republican and you’re still reading up to this point, I applaud you. It means that you want to better understand Donald Trump’s predicament. Donald Trump is most definitely skirting laws that the rest of us would never be able to skirt. What it ultimately says is that Donald Trump is above the laws of the nation… and that situation is not right. No man is above the law. Yet, Donald Trump firmly believes that he is… and so do his sycophant cult members.
Why MAGA Republicans continue to endorse a man who wishes avoid legal consequences by becoming a dictator over the United States solely to make sure no laws ever apply to HIM, but then happily apply laws to everyone else, why would you as a Republican want that, not just for you and your family, but for the rest of the United States?
Democracy keeps the United States whole. The rule of law glues our democracy together. Dictatorship ensures neither remain and that the United States falls. Your very livelihood, family and indeed everything you hold dear is at stake. You may think that this man’s MAGA ideals are worthy, but Trump’s ideals are only worthy of collapsing the United States and turning the United States back into a third world nation.
If Donald Trump or any of his sycophant ilk including Kevin McCarthy, Lindsey Graham, Mitch McConnell, Marjorie Taylor Green, Ron DeSantis, Gregg Abbott, Josh Hawley or any other doofuses manage to become President, democracy is likely to end.
The End of Democracy?
What does it mean if democracy ends? It means you won’t have a job. It means millions won’t have a job. It means the loss of income. It means the loss of whatever money or savings you have. It means the loss of your home. It means no more public schools for your children. It means no more food. It means restaurants close. It means that the United States as you know it is over. It means those with guns survive a bit longer than those without. It means the medical system serves those who are favored by the dictator, but affords those to die who aren’t.
What comes in Democracy’s place is no more elections. No more law enforcement, except against you if you speak out against the current regime. No more free press. No more constitution at all. It effectively means the situation that now exists in China and Russia, except it’ll be under Donald Trump in the United States. Puerto Rico will likely withdraw its involvement with the United States as many other US territories are likely to do (e.g., Guam, US Virgin Islands, American Samoa, etc). Even Hawaii might try to become a territory of another nation since it’s a set of islands in the Pacific and not physically connected to the 48 state continent.
Further, it means the loss of allies and the loss of NATO status. The military will become, well who really knows? There’s no way to know what a dictator might do with a military the size of the United States Military nor the nukes under his control. It also means that those who live on or near a border, such as Mexico, will see the very real possibility of Mexican military takeovers of that border land and property. 50 states? Not anymore, with Russia firmly moving to take back Alaska and Mexico likely taking over border states.
Let’s just say that the life that you have come to know and understand is over. You won’t live under the rule of law, you will live under the rule of a supreme leader… one who will just as quickly kill you as look at you. Death will likely become the means to solve all legal problems. If you break the law, you die… even for a simple matter of theft of food simply to feed yourself or your family… even if that food was grown by you in your backyard. Once democracy is lost, your land is no longer yours and no longer is anything that sits on it.
Once democracy ends and a dictator comes into power, what you knew of the United States is gone. You can’t vote someone out of office if you’re not allowed to vote. What is the first thing that Donald Trump does if he’s re-elected president? He halts all future elections indefinitely, state or federal. An elected person cannot be voted out of office when elections don’t take place. Don’t think that Trump won’t do this. Further, Democrat led states will be either disbanded or new state leaders will be appointed by Trump, pushing out any remaining Democrat control.
This is who and what you’re endorsing and wanting to vote back into office as a MAGA Republican. You’re not voting in freedom. You’re voting out the ownership of everything you own. You’re voting out your very family’s well being. You’re voting out America’s future.
Vendetta
Why didn’t this happen in 2016? It didn’t happen in 2016 because Donald Trump didn’t have a vendetta against the United States. Today, Donald Trump has a very strong vendetta; a vendetta so strong that he’ll do anything once he regains power to ensure that vendetta is fulfilled and that he remains in power indefinitely. That includes shutting down democracy.
Once that happens, the rest of the world will retaliate by cutting off the United States from, well, just about anything and everything (imports and exports alike). No more imported food, clothing, oil, energy, products and various other stuff that keeps America economically rolling. No more exports will be accepted. That will collapse both Main Street and Wall Street alike. America’s dollar will become so devalued and worthless as to become worth less than the value of one Mexican Peso. Mexico’s money will likely become worth more than what will be left of the USD. Trump will have to seek new allies and trading partners. Better buy up some gold and horde it in your house. It’ll be the only thing you can buy stuff with… assuming Trump doesn’t force the military to go on raids and take everything you own away from you.
At this point, the United States will have to be renamed to something else… probably something like Trump Nation… or whatever naming whim Trump dreams up. What this also means is a major exodus of people flooding out of what’s left of the United States and into Canada or Mexico or other locations. Some will leave and head to Europe, but Europe (and the rest of the world) will suffer dearly from the collapse of the United States.
Staple products like cars and other big ticket items will disappear. Manufacturing will cease because there will be no money to buy these products by anyone in the United States. Grocery stores and most forms of commerce will cease. Barter will take hold, assuming Trump doesn’t annex the entirety of the United States land (and everything on it) into one big land mass ownership for himself, leaving no borders, no ownership and no more need for state legislators or state capitols. Meaning, you won’t be left with anything other than perhaps the clothes on your back with which to barter. A post Trump dictatorship economy will make the Great Depression decade between 1929-1939 seem like a pin prick by comparison.
The only people who will serve Trump directly are those who continue to lick his boots. The rest will be thrown to the curb and/or arrested and possibly disappeared (read killed). As for jails and current inmates, who really knows? Trump will deal with these institutions at his own fancy. Perhaps moving some military to manage and keep certain penitentiaries open and closing down others by releasing inmates back into what’s left of society or possibly executing them all. There’s no way to know exactly what Trump as a full out dictator might do here. Trump will have a huge bodyguard detail, but the rest of “America” will be left to fend for itself. Those in Trump’s employ who backstab Trump will summarily disappear.
There will also be no more press or TV channels or radio, except for radio and TV channels devoted solely to the Trump propaganda, which will run 24/7 on big screens around big cities. Trump’s still gotta stroke his fragile ego. No more free press or freedom of speech. Try to protest? The military will see to that.
Make America Great Again? Yeah, this is not so great is it? If you think this is all just alarmist rhetoric, then you really don’t know what Trump is capable of doing. Of course, if you want to live under the thumb of a dictator in squalor and poverty worse than what we have today, then by all means vote for Donald Trump again.
Donald Trump isn’t a Republican. Donald Trump isn’t even a Christian. Donald Trump is a nihilist; probably the exact type of nihilist that the author Fyodor Mikhailovich Dostoevsky warned us about.
A nihilist, by believing that laws and morals are useless, is also a person who would place the ultimate importance of life on material things. To this person, family, religion, and laws would have no purpose. This would make them a materialist, someone who believes the only things which have any value are those which are physical.
Does this quote sound just a little too familiar?
Trump actually doesn’t care about you or your family or anyone, let alone laws, religion, family or any other thing he professes to claim. He doesn’t care about the United States, religion or anything else… other than money and power (which gets him the things he wants… materialism). Trump pretends to care about such social topics, but only to the point that Trump hopes to convince you just enough so you as a Republican will vote for him. Once Trump lands back in power, his vendetta sees to it that the United States ends and so too with it do the Republicans, the Democrats, religion and the economy. After Donald Trump gets done with the United States, there will be nothing left united about it.
Let’s hope that before this happens that an indictment and a court finds Donald Trump criminally guilty and puts him away in prison for a very, very long time. The world is not ready for a petty nihilist dictator like Donald Trump practicing his petty dictatorship on American soil. Donald Trump cannot be allowed to be re-elected to any position. There are also plenty of non-MAGA Republican candidates who are actually willing to do the right thing for Democracy, who can kick these MAGA extremists to the curb, who can put this morally bankrupt Republican period behind us and bring respect and sanity back to the Republican party. Republicans need to finally wake up and stop defending a man who is so clearly morally bankrupt and in no way worth defending. Let Donald Trump be indicted; it’s his problem, not yours. It’s long past time to shut up and leave Donald Trump to his own fate.
Donald Trump Indictment Text
For your reading pleasure and enjoyment, here is the full text of Donald Trump’s New York indictment.
If you’re on a phone or tablet, you may need to click the link for the document to open. Donald Trump’s team is also still calling this a politically motivated prosecution from Alvin Bragg. There’s nothing in this indictment that seems politically motivated in nature. Though, the charges are also not surprising or unexpected considering Donald Trump’s activities stated by Michael Cohen. All of the counts are based on falsifying business records. Whether these counts are valid and have merit are for the courts to decide, not for Donald Trump or his sycophants or CNN’s analysts to decide. Donald Trump can file motions to dismiss in a legal format, but again it’s up to the courts to decide whether to consider if those motions are valid.
Analysis
I hadn’t really wanted to include an analysis section of this indictment, so I’ll include a short one. CNN legal pundits are heavily leaning in Donald Trump’s favor. It’s clear, CNN has become much more right leaning in its views. Thus, CNN’s legal analysts have basically treated Bragg’s indictment as nothing more than a mere, but very weak nuisance. Donald Trump’s lawyers echoed this same sentiment immediately upon leaving the arraignment court building. These Donald Trump sycophants and CNN alike have decided that Trump will likely to be able to dismiss the entire set of charges.
MSNBC, however, has taken a more balanced approach in its view; an approach to which I agree. There are 34 counts present in the indictment (this sheer number is important to realize). If the case had zero merit, it would have never been accepted by a judge to arraign Trump over. Thus, the counts are most definitely strong enough to arrest and arraign Trump. What MSNBC’s analysts postulate is that while many of the counts may be dismissed as weak, not all of them are likely to be dismissed. That reduction in counts reduces Trump’s criminal exposure, to be sure, but it is not eliminated. If even 10 counts remain after Trump’s move to dismiss, that’s still 10 counts to which Donald Trump must be held to criminal account.
I do agree that Trump may be able to get some or even a larger number of the counts dismissed. I also agree that Trump may not be able to dismiss every single count. Trump understands this. Even just 1 count is enough to take it to trial. Though, I believe there will be well more than just 1 left over after whatever is dismissed is dismissed.
False Rhetoric
One thing I do not agree with is that Bragg’s indictment is in any way politically motivated. Bragg has every right as the Manhattan District Attorney to bring anyone and everyone to justice for perpetrating illegal activities. If Bragg has uncovered evidence that Donald Trump has, in fact, perpetrated illegal activities… and according to this indictment he has… then Bragg has a legal obligation under New York Law to seek prosecution against the accused. It does NOT say witchhunt. It does NOT say politically motivated. It DOES say that District Attorney Alvin Bragg is doing his job for the state of New York. Donald Trump and the Republicans will spin this as political, only because they think it will help Donald Trump skirt responsibility for the laws that he has allegedly broken. To that I counter, if you break the law and you are exposed, you take the consequences; ex-president or not. No man is above the law.
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Is the Demise of Twitter imminent?
With Elon Musk’s $44 billion hostile takeover of Twitter now closed, it’s clear that Musk is way out of his depth operating this social media platform and with that inexperience, this platform is very likely to die. Note, this is an unfolding story. Please check back for new updates to this article over Twitter’s latest blunders. Let’s explore.
Twitter as a Microblogging Platform
The rise of Jack Dorsey’s Twitter was rather unexpected considering its severe limits, such as its initial 140 character limit which was later doubled to 280 characters. Small messages are akin to SMS messages and I suppose that’s why so many people readily adopted this character limit.
Twitter has gained a lot of “people”, but unfortunately has also gained a lot of “bots”… which at this moment appear to far outnumber actual live people.
Blogging platforms, like WordPress.com on which this article is hosted, allows users to mostly say whatever they like. However, saying things isn’t without problems. Sure, free speech is important on blogging platforms, but what can be said isn’t without bounds. There are, in fact, TOS limits that prevent certain types of speech. For example, there are rules against hate speech, perpetuation of misinformation and disinformation and there are even laws against certain types of speech like “fighting words” and “defamation”. Free speech most definitely has its limits. Free speech is also not without consequences.
