Whose ringing that cash register, Tom Bozzuto?
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Mr. Tom Bozzuto, local builder, came by today to discuss business in the crazy modern era. We talked about general business, building, leasing apartments, The new Silent Depression in America, now come, finally to Washington, the future of city business, cash registers and how they get rung, and likewise how they don’t get rung, what a welcome mat should say–and what it should never say to your guests, Starbucks coffee and of course, old Sam Walton~who likewise stopped by for a coffee and a talk about the insuperable importance of a smile in business.
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~Mr. Sam Walton~Guest Emeritus
Mr. Thomas S. Bozzuto~Guest
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John Daniel Begg~Host~ Father Joe~Referee For The Church~
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Good morning.
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Today, we’re happy to have Mr. Thomas Bozzuto with us.~~
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Mr. Bozzuto, The Bozzuto Group CEO, runs a local Washington construction company.
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Tom has sent a note which asks a very curious question for a construction man.
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“Are we building too much?”
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Quick answer~it depends, doesn’t it, Tom~upon what you are building and where?
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The longer answer follows.
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The group thanks Mr Bozzuto for his note today, the gist of which can be followed here, on Tom’s company blog
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http://tom.bozzuto.com/2012/are-we-overbuilding/#.UxtrWfldWh
~In his blog, Tom expresses a very serious concern for young people coming out of school into an economy in which there are no ready jobs–most particularly good jobs.~
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~Tom writes in his blog that “My answer to my own question is this~~we are not overbuilding~~we are creating insufficient jobs.
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Well said, Tom. Moreover to our mind here, it falls to businessmen to create these jobs as government is more of a nuisance than an assistance in that job creation process.
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As for the group here, I’ll say that~~Beyond the short answer given~~that “it depends what you are building and where, Tom”~~there are a number of more complex, largely demographic, issues we can have a look at now.
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In some respects, America is massively over built, but that rather misses the point of today’s discussion~which is about other things.
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Let’s first have a look at this issue on a Macro level, Mr. Bozzuto.
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First and above all note that the Silent Depression that has hit all of America since the Panic of 2008 has finally hit Washington!!
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You see the signs everywhere. Washington is the font of all money in America, but Washington has overplayed its hand~~there is no money left.
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*Anybody familiar with Washington business culture knows that means a lot of businesses are going to go under.
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*The incumbent government won re-election largely on successfully selling this notion:
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“We kept America from going into another Great Depression.”
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*This is a very convenient claim as it can be neither proven nor refuted.
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*But is it true?
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*What I mean is~~is it true that we are not in a Depression?
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*In fact, there will never be another 1930’s era Depression, but there are other sorts of Depression as well.
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*Today, we have in America, what Tom, Sam and I have decided to call America’s new Silent Depression.
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*What is a Depression?
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*Economists define Depression as a combination of collapsing prices and mass unemployment.
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*There has been absolutely no inflation in America for 6 years~~none.
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*Reciprocally, there has been sustained and intractable unemployment and more so, underemployment, for 6 years.
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*I can tell you that the Federal Reserve is in a state of full-blown panic–The Federal Reserve considers flat zero inflation for their purposes as being 2%.
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*Do you know what the inflation rate is in America, again in the Fed’s own terms?
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*It’s 1.5%.
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That’s bad~~really bad~~it means something the Fed calls “negative inflation.”
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And worse yet~~
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*It won’t budge.
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*We all have been taught to hate inflation but some inflation is desirable, even necessary, in a healthy, vibrant, bustling, economy.
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*A bit of real live inflation is a sign of America’s economic pulse.
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*Right now, there is no heartbeat at all.
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*The Fed admits that it is desperate to pump some inflation into the economy, but nothing works.
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*Despite all the spending, there is no inflation–there is no pulse to the patient.
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*I contend that America has been in a Silent Depression since summer 2008. I contend that the Fed knows this and is frantic.
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*The reason that politicians can successfully place bets on the notion that they have saved us from another Great Depression is that Americans have locked in their minds graphic pictures of that dark passage from the 1930’s and somehow this doesn’t seem that bad.
