Gecko hits the wall at Disney

In 1987's Wall Street the Gordon Gecko character made a memorable speech, penned by Oliver Stone and Stanley Weiser:

The point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind.

Apparently Mr Gecko's way to run a business has hit a wall at Lucasfilm, reeling (pardon the pun) from the fact that Solo: A Star Wars Story is a box office disappointment. So far it has generated only $345 million in revenues against a $275 million production budget. I suspect the film is barely breaking even, at best, after factoring in non-production expenses such as promotion. In comparison, the widely-critiqued Episode I earned over $1 billion and the equally critiqued Episode II earned $650 million — without taking inflation into account.

The commercial failure of Solo isn't the first warning. Episode VIII took in only two-thirds the box office that Episode VII did. Rogue One fell short of Episode VII, too.

Clearly the message is that people are tiring of Star Wars. This scares the devil out of Disney, who paid $4 billion for Lucasfilm in 2012. The assumption at Disney was that Star Wars could spawn all kinds of prequels, sequels, and spinoffs over decades to come — supporting two or even three releases each year. Ain't working out that way!

One could argue that the recent Star Wars releases are mediocre and deserve the box office they've gotten. But I'm certain Disney had believed mediocrity would be good enough. Disney might recover the situation by releasing a truly great Episode IX in December 2019. Problem is, no one can guarantee a blockbuster. Meanwhile Disney has gotten the message; their plans for films on Boba Fett and Obi-Wan Kenobi are said to be under reexamination. "The trouble with movies as a business is that it's an art, and the trouble with movies as art is that it's a business," laconically commented the late Charlton Heston.

Gecko was correct about greed in some narrow contexts. This isn't one of them.

Four months in

Today I was asked, How's retirement going? Actually I've been asked that many times since January. The short answer is, Great! Here's the longer answer.

My priority for 2018 has been my health. A year ago my prostate cancer appeared to recur. I must confess, this was on my mind when I elected to retire. Fortunately it has resubmerged, to the puzzlement of my urologist. Something might be going on down there, but we don't know what and our approach is wait-and-see.

For the knee with torn cartilage, I've been doing physical therapy three days a week in a pool. I'm also taking chondroitin and glucosamine although I don't know whether they work. They are inexpensive, they carry very low risk, and I've had very good results from a related topical medication Movelat available in the UK but not the USA. The knee is 70% back to normal… encouraging.

And lastly on the health front, I've dropped weight and improved conditioning. My allergies resolved immediately after I quit flying to Europe and Asia so often, and I'm no longer constantly fatigued by jet lag and round-the-clock emails. It seemed like I slept the entire month of January.

My former employer asked me to help with a project in Latin America, and that takes some of my time. I enjoyed my job and the people I worked with, so this is a source of satisfaction.

I remain the Secretary of the Episcopal Diocese of North Carolina. The position requires one day per week on average, but it comes in spurts that now are easier to cope with.

The two books I intend to write are still on my mind. I haven't written any words yet, but I have done initial research for one of them.

And then we get to ham radio, the biggest increase in my use of time. I'm having a blast with it. Besides making a new set of friends in the local area, I'm regaining competence in electronics and using some leading-edge software for "weak signal" propagation.

Overall, I am about as busy Monday-Friday 8-5 as before I retired. The big difference is evenings and weekends. Before retirement, evenings and weekends were hectic with to-do's. Now I can do those during weekdays, leaving evenings and weekends for leisure. That's grand.

Frequent flyer programs: the game has changed

I began participating in frequent flyer programs in the early 1980s. The airlines offered first-class upgrades at startlingly low prices, and as long as not many people were participating in the programs and the average load factor on a flight was 60%, it was easy to claim awards for free travel. What a deal! Hotels got involved in the late 1980s and the programs became known as loyalty programs. In the 1990s, the airlines and hotels observed that they could increase loyalty of their most frequent customers by providing perks such as preferred seating and lounge access. These became known as elite programs.

As a road warrior from 1982 through last December, I used these programs to maximum advantage. I was careful, of course, to abide by my employers' travel policies, but it was almost always possible to use the hotels and airlines of my preference without breaching the employers' directives. My wife and sons got the benefit of great vacations, and I came to depend on the perks of elite status. I don't know how I could have held up under the constant, arduous international travel without those perks.

But the scenario for the next 10-20 years is quite different:

• Airline load factors are now 75-85%, on average. The airlines have fewer unoccupied seats to give away.
• As people like myself accrued large balances of points over long periods of time, the airlines and hotels increased the number of points needed to claim awards. They have also added hidden co-pays and restrictions.
• As airlines and hotels have consolidated — the most recent example being the merger of Marriott with Starwood, which ran Sheraton, Westin, etc — the hurdles to requalify annually for elite status have been raised considerably. The requirements for liftime elite status have risen, too, and some perks have been taken away.