Freedom of speech is not truly “free” in the sense that you are free to say whatever pops into your head. You do have to consider the ramifications of what you say to those around you. One classic example is yelling, “Fire” in a crowded theater. That’s a form of trolling. It is most definitely not protected speech and could see the perpetrator fined and/or jailed for performing such reckless activities. Yes, freedom of speech has limits.
Those limits can be defined both by laws and by Terms of Service agreements. If you sign up for a service, you must read the Terms of Service and Acceptable Use Policies carefully to determine where the boundaries begin and end. Running afoul of Terms of Service rules can see your account restricted, suspended, banned or deleted. Such suspensions and bans can be limited to a few days or the action could be permanent. It might even see your account removed from the platform depending on the egregiousness of the action.
Suffice it to say that Free Speech, as I reiterate again, has limits and boundaries. You are not allowed to say whatever you want when using private company services. Other violating examples include such speech as death threats, threats of self-harm or of harm to other people, bullying, harassing others, inciting people into violence, stalking others or any other activities which are considered illegal or condone violence upon others.
Freedom of Speech
Many people hold up the first amendment as though it’s some sort of shield when using platforms like Facebook, Twitter or YouTube. The First Amendment is not a shield! Let’s examine the text of the First Amendment to better understand where and how it applies:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
Let’s break it down. “Congress shall make no law” firmly states that the limits of the First Amendment are strictly on the Congress and, by that same extension, all Government entities. The Constitution strictly governs how the U.S. Government operates. It does not cover protection of speech for private businesses at all. Thus, the text of this amendment does not apply to how Facebook, Twitter or any other social media site operates unless that service is wholly or partially owned by the Government. How the First Amendment applies is by preventing Government workers, including any branch of the government, from abridging speech either written (press) or verbal (protests).
For example, using sites operated by the U.S. Government, such as the FTC’s call for comments area, the First Amendment fully applies. If you say something that may become publicly visible on such Government web sites, your speech is protected by the First Amendment. However, if you say something on Twitter, a site not owned or operated by the U.S. Government (or any government), your speech is not protected by the First Amendment, but instead is governed by Twitter’s Terms of Service agreement and/or any other associated agreement(s).
Too many people believe that First Amendment free speech rights apply to private enterprise, but it does not. While most speech is allowed on these platforms, some speech forms are not and those that are not are clearly written into the Terms and Conditions to which you must agree by opening an account.
For example, Twitter only allows impersonation of accounts as parody when the parody accounts are clearly labeled in specific ways. This Twitter rule restricts your freedom of speech in very specific ways. Meaning, you are not allowed to impersonate an account in a way that makes it appear as if you are genuinely the person you are attempting to impersonate. If you don’t label your account according to Twitter’s rules, your account is considered in violation and will be disciplined accordingly.
The First Amendment doesn’t restrict this type of impersonation activity, however. Other state or local laws might restrict such impersonation activities, but the First Amendment does not. However, Twitter does restrict this activity via its rules to which you must agree as part of using its services. There are other such activities which are also considered in violation of Twitter’s rules which can also become apparent after you violate them.
In other words, Free Speech on Twitter is firmly at the whims and rules of those who operate Twitter… rules that can be changed at a moment’s notice.
Twitter as a Viable Platform
Prior to Elon Musk’s takeover, Jack Dorsey (and his successor team) operated the platform in a way that many political pundits believed to be unfair to certain parts of the political spectrum. Politics are generally divisive. After all, there are two parties and each party believes they are superior to the other. I won’t get into who’s right or who’s wrong politically, but suffice it to say that the rules must apply to political activists in the same way as any other person using the platform.
Unfortunately, Musk is now seeking to shield political activists from Twitter’s rules. Instead, choosing to not hold any political activists accountable to Twitter’s established rules.
For example, Musk has recently chosen to reinstate Donald Trump’s account to Twitter. Donald Trump intentionally and willfully violated Twitter’s rules in the past. Yet, because Musk now owns Twitter, he has forgiven Donald Trump those past transgressions and has reinstated his account. This is a very clear example of how Musk chooses to break Twitter’s own rules at Musk’s own whim.
“Rules are made to be Broken”
This is an old saying, but it’s one that has no place in Social Media. If rules only govern some people, but not others, then there can be no ethics or justice. Rules must apply to all or they apply to none. Selective rule application is the basis for no rules at all. That’s how law works. If law enforcement fails to enforce laws on some criminals, then laws mean nothing. Likewise, if rule breakers can get away with breaking rules, then rules mean nothing.
Twitter has firmly moved into ethically questionable territory. If Musk thinks that selective application of rules to some people, but not others, is a recipe for success, then Twitter is truly no platform anyone should be using. It’s part of the reason I am no longer using Twitter. I have walked away from the platform and will not return. Here’s another example of Musk applying selective rules.
Musk’s Selective Rules and Instant Rule Changes
With Kathy Griffin’s suspension, Musk has made it clear that Musk makes the rules and no one else. This means that if someone does something that Musk doesn’t like, he’ll instantly rewrite the rules to satisfy his own whims. That’s actually called a moving target. Any user who ends up rubbing Musk the wrong way might end up with a suspension simply because Musk decides he doesn’t like whatever it was and he’ll then rewrite the rules instantly to make that activity against Twitter’s terms.
He did that with Kathy Griffin. She parodied Musk in a way that Musk didn’t like, then Musk retaliated by strictly applying Twitter’s terms, but more than this, he also rewrote Twitter’s rules by not giving her the 3 required warnings. Instead, he gave her zero warnings and instant suspension. Twitter’s rules about warnings are clear. You’re supposed to get at least 1 warning in advance of suspension. Kathy Griffin didn’t get that. She got the boot from Musk without any warnings at all.
Again, that’s a moving target. If you don’t know what the full rules are, you can’t abide by them. Sure, Kathy should have read the terms of impersonation more closely to prevent even getting warned. However, Musk should have read Twitter’s terms and upheld those rules by warning her before suspension, not change the rules on a whim. Both Musk and Griffin are guilty of not following the rules.
For Twitter users, it means Musk can instantly rewrite Twitter’s rules without warning and then suddenly a user is in violation. That’s no way to run a site. The rules are written in advance so we all understand them and have a fair chance at abiding by them. Instant changes mean there’s no way to comply with randomly changing rules simply because you can’t know what they are or what they could become if Musk gets triggered.
App Store and Twitter about to Square Off
[Update 11/25/2022] Twitter’s new “freer speech” rules combined with its lack of enough staff to manage the deluge of hate speech on Twitter is leading Twitter down many wrong paths. In addition, Elon Musk is also complaining about losing between 15% to 30% of its $8/mo subscription fees to Apple and Google when purchased in-app.
Because Apple is also now investigating Twitter’s latest “freer speech” maneuvers, Twitter is poised to potentially lose its app listing in the Apple Store over Twitter’s own inability to abide by its App Store agreements with Apple. Apple is already investigating if this is the case now. If Apple shuts Twitter out of the app store, Google is likely to follow suit for similar reasons. That leaves Twitter with no new users. Existing Twitter app owners can continue to use the Twitter app, but new users will be shut out. That means new users will be forced to use a browser to consume Twitter.
An app store removal is an even bigger blow to Twitter than the mere loss of 15-30% to Apple’s and Google’s in-app purchase fees. Elon Musk is playing with fire by not honoring its own Terms of Service agreements against both previous and current violators, a fact that could lead to an app store removal. Instead, Twitter is also giving former violating accounts “amnesty” allowing them to be reinstated. App store agreements require that apps providing services must adhere to Apple’s app store has rules against apps which don’t properly handle hate speech and other objectionable content.
With Twitter’s more lax rules around objectionable content and reduced “freer speech” filtering, Twitter is very likely now in violation of Apple’s developer rules. Such an app store removal would have a devastating effect on Twitter’s bottom line, especially after advertisers have begun abandoning the platform. When even Apple staffers are abandoning Twitter, that doesn’t say good things for Twitter’s longevity:
Over the weekend, Phil Schiller, the former head Apple marketing executive who still oversees the App Store, apparently deleted his widely-followed Twitter account with hundreds of thousands of followers. —cnbc.com
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Twitter’s Demise
In addition to all of the above, Musk has saddled Twitter with mountains of debt numbered in the billions of dollars. Some people speculate that it’s $13 billion because that’s what banks have issued Musk in loans. However, that doesn’t take into account the “investors” who Musk didn’t pay out or private investor loans from people who aren’t banks. Twitter’s debt is likely well higher than $13 billion, it’s just that $13 billion is what we can visibly see. Since Twitter is now private, Musk is not obligated to report anything to anyone about the Twitter’s total debt burden or any of its other finances.
One thing is certain, Twitter (and by extension, Musk) was required to pay out all shareholders to take Twitter private. That payout delisted Twitter’s stock and made Twitter a private company. If Twitter was in debt at around $1 billion prior to the takeover, Twitter is likely carrying at least 20-30x more debt now. If Twitter couldn’t make ends meet prior to Twitter’s takeover, there’s absolutely no way Twitter has any hope of doing that under Musk’s “leadership” (and I use this term quite loosely).
When attempting to reduce expenses in any company rapidly, there are only so many places to begin. The first place is in staffing. Staff reduction is low hanging fruit and it’s relatively easy to let staff go to stop at least that cash hemorrhaging quickly. It’s also the first place where Musk chose to begin. Nine days after taking over Twitter, Musk let half of Twitter’s staff go. But that’s not where the staff changes end. That’s just the beginning. In amongst Musk’s crass jokes and public displays about these staff reductions on Twitter, Musk continues to reduce staff every single day. There’s no way to know when Musk will be satisfied with the staff reductions. In fact, he could eliminate every single staffer and still not reduce expenses enough to keep Twitter from running out of money.
Other places to reduce after the above low hanging fruit include real estate (i.e., leases), employee perks and travel expenses.
Employee Perks
Musk has also taken aim at employee perks. Musk has claimed that it cost Twitter upward of $400 to feed each employee per day at the Twitter’s onsite employee cafeteria. While that claim is bold, it’s not really backed up with actual information. Though, Musk has claimed that less than 10% of the company participates in that free food program. If that’s true, then…
My assumption is that the cafeteria continues to buy enough food to feed an overly large lunch crowd every day, yet much of that food goes to waste as employees don’t show up. That’s really a food expense and food prediction problem.
If you want to operate a cafeteria, you have to buy enough food to handle future crowds. You can’t buy only enough food to handle 10% of the employees because then you’ll run out of food when 20% of the employees show up. The first option for this free food perk is to shut it down. If you don’t want to pay for the food expenses of a cafeteria, then you don’t run a cafeteria or you run it more intelligently.
For an example of a more intelligently run cafeteria, the cafeteria could publish its menu a week in advance. Employees who wish to order a meal for any given day submit their orders early. The orders would be accepted up to two days before to prevent people ordering a week’s worth of food in advance, but never show up to eat it. They also can’t order the “day of” because a cafeteria can’t operate that way without over ordering. This then allows the cafeteria to know a few days in advance how much food to order to handle that day’s lunch orders. This limits the food order costs to only those who order meals and only to the amount foods needed to create those ordered meals.
The cafeteria could add on a limited number of extra meals beyond those that were ordered to handle a limited number of walk-ins as well as replacement meals, just in case.
Alternatively, Twitter could contract with a meal provider like Eat Club, which essentially does the same as what I describe above. You order your meal up to a couple of days in advance. This allows Eat Club to only need food enough to cover the meals ordered. It also means that Musk doesn’t need to operate a cafeteria at all, removing food costs and all cafeteria staff.
Beyond smartening up food costs of a cafeteria, other perks may also be targeted for removal, such as child care, reimbursement of certain types of expenses and other employee benefits which are costly. The public may never know about the other perks that get eliminated unless Musk states them publicly or employees speak up, but that’s unlikely because Musk has likely required an NDA for all employees.