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*The reason it doesn’t look as bad is that now we have in place social safety nets, buffers against the pain.
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*We did not have such things in the Great Depression.
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*Thank God, now we do have these safety nets.
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*But, I contend that safety nets lull the Americans into a false sense of security.
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*We think that~~Oh, Well~~We are in a Silent Depression but it is not really bad like in the 1930’s.
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*In many ways, however, this type of Depression is more serious, more insidious, more invidious, than the Great Depression.
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*This is terrible news for businessmen.
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*Why?
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*Because, businessman need a healthy middle class society to buy products and services.
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*I am afraid that we have created a new, very populous and habituated poor class~~and that is terrible news for businessmen.
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*Where will we get our customers in this new poor class?
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*We won’t.
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*This is of salience to Washington businessmen because the Silent Depression that has wreaked havoc on America for 6 years has finally landed at Washington.
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*America is fast turning from being a solidly middle class society into a majority poor class society–and this has happened almost overnight–since the Panic of 2008.
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*Washington is supposed to be immune to downturns but, in fact, the Silent Depression is now here.
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*Everything and everybody at Washington is tied, directly or derivatively, to government money.
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* This is why 7 of the top 10 richest counties in America~~and all of the top 3~~ touch the place where this discussion today is taking place~~floods of money from Mother Washington.
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*Now, that money has simply run out. Mother Washington is broke.
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*Things are going to hurt for a long while here.
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*Let’s assume Tom, that we get out of the Washington Silent Depression alive, OK?
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*Now, comes the bad news.
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*The worldwide trend toward moving back into the city from the suburbs and beyond has been noted by many over a number of years but that trend is starting to take on critical mass.
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The young, in particular, want to live in cities for these reasons:
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*It’s hip to do so.
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*Reciprocally, it’s not hip to live out in the woods.
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*America’s love affair with motor cars has been over for many years and awaits only a final, absolute, writ of divorcement.
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*The young want to live nearby everything they do and likely in the very near future will not own motor cars at all~they will simply rent them as needs must.
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*This alienation of affection from motor cars is easy enough to understand~to drive a motor car makes one a moving liability on every possible level one can imagine.
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*Specifically, motor cars are expensive to buy, maintain, fuel, park and turn over when you want to sell.
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*Young kids today are not of a mind to spend in excess of an extra one-half day’s work commuting to and from work.
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*The young want a reliable Metro and bus system at their doorstep that will take them to work and back and also to cultural and nighttime events and take them back home again after, without a care in the world as to a drink/drive citation.
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*The young want to bound back out of the train or bus and go upstairs to bed to repeat the same process in the morning.
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*First, middle and last, it’s hip to be living in city.
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What does this new dynamic suggest for our Mr Bozzuto and others, whose work and business will be so markedly effected by this in-migration to the cities?
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A number of things come immediately to our mind, Tom Bozzuto.
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*At this point, Tom, let’s switch to the retail end of the building business and have a look at the leasing business after a residential apartment building has been put up and onto market.
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Here is a Micro picture to complement the earlier Macro painting of the future.
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*Land of all types in city will become extremely expensive and the demand for new infrastructure and supporting systems will be intense.
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*Many of the now desirable places to live, at Washington and elsewhere, are quickly losing their allure.~
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Upper Connecticut Avenue at Washington, for example, Washington’s old line correct address, is going through a confusing and harmful metamorphosis for those unprepared for the changes.
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*One of the things that Mr. Bozzuto and others in his line have got to understand in the front part of their brains is the extent to which the young live in a digital universe, which frequently has changed and moved on, by the time Tom and I get to master today’s rules.
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*The young demand instant and ready access to city amenities, their social media and the knowledge that it brings about all sorts of things–including you–at the press of a button.
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*Either apartment house or office, if your operatives are not prepared to offer these things the younger set wants~~prepare to learn about them–Fast– or perish~it’s that simple.
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Somebody’s going to give that to them–will it be you or somebody else?
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*Somebody who is awake is going to make a great deal of money playing the right cards in this new game–do you want to be that guy?
