Tag: business

Never Trust the Money

My post today on White Bull offers yet another reason to not sell out:

I was speaking to a man who has some incredible new technology that has the potential to disrupt and perhaps even revolutionize his industry. Some big VC names have taken meetings with him, and they were encouraging him to do two things that he found more than a little puzzling. First, they wanted him to ask for considerably more investment than he believes he needs in order to accomplish his objectives. Second, they wanted him to completely change course from offering what is naturally a professional service to what would be a consumer product.

I’d also recommend watching the interview with the White Bull himself on reinvention. No business plan ever survives contact with the market for long. Just look at Castalia, or Infogalactic for that matter. For me, the byword has always been Coleco. As in COnnecticut LEather COmpany.

When you understand how a leather company ended up briefly becoming the number three player in the video game industry, you will grasp the vital importance of reinvention.

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White Bull at Mobile World

If you’re a young entrepreneur, or someone attempting to break out of a career rut, you absolutely must watch the series of videos White Bull is putting up on their substack, beginning with today’s.

E: When there’s a networking event, what’s the first thing you need to do?

F: Survey the landscape, make some determinations (about who is there and who you should try to talk to), but mainly, just go… You’ve just got to execute, make a decision and go.

E: What’s your advice for young entrepreneurs. They’re just scared!

F: Yeah, it’s always uncharted territory. Uncharted waters. So you can be afraid of your own shadow, getting up in the morning, all of that. But that doesn’t pay the bills, it doesn’t get customers. So engage, say hello, see what’s going on. Ask people questions. They love to talk about themselves. And then, when it’s appropriate, insert what you’re doing.

The key phrase: when it’s appropriate. You can always tell the newbies and the nobodies, because they’re desperate to talk. They don’t listen. They don’t pay any attention to who is who and what is what. The vets, who are actually there to do business, are always relaxed. They’ve probably already got a lunch meeting or a workout session scheduled with the people they’re there to meet, so they’re networking strategically, making connections that may or may not be important in the future.

My advice: listen, don’t talk. Sooner or later, someone will ask you. And when you answer, keep it very short and succinct. You’re not there to sell, you’re there to learn, to connect, and to plant seeds.

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America First Investment Policy

I’ve agreed to contribute a pair of posts per week to the White Bull’s business and policy substack; my first post there addresses the God-Emperor 2.0’s recent executive order that transforms America’s previously open door approach to foreign investment.

Investment by United States allies and partners can create hundreds of thousands of jobs and significant wealth for the United States. Our Nation is committed to maintaining the strong, open investment environment that benefits our economy and our people, while enhancing our ability to protect the United States from new and evolving threats that can accompany foreign investment.

Investment at all costs is not always in the national interest, however.

This is a major change from the “all free trade is good for the US economy” mantra that has ruled US trade policy since the 1980s. While this is not the place for a lesson in Economics 101 or a departure into economic history, the fact that M (imports) are subtracted from the sum total that is the result of the GDP equation is sufficient to point out that when (X-M) is negative, which is to say that there is a trade deficit, the economy is contracting, all else being equal.

In the same way, while “investment in America” sounds as if it should always be positive, if it is described as “selling American assets and property to foreign countries,” it obviously isn’t in any and all circumstances. There are times where the sale of American products are advantageous to the American economy, such as the sale of American steel to foreign automotive manufacturers, and times when they are not.

Read the whole thing there. As with Sigma Game, I’m aware that business and government policy tend to be of limited interest to the general readership here, so it will be good to have a specific place to address those topics regularly for the benefit of those who actually like reading about such things. But never fear, if I happen to post something there that I think is – or even that I think should be – important for everyone here to know, I’ll post it here as well.

But as with tariffs, a judicious foreign investment policy that takes each case on its merits is a vast improvement than simply selling off all of the family jewels to the first foreigner who happens to want them.

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It Actually Is What it Is

White Bull has launched their long-awaited substack focused on business and the intersection of policy on business with a very solid piece on tariffs. This is particularly important, because both the media and most official government positions on tariffs are still stuck in 18th century critiques of European mercantilism and therefore take nothing that has happened and nothing that we’ve learned in the last 250 years into account.