Moving Twitter’s HQ
To reduce yet more expenses, the next place for a CEO to look is to expensive office leases. Twitter operates in one of the most expensive real estate markets in the nation, San Francisco, California. Worse, Twitter operates in San Francisco city proper. While San Francisco has, at least in the past, been amenable to offering tax incentives and subsidies to companies willing to remain in San Francisco, there’s no way to know if Twitter benefits from those.
Unfortunately, San Francisco does not extend those tax breaks and incentives to individuals who work in the city. San Francisco is one of THE most expensive places in the nation to live and work. That’s why so many people commute into San Francisco rather than actually living there… that and the crime rate in SF is astonishing. If you work in San Francisco and commute there, expect to spend at least $340 per month simply for a parking space every day. And no, most companies operating in San Francisco won’t pay parking expenses for employees. That’s simply a pay cut you deal with when working at San Francisco companies. The same lack of reimbursement goes for gas expenses or choosing to ride BART or Caltrain every day.
What this expensive lease means for Twitter staffers is that eventually Musk is likely to move Twitter’s HQ to Texas along side Tesla’s HQ. That means that staffers will eventually be forced make the decision to move to Texas or find a different job in California. This mandate has not yet come down from Musk, but looking ahead to the future, this is very likely Musk’s trajectory. That all assumes Twitter doesn’t fail long before a move.
Bankruptcy
Twitter may not quite yet be on the verge of bankruptcy, but only because Musk apparently still seems to have some liquid cash stashed somewhere to pay Twitter’s bills. He may even be using some of his own personal cash to prop Twitter up at this point. Considering that many advertisers have left Twitter, which is made worse because the previous management team failed to secure pre-buys for advertising in 2023, Twitter is about to come into a cash crunch very soon. No advertisers means no ad revenue. For this reason, Musk has his hands tied trying to keep Twitter from running out of cash. Hence, Musk’s $8/mo plan to try and keep Twitter afloat. If Twitter runs out of cash, it’s all over.
There are very likely no banks willing to extend Twitter yet more loans amid the billions that Twitter has already leveraged in Musk’s ill advised buyout. Musk knows this. That’s throwing good money after bad.
Once Twitter’s liquid cash runs out, there’s no way to pay the server bills or staff or electric bills or any other bills. Considering how drastically and rapidly Musk is cutting, Twitter’s cash flow situation must be relatively dire.
What that all means is that Twitter is very likely just weeks away from bankruptcy, which is dependent on Twitter’s cash burn rate. As I said above, Musk may be dipping into his own personal wallet to fund Twitter at this point. If so, it’s understandable why Musk is cutting so deeply and so rapidly. Who wants to prop up millions in cash burn every day? Musk is wealthy, but that’s not a smart way to use (or rather, lose) money.
[UPDATE] It looks increasingly likely that Twitter will need to file bankruptcy. This New York Times article explains that some of Twitter’s bills are now going unpaid. That’s the first step toward not being able to pay any bills.
But once Mr. Musk took over the company, he refused to reimburse travel vendors for those bills, current and former Twitter employees said. Mr. Musk’s staff said the services were authorized by the company’s former management and not by him. His staff have since avoided the calls of the travel vendors, the people said….
Twitter’s spending has dropped, but the moves have spurred complaints from insiders — as well as from some vendors who are owed millions of dollars in back payments. —New York Times
Yeah, this is a bad sign. If vendors are now going unpaid, that indicates lawsuits from just about every angle are imminent against Twitter. It’s also a matter of time before Musk stops paying other critical bills.
Check Mark for $8/mo
One additional thing that Musk has banked on to increase revenues over Twitter’s loss of advertising revenue is to charge users $8/mo for Twitter. Not only was Twitter free to use in the past, the compensation for using Twitter was Twitter’s free access to the IP content generated by its users.
Instead, Musk has forgotten and ignored that gentleman’s agreement between Twitter users and Twitter, instead choosing to try to make money off the backs of its content creators. That would be tantamount to YouTube charging its content creators monthly for the privilege of creating content for YouTube. It’s a ridiculous ask.
The Check Mark verification system originally instituted by Twitter was intended to prove that those with a check mark are who they say they are. Unfortunately, by reducing this feature to an $8/mo plan and because more than half of Twitter employees have been sacked, there’s effectively no one left at Twitter who can actually verify someone who buys the $8/mo plan.
That fact was born out when Musk released the not-ready-for-primetime feature to the public before it was ready, let alone tested. A bunch of bad actors all paid $8 and then began impersonating nearly every celebrity that you could possibly think of. This then forced Musk to halt the program, but not before much damage had been done to the platform and the reputation of the “new” Check Mark program.
Musk was forced to shut down the subscription plan in an attempt to revamp it. So far, the fixed plan has not been released. Those who purchased and who played games were left holding the bag when they were unable to change their usernames back. Irony shines hard on bad actors for being bad actors. Anyway, Musk is a loose cannon and this is clear example of that. Musk was so desperate to make revenue, he was willing to release an unfinished feature that was easily gamed by the bad actors on Twitter.
Worse, it has brought even more bad actors to the platform and those are now beginning their own tirades. Yet, Twitter is now so understaffed and because the bad actors know this, they are running rampant all over the platform harassing, trolling, spewing hate speech and there’s no one there watching or enforcing. Twitter is literally a cesspool. If we thought Twitter was bad under Dorsey, it’s 1000 times worse under Musk… and Musk literally doesn’t care.
Above all of this, Musk plans to prioritize tweets for those who pay and de-prioritize tweets for those who don’t. Meaning, if you pay, you get placement and visibility. If you don’t, your tweets don’t get seen. More than this, Musk even admitted to hiding tweets that he doesn’t like. I’ve even seen this behavior. Hidden tweets are not new. Thread creators can hide tweets of those they don’t like. This goes one step beyond hidden tweets. This allows Twitter to hide tweets silently. No one knows tweets have been hidden unless you go check. Even then, you can’t know it’s been hidden unless you see certain behaviors within Twitter’s UI. Your tweet could be visible one moment and invisible the next, with no notification.
This behavior goes way beyond benign and lands well into nefarious territory. There is zero difference between suspending people over bad tweets and hiding people’s tweets from view without warning or notification. They’re both forms of oppression and speech suppression by an overly wealthy man-boy who simply becomes triggered too easily. This cliché comes to mind, “Out of the frying pan and into the fire!” Which leads to…
The Rise of Oligarchy in Journalism
Make no mistake, even 280 characters is considered a form of journalism. However, because users aren’t journalists, they aren’t bound by journalistic ethics. Meaning, bad actors believe they can say anything they wish, sometimes even doing so willfully to test the boundaries for how far they can take their speech.
Regardless, wealthy individuals are beginning to buy up these large platforms for their own egocentric interests. For example, Rupert Murdoch purchased Fox News (and other similar news outfits) to push his own personal political agendas. Later, after Warner Brothers Discovery purchased CNN, we’ve come to find that billionaire John Malone is a large stakeholder in this new CNN acquired outfit. The latest, of course, is billionaire Elon Musk who has now purchased Twitter, yet another more or less news outfit. Even Facebook’s Mark Zuckerberg has his own biases which get injected into Facebook’s operation… and yes, Zuckerberg is also considered a media influencing oligarch.
Oligarchy is now firmly entrenched in our media sources in ways that are not amenable to providing unbiased news sources. With Fox News’ right leaning bent at the hand of Rupert Murdoch and now CNN’s more-or-less right leaning bent with John Malone and Musk’s somewhat right leaning bent with Twitter, more and more news organizations are becoming right wing news sources because of these right wing billionaires.
Yet, the government is doing nothing to halt or stymie this harm to consumers. Overall, right wing propaganda is getting more and more intense, with these right wing news organizations spewing false propaganda claiming it is the left who is doing the damage? It’s not left wing billionaires buying up news sources. Note, there is another blog article here yet to be written which is born out of this section, look for it soon.
I’m not saying that left wing or right wing political slants are at all good business for media. However, it appears that the vast majority of false disinformation is coming from right wing media. False information that is perpetrated as truth, particularly about left wing politics.
I’m not here to get into who’s right and who’s wrong. I’m simply disclosing that the political discourse in many media platforms are now being swayed by right wing billionaires. This is to the loss of professional unbiased journalism. It will have to fall to small blog article sites, like WordPress, that are independently run not by right or left wing billionaires where news can be had in unbiased ways. That assumes that right wing billionaires don’t buy up these blogging sites, too. Unfortunately, too many people are willing to listen to these biased news organizations thinking they are both unbiased and purport truth when, in fact, they do neither the vast majority of the time.
Alternative Platforms
While there isn’t a clear winner for a Twitter replacement, some are in the works while others are trying. For example, both Tribel and Mastodon are giving it a good college try and likely have seen an influx of traffic since Twitter’s wobbly last few weeks.
One might also consider Truth Social were it not simply a playground for Donald Trump’s exceedingly fragile ego. If you go over to Truth Social, expect to be barraged by ads. Also, don’t expect to be able to say anything negative about Trump or any of his sycophants or you’ll be banned. Freedom of speech is most definitely not alive and well at Truth Social.
As for Tribel and Mastodon, read their terms and conditions closely before opening an account. Tribel, for example, requires you to agree to hand over all rights to any Intellectual Property (IP) that you upload into Tribel. You forfeit all rights for anything you submit to Tribel. Twitter’s terms allow you to retain ownership, but give Twitter rights to use it. However, with Musk’s haphazard behavior, anything is now possible. I simply can’t trust that Twitter is a safe space any longer.
One possibility is waiting for Jack Dorsey’s BlueSky social which is based on a decentralized system like Mastodon. However, there’s no way to know if Dorsey’s BlueSky will become the defacto Social Media site like Twitter was. However, it may be worth waiting for BlueSky to see if it can become a sufficient replacement for Twitter.
For now, there’s no real leader in social media… unless you trust Facebook and its ilk completely (i.e., Instagram and WhatsApp), which I personally do not. Facebook, or more specifically Meta, has proven itself time and again to be a completely untrustworthy organization. And now, Twitter has fallen into this same trap of being entirely untrustworthy.
Overall
Twitter is a train wreck unfolding right before our eyes. Musk says he wants Twitter to succeed, but his actions say the opposite. From his lackadaisical application of Terms and Conditions to random suspensions to sacking half of Twitter’s staff without understanding that there’s no one there to moderate the platform.
Because of all of these factors, Twitter has effectively become a free for all for bad actors. By ‘Bad Actors’, I mean people who are intent on causing mischief, trolling, attacking people and being general nuisances all without any supervision. In effect, the crazies are running the show at Twitter and Musk clearly doesn’t care.
Unfortunately, I don’t have the hours needed to spend babysitting Twitter trolls. Prior to Musk, at least 50% of the time you could have civilized discourse between various people. Now, there’s almost no one willing or able to have civilized discourse on Twitter, instead choosing to attack, troll or vomit random memes in hopes of solely getting a rise out of someone… simply to pick a fight.
I don’t have time to become a babysitter for Twitter babies. That’s Twitter’s job, not mine… and Twitter is not doing it. Twitter doesn’t pay me to do that work, yet I’m expected to deal with it? No.
As long as Twitter can’t get their shit together, I’m out. I simply can’t spend hours babysitting a Twitter account to continually mute, block and report thousands of users for inappropriate behavior. I don’t even want to think about what celebrities are going through right now with perhaps tens of thousands or millions of followers. Twitter is simply a disaster.
One thing is certain, there will be a dedicated chapter written over “How not to run a business” in business school textbooks for Musk’s incredibly shitty handling of Twitter.
Once Twitter folds, the best thing I can say about it is, “Good riddance to bad rubbish.” I’ll also say that, for the record, it does appear that Twitter is on the brink of collapse. Clearly, Musk didn’t perform his fiduciary responsibility to ensure Twitter’s books were solid before making an offer to purchase. Instead, he harped only on the excessive number of bots on the platform. If Twitter was in this dire of a financial situation prior to the purchase, that should have been enough for Musk to squash the purchase contract. Who agrees to buy a financially insolvent company?
