" If you and other crybabies would quit complaining about Key West tourism and housing, then maybe this town would get back to what it was a few years ago."
And that was just the warm up first sentence of a nasty email I received from a local reader of this blog.
Being an opinionated person who thinks for himself, it never ceases to amaze me how many"adults" love to blame me for their crowd mentality decisions to buy real estate or business at market highs.
The person in the above email was blaming me and others like me (I am guessing bloggers such as Cayo Dave and Sally O' Boyle) for his badly timed purchase of a Key West business suffering declining numbers.
I wrote back to this person that I did not know who he was in real life, nor do I ever remember wrestling a prospective Key West business buyer to the ground and forcing them to sign a piece of paper requiring them to buy a business . . . or home . . . at a market top.
I've been asking this question a lot lately: "Where are the adults out there?"
When I lost a good deal of money in the stock market at the turn of this Century, I examined my losses in minute detail. I blamed myself for not having taught myself value investing at a much earlier juncture in my earliest years of purchasing stocks. Instead of learning the true value of a company, I simply listened to unabashed cheerleading of stocks by analysts who . . . unknown to me . . . had interests in "pumping and dumping" those same stocks to sell at a top.
For instance, back in the go go days of the dot.com craze, buy side analysts, i.e., cheerleaders of stocks who were making these incredible calls for "Amazon to go to $600" or "Qualcomm target of $1000", were usually from the same investment bank which had issued shares of the companies in which they were making such outlandish calls. There was no "Chinese Wall" between analysts and their investment banker brethern all in the same bank. Hence, the inbred and vested interests of all in the same bank were put above those interest of small investors such as myself.
Had I listened to Warren Buffet, Anotn Van Den Berg, Sir John Templeton, or any other of the great value investors of the 20th Century, who were warning in 1999 about the insane pricing of Nasdaq stocks and what would surely befall investors who believed they hype, I would probably have a million dollars in my trading accounts today.
The dot.com Bust was my expensive education in "following the herd" and listening to sharpies with "vested" interests in keeping a Ponzi Scheme alive where the "Greater Fool" is the next buyer of the overvalued asset in question.
How am I responsible for your stupidity?
If you, the writer of that nasty email to me, are reading this, I want to tell you what you need to do to cut your losses short: educate yourself and admit it is you, not I and others who are trying to help educate you, who is the baby.
I don't even know what kind of business you are in, yet if you were smart, you'd go to town learning how to market your services or wares better than you are doing now.
As it is, the bar where I work has just expanded our size in a major down market. And we are kicking ass in the biggest block of Duval by paying attention to details our competitors give no thought to.
Our hard earned "winners" knowledge has come at the expense of taking notes, experimenting, using the Scientific Method and Scientific Advertising to crush our competitors. You can apply these same methods to whatever business you might be in.
Okay, I'll give you one secret: use headlines in all your advertising . . . and test those headlines over and over to see which work best.
As the DJ in our business, I use "spoken headlines" which I've tested over the years to make our customers laugh, think, and then try out new features in our club, or come back 2 or 3 times a night.
Every winning headline is something I've documented by asking customers and my co-workers, "Are you back because of A or B?" "Did your client come back because of A or B?" "Am I repeating this headline too many times in a night?" "Am I not saying that headline enough?"
Many times, locals will come in and chat for a second or two and tell me, "Yeah __________ Bar is already closed . . . ." and here my bar, in the same business, is kicking ass with 130 people inside at 2:00 AM.
The competitor just down the block has no cover charge, beers are $2.00 cheaper than our place, and still, I keep hearing how they are going to kick our ass when they get their new addition open. In fact, the head carpenter on the property at this bar I'm telling you about recently told me how their new bar was going to "put us out of business." And then he went on complaining about how our drinks are overpriced, how he would never pay a cover to come in any bar in Key West, and so on and so forth.
And I thought, "Yep, YOU, may not want to come in our place, but tell that to the hundreds of people who visit us nightly and who are staying longer." The reason we charge our price (on the mainland stripclubs charge 4 times what we charge at the door, and many charge more for beer and drinks than we charge) is we offer a superior product which people feel no problem paying for once they've seen what we've got. Once you come into our club . . . especially if you visited our two competitors . . . you would gladly pay four times what we are charging at the door and more than what we are charging for drinks for now.
Put it like this: let's say you have a choice of visiting Sloppy Joe's tomorrow night to hear the best generic Classic Rock band on the island. Okay, they might charge you $3.00 cover. Meanwhile, let's say I've got a maximum occupancy of a club space down the block of 300. I hire this little band called the Rolling Stones who owe me a favor from the 60s. I charge $1,000 per ticket. I sell out and have people massing on the sidwalks in such big lots that the KWPD has to close off Duval Street while Sloppy's sits empty.