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*Many of the apartment buildings in the older and established neighborhoods in cities are managed by companies that haven’t a clue what is being discussed here today.
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*Content as many such are to rest on inherited royalties from the past, I watch them dying on the vine.
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*Their business models are 1950’s American military and government~~file papers, file more papers, count paper clips to be sure none are missing, strut around the office trying to guess how to be a boss, and, as an afterthought, tend to prospective clients and to retaining the ones have now.
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*All this works in the military and the government of course–because they get paid by the citizens of the United States.
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*Businessmen and their workers get paid to produce–product, services of various sorts–in a word to ring a cash register–to make sales.
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*Allowing your on-site sales force and managers to adopt this attitude that they are military or government men is death to a business.
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*If you are the owner, it’s down to you to change that dynamic as it was you who permitted it to develop in the first place.
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*Before we look at a little case study in microcosm, of how not to do business on the retail end of a residential leasing operation Tom, let me say that I am conversant with mergers and acquisitions, arbitrage, leveraged buy-outs, most derivative new financial instruments and private equity.
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*In the instant case study we will now explore, this sort of market knowledge needs to be front and center as the backstage purpose of the owners is to fatten up the calf for slaughter and sell her at market–Fast. Pronto. Quick.
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*There is in all business a sad and silly vanity that one gets rich by being cheap.
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*As with all vanities, that is misguided.
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*Most particularly misguided if you are trying to fatten the calf for slaughter, because being cheap is cutting your own legs out from under yourself as you go in for what should be, a gimme a lay-up.
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*I understand this concept of fattening your calf for sale and slaughter and now let us consider our test case in that light, although I must say that if your objective is to blow a place out and dump it on an unsuspecting buyer, you chose a helluva time to do that as the residential apartment business at Washington gets tougher by the day.
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To throw gasoline on the burning building, the owners have been desperate to dump this property for over 3 years. The Washington market has been soft for years and so–no go.
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Now in the Washington market, most particularly in upper Connecticut Avenue residentials, we are in an Ice Age~~frozen stiff~~no customers to live there, no buyers to sell to~~no demand of any kind.
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I understand, these guys are frustrated, they’re trapped, they are increasingly desperate as it becomes apparent to anyone that this place is a white elephant~~you couldn’t give it away~~so what do they do?
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Well, they do what businessmen always do when they are panicked, they act rashly and act really stupidly.
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Somebody tells them a bit about finance in crisis~~about arbitrage~and recommends that they slash costs in order to sell~~bad move–the worst move.
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They dump the management company as a cost cutter.
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The management company is Washington-based and knows the markets here ~~they are, frankly, very happy to leave the sinking ship.
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Then, things get worse.
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Much worse.
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Right now at Washington, all the upscale rental units are being overrun by out-of-state management companies who don’t bother to do research on the very peculiar ways of Washington rental law.
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These rental laws are no joke~violate them and you end up in front of a judge~~and then, because you are a white guy in a suit~~you lose the case~~you always lose the case~~always.
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My intimation, Tom, is that these big outside companies are moving into Washington so aggressively because they anticipate the very reverse migration back to the city that we have discussed here today and they want to be positioned to profit from it.
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That idea is fine and good but it fails to anticipate that in order to get to the promised land later, you have to wait out the just arrived Silent Depression at Washington.
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This Silent Depression has been creeping into Washington now for about a year but frankly, an outside businessman who wants to take advantage of what happens after the Silent Depression is over, can be forgiven for not having anticipated having to wait out the Silent Depression in his longer-term business calculations.
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How could he know, he is stranger here, he doesn’t know this city, he doesn’t have his ear to the ground here, listening for the hoof beats, listening for the trouble?
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Now what about our little guy who is caught in a jam and can’t sell and can’t get out~~nobody is moving in and residents are moving out~~he’s frantic, of course, I understand~~so, he keeps making dumber and dumber mistakes~~hoping they will work~but we know dumb mistakes rarely ever work.
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I say~~in theory, in arbitrage, there’s a back door out through which, you blow out the place by dropping the price until it finds a buyer, in theory.