Musk, if you’re reading… 
.
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Wink to shut down free services, requires subscription
If you own a Wink home automation system, including a Wink hub, you’ll want to pay attention to Wink’s upcoming changes on May 13th 20th, 2020 (deadline extended). Let’s explore.
Shutting Down Free Service
Wink is clearly in some kind of financial trouble and they’re trying one last ditch effort to save their (f)ailing company. In that effort, on May 20th, 2020, Wink intends to shut down all free services and move to a $5 a month subscription pay model.
While this reeks of ransom and extortion, it’s also got some other issues that are even more serious.
On May 20th, all Wink hubs without a subscription will be summarily cut off from use. This means no more app access, no more API access, no more controlling your smart lights, smart plugs or anything else you presently own that is operated by Wink. Here’s the seriousness. During the Pandemic, some people may be relying on smartplugs to operate home medical devices. Cutting off these devices could cause serious complications to some people.
Effectively, they’re going to brick your Wink hub unless you fork over their extortionary $5 a month.
Bad Service
Wink’s troubles have been brewing for a while. Over the last 6 months, I have regularly seen my Wink hub go offline for hours at time. The most recent was on May 7th, 2020 from early in the morning until after midday. Yes, the hub was completely non-functional for at least 6 hours. If this were a one time problem, I might forgive Wink its outage. Unfortunately, this has been a regular occurrence about every other day for the last 3 months. Literally, there are times where the lights cannot be used because the Wink hub cannot connect to Wink’s service.
Premium Service
This is where I look at Wink and think, “What the hell?” You’re seriously thinking that anyone will pony up $5 a month to continue to have daily outages? No no no. Think again Wink. Your service attached to the hub is already trash. There’s no way I have an intention of paying you $5 a month to reward you for such bad service.
Too Little, Too Late
Unfortunately, by cutting off millions of smart hubs, this will be Wink’s undoing. Forcing people to pay up won’t lead to anything good. If Wink had attempted to roll out a for-pay subscription service 3-6 months ago by offering something better than what we’re presently getting, like dedicated support services or unique discounts on devices, I might think twice.
But, to pay for a service (a very crappy service at that) that we were getting for free without anything premium about it? Uh, not gonna do it.
I know a lot of people have sunk money into devices for their Wink hubs. Thankfully, I didn’t do that. I only have two lamps controlled by my Wink. After I realized just how crappy Wink’s service and hub actually was, I decided not to invest any further money into devices for the Wink. Instead, when I invest money in a smart home system, I’m doing it with Philips Hue, which so far is still a free service and offering a near rock solid uptime track record. However, Philips may not continue its Hue service for free forever, either.
The Wrong Way
Unfortunately, Wink has chosen the absolutely most wrong way to handle this roll out of a new subscription service. Not only did Wink offer a pittance 7 day notice for this drastic change, they didn’t even bother to attempt to widely notify users of this change. Consider that there are are probably 1.5 million of these devices in service, yet very limited notifications have been sent. Instead, they have relied on a Tweet, a Blog article and for some, an email.
There are correct ways and incorrect ways of handling such a service change, but it is clear that Wink is almost assuredly inches from going out of business. Some users have attempted to call Wink’s support line only to find that the number has been disconnected. Yeah, disconnected numbers are not hallmarks of a successful company. Quite the opposite, in fact.
Do you own a Wink?
If you own a Wink hub, you will need to understand what this means for you. You think, “I’ll still be able to control my lights”. Uh, no you won’t. After the deadline, the ability to use the app, the API (Alexa) or any other means (i.e., automation) will be shut off. In fact, I’d expect Wink to roll out a new app update to all smart phone devices that will force you onto a signup page to subscribe to their new for-pay service.
Don’t roll out of bed on the deadline and expect your lights or smart switches to work as they always have… at least, not unless you fork over that $5 a month.
Still, even if you do pay for that service, they’re likely to raise it to $10 a month, the $15 a month and keep raising up to some incredibly expensive amount in probably 4 months. The $5 a month is simply a ruse… a ruse to rope you in, then once they’ve got you hooked, raise that price to completely gouge you in the near future.
It’s up to you if you want to pay for service. You don’t really need to, though, when you can buy other smart hubs, like Samsung’s SmartThings that doesn’t require a subscription fee. Apparently, Samsung’s SmartThings hub is also fully compatible with most or all of Wink’s devices. So, there’s that. Unfortunately, Philips Hue’s hub isn’t that compatible. Hue will work with some non-Philips devices, but it clearly works best with Philips’s devices.
Critical News
Because this is pretty much timely news that needs to arrive in your inbox today, I’m publishing this without too much proofreading. If there are errors in this article, I will fix them in time. I just want to get this article pushed out quickly because of the clock ticking towards that deadline.
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Rant Time: Flickr is running out of time & money?
I received a rather questionable email about Flickr allegedly from Don MacAskill, CEO of SmugMug.
Unfortunately, his email is also wrapped in the guise of email marketing and arrived through the same marketing channel as all other email marketing from Flickr.
Don, if you want us to take this situation seriously, you shouldn’t use email marketing platforms to do it. These emails need to come personally from you using a SmugMug or Flickr address. They also shouldn’t contain several email marketing links. An email from the CEO should contain only ONE link and it should be at the very bottom of the email.
The information contained in this letter is not a surprise in general, but the way it arrived and the tone it takes is a surprise coming from a CEO, particularly when it takes the format of generic email marketing. Let’s explore.
Flickr Pro
I will place the letter at the bottom so you can it read in full. The gist of the letter is, “We’re running out of money, so sign up right away!”
I want to take the time to discuss the above “running out of money” point. Here’s an excerpt from Don’s email:
We didn’t buy Flickr because we thought it was a cash cow. Unlike platforms like Facebook, we also didn’t buy it to invade your privacy and sell your data. We bought it because we love photographers, we love photography, and we believe Flickr deserves not only to live on but thrive. We think the world agrees; and we think the Flickr community does, too. But we cannot continue to operate it at a loss as we’ve been doing.
Let’s start by saying, why on Earth would I ever sign up for a money losing service that is in danger of closing? Seriously, Flickr? Are you mad? Don’t give me assurances that *I* can save your business with my single conversion. It’s going to take MANY someones to keep Flickr afloat if it’s running out of money. Worse, sending this email to former Pro members trying to get us to convert again is a losing proposition. Send it to someone who cares, assuming there is anyone like that.
A single conversion isn’t likely to do a damned thing to stem the tide of your money hemorrhaging, Flickr. Are you insane to send out a letter like this in this generic email marketing way? If anything, a letter like this may see even MORE of your existing members run for the hills by cancelling their memberships, instead of trying to save Flickr from certain doom. But, let’s ignore this letter’s asinine message and focus on why I decided to write this article.
Flickr is Dead to Me
I had an email exchange in November of 2018 with Flickr’s team. I make my stance exceedingly clear exactly why I cancelled my Pro membership and why their inexplicable price increase is pointless. And yes, it is a rant. This exchange goes as follows:
Susan from Flickr states:
When we re-introduced the annual Flickr Pro at $49.99 more than 3 years ago, we promised all grandfathered Pros (including the bi-annual and 3-month plans) a 2-year protected price period. We have kept this promise, but in order to continue providing our best service to all of our customers, we are now updating the pricing for grandfathered Pros. We started this process on August 16, 2018.
With this being the case, bi-annual Pros pay $99.98 every 2 years, annual Pros pay $49.99 every year, and 3-month Pros pay $17.97 every 3 months. Notifications including the price increase have been sent out to our users starting from August 16.
I then write back the following rant:
Hi Susan,
Yes, and that means you’ve had more than ample time to make that $50 a year worth it for Pro subscribers. You haven’t and you’ve failed. It’s still the same Flickr it was when I was paying $22.48 a year. Why should I now pay over double the price for no added benefits? Now that SmugMug has bought it, here we are now being forced to pay the $50 a year toll when there’s nothing new that’s worth paying $50 for. Pro users have been given ZERO tools to sell our photos on the platform as stock photos. Being given these tools is what ‘Pro’ means, Susan. We additionally can’t in any way monetize our content to recoup the cost of our Pro membership fees. Worse, you’re displaying ads over the top our photos and we’re not seeing a dime from that revenue.
Again, what have you given that makes $50 a year worth it? You’re really expecting us to PAY you $50 a year to show ads to free users over the top of our content? No! I was barely willing to do that with $22.48 a year. Of course, this will all fall on deaf ears because these words mean nothing to you. It’s your management team pushing stupid efforts that don’t make sense in a world where Flickr is practically obsolete. Well, I’m done with using a 14 year old decrepit platform that has degraded rather than improved. Sorry Susan, I’ve removed over 2500 photos, cancelled my Pro membership and will move back to the free tier. If SmugMug ever comes to its senses and actually produces a Pro platform worth using (i.e., actually offers monetization tools or even a storefront), I might consider paying. As it is now, Flickr is an antiquated 14 year old platform firmly rooted in a 2004 world. Wake up, it’s 2018! The iStockphotos of the world are overtaking you and offering better Pro tools.
Bye.
Flickr and SmugMug
When Flickr was purchased by SmugMug, I wasn’t expecting much from Flickr. But, I also didn’t expect Flickr to double its prices while also providing nothing in return. The platform has literally added nothing to improve the “Pro” aspect of its service. You’re simply paying more for the privilege of having ads placed over the top of your photos. Though, what SmugMug might claim you’re paying for is entirely the privilege of the tiniest bit more storage space to store a few more photos.
Back when storage costs were immense, that pricing might have made sense. In an age where storage costs are impossibly low, that extra per month pricing is way out of line. SmugMug and Flickr should have spent their time adding actual “Pro” tools so that photographers can, you know, make money from their photos by selling them, leasing them, producing framed physical wall hangings, mugs, t-shirts, mouse pads, and so on. Let us monetize our one and only one product… you know, like Deviant Art does. Instead, SmugMug has decided to charge more, then place ads over the top of our photos and not provide even a fraction of what Deviant Art does for free.
As a photographer, why should I spend $50 a year on Flickr only to gain nothing when I can move my photos to Deviant Art and pay nothing a year AND get many more tools which help me monetize my images? I can also submit them to stock photo services and make money off of leasing them to publications, something still not possible at Flickr.
Don’s plea is completely disingenuous. You can’t call something “Pro” when there’s nothing professional about it. But then, Don feels compelled to call out where they have actually hosted Flickr and accidentally explains why Flickr is losing money.
We moved the platform and every photo to Amazon Web Services (AWS), the industry leader in cloud computing, and modernized its technology along the way.
What modernization? Hosting a service on AWS doesn’t “modernize” anything. It’s a hosting platform. Worse, this hosting decision is entirely the cause of SmugMug’s central money woes with Flickr. AWS is THE most expensive cloud hosting platform available. There is nothing whatsoever cheap about using AWS’s storage and compute platforms. Yes, AWS works well, but the bill at the end of the month sucks. To keep the lights on when hosting at AWS, plan to spend a mint.
If SmugMug wanted to save on costs of hosting Flickr, they should have migrated it to a much lower cost hosting platform instead of sending empty marketing promises asking people to “help save the platform”. Changing hosting platforms might require more hands on effort for SmugMug’s technical staff, but SmugMug can likely half the costs of hosting this platform by moving it to lower cost hosting providers… providers that will work just as well as AWS.
Trying to urge past subscribers to re-up into Pro again simply to “save its AWS hosting decision”, not gonna happen. Those of us who’ve gotten no added benefit by paying money to Flickr in the past are not eager to return. Either give us a legitimate reason to pay money to you (add a storefront or monetization tools) or spend your time moving Flickr to a lower cost hosting service, one where Flickr can make money.
Don, why not use your supposed CEO prowess to have your team come up with lower cost solutions? I just did. It’s just a thought. You shouldn’t rely on such tactless and generic email marketing practices to solve the ills of Flickr and SmugMug. You bought it, you have to live with it. If that means Flickr must shutdown because you can’t figure out a way to save it, then so be it.