Before the 2024 election Trump said, “Tariffs are the greatest thing ever invented.” While it is typical Trumpian hyperbole, it is not wrong. Following almost 4 decades of globalists being hell bent on eliminating trade barriers, US trade policy supporting exporting US manufacturing to Canada/Mexico with NAFTA, or China with MFN and then accession to WTO (thank you Bill Clinton + Laura Tyson), the US has essentially been subsidizing other nations at its own expense. Tariffs are one of many tools that the US needs to start using to recalibrate its place vis a vis the global marketplace.

The globalists in Congress keep saying that Trump doesn’t know what he is talking about when he discusses who actually pays the tariffs.They say consumers pay the tariffs. Well, they are (partly) right and everyone knows this. What they don’t talk about is that unless the producers who have tariffs levied on them reduce their wholesale prices, the cost to the American consumer will increase by retail price + the tariff %. American consumers are smart enough to shift their buying preferences towards better value, alternative products or wait on purchases until alternatives emerge. American manufacturers will be motivated to bring manufacturing back to the US, since profitability is possible again. Everybody in America wins! At Davos a few weeks ago, even the pragmatic Jaime Dimon came out in favor of tariffs, saying, “I would put into perspective: If it’s a little inflationary, but it’s good for national security, so be it. I mean, get over it.”

Tariffs were a very effective tool for the US during the 1800s, and between 1861-1933 the US had one of the highest average tariff rates on manufactured imports in the world. Is it surprising that after 1933/New Deal, tariffs started to disappear while being replaced by income taxes, sales taxes and a myriad of social programs started to emerge? Tariffs can be raised, lowered or eliminated entirely as needed. But taxes and entitlements rarely disappear creating virtually unlimited budgets for politicians to tap into or steal. And while there is always the danger of a trade war, it looks like many ‘deals’ will get cut to decrease US trade deficits with targeted countries before needing to actually levy the tariffs.

IT IS WHAT IT IS promises to be as significant in the business and technology space as FANDOM PULSE has already proved to be in the entertainment and culture space. If you’re running a side hustle or you’re a full-time entrepreneur with your own small business, you will definitely want to be a part of the conversation there. It’s something I’ve wanted White Bull to do for a long time, simply so I don’t have to, because it is one thing that we just haven’t had in the greater community.

We’ve just never really had a place where those of us who are active in business can discuss what is going on around the world in the context of our business operations, so I think this will be an important step going forward.

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The End of The Escapist

The collapse of The Escapist is an object lesson in when SJWs and financial interests take over a previously successful company:

When people ask me how to get into games journalism these days, my main piece of advice is “don’t.” I’m really not kidding, as while I am privileged to be where I am, it’s an almost impossible path to walk given the state of the industry and the instability found within.

Case in point, a wild scene unfolded last night as long-time gaming site The Escapist fired some of its team members, including EIC Nick Calandra, for reportedly not meeting goals set by its parent company Gamurs.

After Calandra was fired, Escapist staff members, contributors and producers all took to Twitter to announce they were also leaving the site, with many of them indicating they would be working on some new project with Calandra directly.

The departures and firings essentially cleaned out the entirety of The Escapist’s video department, including most significantly at all, the departure of Yahtzee Croshaw, the voice of Zero Punctuation, one of the oldest and most famous game criticism video series, and one I grew up watching long before I started doing this for a living. Croshaw resigned, but he does not own the rights to Zero Punctuation itself, so whatever he does next, it will be without that branding. Though it’s obvious the branding can’t survive without him, even if The Escapist retains it.

By all accounts Calandra was a great EIC, and clearly inspired a lot of loyalty in those working for him, given the events of last night. Gamurs feels like yet another company trying to squeeze blood from a stone with likely unreasonable growth targets in an industry where large increases are more or less impossible.

‘The Escapist’ Faces Mass Resignations After EIC Firing, 7 November 2023

Nor is The Escapist the only place where some major shakeups in entertainment journalism are coming. It’s going to be intriguing to see how things develop going forward, as some of our competitors – who shall go unnamed – are similarly structured and are facing similar pressures, which suggests that it may not be too much longer before experiencing similar disruptions forced by the financial interests.

