Episode #198: Free-Rider Friday - June 2018

Ron’s Topics

Fawning Press for Elon Musk

Elon Musk Just Gave the World’s Best Productivity Advice in a Single, Short Sentence: and we all owe him a debt of gratitude for pointing out the obvious. April 28, 2018, Geoffrey James, Contributing editor, Inc.com

Recent memo from Musk to Tesla employees proposes a number of actions to increase performance with Model 3 MFG:

  • Avoid large meetings and keep them very short
  • Avoid acronyms and company-specific jargon lest you confuse contractors
  • Ignore corporate rules if they are obviously idiotic

But this suggestion takes the cake: “Walk out of a meeting or drop off a call as soon as it is obvious you aren’t adding value.”

In a related article, “Driving to the next circle of hell,” The Economist, April 7, 2018, on April 1 Elon tweeted: “We are sad to report that Tesla has gone completely and totally bankrupt.”

  • Tesla share price has fallen by 16% since end of February 
  • On March 23, a Tesla crashed and the driver killed
Tesla_Model_3_parked,_front_driver_side.jpg

The new Tesla Model 3

  • Price: $35,000
  • Range: 200+ miles
  • Deposits: Over 400,000

In July 2017, Musk claimed production would be 20,000/month by December 2017, however fewer than 2,500 were produced in entire 4th quarter. By April 2018 they had ramped up to around 2,000 a week was actual production. Tesla reportedly lost $2 billion in 2017.

The company boasted, “Model 3 assembly line is now providing the fastest growth of any automotive company in the modern era. If this rate continues, it will exceed that of Ford and the Model T.” The Economist replied, “Such bluster does not withstand scrutiny.”

Musk wants his factory to be a machine that makes machines. But auto companies have found a mix of man and machines is best.On March 17th, Moody’s downgraded Tesla’s debt. Others predict Tesla will need to $2.5B to $3b cash this year.

“Not Finished,” The Economist, April 28, 2018

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Finland ran a trial Universal Basic Income program on Jan 2017 whereby 2,000 people received $680/month. The experiment ended December 2018. It was planned to end after two years, but had hoped to expand it beyond, but the legislature denied funding. It was not universal as all recipients were unemployed, and no results have been published yet.

California Incubator Y Combinator in the USA is using randomized control trial for a UBI in Oakland, CA, and Kenya is launching one, run by Give Directly. There’s another in Ontario, with 4,000 participants in 4 towns, and one in Scotland, Glasgow and Edinburgh working on pilot UBI programs.

Is Adam Smith spinning in his grave?

“Thinking outside the police box,” Buttonwood, The Economist, May 12, 2018

In writing the his final column the author surmises "what useful knowledge would he impart if he could go back 12 years (550 columns)?"

Avoid confusing financial markets with the economy (S&P Index doubled from 2006)

  • The market has incredible resilience: corporate profits, pre-crisis levels rapidly regained, and surpassed 2008 levels.
  • Less competition means globalization of suppressed wages.
  • Never underestimate the power of central banks: quantitative easing did not cause expected inflation.
  • Relax about China!
  • Microeconomists are wrong about specific things, whereas macroeconomists are wrong in general. 

Ron would add professional pricers are getting better.

The Economist, Exclusive access, Special Report, Financial Inclusion, May 5, 2018

Mobile tech brought hundreds of millions into financial system, such as bKash in Bangladesh, began in 2011, with 30 million users, known as the collective mattress.

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In 2012, The World Bank created “Findex,” a financial inclusion index (the Gates Foundation funded). The Unbanked numbered 2.5 billion in 2011, 2B in 2014, and 1.7B in 2017.

Adults with a bank or mobile money account: 69%. Though access is not the same as inclusion, since 25% of all accounts are inactive.

Mobile tech also pays crop insurance (e.g., when rainfall is below a certain level).

Also, credit scores: GPS can tell is someone has steady job, permanent address, social media data, shopping data, etc.

A Findex survey asked this question: why do those 1.7 billion people remain unbanked? Two-thirds replied because of having too little money. Technology is essential, but obviously not enough.

Carved into the Post Office building in New York: “Neither snow nor rain nor heat nor gloom of night stays these couriers from the swift completion of their appointed rounds.: A graffito was once scrawled alongside: “What is it, then?” It’s time to privatize the US Postal Service.

Updates on Venezuela

Venezuela’s Future—And Ours,” Kevin D. Williamson, June 24, 2018.

Venezuelans Shrugged. Ayn Rand Was Right,” Townhall, Marina Medvin, June 4, 2018

According to Newsweek, Polio has returned to Venezuela. Other reports now dispute this.

Ed’s Topics

In four years, should Ed buy his 12-year son, Sean, a car or give him an Über account with a $400/month allowance?

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Children of a couple who were Russian spies who lived in Canada are fighting to keep their Canadian citizenship. Will the FX TV show, The Americans, have a spin-off?

Should California be broken up into three states?

According to Bloomberg News, millionaires now control one-half of the world’s personal wealth, up from slightly less than 45% in 2012. Estimated world-wide wealth is $201.9 trillion. This does not mean that the poor are getting poorer, but that people are getting richer, especially in China.

ASKTSOE: Email Question from Listener

Dear Ron and Ed,

Hello from London UK.

Thanks for your eye opening programmes and books. I read your book on "Implementing value pricing” and I’m trying my best to implement your ideas in my business. I am a UX design consultant and in progress to build with a design consultancy.

One of the points I struggle with, isn’t the fixed price itself, but how to justify the direct relationship between business value (say revenue) and my services. See, the client is suspicious when I get too deep into their business model and think “this guy wants to see how much we earn to charge us more”. I see the suspicion in their face.

Wondering how you’d turn that perspective around. I’d appreciate giving us some hints on your podcast.

Best wishes,

Spyros Zevelakis
Director
www.2xUX.com

Digital Product Design

Ed suggested listening to our show on Consulting Theory, We Are All Consultants Now, Episode #40. The key is to recognize that ones purpose as a professional is to help people make the best possible decisions.

Ron suggested that we have to infer value through better questioning in the value conversation. Also, you must consider not just the materialist value (that which can be measured, such as cost savings, tax savings, etc.), but spiritual value—those things that cannot be measured. Relationship, brand, social capital, etc.

Comment

Ed Kless

Ed Kless joined Sage in July of 2003 and is currently the senior director of partner development and strategy. He develops and delivers curriculum for Sage business partners on the art and practice of small business consulting. Courses include: Sage Consulting Academy, Business Strategy and Customer Experience Workshops. Ed is the author of The Soul of Enterprise: Dialogues on Business in the Knowledge Economy, a compendium of a few of the episodes of his VoiceAmerica talk-show The Soul of Enterprise: Business in the Knowledge Economy with Ron Baker, founder of the VeraSage Institute where Ed is also a senior fellow.