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But that won’t work in the instant case–you can’t drop the price until it meets a buyer, there are only sellers–you can’t give your calf away.
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You can’t even backtrack and hire a Washington-based manager~~the word is out on the street–nobody will touch you.
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It’s your move, what do you do? Decide.
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*If you seek to build up and then blow out your property on Connecticut Avenue, you had best be a very good swimmer as the tide has turned in Washington economics and you are headed into a merciless uphill current that grows more savage and torrential with each passing week.
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*I say–you’ve only one shot here~~forget about arbitrage–forget about fattening the calf in order to sell her for slaughter~~nobody wants your calf and nobody will for a very long time.
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*So–be SMART–do the best you can–run the place like a real business and not something you want to blow out.
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Let’s take a look about how best to be SMART now, given the unpleasant circumstances~~you really haven’t any choice.
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*Let’s look at how your employees operate on the ground–with full knowledge that they don’t even know your endgame objective is to sell the place.
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*So tone-deaf are these out-of-town, corporate-based Washington residential management companies, that they don’t understand the rudimentary principal of business called a “loss~leader.”
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*Recently, I encountered a company that, on taking over management of a building they own on upper Connecticut Avenue, openly bragged to their main office about having taken away the Starbucks coffee service in the lobby as “we have to stop “spoiling the residents.”
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*First off~~think of this–the residents and prospective residents of an apartment building are offered amenities, such as Starbucks coffee and other treats, as an inducement to sign a lease with you.
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*This is why the Starbucks coffee is a classic loss leader~~you eat the small loss on the coffee to help you get to your bigger goal–to make the sale–to sign people up to live in your building–and after that to give them their coffee treat as an inducement to stay with you.
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*The existing residents get their Starbucks in the morning in an attempt to pamper them so they won’t leave.
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*Speaking of loss leaders–do you know yourself, do you even think yourself~~how much good will did I just lose by alienating my customer?
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*You saved me pennies and cost me uncountable dollars in lost goodwill that can never be bought back with my current customers–who expect to have their Starbucks in the lobby tomorrow morning.
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*Don’t do that again and if one of your retail managers does that again~fire him and be prepared to teach your people the lesson of why stealing a cup of Starbucks coffee is such a bad business move.
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*Having discussed Starbucks and its importance in selling young residents, let’s ask another question~
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*We realize that the apartment leasing trade doesn’t typically get much notice from Hav~ad men but then–it doesn’t need to.
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*Yours is a very, very simple business–no brain surgery here.
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*If your employees have not been trained exclusively to pamper, cajole and smile along with the residents and prospective residents, teach them to be, and their failing at learning that, fire the lot of them.
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*Far too many in retail outlets view their customers as annoyances and enemies–instead of being their bread and butter.
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*Again, somehow, your workers either learned, or adopted without being questioned, this attitude of hostility toward their customers.
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*Whatever the reason that terrible business practice exists on the ground, it had better get corrected and quickly.
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*As we have considered our Starbucks coffee, let’s have a look at an even more serious question:
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*Whose name is on your welcome mat and why?
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*It is amazing to me that the corporate owners of a residential retail property would toss out the old welcome mats adorned with the name of the property and replace them with mats adorned with the name of a distant corporation nobody has ever heard of and about which nobody cares.
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*Do you even know why this is so stupid–well, do you?
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*An apartment house is your home if you are a resident.
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*You live there.
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*You don’t live in some distant corporation.
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*You live in your home.
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*The place has a name~~use it.
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*On many levels, tossing out the welcome mat with the building’s name on it is even stupider than getting rid of the Starbucks coffee service.
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*Ask yourselves–what is my agent selling to customers on Connecticut Avenue–the building in which they will live or some two-penny corporation 2 thousand miles away?
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*On a larger level, it is the responsibility of the owners of the building to teach their employees what they ought to do on the job.
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*Old Sam Walton used to say~”if the sales force is not selling, they ain’t been taught right~teach ’em right.”
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*If you teach employees that pleasing the home office is their job, or that finding new ways to be cheap for stupid reasons gets them happy reactions at corporate–that is what they will do.