As to why this is suddenly happening among companies that were acquired in the last ten years, the answer is economic: the acquisitions were made with debt that was obtained at historically low interest rates. Now that the interest rates on that debt is rising, the acquisitions are no longer as profitable as the acquiring company expected them to be, thereby leading the acquirers to put pressure on the acquired companies to produce more and more money.

Once these debt finance-driven demands start cutting into the resources required to perform basic functions, and once key personnel start leaving instead of subjecting themselves to the ever-increasing demands of the new owners, the death spiral has begun and the fate of the organization is sealed.

Which, of course, is a very good thing for its stronger, more conservative competitors.

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The NFL is Massaged

It’s not quite right to say the NFL is fixed. But it is most definitely tweaked, adjusted, and massaged in order to favor certain teams on certain specific Sundays. I think it’s a stupid policy and shows an unnecessary lack of confidence in what would arguably be an even more entertaining entertainment product if left unmanaged.

And I think I speak for every lifelong NFL fan when I say that using fake celebrity relationships with NFL stars to spark female interest in the game is vastly preferable to the previous over-the-top activism on breast cancer and BLM. It’s been encouraging to see the complete absence of Ukraine-Russia and Hamas-Israel on the field and in the broadcast booths.

Even the anti-conspiracists are beginning to recognize the way in which the referees are being used to put the league’s thumb on the scale.

  • Amari Cooper drew a flag for getting his thigh pad touched, which negated a forced fumble. Donovan Peoples-Jones drew another one on a ball launched out of the back of the end zone. This pair of calls almost assuredly would have been rejected by a neutral observer in the booth with the ability to view what all of us were watching, that this crew was single-handedly clubbing at the knee a Colts team that was punching way above its weight class. After the game, Colts coach Shane Steichen called the whole experience a character builder. I suppose that’s the only way to look at it without becoming a full-blown conspiracy theorist.
  • The Chiefs pulled off a primetime win over the Jets that ended up being far closer than fans had anticipated. Kansas City escaped with a 23-20 win to improve to 3-1 on the year, but their victory wasn’t without controversy. In addition to a questionable defensive holding call against Sauce Gardner, which wiped away an interception, Jets defensive lineman Jermaine Johnson was inexplicably held for a stunning length of time on a play that resulted in a 25-yard run for Patrick Mahomes. Somehow, the officials seemed to not notice Johnson being held for multiple seconds by Donovan Smith. The missed hold would likely explain why Mahomes had so much time in the pocket, which he eventually used to slither free for a first down run.

I thought there were a lot of key calls yesterday that were made correctly, and a few that were missed were correct on replay. The refs are clearly capable of doing a good job, albeit only when the league permits them to do so. It’s not an accident that so many of the egregious calls and non-calls happened late in the fourth quarter of close games, or that they all went in favor of the league-preferred team.

The fact that it’s perfectly legal to script an entertainment product doesn’t mean that it’s actually more entertaining. Using the refs to protect the quarterbacks is one thing; last year’s NFC championship game clearly demonstrated that no amount of protection can be too much given the inability of even a very good team with a sixth-round rookie quarterback to remain competitive without a healthy QB in the modern game.

But bad calls in the fourth quarter on key plays that hand the game to the league-favored team are a turnoff even to the most uninterested parties. Is making sure the Chiefs are 6-1 instead of 5-2 in a division they’re leading by four games really worth sacrificing the perceived integrity of the game?

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Rolling the Loaded Dice

It looks as if Tucker will be the next famous public figure to go down in flames. The same people who took down Milo by “investing” in him, and who tried to take down Gab through Parler, have now “invested” in Tucker Carlson’s media company.

Media celebrities are remarkably clueless when it comes to business. They literally can’t see anything beyond the dollars being waved at them by the conservative establishment. And it never ceases to amaze me to observe how they genuinely think it is safer being partnered with the establishment than with the so-called “extremists”, now matter how many of their predecessors get spit up and chewed out.

He’d better check that contract very closely and make sure that the “investment’ can’t be converted to a loan under any circumstances.