It's a case of getting your money's worth. Would I pay $1000 to see the Rolling Stones for four hours in an intimate bar setting? You bet I would. And millions more Boomers would do the same.
Hence, you get what you pay for. You can demand more for a superior product. In fact, I will go so far as to say our competitors are stupid in having cover charges only on weekends for the same entertainment you can see free on the other five nights of the week. We don't play no games at our place. We don't have "All You Can Drink - $10" or "Heiniken - $3.00 a bottle" nights or whatever. Why? We don't need to. We've got the best show in town with the best looking entertainers.
Our competitors in this town will never come close to matching our growing business until they learn the hard earned "secrets" of marketing our business correctly. The way they market stamps "Loser" all over their name.
I am telling you this because I not only know you can survive during down times, you can thrive too. I know this as my club is doing just this right now. If you want to succeed like us . . . or the successful mom and pop coffee stand owned by some hard working Mexicans I know and love . . . you simply have to go to school on your business and execute it better than any of your competitors. If you spen your energy whining about outside factors you cannot control, you will not be in busines much longer. Period.
I love competition
What I don't like is for expletive filled finger pointing email from an insecure business person claiming I and other chroniclers of Key West's current downturn in Housing and Tourism are the main reason for your suffering. That's so ludicrous that I laughed many times at your email and wondered how it is, yet again, that another Key West worker/business owner can't understand they are doing something wrong.
Look, I've worked with many good people in this town who got fired for disobeying rules and who made it hard on the good employees who always show up to work on time, sober, and who don't rely on drugs or alcohol to get through a night. Still, to hear it from these employees who were fired, or who quit and badmouthed our club and who now want to come back, you'd think their problems were caused by outside "bad people" who threw them under a bus somehow.
It's like you, you are blaming your bad business on bloggers and negative people from Key West.
If I knew who you were, I would bet I could walk into your place and see 101 things wrong which I would change immediately to improve business. I'll bet you are like 99% of all businessowners who don't even have a monthly, quarterly or even yearly personal message sent to your best customers.
And I'll bet you don't treat customers like clients. And I'll bet you don't know the difference between the word "customer" and "client".
As it is now, there are dozens of things in my successful nightclub which I would be doing differently. But I don't own my club. I can only make suggestions. But the difference between you, the writer of that ugly email, and my bosses of my club is that my bosses are risk takers who never stop innovating and experimenting with the way we do things. We do a little something differently every day.
Sometimes my bosses do something and I go, "What in hell are we doing that for?" And then their suggestion works in Spades and kicks up revenue and earnings another notch. And I learn from their successes as well as their disappointments.
On the other hand, sometimes I or a manager will over-ride one of the bosses decisions which doesn't work, and our change in format, lighting, position of tables, whatever, works better than the initial decsion our bosses made. My bosses don't fight us. They don't feel like we've slighted them.
From my end, I never, ever quit experimenting with spoken headlines pushing our benefits of our club and the whole entertainment complex. What I make look or hear simple, took many years of experimenting in seeing what worked. I also keep our music fresher than any club in town . . . and this includes the dance club down the block, the big bar which hires bands and has a DJ on break, the new hip hop club down by Mallory Square, and all the gay clubs in town.
My next new idea for music is to have cards printed up with our business logo and the words, "Artist" and "Title" printed on the face of the card with a "Thanks for dropping by, DJ Rock" printed at the bottom with my signature in blue. Now this may seem like a small thing to those of you who have never deejayed, but let me tell you, since we've opened up the new addition of our club a few weeks ago with the best sounding PA in Key West and a deejay booth which is more accessible to the public . . . our numbers of clients who come to me to ask the names of songs has skyrocketed. If I as a DJ can take a 60 year old man and turn him onto a new "Gabriel and Dresden" trance fan, I know I am excelling as a DJ. If I can write that on an officially pre-printed card, it tells clients that we are so cutting edge that we are constantly breaking the freshest music in town and going the extra step to provide them with the knowledge of this new music . . . no sweat to the DJ.
I am not the reason we are so successful in this market downturn.
A good business takes teamwork. I am but a cog in the machine. But our machine runs better than our competitors.
Most importanlty, we know what business we are in and how we can keep getting closer to perfection in the selection of our Number One asset . . . which I'm not going to discuss here.
But I am going to give you, the writer of the scathing email to me, another ace suggestion: you need to find your Unique Selling Proposition of your business. You need to push that top selling USP in all your advertising...
And you need to execute better at whatever it is you do.