Below is Don MacAskill’s email in all of its unnecessary email marketing glory (links redacted):
Dear friends,Flickr—the world’s most-beloved, money-losing business—needs your help. Two years ago, Flickr was losing tens of millions of dollars a year. Our company, SmugMug, stepped in to rescue it from being shut down and to save tens of billions of your precious photos from being erased. Why? We’ve spent 17 years lovingly building our company into a thriving, family-owned and -operated business that cares deeply about photographers. SmugMug has always been the place for photographers to showcase their photography, and we’ve long admired how Flickr has been the community where they connect with each other. We couldn’t stand by and watch Flickr vanish. So we took a big risk, stepped in, and saved Flickr. Together, we created the world’s largest photographer-focused community: a place where photographers can stand out and fit in. We’ve been hard at work improving Flickr. We hired an excellent, large staff of Support Heroes who now deliver support with an average customer satisfaction rating of above 90%. We got rid of Yahoo’s login. We moved the platform and every photo to Amazon Web Services (AWS), the industry leader in cloud computing, and modernized its technology along the way. As a result, pages are already 20% faster and photos load 30% more quickly. Platform outages, including Pandas, are way down. Flickr continues to get faster and more stable, and important new features are being built once again. Our work is never done, but we’ve made tremendous progress. Now Flickr needs your help. It’s still losing money. Hundreds of thousands of loyal Flickr members stepped up and joined Flickr Pro, for which we are eternally grateful. It’s losing a lot less money than it was. But it’s not yet making enough. We need more Flickr Pro members if we want to keep the Flickr dream alive. We didn’t buy Flickr because we thought it was a cash cow. Unlike platforms like Facebook, we also didn’t buy it to invade your privacy and sell your data. We bought it because we love photographers, we love photography, and we believe Flickr deserves not only to live on but thrive. We think the world agrees; and we think the Flickr community does, too. But we cannot continue to operate it at a loss as we’ve been doing. Flickr is the world’s largest photographer-focused community. It’s the world’s best way to find great photography and connect with amazing photographers. Flickr hosts some of the world’s most iconic, most priceless photos, freely available to the entire world. This community is home to more than 100 million accounts and tens of billions of photos. It serves billions of photos every single day. It’s huge. It’s a priceless treasure for the whole world. And it costs money to operate. Lots of money. Flickr is not a charity, and we’re not asking you for a donation. Flickr is the best value in photo sharing anywhere in the world. Flickr Pro members get ad-free browsing for themselves and their visitors, advanced stats, unlimited full-quality storage for all their photos, plus premium features and access to the world’s largest photographer-focused community for less than $5 per month. You likely pay services such as Netflix and Spotify at least $9 per month. I love services like these, and I’m a happy paying customer, but they don’t keep your priceless photos safe and let you share them with the most important people in your world. Flickr does, and a Flickr Pro membership costs less than $1 per week. Please, help us make Flickr thrive. Help us ensure it has a bright future. Every Flickr Pro subscription goes directly to keeping Flickr alive and creating great new experiences for photographers like you. We are building lots of great things for the Flickr community, but we need your help. We can do this together. We’re launching our end-of-year Pro subscription campaign on Thursday, December 26, but I want to invite you to subscribe to Flickr Pro today for the same 25% discount. We’ve gone to great lengths to optimize Flickr for cost savings wherever possible, but the increasing cost of operating this enormous community and continuing to invest in its future will require a small price increase early in the new year, so this is truly the very best time to upgrade your membership to Pro. If you value Flickr finally being independent, built for photographers and by photographers, we ask you to join us, and to share this offer with those who share your love of photography and community. With gratitude, Don MacAskill |
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Did Toys “R” Us have to fail?
If you’ve read various articles including this Bloomberg article, you might come away thinking that all of what happened to Toys “R” Us began a decade ago (i.e., the early 00s). In fact, you would be so wrong… and so would Bloomberg. Let’s explore.
The 80s
Around 1981 or 1982, I worked at Toys “R” Us. Even at that time, Toys “R” Us ran a questionable business model. A business model that, I might add, even store managers recognized and thought was unsustainable. In fact, after having discussions with store managers at my store, I got an earful about how they thought that the chain would likely fail within a decade if they kept on using that business model. This was the early 80s.
What business model?
Toys “R” Us sowed the seeds of its own destruction at least beginning in the 80s, perhaps as early as the 70s. What questionable business model is this? The model chosen was to operate the stores in the red (otherwise known as losing money) through 80-90% of the year (aka, “90 in the red”). Then, the management hoped to recoup those losses in the final 1-2 months of the year during holiday season sales. It didn’t always work out.
While this model seemed to work to keep most Toys “R” Us stores afloat through the 80s and 90s, it served to keep the company from really turning a solid profit and, ultimately, led to the company’s massive debt load. What that model meant to the stores is fully stocked shelves every day of the year. This was readily apparent walking into any Toys “R” Us store. The stores were not only full, they were positively brimming over with the latest toys. This also meant putting itself into massive debt each year in inventory and then hoping to pay off that debt at the end of the year when most of the stores finally ran “in the black” (read, turning a profit for the year).
Keep in mind that many of the stores didn’t turn a profit, but so long as enough stores did, they could cover for the debt they had been incurred company wide, or at least so that was the idea. Even the store manager at my Toys “R” Us location could see the handwriting on the wall in the early 80s. This store’s business model was not sustainable and I was, even as an standard employee, told this by various managers. These managers didn’t hold back their thoughts.
Bloomberg, Fads and Sustainability
What Bloomberg got right was that even a decade ago, TRU’s debt load had put them underwater. What Bloomberg didn’t address was that this debt began almost 2 decades earlier of overbuying, followed by hoping that a “hit toy” would kick them over the profit line at the end of every year.
“Hit Toys” were Toys “R” Us’s hopeful thing. They needed that Tickle Me Elmo or Nintendo Wii or Lazer Tag or Cabbage Patch Kid fad toy to carry the chain into the new year with profit on the books. Throughout the 80s and 90s, there were a string of these hit toys practically every year. Fad toys which flew off the shelves and brought Toys “R” Us to profitability each year. It was a risky move for Toys “R” Us to bank on a hot fad each year, but there it is.
Unfortunately, relying on this kind of yearly toy fad to sustain a business every year was not only risky, it began to burn Toys “R” Us as these yearly fads began to die off by the late 90s. Even during mid-late 90s, these fads were much less intense than they had been just a few years earlier. By the mid-00s, these fads were practically non-existent. Sure, there were hot toys, but no where near the levels of sales that Tickle Me Elmo or the Cabbage Patch Kid fads offered to Toys “R” Us’s bottom line… particularly when Best Buy, Walmart and Amazon concurrently began diluting the toy profits of TRU.
These fading fads were responsible for killing other toy stores chains as well, such as Kay Bee Toys and even the once high flying, high end FAO Schwarz. These fading fads also left Toys “R” Us holding a huge mound of debt.
Walmart
While Walmart did usurp the title of top toy seller from Toys “R” Us, that’s primarily because Toys “R” Us prices were always on the higher side. Walmart did carry toys, but not all toys. If you wanted something you couldn’t find at Walmart, you went to Toys “R” Us and it was pretty much guaranteed they would carry it (even though it might be out of stock). Walmart didn’t even stock many of these. The toy section in Walmart was always small by comparison. Sure, you could find better deals at Walmart, but only from the toys that they chose to carry.
Walmart was also not very kind to collectors in the 90s. If a collector showed up to buy toys, Walmart would try to do everything to keep that toy item away from the collectors… sometimes even going so far as to banning them from the store simply for buying toys. Does it really matter whose dollars are buying an item? Granted, I wasn’t particularly happy that a collector had gone to Walmart to buy out all of the “good” stock leaving tons of “peg warmers” sitting around that no one wanted. But, that’s how toy collecting worked in the 90s.
The whole collector market kind of died off with the advent of places where collectors could buy case packs, like Entertainment Earth. Instead of having to rummage around Walmart at 3AM (when they stocked new merchandise), you could order a full case of figures, guaranteeing that you’ll get at least one “rare” figure. This meant that the once Walmart and Toys “R” Us shopping locations for collectors became a thing of the past. Collectors took their money online to buy cases and stopped buying at Toys “R” Us. Buying case packs is easier, more convenient and doesn’t require the hassles of dealing with surly underpaid Walmart workers.
Toys “R” Us Kids Grew Up
Kids of the 80s became collectors in the 90s and became families on the 00s. The once popular collector market throughout the 90s fell apart into the 00s because the collector market changed and Toys “R” Us failed to understand this important change. The collector market is (or at least was) also a huge market that kept Toys “R” Us afloat in addition to the end-of-year-fads. However, brands like Hasbro and Mattel didn’t grow with the collector market. Sure, Hasbro tried, but the toys they made were tiny improvements over their (sub)standard toys. Mattel also tried with its collector Barbies, but, again they failed to understand the critical quality needed for what collectors really yearned.
In essence, the toy brands themselves didn’t grow to provide what collectors wanted… which left Toys “R” Us mostly without collector money. However, collector brands did grow up for the collector market outside of Toys “R” Us, including Sideshow and Hot Toys brands. These brands are now considered the premiere collector “toy” brands for adult collectors. These “action figures” are some of the highest end, most expensive, most collectable toys out there, yet these are not sold at Walmart, Target or even Toys “R” Us (before they closed). Though, you can find them on Amazon via third party sellers. This is where Toys “R” Us failed to keep up with the kid-turned-adult collectors. Hot Toys figures cost anywhere between $150-350 per figure; a price point that collectors are more than willing to pay to get that level of craftsmanship. A price point that Toys “R” Us never carried. A quality that not Toys “R” Us nor Walmart nor Target ever carried.
While Toys “R” Us continued to sell these low-end toy products to kids, it failed to grow up and to sell high end collectibles to adults. Ironically, this runs counter to their jingle. The most prestigious type of collectibles that Toys “R” Us sold were the collector Barbies and McFarlane figures, offering price points at $15-40. A price tag that cannot provide the levels of detail, paint jobs and overall craftsmanship that goes into a Hot Toys or Sideshow figure. Adult collectors want high end figures and Sideshow and Hot Toys fill that niche. Toys “R” Us management never recognized this growing trend.
“I don’t want to grow up, I want to be a Toys “R” Us kid”
This jingle is ultimately the rationale that appears to have led Toys “R” Us management down the wrong path. Instead of singing the praises of not growing up, the toy store should have realized that kids grow into adults; adults who still want to buy collectible toys, but who don’t want the junky, low priced Hasbro and Mattel versions. They want premiere brands like Hot Toys offering highly detailed, highly realistic, meticulously crafted and painted figures… not Hasbro’s now antiquated, poorly painted, robot-style 12 inch figures. You might give these cheap toys to your kids, but you wouldn’t display them in a display case.
This collectible market began with highly detailed military figures, but branched out into licenses with Marvel, DC, Star Wars, Warner Brothers and various other large movie franchise brands. Toys “R” Us failed to latch onto this market and, thus, failed to capture the once Toys “R” Us kid who had grown into an adult and now desires these highly detailed collectible toys. As kids grow into adults, tastes change and people want more sophisticated products. Hot Toys and Sideshow found that niche for sophisticated adult tastes. Yet, Toys “R” Us failed to recognize this niche.
If Toys “R” Us had realized this mistake and had added brands like Hot Toys to its shelves, it might have been able to entice the collector’s market back into its stores and pay down some of its debt. Every discount retailer has, so far, failed to realize the adult collectible toy market. However, this lack of foresight hurt Toys “R” Us the most.