In short, these programs are not as beneficial as they once were. The true road warrior who spends $50,000+ a year on travel should still pay attention to them; I had that level of spend (more, actually) for each of the last 6 years. Increasingly it's the elite status, not the "free" tickets and hotel rooms, that are the carrot on the stick. But on American Airlines, for example, being Gold is virtually worthless and even being Platinum is of marginal value. The big winners are the Executive Platinums and the ConciergeKeys — but fewer than 100,000 people fall into those categories, according to informed speculation. And there is no lifetime Executive Platinum or ConciergeKey; one must requalify each year.

For everyone outside the road warrior community, I question whether the loyalty programs are worth one's time. The infrequent traveler will rarely get much value from them even when concentrating travel on one airline and one hotel chain. And if you have a credit card affiliated with an airline or hotel, you will find that those perks are being diluted.

My ConciergeKey status on American and my Platinum status on Marriott will expire next year. Then I'll be just a schmuck — lifetime Platinum on American and lifetime Gold at Marriott — albeit with point balances to burn. It was nice while it lasted.

Sprint: quo vadis?

In 1981 I was at a crossroads in my career. I discerned that being a university professor was not for me, so I quit the Ph.D. program. Having taken that step, it was logical that I leave the administrative employ of the university too. A friend of mine had recently joined a start-up in Atlanta, ISACOMM, that was selling satellite communications services. That sounded like fun, so I began interviewing with them.

During the hiring process, a company I'd never heard of — United Telecom, headquartered in Kansas City — acquired ISACOMM. I saw no downside in the deal for me, so I took the job at ISACOMM. A company with a very conservative reputation, United owned local telephone companies ("independents") in various places around the country… a steady if somewhat boring business. United left us alone for the first two years. During that period, the long-distance telephone market in the U.S. began to be competitive and people became aware of companies like MCI and Sprint. The latter had emerged from the internal microwave network of the Southern Pacific Railroad.

One day a vice president from the Kansas City corporate staff came to Atlanta and told us a rather incredible story. McKinsey, one of the top-notch management consulting firms, had convinced United to enter the long-distance business. Moreover, their entry would be timed to align with the emergence of fiber optic transmission as a disruptive alternative to satellites and microwaves. Kansas City "bet the farm" and went forward with the plan. The most expedient way to obtain a customer base for the fiber network was to acquire Sprint and then decommission Sprint's microwave network in favor of fiber. Having done that, United renamed themselves Sprint.

That's where the story ends for me. Sprint wanted to centralize everything in Kansas City. By then I had been to KC often enough to know that I didn't want to move there, so I changed jobs. Soon, Sprint was on national television with the "You can hear a pin drop" ad campaign. Eventually they decided that the local telephone business truly was boring, so they divested it. The mobile phone business, on the other hand, was exciting. Over a period of years Sprint re-positioned itself as a mobile phone service company; no one cared about long-distance services anymore. Unfortunately for Sprint, AT&T and Verizon had exactly the same idea. As a weaker competitor, Sprint fell into third place and gradually lost its mojo in the market.

After years in a rather hopeless situation, Sprint has announced a merger with T-Mobile, the fourth-place mobile phone company in the U.S. and similarly impotent. Even with their market shares combined, they'll still run third to AT&T and Verizon. The merged company might be able to improve its profitability by eliminating redundancies, but that's an ugly process. The "Sprint" name will be retired in favor of T-Mobile's branding, putting an end to roughly a 40-year run. Although I lost any personal connection to Sprint long ago, I would like to see the company survive. Something about this deal, however, strikes me as the new Penn Central.

"Trumpism on steroids"

Brookings has released a new thought-provoking piece on the economic and political consequences of automation. Among other sources, it quotes an Oxford University study that 47% of U.S. workers have a high probability of seeing their jobs automated over the next 20 years. The Brookings authors go on to say:

While some dispute the dire predictions on grounds new positions will be created to offset the job losses, the fact that all these major studies report significant workforce disruptions should be taken seriously. If the employment impact falls at the 38 percent mean of these forecasts, Western democracies likely could resort to authoritarianism as happened in some countries during the Great Depression of the 1930s in order to keep their restive populations in check. If that happened, wealthy elites would require armed guards, security details, and gated communities to protect themselves, as is the case in poor countries today with high income inequality. The United States would look like Syria or Iraq, with armed bands of young men with few employment prospects other than war, violence, or theft.

Wow. And you thought global warming was scary. It is, but so is this.