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*So teach them properly. After all, if your people think that being cheap is a great business model–you taught them that–how else did they learn it?
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*If your corporation is top-heavy with worthless low-level managers~that’s your fault~~you taught your people wrong–and today, there is no room for error and lying around resting on aged reputations.
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*Consider that a young girl in Tokyo can find out more about your company and it’s reputation than you likely know yourself in 20 minutes.
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*Kids today are fast, agile, and informed beyond most men’s comprehension.
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*Most of your office staff is as clueless as you are about the future of business in the city.
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*Owners, Consider~~In your retail leasing offices~~ think~~these kids I have deployed there have missed the last bus out~~the residents are your bosses–your only bosses–they can be as spoiled as they want. Better learn this and teach it to your people.
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*Apartment building leasing business is the simplest business on earth.
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*People need a place to stay, you provide the place in exchange for cash. That’s it!! Nothing could be simpler.
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*So, why is it so difficult? Again, any failure of your people to grasp the simple dynamic of business is your fault for not teaching them and demanding that they follow the rules.
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* Any apartment management company that does not, front and center, tell all its employees this and only this every day does not deserve to survive and cannot survive~~
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” We exist only to rent apartments and keep our guests happy. All our pay derives from that source –ALONE.”
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* One hears of a great deal of swaggering around in these buildings by staff fixated with the question of “who is in charge of whom?”
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*One sees the dynamic whereby apartment leasing companies are bloated or top-heavy with layer upon layer of low and mid-level managers and have little money generating workers.
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*Managers add nothing to corporate profit sheets~~in fact they are all net liabilities.
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*The only employees who matter at all are the leasing agents–they bring in money–everybody else is merely support staff to the leasing agent.
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*If you are an owner of a management company ask yourself this question~~How much money did my managers bring to me this week? That’s they only question. If they didn’t bring you any money today, train them differently or get rid of them.
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*Teach all your people~~ the ONLY job in an apartment retail office is renting space, pleasing the residents and, when they leave, replacing them quickly~~all the while SMILING~~always SMILING~
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*When your people ask~~who gets to be in charge here–answer them–the residents and prospective residents are the only ones in charge here–nobody else~
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*I’ve noted in my life in many retail environments that the singular purpose that most employees have to become a manager is to avoid doing any real work and above all to avoid contact with customers.
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Such employees aren’t suited for a retail job.
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*Owners– Teach your people the rules of retail selling, not the rules of management~~and judge them solely on that capacity.
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*What have we learned here?–we have learned that the sole source of income in a residential retail space is our customers~
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*Again, today, we have a world rapidly changing–effecting every business–nobody can hide under the desk–embrace the new world or die in the old one.
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We have this remarkable reversal of the post-war boom out into the suburbs and beyond. Millions will be moving back into cities–are you prepared for them–are your people prepared for them?
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*Mr. Bozzuto is very prescient to say that we have a new baby boom coming out of school and I ask him as a builder and the management companies that run the new buildings Tom builds to consider:
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*This baby boom is very different–are you aware of these trends discussed here today, are you prepared to train your front line people to deal with them or are you going to die?
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“Am I even aware of this remarkable demographic shift back into cities and am I prepared to learn what the new kids on the block want as far as amenities and living space and make keeping up with that knowledge priority ONE for all my employees?”
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Any builder, any building manager, who does not put these questions front and center will die quickly and deserves to do so.
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Mr. Bozzuto is to be applauded for his comments in the press services that when he is congratulated for his successes, he never fails to mention that “without my employees, I can accomplish nothing.”~
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*What we have discussed here today is on mark with Tom’s comments and we go a bit further~
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*Yes, a businessman is nothing without good workers–but it is imperative that the top boss and his executives take great care to teach those workers properly so that if those workers are asked by the press services how it is that they do such a good job when so many other companies fail to do that–they will say~without hesitation~
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*”Without the customers and guests, I could accomplish nothing.”
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*Just don’t say these words, believe them.