Kid Tastes
Additionally, kids tastes have also changed as a result of brands like Hot Toys and products like the iPad. Kids don’t want want to buy Leap or other “toy” or “fake” tablets when they can ask their parents for the real thing. Kids also want the higher end Hot Toys than the poorly crafted Hasbro Ironman figures. While Toys “R” Us did begin carrying Apple products, the stores really thought of these more as a toy rather than treating them as something useful. Best Buy always treated their Apple section with the best possible displays. Toys “R” Us displayed its Apple tablets right next to random other tablets as though they weren’t anything special. I’m not even sure that I’d have felt comfortable buying an Apple tablet from Toys “R” Us. Not only did they have no one versed in this technology on staff, what they carried could have been 2 or even 3 generations old. Toys “R” Us just didn’t treat these products with the respect that they deserved.
As a result of kids changing tastes and higher levels of sophistication, kids really didn’t want much of what was in that toy store after a certain age. This meant that Toys “R” Us was primarily for kids of a certain age and below (probably 8-9 or younger). Even still, these ages were growing up faster.
Toys “R” Us Closure
Did Toys “R” Us have to close? Yes, it did. Without a management team capable of fully understanding the downsides of running its stores using the “90 in the red” model throughout the year (and failing to accommodate the changing tastes of adult collectors), the stores ultimately succumbed to closure. It was inevitable.
What tipped the scale, though, was 2005’s $6.6 billion leveraged buyout of Toys “R” Us by the KKR, Bain Capital, and Vornado Realty Trust; a purchase that saddled the corporation with at least $5 billion in debt, in addition to its already mounting toy inventory debt each operating year. There was simply no way Toys “R” Us could recover from and pay down that debt considering its interest each month.
In fact, it was this very same leveraged buyout that not only trashed Toys “R” Us, it also lost its original private equity investors at least $1.28 billion. Even these private equity firms were ignorant of Toys “R” Us’s “90 in the red” model. You’d think that between three different private equity firms, one would have had brain among them. I guess not. Toys “R” Us was not worth buying strictly because of that business model… and it was especially true when considering saddling an already debt overburdened company with even more debt. It was an insanely stupid buyout made more stupid because of the lack performing even the most basic of fiduciary responsibility. Those private equity firms got exactly what they deserved out of that deal. Make the wrong deal, get the wrong results.
If I had been sitting in the room when this buyout deal was being considered, I would have put the kibosh on that deal pronto. If managers of stores could recognize how badly Toys “R” Us was operating in the 80s, why couldn’t a bunch of suits at three different private equity firms see this before plopping down $6.6 billion?
Overvaluation
If anything, 2005’s TRU sale is a cautionary tale. There are way too many buyouts that are purchased at way too high a value. I’ve seen it happen time and time again. Companies worth maybe $500 million sell for $3 billion? It’s just insane the money that’s being overspent. Would you walk into Walmart and offer to pay $25 for a $5 tube of toothpaste? I don’t think so. So, why do these investors think it’s okay to spend $6.6 billion on a company worth maybe $1 billion at its best… and it was then likely actually worth much less considering the debt that it already carried. Its insane business model should have further reduced its value.
Could Toys “R” Us have been saved?
Probably not. At least, not with its status quo business model. But, it might have been saved IF Toys “R” Us had adopted a more balanced approach to its store sales and more sane merchandise ordering in combination with letting managers actually handle full store merchandising instead of relying on nice looking, but misguided corporate-standard planograms.
Only stock enough merchandise in a specific store that that store can actually sell. Let managers move stock around on shelves and place the merchandise in their store where it’s most likely to sell. Additionally, don’t send stock to a store where the buying demographic isn’t buying that type of merchandise. If Barbies aren’t popular in a particular store’s demographic region, send limited amounts of Barbies there. It’s a waste of money and effort to stock merchandise that doesn’t sell. One of Toys “R” Us’s biggest foibles was its cookie-cutter store approach. That meant it was sending the same stock to all stores regardless of popularity in that local store’s area. It also meant that it way overspent on toys that would never sell at certain stores. Eventually, they simply had to clearance out those toys. Each store’s inventory should have been customized based on buying habits of local consumers and by the local manager. Only the local store team knows what’s the “hot sellers” in their store.
Clearance merchandise is actually a red flag in the retail business. It means that, as a store, you way overspent on merchandise that you couldn’t sell. If you have excessive clearance merchandise, then your merchandise spends are way off. It also means that your buyer is overbuying stuff that isn’t selling. It means you need to rethink your buyer and it means your new buyer needs to rethink how much to spend on similar types of products.
One of Toys “R” Us’s other foibles was its inability to recognize and stock the “hottest toys” rapidly. If you send 5 of something to a store and it sells out in 10 minutes, you need to stock more of it and you need to do it pronto. Yet, it might take Toys “R” Us 30 or more days to get that merchandise back in stock. That’s 30 days of zero sales… sales that could have been had the next day and the day after that. Missed sales were one of TRU’s biggest problems. Having merchandise in stock that you can sell day after day is a huge win. Yet, if the corporate buyers don’t even know to reorder this thing again, the store is blind. This is why the next part was so important to improving TRU.
Instead, this toy chain should have let the local managers have autonomy via cutting merchandise from their store that isn’t selling and placing rush orders on the hottest toys. By letting the managers, you know, actually manage the store’s inventory properly, the stores could have cut costs and raised profits. The managers could have done this by buying more of popular hot sellers in that area, shuffling cold merchandise to other stores that can sell it and cutting non-sellers from the inventory. In fact, managers should have actually had access to every store’s inventory throughout the chain and when that item last sold there. If a particular item is selling hot in one store, but is completely dead in other stores, the hot item store manager should be able to request stock moved from the cold stores to their store. This way, managers could have directly moved inventory from store to store instead of placing orders for more stock, thus causing more debt. Only after the existing in-store inventory was exhausted should a new order need to be placed. The buyers from the chain should have endorsed this manager autonomy.
Unfortunately, that wasn’t a priority for the very rigid corporate run TRU. I could walk into a store in Texas and find specific toys always out of stock. Then walk into a TRU in St. Louis a week later and find twenty of them sitting on the shelf with dust on the top. If stores had been able to request the hottest toys moved from other stores, the chain could have saved a lot of money on new stock orders.
This change in business model could have drastically improved Toys “R” Us’s profitability throughout the year. It probably would have cut down on orders to toy sellers, but something’s got to give when you’re running a retail store chain. If the toy manufacturers had to suffer a little to let Toys “R” Us recover and be a whole lot more profitable, then so be it.
Unfortunately, TRU’s status quo model endured. Even if the leveraged buyout hadn’t occurred in 2005, Toys “R” Us’s fate was pretty much sealed strictly by is “90 in the red” (cookie cutter) mentality. It was only a matter of time before it succumbed to its own debt burden even if it hadn’t incurred a ton more debt after that poor sale. The 2005 unwise sale simply accelerated Toys “R” Us’s already looming demise.
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Toys R Us: Say Goodbye to an Era
For many, we grew up with Toys Я Us as the go to place to find that cool new toy, game, doll, action figure, Teddy Ruxpin, train set, learning toy, crayons, movie or even video games. Times are a changin’ folks and Toys R Us now finds itself way less than one Barbie away from permanent closure. Let’s explore.
Update from the News Desk — 2018-03-14
Toys R Us headquarters has apparently informed all US and UK employees on Wednesday, March 14th that all US and UK locations would be closed, a move that would lose 33,000 jobs. This would be one of the biggest retailer liquidations. CEO David Brandon intended to file paperwork to begin the liquidation proceedings on Wednesday.
From small to BIG to defunct
In the 70s, I remember toy stores primarily consisting of smaller retailers in malls, usually carrying Lincoln logs, wooden toys or learning toys. While I didn’t mind visiting these places, they felt more like a library than a toy store. They also didn’t carry much of the things that I liked. It wouldn’t be until sometime the mid-70s when a Toy R Us opened near my house. That’s when toy shopping all changed, at least for me.
I’m sure my parents hated taking me to Toys R Us, just as so many parents do. For us kids, it was like a day at Disneyland: a gold mine, a treasure trove, a place of dreams. Unfortunately, the parents were having none of it… or at least, as little as they could walk out of the store carrying. Good on them, but that didn’t make Toys R Us any less magical to a 8-10 year old. We loved it, we loved going there and we especially loved it when we got to take something home with us.
Geoffrey
I was never a super big giraffe fan, but Geoffrey was a fun and charming mascot constantly pointing out cool new things in the store. I would come to see Geoffrey as cute mascot designed to help me find new stuff. Not always, but a good bit of the time. Sometimes he was just present, like Mickey Mouse. That Giraffe always made me smile because I knew that I was at that magical place, like Disneyland but local. Over the years, Geoffrey began being used less and less by TRU, but he’s still considered their mascot.
Every once in a while, Toys R Us would offer an enter-to-win a fill-your-cart shopping spree. I always wanted to win one of those as a child, but alas never did. To think what I would have filled my cart with. The mind boggles, if only because some of those toys are considered highly collectible today. Though, those toys most assuredly would not have remained closed in their packaging after making their way home.
Growing Up
As I grew into my 20s, got my own car and job, my relationship with Toys R Us changed. No longer was it that magical place, but it now had firmly become a store and I was a consumer. Still, it was a place to go to find that hot new toy that everyone’s talking about. It also became the place to find computers and video games. If I couldn’t find it at Target or Kmart or, later, Walmart, I could almost certainly find it at Toys R Us or Kaybee or Children’s Palace (competitors at the time) and to a much lesser degree FAO Schwarz. Toys R Us was always the first place to go, then the others as they were less reliable.
Dominoes
As the competitors fell over one at a time, first Children’s Palace in 90s, FAO Schwarz in early 00s, then in the middle 00’s, Kaybee Toys, Toys R Us was still standing and, in 2009 would acquire the FAO Schwarz brand, but would sell it off in 2014. It was (and currently is) the place to go to find all things toys. Unlike Target and Walmart that choose to stock limited toy items, Toys R Us (like the previous Children’s Palance and Kaybee) still carries aisle after aisle of wide ranging toys you can only find at Toys R Us. You simply can’t find this selection of toy items at a discount department store. This is why I always ended up at Toys R Us in search of fun, exciting new things.
The Mistakes
Throughout the later years, I’ve grown a love-hate relationship with the Toys R Us chain. Not only because I worked there for a short time while in my 20s, but also because the management does a lot of things that don’t make sense. For example, Babies R Us. For a time, Toys R Us stores devoted half of their space to baby goods. I don’t have a baby, so there’s no interest in that. Yet, Toys R Us decided to kill half of their store space to devote to these products. This meant, less space for toys, games and other items.
I understand that the management wanted to expand their selection into babyland, but it was a mistake to take away valuable Toys R Us aisle space to devote to all-things-baby. This, in my opinion, was one of the biggest mistakes the Toys R Us management foisted upon its stores. That was, until they finally spun Babies R Us into its own stores and gave it its own space.
Later, the management decided to do away with separate Babies R Us stores and chose to abut the two stores together for one seamless one-store experience. That was at least better than taking away shelf space from an already cramped toy store, but even that was unnecessary and, in my opinion, a mistake. They can be next to each other, but walled off and separate stores with separate stock and separate staff. I know why they did chose to hook them together. They did it so they could use one set of checkout lanes, one set of cashiers and one set of staff to stock both stores.
The X
At around the time that Babies R Us was coming into its own as a separate store chain, Toys R Us decided to change its shelving layout. Instead of the more logical long rows running from the front to the back of the store (with middle store aisle breaks) which made it easy to find everything, the store layout designer decided to change the aisles to be side to side and then create X shaped rows in the middle of the store. Not only were these rows much harder to navigate, the layout of the aisles were crippled as a result. This layout made finding things incredibly hard and it seemed like they had less shelf space.
Not only was everything now moved around haphazardly, it made finding what you’re looking for overly hard. Meaning, now you had to navigate the whole store looking at everything just to find that thing.
Maybe the designers thought this was a good idea? It wasn’t. This is the second mistake from Toys R Us management.