Wait, there's more:

With some workforce disruption virtually guaranteed by trends already underway, it is safe to predict American politics will be chaotic and turbulent during the coming decades. As innovation accelerates and public anxiety intensifies, right-wing and left-wing populists will jockey for voter support. Government control could gyrate between very conservative and very liberal leaders as each side blames a different set of scapegoats for economic outcomes voters don’t like. The calm and predictable politics of the post-World War II era likely will become a distant memory as the American system moves toward Trumpism on steroids (emphasis added).

I've written before that the election of Donald Trump was a confluence of several trends in America, one of which was a subset of the electorate justifiably angry about a lack of economic opportunities for themselves and their children — particularly outside the growing, affluent urban areas. Conventional wisdom says the U.S. doesn't manufacture much of anything anymore, but the statistics say the opposite: manufacturing in the U.S. is at an all-time high, in terms of dollar output. However, manufacturing employment remains low because technology allows more goods to be manufactured without more workers.

Increased productivity, as defined by economists, was supposed to be a good thing. And for people with IT or engineering skills who set up and maintain these highly automated factories, it is a golden age. But not everybody has an IT or engineering background, and even if everyone did, the number of jobs in those fields is finite.

Brookings describes a startling future when Americans become so disenchanted with low-wage employment in service jobs that serious political consequences ensue. I believe we've already seen the start of it. New import tariffs and threats of a trade war with China are political reactions to the distress of these Americans. Such tactics aren't likely to achieve anything positive and could actually make things worse. But if dystopia is to be averted, we need action of some type… better ideas and the will to implement them. Otherwise, the Brookings piece has an attribute of inevitability.

Picking a coach

More than three months after Alabama beat Georgia for the NCAA football championship, I love watching replays of The Pass. Gail once paraphrased, "You can take the boy out of Alabama, but you can't take..." In some ways I suppose she's right.

My in-laws in Georgia will have to indulge me. Watch it here, which offers eight different views. But the last of those views — ESPN's Coaches Film Room — is what I write about today.

Six NCAA coaches were on the air live, although the view of one was obscured. This screen capture was taken as the play developed:

And after the play was over:

If I were a high school football star about to decide which university to play for and all the offers were equal, the second photo tells me all I'd need to know. The guy with the smile is Pat Fitzgerald of Northwestern. He's a former linebacker, a two-time consensus All-American. I'll bet he is tough as nails during practice. But for heaven's sake, give me a coach who enjoys the game and isn't afraid to show it.

And he wins, too.

What electrical engineers do

Yesterday Peter Grünberg died in Germany at 78. Never heard of him? Relax, hardly anyone outside the physics community had, despite his Nobel Prize. The discovery of giant magnetoresistance (GMR) is just what the New York Times said: a unique enabling technology for many popular consumer devices such as the Apple iPod.

After the physicists had developed the theory of GMR, built a prototype, and published the results, the electrical engineers took over. The approximate sequence of events:

• The physical size of the prototype had to be reduced from several inches to about 1 millimeter.
• The component had to be designed for resistance to shock and temperature (within reasonable limits) and to have an in-service failure rate of something like 1 failure per year per 10,000 devices.
• The component had to be connectable to other components.
• A manufacturing line had to be set up that could make millions of the components per year, at a unit cost of a dollar or so, with less than 1 manufacturing defect per 100,000 units.
• And then the component had to be designed into a device like an iPod that consumers would buy by the millions, with a price and a cost that would make a profit for Apple.

Physicists (and mathematicians) and electrical engineers have complementary skills. Each knows something about the other, but each brings its own perspective. Physicists and mathematicians seek truth and beauty. Engineers seek practicality. As someone told me once, the definition of an engineer is he or she who can build for $10 a device that would take everybody else $100.

And there's another key difference: Grünberg and his French colleague Albert Fert were assisted by graduate students, no doubt, but the discovery of GMR is principally theirs. However, hundreds if not thousands of electrical engineers — almost all anonymous, outside their own employers — were needed to put GMR to work. And in the process, most of these engineers were organized into separate teams, each with its own specialty or assignment in the work breakdown structure.

During my undergrad years at Georgia Tech, I had to pass 8 electrical engineering lab courses. Three of us took all our labs together. The first guy was responsible for reading the lab assignment each week and prepping us for the steps to take. The second guy was responsible for collecting data during the lab and ensuring that the numbers made sense before we left. I was responsible for writing and submitting the report on time and answering any questions from the TA. This worked like a charm; each of us was good at our role on the team.

I hear that undergrad EE labs are no longer designed to force teamwork, and that's a pity. Teamwork is so important to adult success. You don’t have to be on an athletic scholarship to learn about teamwork.