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Why You Don’t Sell

Less than five years after founder Aaron Schatz sold the popular Football Outsiders site, it’s dead, done, and dusted.

Football Outsiders was founded in 2003 by Aaron Schatz. What began as his passion project grew into a fully fledged website for advanced football analytics and statistics such as DVOA (Defense-adjusted Value Over Average). Football Outsiders went on to strike partnerships with ESPN and became a popular source for hardcore football nerds and casual fans alike. In 2018, Schatz sold Football Outsiders to a company called EdjSports. He stayed on as editor-in-chief, and, according to longtime Football Outsiders writer Mike Tanier, the site continued to operate as normal.

Then, in September 2021, Champion Gaming, co-founded by Simmonds and Hershman, entered the picture. It acquired EdjSports, and Football Outsiders along with it, in late 2021 as part of a “reverse takeover,” a way for private companies to go public quickly without having to go through an Initial Public Offering. As part of the deal, Champion Gaming merged with a shell company called Prime City One Capital. According to a news report from the time, “the group closed a funding round of $3.65 million (CAD $4.62 million), giving it a roughly $12.3 million post-money valuation, and it is on track to begin trading in a few weeks.”

Champion Gaming had ambitions to expand beyond NFL coverage. It struck a licensing deal with Inpredictable, an NBA analytics website run by Mike Beuoy, and partnered with SharpRank, a sports betting resource. The terms and status of these partnerships are unclear; Beuoy and SharpRank did not respond to queries. Champion Gaming also brought on Chris Spagnuolo to oversee content (for a particular microgeneration of sports media consumers, Spagnuolo is best known as the guy who left Barstool Sports after writing a blog calling Rihanna fat), and hired ESPN’s Katie George to be a brand ambassador and create video content. Spagnuolo declined to comment. Defector was not able to reach George for comment.

By the summer after the takeover, changes at the top of the company were underway. In June 2022, Simmonds took over from Hershman as CEO; Wickham took over as CFO; and the company’s president, Chief Innovation Officer, and director all resigned. The company framed the changes as an exciting new chapter. Of Simmonds’s ascent to CEO, Hershman said in a press release, “Given his previous experience as a public markets CEO and his extensive background in online gambling, the board of directors and I determined that his leadership of the Company would be both ideal and appropriate to steer us going forward as we build a leading sports content and data intelligence business.”

But by the fall there were signs that the company was floundering. According to financial documents filed in November 2022, which are publicly available through Sedar, Canada’s securities filing system, the company had little cash flow and was carrying significant debt, especially relative to its revenues. In the first nine months of 2022, Champion Gaming reported $969,789 in revenue and $5,619,803 in losses. (All monetary figures cited in the filings are in CAD.) As of Sept. 30, 2022, the entire company had only $55,776 in cash, with even less coming in. As of the same date, the accounts receivable, meaning revenue the company accrued, but which they still needed to be paid, was only $13,911. On page six of the same filing, the company wrote: “These material uncertainties cast significant doubt as to the Company’s ability to continue as a going concern.”

The company’s main form of cash flow came from issuing equity and borrowing money.

Now, if your sole focus is money, it may make sense to literally sell out. Schatz probably made a nice bit from the initial sale, although he didn’t make the big score that would have resulted from the money guys going public or selling it to a big public corporation would have.

An operation like FO, despite its popularity, never makes all that much money. A million dollars sounds like a lot, but FO probably didn’t do much more than provide a reasonable living to its owners due to the need to pay for all the contract-based content produced. And as usual, the people who practically invented the NFL analytics game are about the only ones not profiting much from it.

“It’s just really disheartening to see this niche, special interest, really passionate sports blog that blossomed into a pretty influential sports analytics company, just get sucked dry so quickly,”

It is always disheartening to see how quickly, and how comprehensively, the financial parasites manage to destroy great little companies. So if you’re doing what you love, if it’s truly a passion, why sell out and run the very high risk of seeing your creation destroyed? For every sell-out that scores big, there are probably ten or more that end up dessicated, defunct, and forgotten. It’s amazing how many organizations that could have continued doing what they were doing almost indefnitely have disappeared as a result of cashing in and cashing out.