Overbuying and Stocking the Wrong Toys
I don’t know how many times I visited Toys R Us in the 90s only to find the same toys every time I visited, sometimes months apart. These we affectionately call peg warmers. This mistake continues to plague Toys R Us to this day. Not only did Toys R Us have incredible buying power way back when, they just didn’t use it to their advantage. Instead, they would continually overbuy on dud toys and not buy enough on the hot toys.
You can’t sell toys that you don’t have in stock. For example, Cabbage Patch kids. When that craze hit, they couldn’t keep them on the shelves. You’d think Toys R Us could have negotiated with the manufacturer and buy 10x the amount they originally bought… simply so they could fill the demand. Sure, there might be a drought while the manufacturer created more, but eventually they would have enough stock quickly to satisfy demand. Alas, they didn’t and the shelves remained bare until the toys were so cold you couldn’t even give them away. Too little, too late.
Further, Toys R Us needed to let the local managers order stock for their specific location to stock toys that are regionally hot. Not every toy sells the same in every store, yet Toys R Us felt the need to send cookie cutter stock out to every single store. If you walked into a Toys R Us in any state, you’d see identical stock. Each store manager needed to be given free reign to specifically order stock in sizes that made sense for amount of local demand they were seeing for a given toy item. If they couldn’t keep a specific skateboard stocked, then the manager should be able to order the proper amount to cover the local demand from their store. In fact, stores that couldn’t sell the item should have shuffled the stock over to stores where the demand was high. That’s smart inventory management. Nope.
Store managers should also be able to nix slow selling items from their shelves and replace it with hotter selling toys. Why continue to carry that obscure toy that you can’t even clearance out when you can sell 100x as many Tickle Me Elmos? Having great selection is fine as long as you’re not stocking 50 of an item you can’t even give away. Again, smart inventory management people. Stock them in small quantities, sure, but not in the quantities that each store was getting. Shuffle extra stock to other stores that have none. Remember, I worked there, I saw the stock amounts in the stock room.
Nope. Toys R Us continued to make this mistake year after year.
Over-expansion
Nearly every business thinks they should open as many stores as physically possible. But, you can’t do this when most of your stores are operating in the RED. Toys R Us was no exception. This chain continually felt the need to open new stores rather than trying to shore up their existing stores and get them each to an individually profitable status. If the management had stopped their expansion plans and, instead, focused their efforts on making each store profitable by the end of Q1 each year, Toys R Us would not be in this predicament.
Dated Store Displays
Not too long ago (perhaps early 00s), Toys R Us did away with the X aisle layout and converted them back into horizontal rows once again. However, the aisles now run left to right in-store rather than the original front to back design (which was arguably its best floor plan). Unfortunately, their fixtures are all incredibly dated pegboard and 70s style metal fixtures. They look like they’re straight out of a 70s store… even when the store is brand new. Maybe these are the cheapest fixtures they can buy? No idea, but they don’t look modern.
The store is also incredibly jam packed with stuff. The shelves are always full of stock yes, but it doesn’t help when the stock is old and is sitting on dated shelving units lit by 70s style fluorescent lighting fixtures.
The Business
Here’s Toys R Us’s primary operational problem and the problem that ultimately leads to where we are today. Toys R Us always relied on the holiday shopping season to pull its stores into the black. Meaning, Toys R Us always operated its stores in the RED through 80-90% of the year hoping for the holiday season to pull each store up and out and operate in the black for that year. This was the chain’s primary mistake. This operating model had been ongoing since the 80s. This was the way that TRU intentionally chose to operate its stores. This was also entirely their biggest operating failure and it’s the mistake that is now what’s threatening closure and costing TRU its business.
In addition to operating in the red, Toys R Us also didn’t wield its buying power to get the best possible credit terms, the best possible deals and the best possible return arrangements. If a toy doesn’t sell, package it up, send it to another store that can sell it or send it back to the manufacturer for full or partial credit. Let the manufacturer deal with that stock rather than trying to organically clearance out items on the shelves years later. No, get these old toys off of the shelves to make way for new toys. Fill the shelves with toys that can sell and that will pay the bills.
If you can’t pay your bills, you can’t stay in business. Business 101. Yet, Toys R Us management felt that they were above these rules. The management team felt they could continually run their stores in the red without ramifications. Well, fate has now caught up with you, Toys R Us.
Being Acquired by Private Equity Firms
Because of the way Toys R Us chose to operate its stores, it could not support being acquired in this way. This acquisition was entirely shortsighted on the part of the private equity companies involved and they (and us consumers) are the ones who are now paying the ultimate price.
In 2005, Toys R Us was acquired by a set of private equity firms. These firms included KKR & Co., Bain Capital and Vornado Realty Trust in a $7.5 billion buyout deal. These three companies (and their investors) sank $1.3 billion of their own funds into the purchase, leaving the rest of the purchase price of $6.2 billion to be made up in loans. These loans saddled Toys R Us with an over $6 billion debt burden. A debt that, because of the rather nonsensical business model that the stores had been following since the 80s, could never be recouped. All of this leads to…
Bankruptcy
In late September 2017, Toy R Us filed for bankruptcy protection against its creditors. This means that its creditors can no longer go after Toys R Us for not paying bills. It also meant that the loans left over from that terrible 2005 buyout deal could no longer collect on those loans. Of course, in return for this court issued bankruptcy protection, the company has chosen Chapter 11 to work through a plan to reorganize in a way to get themselves back to profitability and pay their creditors over time before time runs out. For the Toy R Us management, that meant finding a suitor to buy the business… because, of course, they couldn’t be bothered with actually trying to restructure the stores in a way to make them profitable. Oh, no no no.. that’s just too much work.
What? Are you kidding? Are you really expecting some well funded company to swoop into this ailing business holding onto a mountain of debt and offer to buy you? Really? The way that TRU operates is textbook operating procedure for failure. It cannot continue to operate in the way that it does. Even closing half of the stores may not be enough to solve this operating problem. It’s only surprising that it took this long for this toy chain to make it to this point. I expected this day to come a lot sooner.
Toy Collectors and Toys R Us
I full well expected to see Toys R Us fail in the 90s. However, Star Wars saw to it to keep Toys R Us in business. The Star Wars collectors came out in wild abandon to snap up tons of revamped Star Wars merchandise for not only the previous trilogy (including the Orange and Green carded Power of the Force series), but also snapping up the then new prequel trilogy toys. These toys still remained hot even after 1983’s Return of the Jedi cooled down. It all heated up again when the Prequels began in earnst in 1999 (toys beginning to appear in stores about a year earlier). Toys R Us got a reprieve from their red ledger problems due primarily to Star Wars collectors, Hasbro and a few other unrelated hot toys during the 90s (Tickle Me Elmo). Almost every year, there was some new fad that kept Toys R Us’s year end strategy in check. Though, this strategy would ultimately fail them when, in the last 10 years or so when there just haven’t been those must-have toys or collectible Star Wars toys. Even the Zhu-Zhu pets weren’t enough. Even the latest Star Wars trilogy from Disney has not had the merchandising power that the 90s saw. Though, Disney isn’t crying over what they have sold.
In fact, I’d venture to guess that the 90s collectors have all but stopped collecting and have moved on with their lives… which put a huge crimp in the Toys R Us budget. In fact, during the collector heyday of the 90s, Toys R Us did their very level best to chase away the collectors. Much to their own chagrin, they succeeded in doing so by the mid-2000s. It also doesn’t help that collectors can now buy full cases directly from places like Entertainment Earth, which no longer meant the need to scour the pegs at Toys R Us in the wee hours of the morning. You could order cases directly from the comfort of your own home, then see them delivered to your doorstep.
Amazon and Online Shopping
Because of the power of the Internet, Amazon and eBay, it’s pretty easy to find that hot toy at more reasonable prices. Yes, Toys R Us is still a staple in the current shopping landscape. When it closes, both Amazon and Entertainment Earth will simply pick up where Toy R Us left off without missing a beat. If anything, I’d suggest that Amazon pick up the Toys R Us branding at a fire sale during liquidation and rebrand the Amazon toy section to Toys R Us. Keep the TRU brand alive, but not with all of that bloated store baggage. Then, dump the Babies R Us brand entirely. You can still sell baby things, but branded as Toys R Us.
Toys R Us Closing
As I said, I have a love-hate relationship with Toys R Us. I do enjoy visiting and seeing what’s new, but every time I walk into a store, I’m confronted with the dated shelving and decoration, the continual nagging reminder of just how careless the management is and how much of a wasted opportunity that Toys R Us was when it could have become the biggest most profitable toy chain in the world. Yet, they’ve failed.
If Toys R Us can manage to pull a rabbit out of a hat at the last minute and keep the lights on, I’ll be fine with that. Sadly, I think this is likely where it will all end for Toys R Us.
Gift Cards or Rewards — Use em’ or lose ’em
If you have any remaining unused gift cards from Toys R Us, be sure to visit a store now and use them immediately. Don’t wait until after Toys R Us begins closing its stores.
Likewise, if you have any rewards points left on your rewards card, log into Toys R Us Rewards, issue certificates and use them up now. Same for Babies R Us Cashback Endless Rewards program. Otherwise, forfeit your chance to convert those points into dollars. Representatives for Toys R Us have said that they will honor gift cards, rewards points and cashback programs for 30 days. The 30 day clock likely began on Wednesday March 14th, when they filed their liquidation paperwork with the court.
I guess in an odd way, I do kind of get that shopping spree after all, and many years later. I just found that I have over 2500 points in my rewards account. That equates to a $100 shopping spree.
For my $100 in rewards points, I got a Nintendo Monopoly set, a Care Bear Grumpy Bear, Two Schliech Geoffrey branded figurines, 5 different Halo Hot Wheels, a Pit Amiibo, a Pain-Yatta Skylander, a Playmation Vision figure and two Geoffrey branded reusable shopping bags. I ended up paying $9 to cover the tax. I also bought a $5 Geoffrey gift card and immediately used it to get dock protector straps for a Nintendo Switch. I wanted the Geoffrey branded gift card as a souvenir. I’d also previously purchased the day before, two Geoffrey 18″ plush and one Geoffrey plush gift card holder, which I’ll put that used Geoffrey gift card in.
Returns and Exchanges During Liquidation
Check any purchased merchandise thoroughly for defects the same day you buy it. If there are any problems, return it the same or next day and exchange it. Don’t wait even a few days to exchange as you may not be able to find the same item. According to Toys R Us representatives, all sales are final. This means, no refunds. However, they may continue to honor exchanges for a period of time. If you’re uncertain of any of this, ask for details at the service desk before you buy.
If you’re thinking of shopping for gift items, you might want to buy elsewhere. Buying a gift for someone could mean the gift recipient can’t return or exchange the item. You don’t want to force a gift onto someone when it’s not something they want only for them to find they cannot return it.
Be that Toys R Us Kid one last time
If you grew up visiting and are as fond of Toys R Us as I am, I’d suggest for you to take a few minutes out of your day and visit your local Toys R Us to reminisce about the good ole days. Once the liquidation sales start, they’re quickly going to look like half-filled shells of a store. Note that the deadline for Toys R Us to find a buyer is early April of 2018, so visit them quick. You have less than a month.
You might even want to pick up a souvenir, such as a plush Geoffrey, to remember what was Toys R Us and what it meant to us as kids. If you want a plush Geoffrey, ask at the Customer Service desk. It seems they keep them there for some reason.
How not to run a business (Part 10.3) — Case Study: Sears Holdings
Back in late 2004 when Kmart and Sears merged to create Sears Holdings, I had to wonder what one failing retail chain could do to help another failing chain. However since 2004, the one thing this new company has proven is that these brands die hard. In 2017, however, I think the answer has come back to conclusively nothing has been gained. Let’s explore.
Back in 2004, I didn’t really dig deep into the $11B dollar merger deal to get the nitty gritty details mostly because I had no interest in two failing retail chains (where I personally never shopped). Though, I already knew the handwriting was on the wall for both of these chains. It was just a matter of time before both chains closed their doors. That they’ve managed to hang on another nearly 17 years is a testament to the cash infusions from a billionaire. I digress.