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* So we see how, appropriately, that the message moves from the corner office to the retail work site~
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*Tom relies on and appreciates his people~~and his people in their turn rely on and appreciate~
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*Their customers and guests.
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*All the workers realize that nothing moves without friendly, helpful, workers who understand who butters their toast.
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*Tom does not butter their toast–the customers and guests butter their toast.
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*Taking this lesson to the instant case today–this means:
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*For God’s sake have a welcome mat that says the name of the building in which your guest, you hope, will live.
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*The building is what, you hope, will be the name of their future home.
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*Smile–a lot.
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*Give your customer a nice cup of coffee and make him feel like a welcome guest as you tour him around what you hope will be the new home that guest will choose.
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*No hard sell–people hate the hard sell–make your property desirable and, if it fits his price and needs–it will sell itself.
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*SMILE some more.
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*Lets, finish with this for now, Tom Bozzuto.
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*When Sam Walton was an old man and a billionaire still driving his red pickup–he would go to surprise visits at his Wal-Mart stores and he went, not to scare and torture his employees–he went to teach them.
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*What did he do to teach them? He always went~~first thing~~ onto a cash register.
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*Sam’s message~~the only reason we are here is to take care of our customers~~NO other reason.
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*For owners of residential apartment buildings–here is the message for you:
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*When line managers would complain to Sam Walton about line workers he would say “Yeah, well, they ain’t been taught right–teach ’em right.”
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*If you are an owner and your line managers don’t know that the sole purpose of a retail shop is to ring cash registers–that’s on you–the owners.
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*You didn’t teach them right.
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*If your managers shuffle papers back and forth on computing machines all day instead of being solely dedicated to ringing cash registers, that’s again–on you–the owners.
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*The workers will do what your teach them to do. Teach ’em right.
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*If you taught them to shuffle papers on a computing machine all day instead of working to ring sales–you didn’t teach ’em right.
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*So teach ’em right.
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*And teach them always to SMILE!!~~people don’t smile very much these days and if you smile, you are miles ahead of your competitors
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*Teach them about sales–what to do–what not to do— in order to get the cash registers ringing.
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*Learn this lesson, preach this lesson to your workers and do not tolerate any behavior that does directly lead to the ringing of a cash register.
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*Old Sam Walton knew the only real lesson of business~~yes, Tom Bozzuto, times are changed and will change a great deal more~~but we know that great change always equals potential great profits to those who think properly.
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*Remember that the adage to the young man is not study and grow rich or go up to Hav~ad College and grow rich, but rather:
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*”Think and grow rich.”
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*Lets all resolve to think about the things we have talked about here today and to let our thinking guide us to profits–as profits are the only legitimate reason for being in business.
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*So, think and encourage your people to think about these things just now discussed.
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*When you and your people open for business every day, remember that, in fact, only the demographics and techniques have changed~~in fact, the only question of business is and ever is~~
How much money did you make for me today?
Jack Begg
Washington, DC
9 March, 2014~~
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- The rich man ought not be taxed at all~~he ought be compelled to employ and train the poor man~~directly~~
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~~Bene Nati, Bene Vestiti, Et Mediocriter Docti~~~
~~La crema y nata~~
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~~Artista de la conquista~
~~In sunshine and in shadow~~I hold tight to the Republican view of time and money~~I write night and day~~yet~~while impecunious~~I am vastly overpaid~~in that taking pay to do what I love is unfair~~to my employer~~in a fair system~~under such circumstances~~I should pay him~~not he me~~I am far, far too old a man to be sexually confused~~praise Jesus~~but I am yet young enough to be politically confused~~is anyone not~~in an absolute sense~~I am a Catholic Royalist~~in a practical sense~~I am a Classical Liberal~~a Gaullist~~a Bonapartist~~an American Nationalist Republican~~in either sense~~my head is soon for the chopping block~~to hasten my interlude with Madame La Guillotine~~I write without fear~and without favor of~any man~~~Non Sibi~~Finis Origine Pendet~~~Κύριε ἐλέησον~~Rejoice and Glad!!
Amen~~
~The Original Angry Bird~~The Catholic University of America Screaming Red Cardinal Mascot~~
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