That’s one reason why Castalia subscribers need not worry about their source of world-class leather books going away, as long as enough people continue to subscribe to it. I am fully aware of the realities of the merger and acquisition market, which is why I won’t even agree to have “a conversation” with the financial pirates when they “reach out” to see if we’re interested in “exploring mutual opportunities”.

And speaking of Castalia, I would be remiss if I did not point out that CARAVAN OF THE DAMNED, Chuck Dixon’s Conan #2, is back in stock on Amazon.

Anyhow, at the end of the day, a man needs to ask himself: what is my purpose? And also, is money a necessary evil or is it the prime objective?

UPDATE: Caravan has also reached the fulfilment house for those who bought direct. The cover colors look brilliant.

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Genius Trumps Expertise

There are two important business lessons here in this story about the success of a humble kitchen tool:

Richard Grace, inventor of one of the greatest tools the kitchen has ever seen, neither knows how to cook nor cares to learn. In the mid-’90s, he set out to make a wood-carving rasper and ended up with a culinary masterpiece called the Microplane: a cheese-grating, citrus-zesting, nutmeg-dusting revelation that today costs as little as $12 on Amazon. He’s an inventor in the truest spirit of the word, someone who treats ideation as a profession, not a calling. He doesn’t speak in buzzwords and has never hosted a TED Talk. He simply makes things and finds uses for them later.

Lorraine, a baker with an affinity for Armenian orange cake, wasn’t happy with her old kitchen grater. So she slid her husband’s Microplane over an orange. She was so astounded by the results, she had the description of the product changed in the store catalog to include its effectiveness at this seemingly niche kitchen task. This is how the story, “Test Kitchen; A Gift for the Cook, or Carpenter,” published by The New York Times four years later, began.

Before the Microplane brass could blink, they had become a kitchenware company — whether they liked it or not. Penned by Amanda Hesser, who later cofounded the award-winning food publication Food52, this 516-word story was to become Microplane’s crossing of the Rubicon, from carpentry to culinary.

“After the Times article, basically everybody who sells anything contacted us,” Arivett told me. “Williams Sonoma; Bed, Bath & Beyond; Sur La Table — everybody. It was almost too much to keep up with.”

Before the Microplane brass could blink, they had become a kitchenware company — whether they liked it or not. Within the first month following the article’s publication, the brand saw its kitchen customers eclipse its woodworking customers ten times over. Microplane, the wood rasp, sold between $300,000 and $400,000 a year; by 2002, Microplane, the kitchen gadget, did that in a month.

Then came an even bigger boom, one fueled by the power of the original kitchen influencers: celebrity chefs. Martha Stewart, Ina Garten, Rachel Ray and virtually anyone that mattered used a Microplane on their shows, calling it out by name for their audience. Julia Child liked the product so much, it earned a permanent spot hanging on the wall of her kitchen, which was later replicated at the Smithsonian. And Oprah’s personal chef, Art Smith, once called it “the most coveted tool in chefdom.”

But for all the brilliance of the original invention and the Grace family business savvy, they still weren’t sure what they were selling. “None of us were cooks,” Chris said when I asked him if the Grace family was culinarily inclined.

Lesson One: The experts know what has been done before. That’s what makes them experts. However, they do not know what is possible nor are they usually psychologically inclined to explore the various possibilities and tangents related to their knowledge. So, if you’re doing something new, do not permit yourself to be guided solely by their expertise. This is something we’ve been learning with regards to the bindery operation.

Lesson Two: Don’t be married to your business plan. I would bet that less than one-third of the most successful companies are actually successful doing what they initially started out to do. For example, Castalia intended to avoid doing print editions and focus on selling ebooks through Amazon. My favorite example, however, is the Connecticut Leather Company, which started out making leather goods in 1932, and later began producing plastic wading pools, which led to it making children’s plush toys, and eventually, the home video game system called Colecovision.

Of course, Coleco offers another lesson, which is the danger of success. Despite average sales of one million Colecovisions a year for six years, the company that started in and survived the Great Depression collapsed in 1988 after digging a hole for itself with its attempt to produce its own computer.

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