After deciding to finally dig into this merger deal, however, I have come to find that this deal was instrumented by a former Wall Street darling Eddie Lampert. A wiz bang former Goldman Sachs employee who started his own hedge fund and apparently made mad cash. Though, I’d have questioned why a Wall Street darling would have any interest in the failing retail space. It’s clear, though, Lampert still has no knowledge of retail even after 17 years of floundering with Sears Holdings. Lampert pretends he wants to be the next Jeff Bezos with this investment, but is failing at this for two really big reasons: 1) Lack of innovation and 2) Lack of involvement.
According to his executive staff, Eddie spends most of his time at his home on a private island community in Florida. A community of apparently 86 residents and a staff of private police to ‘protect’ the island. Based on his executive meetings, he literally phones in his CEO job day in and out. He rarely, if ever, makes an appearance in the office.
Running a company by remote control
It’s one thing to be an individual contributor who works remote. Typically, these are task oriented jobs which can be easily monitored for task completion. However, as CEO, there is no possible way you can run a company from behind Skype. However, if Lampert had had substantial previous retail management experience, he might be able to get away with this. Because Lampert has no knowledge of retail after merging Kmart and Sears, he’s effectively flying blind. Even nearly 17 years later doesn’t automatically impart knowledge of retail. It’s clear, Lampert has no business operating this company. Unfortunately, whatever is left of the Sears Holding company is entirely dependent on Lampert for his continual cash infusions (up to $1B) which have kept this listing barge from sinking. However, some boats are best left to sink.
It’s crystal clear, when you buy into a business you know nothing about, you have two choices. One, sit on your arse and assume you’ll figure it out eventually (which usually doesn’t work). Two, dive in head first and learn everything you can about running a retail business. I think it’s a relatively safe bet that Lampert is in the former camp rather than the latter. Instead of being available and actively engaging in the day to day affairs of the business, he sits comfortably at his private island home and dictates policy from a Skype conference call. It’s no wonder this business is being slowly driven into the ground.
For any would-be business owner
As an owner / CEO, you need to be actively engaged in and have passion to drive your business forward, whatever that business is. You can’t sit behind a computer screen at home literally phoning in your CEO day job. That may work for a short period of time, but it won’t work forever. It’s clear, Kmart and Sears are both on the brink of collapse. Why? Because the merger of two ailing turned failing companies was a foregone conclusion without an engaged leader. A CEO / owner is there to drive and guide the business forward. To make the tough choices and ensure the business remains viable and becomes / remains profitable. Your underlings won’t do this on your behalf. They’ll do whatever it is to take their paycheck home, but they won’t go out of their way to run your business. That’s your job.
The takeaway from this case study is that you cannot sit on your arse and expect others to do your work for you. You need to be available in the office often to drive your business. If you don’t take your business seriously, no one around you will either. You need to understand your sales numbers, what’s selling and what isn’t. You need to make strategic partnerships to bring exclusive merchandise (as in the case of a retailer) onto your shelves at a low price as a way to drive customers into your store. You also need to be shrewd to get costs down and profits up. You need to hire a kick-ass marketing team who can bring the demographics into your store. In short, learn your business, understand it, live it, breath it and make it your passion. Own your business’s problems and own its solutions. Also, you need to think outside the box to continue driving all demographics into your establishment(s).
Yes, it would be nice to sit on the beach sipping margaritas all day or behind a gated community in a big mansion and also be a successful CEO of a profitable corporation. That’s a pipe dream that doesn’t happen. You only get that beach time after you’ve done your in-office time and made your money. Retail doesn’t just automatically make money for you. It requires active involvement. You need to actively drive new business into your business. It’s not like your hedge fund where you crunch numbers at a desk and move out bad performers. You need to be in the office driving your staff. You will need to reinvent your business, brand and ideas every so often to remain ‘the place to go for cool new stuff’. Once your retail business is thought of as a mom and dad store, your store is considered antiquated. The mom and dad demographic does make some money, but it isn’t the only demographic spending money and that single demographic will not convert your company from a million dollar company into a multi-billion dollar company.
Why phoning in as CEO doesn’t work
If you aren’t showing up to the office day in and out, you are missing critical verbal queues, having meaningful conversation with your staff and learning the problems that face your business. Keep in mind that some problems are outside problems. Like, for example, the threat to Kmart and Sears has been the internet retailers like Amazon. This means you need to spend quality in office time hammering through new plans to counter growing trends, like Amazon’s quick ship, quick deliver model… like Amazon’s Kindle services. If you don’t keep-up-with-the-joneses, your business is lost. Sometimes the problems are internal problems, like horribly outdated decor and fixtures. Sometimes they are supply chain related.
Since the merger in 2004, Kmart and Sears have both failed to change anything substantial with their store merchandising or, indeed, updating their store look and feel to accommodate new growing trends. Instead, they left their stores looking like something out of the 80s. Who wants to shop in a place with horribly dirty floors, drab coffee stain colored walls and fixtures with chipped paint and rust? Not to mention, that horrid glaring 80s fluorescent lighting job. You want to make your stores inviting and modern, not be a turn off. This is where it takes regularly entering and visiting stores to see how they look, how they feel to a shopper and how the merchandise is being faced. Then draw up plans to remodel your stores.
Being a Billionaire
Not everyone has this luxury. As with Lampert, he’s apparently got lots of money to spend. But, that doesn’t make it spending money smart. The saying, “throwing good money after bad” actually applies here. Why would you want to continue to invest more and more money into a chain not producing returns on your investment? That’s not a good investment strategy. For a Wall Street darling, it really makes no sense at all. Use your gift of understanding good investments and then apply that knowledge to Sears and Kmart. You’ll quickly see your error. It just takes an outside party looking in from the outside to see what someone so close to the matter can’t.
Can Kmart and Sears be turned around? While anything is possible, I’d personally say, “not at this point”. If Lampert had started the turn around back in 2004, he might have been able to pull this listing ship up right. However, because he has become a complacent mostly home bound recluse for many of the last 17 years, a turnaround for this venture is likely impossible with this leadership team. It’s too bad, too. Sometimes we just need to say goodbye to some beloved old brands to let newer brands take us to the next level.
Using time (and lighting) wisely
As a business owner, don’t let your business become a victim of complacency. Expect to reinvent your business every few years to not only keep your business fresh, but also to keep people coming in to see what’s new. Customers value companies that invest in making their stores better. Having a refreshed store means you care about your business. It also means you care about how your merchandise looks on the shelves. If your stores look old and trashy, so will your merchandise. If your store looks new, fresh and well lit, so will the merchandise. It’s literally all about creating the proper mood and perspective in your stores. Lighting has a huge amount to do with this. So, expect to replace old outdated fluorescent lighting with updated LED lighting concepts.
It just comes down to investing money in the right things for your business. It’s clear, Eddie has no clue where to have Sears and Kmart use the money he’s investing. Instead of just throwing good money after bad, ensure that that money is being used to remodel stores, being used to draw consumers in and being used to buy merchandise that fits with the store’s branding.
Unfortunately, both Kmart and Sears haven’t been ‘goto’ places in a very long time. That’s primarily because these chains have not focused on any one area to be proficient at any. For example, Target has revamped its 80s retail-only stance into becoming a neighborhood grocery as well. So, not only can you go to Target to get the latest blu-ray movie, you can also pick up some hamburger and fixings to go with it. It’s a well rounded shopping experience. However, heading into Kmart, for example, yields many deficiencies. For example, the electronics area doesn’t even carry video games any longer. How can you possibly operate a general merchandise store and not carry any video games?
Takeaway
Drive your business smart. Invest money into your business wisely. Remain focused on your goals. Most of all, remain engaged and passionate in everything you do. If you don’t do all of the things that continue to make your business a success, you may end up with a failure. Unlike Eddie Lampert with seemingly endless funds, you may find your doors shut. Though, I believe at some point soon, even Eddie’s pet project of Sears Holding will close. However, if you find yourself as wealthy as Eddie, spend your money however you feel. It’s your money. For the rest of us, driving your business smart is the obvious answer to eventual success. Though, I will say that even as passionate as you may be about your business and as much work as you may put in, there’s still the possibility that your business may fail. Predicting success or failure in any new business venture is tricky as there are so many unpredictable market forces outside of your control. For the things that you can control, you most can certainly guide your business success in the right direction and reduce your chances for failure.
Sears Bankruptcy
I would be remiss at not updating this article in 2018 to add in the recent bankruptcy and closure of the 146 Sears stores. On October 15, 2018, Sears announced it has entered chapter 11 bankruptcy protection while it attempts a reorganization. It will close these 146 stores in this reorganization process to help reduce its massive debt load.
Whether this signifies the last few breaths of a dying chain or whether this chain can actually reorg in some meaningful way and survive is yet to be determined. In my view, this is the last dying gasp of an organization that is about to close. I would highly suggest that you plan to visit a Sears near you for one last nostalgic view before this chain becomes a mere memory. If there are any Sears specific brands that you like and buy, I highly recommend that you stock up now as they are likely to forever become a memory.
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$5 billion given to GMAC Financial
GMAC Financing (GM’s financing arm) has been given $5 billion in addition to the already $17.5 billion given to GM in order for GM to sell vehicles. It was stated that GMAC had gotten tangled up in bad mortgage debt. Um, hello, what business did GMAC have in giving out HOME loans? I thought this company originated for the purpose of auto financing? If auto loan companies are sticking their hands into markets where they don’t belong, they deserve to get them slapped.
Again, here is another bailout that was unnecessary. Yes, I do understand that GM can’t sell cars without its financing arm. Again, who’s problem is this? GM needs to work through its issues itself. The citizens of the US do not need to be propping up these badly run organization through these bailouts. What business did GMAC have even issuing home loans? Yes, I realize they are a financing arm, but GM should have been keeping careful watch over them to prevent GMAC from offering loans on items other than cars or vehicles. Again, another company with no oversight that does not deserve a bailout, yet the government is handing them $5 billion. I understand the reasoning behind the money, but it doesn’t make the pill any less bitter to swallow.
Oh, and the worst part of all of these auto bailouts is that there is no guarantee they won’t go belly-up anyway. Giving the auto makers this money may all be completely pointless, but we the taxpayers will have to pay the price in the end no matter the outcome.
Does CitiGroup deserve a government umbrella?
I guess the broader question, does any large commercial business deserve to be bailed out? Well, clearly Mom and Pop businesses fail every day. Yet, the government does nothing. Why do large conglomerates deserve special treatment?
The short answer is that there is some magical threshold where there are too many people who would lose their jobs as a result of the failure combined with possible economic ramifications. But, still, does that warrant a bailout? No.
If a business cannot run itself in a fiscally appropriate manner (large or small) it deserves to fail and go away. If any of your family is employed by CitiGroup or any financial company caught up in the turmoil of the financial sector crisis, I feel for you. But, that doesn’t mean that the company deserves to continue to exist if they cannot maintain profitability even in the toughest of times. Fiscal responsibility starts at the top of the company and trickles down to even the most bottom level employee.
What does this mean? It means, don’t request a new computer every year. Don’t ask for Herman Miller chairs and the most expensive ergonomic keyboard simply because you can. If the item is considered ergonomic, the company is almost obligated to make sure you get it. Buying all of these expensive amenities for your desk makes you fiscally irresponsible to the company if you don’t really need it (and, in most cases, you don’t). But, that’s not to say that this is responsible for CitiGroup’s problems.
Who knows where the money hemmorage is going inside these companies. But, clearly, it’s not going back into the business. Again, I ask, why do these companies deserved to be bailed out? What makes them special? I have no sympathy for large companies that can’t properly manage themselves. Neither should the government. Spending all of this money to prop up these badly run organizations is clearly counter to free enterprise.
In Free Enterprise you have to take the good with the bad. That means, when business is good, you profit. When it’s bad, you bankrupt and close. There needs to be no governmental cushion here to soften the fall.
Does CitiGroup or any other badly run business deserve an umbrella? What do you think?
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