Or pay $10/month.
Or pay $12.50/month
Ketchup on his trousers cost Richard Phillips, a senior associate with the world's fifth largest law firm, his job. As they say, there are only four lawyer jokes; the rest are true stories.
On May 25, 2005, he dropped his secretary an email, Hi Jenny. I went to a dry cleaners at lunch and they said it would cost £4 to remove the ketchup stains. If you cd let me have the cash today, that wd be much appreciated.
Jenny Amner replied on June 3, With reference to the e-mail below, I must apologize for not getting back to you straight away but due to my mother's sudden illness, death and funeral I have had more pressing issues than your £4.
I apologize again for accidentally getting a few splashes of ketchup on your trousers. Obviously your financial need as a senior associate is greater than mine as a mere secretary.
She wrote that she had told various partners, lawyers and trainees about his e-mail and they had offered to "do a collection" to raise the cash.
I however declined their kind offer but should you feel the urgent need for the £4, it will be on my desk this afternoon.
Eventually, it made the news, including CNN - and it didn't stop there. The folks at Heinz volunteered that vinegar in water will get out ketchup stains - but they'd be happy to come up with the £4 (about $7.88) in order that Jenny should be able to enjoy the world's favorite ketchup, and there was another round of embarassing news stories.
He resigned in June.
Perhaps if we knew the details, we'd be sympathetic with Richard. I'm not the world's tidiest diner - "Can't take him anywhere", my wife claims - but I can't recall ever getting ketchup on someone else's britches unless there was gross misconduct - perhaps tossing a forward pass with a hot dog - on my part.
Furthermore, it isn't clear when Jenny's mother died. He sent his email on Wednesday. If she died on Monday, and Jenny was already gone on Tuesday, the email is far more offensive than if she died after the email was sent.
And it's not clear how they felt about money. My first mother-in-law, Beelzebub, would ask me to pick up something for her from a store 20 miles away, then insist on reimbursing me to the penny, $5.12, not $5.00 or $5.25, over my objections. The 40-mile round trip was more costly than the item purchased, not to mention the value of my time, but if she paid me exactly to the penny, then she didn't feel obligated.
I've always heard from people who weren't engaged in business, that you have to spend money to make money, as if spending money was profitable. That attitude will rapidly put you in the poorhouse. You have to save money to make money.
That doesn't mean you have to be a "stingy stinker", as Bloody Mary put it in "South Pacific". It means you need to get value for your money. Spending too much wastes a little money; spending too little wastes a lot. And that brings us to the story of Michael Dell.
Michael Dell returned Wednesday to the company named after him, formerly known as Dell Computer. He will be CEO, replacing Kevin Rollins who resigned. "We had great efforts, but not great results," Michael Dell wrote. "This is disappointing and it is unacceptable."
The company's top management is being trimmed drastically. There will be about a dozen reporting to Dell, compared to about twenty who reported to Rollins, including the COO. They are drastically revising bonuses as well.
Based on these facts, and these facts alone, it's proper to call Michael Dell an idiot. Perhaps those may be the right actions to take, but it's quite likely that they are wrong.
The fact that everyone seems to engage in this kind of cost-cutting when a company is in trouble doesn't make it the right thing to do. Michael Dell, moreover, has been cursed by being successful at a young age, and never having to deal with great adversity. You learn more about business in a year of great struggle than in a decade of great success - and you learn about turnarounds from both failing and succeeding in them. Dell might succeed - but it'll take a lot of luck
In 2004, Dell had 18.22% margins. In 2005, they had 18.32% margins. In 2006, they had 18.40% margins. In their latest quarter, it dropped to 17.04. You should expect margins to drop as the competition intensifies. In 2004, Dell had $41 billion in sales. In 2005, they had $39 billion. In 2006, they had just short of $56 billion in sales. Nothing there to be distressed about, either.
So what's the problem? It's all with the stock market. Earnings are fine, but investors believed hype, so they're disappointing. Dell is losing market share to Lenovo, Hewlett-Packard, and Apple, but that's to be expected, too.
Lenovo is the old IBM line of computers. They've always been respected, but IBM wasn't managing the line well, so they sold it to Lenovo. It took a while to establish their credentials with corporate America, but now that they've done that, they're claiming the market share they deserve.
Hewlett-Packard was suffering, too, from the acquisition of Compaq, who had previously acquired Digital. When you acquire a bunch of new ducks, it takes a while to get them in a row. Carly Fiorina got fired because HP's board was impatient, and because, well, because Carly was an annoyance. Mark Hurd didn't really change much except the annoyance factor, and when Hewlitt-Packard started to hit on all eight cylinders, HP reclaimed the market share they deserve.
One cannot say Apple deserves the market share they currently have. They've increasingly been a company that lives on smoke and mirrors. It'd be safer to deal with a cellphone company, a televangelist, and a used car dealer, all three, rather than Apple - but Steve Jobs has been flogging his fanboys hard, and they're currently at a relative high. On this SuperBowl Sunday, we are reminded that a year prior to the introduction of the Mac, Apple was neck-and-neck with the PC in market share, and they threw that all away - but they've repeatedly tried very hard to go bankrupt and they're currently in one of their temporary revivals.
So I don't see much wrong with Dell. They had a problem - and not a small problem - with customer support a few years ago. They closed their support centers in North America, and relied on idiots in Asia. The problem wasn't that they were Asian. The problem was that they were idiots.
Much has been made of the fact that Dell is a just-in-time build-to-order computer manufacturer. When prices are falling, the fact that they only have 4 or 5 days of inventory on hand is a great plus. The key to Dell's success, however, hasn't been their low cost so much as their high value. If you can build cheap, but you have to sell cheap, you've gained little. Selling direct, they get retail dollars, not wholesale dollars, and they get those dollars mostly from people who can already go online, which is to say, the smart buyer.
If you can trust Dell to sell you a great computer and support it well, they can command top prices. If you get a bad computer from Dell - and there have been times that has happened - the fact that they support it well is a saving grace. In fact, if you are in trouble, and your supplier bails you out, you're especially likely to tell all your friends to buy from them.
But if you get lousy support, the fact that you're buying direct from the manufacturer is a definite problem. Everybody else can turn to the retailer when the manufacturer falls short. Dell customers cannot.
According to my sources, Dell's pretty well solved the problem with support. Perhaps it is enough that Michael Dell has taken control of the company. It will allay the fears of some investors. Dell should improve market share if they continue to rebuild their reputation for great support. Lenovo or HP or Apple is bound to have a misstep soon, which should improve Dell market share even more, at least temporarily.
Some of our servers are Dell DL 320s. If you look them up, you'll find that's trailing-edge technology - but that's fine with us. Serving web pages is not rocket science. Not only is trailing-edge technology proven and reliable, but you get more "bang for the buck"; we're able to give our users more for their money by using a lot of cheap servers rather than a few pricey ones. And frankly, we don't give a hoot whether they're Dell or not.
The point of this essay isn't whether Dell is a good company to invest in. We don't invest in Dell; we invest in ourselves. We think you should invest in yourself, too. It's not that Dell is a bad investment, and we make no allegation, either way. It's that you should avoid bad decisions in running your own business, by taking a look at the long term.
If you're not planning to sell your company in the next five years, you need to be careful to avoid short-term thinking. Bill Clinton learned that it's unwise to mess around with a young intern. Richard Phillips learned that it's unwise to mess around with a mature secretary. I don't know what my next mistake will be. I'm sure there will be one - but I'm going to try to head it off at the pass, by responding quickly and appropriately. Small mistakes, I can swallow. Big mistakes could swallow me.