Here are 13 reasons why off the top of my mind there are fewer tourists in Key West
Again, if you are the owner of the business who cried about your problems and blamed me and others for your downfall and the downfall in Key West housing and tourism, you need to educate yourself.
Here are just a few things you might want to think about:
1. Nationwide, this is shaping up to be the worst Housing bust since the Great Depression. No less an authority than Angelo Mozilo, ( and this blog's first Real Estate Weenie of the Week) CEO of Countrywide Financial, the nation's biggest lender for home loans, said last week this is the worst crash in new housing since the Great Depression.
CEO Angelo Mozilo of Countrywide Financial also said last week:
- The housing market will not "return" until 2009. (Note: In 2005, he said the bad Autumn figures were just a bump in the road and that housing would come back and take off again in 2006. In 2006 he said the worst of the "slump" was already factored in and housing would bottom by 2007. Now it's 2007 and the "Moz" is warning the "return" is not in 2008 but 2009. You see how his cheerleading has been revised time and again?)
- Alt-A borrowers with better credit than sub-Prime borrowers are "starting to miss payments at a higher rate". What the "Moz" did not mention is that Alt-A borrowers are now growing in default at a faster growth clip (percentage wise) than sup-Prime borrowers. (Famous economist Ed Yardeni called Mozilo's confession " the first piece of hard evidence that the subprime mess may be spreading.")
2. If you paid attention this past week, the Stock Markets in the USA all had 5% or greater losses for the week. For the summer, retailer and restaurant stocks have been particularly hammered.
This past Thursday was a big down day. The news which moved the markets downward that day was new home home sales fell 6.6% this past June and that the National median price of all homes has fallen 2.2%.
(Please pay attention to the Key West's NAR sponsored ad in today's Key West Citizen . . . which I will run out and purchase in an hour or so . . . as it will contain the ad with many bullets of lying "facts" to get you to buy Housing today and which they have been running for months without any corrections whatsoever . Among their "facts" is housing median prices are going to go up this year. Never mind the new reality of numbers coming out of the Fed and elsewhere.)
3. America's Gross Domestic Product, or GDP, has been kept alive by the almighty American Consumer who has maxed out credit cards. We are a nation of negative savers and Nationwide consumer debt is at an all time historical high.
4. America's GDP has been kept alive by consumers tapping into what seemed a few months ago was an inexhaustible Housing ATM. Now, however, with declining home prices, many consumers owe more money on their home loans than their houses are currently worth in a declining market of prices. They are "upside down" on their loans.
Realizing that EZ Credit, Liars Loans and Home Equity Loans are drying up, you will begin to understand another important reason for the disappearing tourist: You cannot borrow from your house by refinancing yet again if your $555,000 starter home is now only worth $400,000 on today's open market. There's just no way it's going to happen. Hence, the "wealth effect" is turning into a "poverty effect". And when Americans can't borrow more to live a lifestyle they are accustomed to, they cut back on expenses.
One of the first things to always go is that "expensive" vacation far from home. Instead of Key West, well, if they are in Virginia, they might do daytrips to the beaches up there, Busch Gardens, Kings Dominion, etc. Vacationing close to home is the new reality this summer. Just read USA Today.
5. Margin loans for stock purchases are at an all time high. The majority of this margin (as documented in Barrons Weekly last week) in this market has been used by big time funds and firms, not individuals such as myself. This is a reverse from the days of the NASDAQ wipeout in 2000. Back then, everyone you knew was margined to the hilt and we were all going to become millionaires because "it's different this time."
Why is this larger misuse of margin by Wall Street important to understand? Because Wall Street uses black box modeling to buy and sell stocks. Hence, future downturns are likely to be more dramatic than past volatility if a panic to sell ensues. Firms selling millions of shares of an issue their black box says to sell will play havoc with our markets, crushing stocks which are assigned to companies which use Crack Cocaine Accounting.
6. Leveraged hedge funds are using Great Depression type margin of 10 to 1 or 15 to 1 on their overexposure to deriviatives in stocks, bonds and especially mortgage backed securities. A few weeks ago, we saw the first pop in Hedge Funds when Bear Stearns saw two of its hedge funds become basically worthless as their over-leveraged bets on Mortgage Backed Securities dressed up as CDOs went wrong. If you were a big investor, say a doctor, lawyer, or CEO of a company, who bet millions of dollars by handing all of your investment money to either of these two Bear Stearns hedge funds, today, you have nothing.
7. Peak oil is a certainty. And more oil is becoming nationalized while 3 billion new Capitalists are helping demand outstrip supplies. I feel $100 a barrel oil is just around the corner.
Goldman Sachs recently said they feel $100 a barrel oil will happen in the next 2 years.
Matt Simmons, respected oil analyst and writer of "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy" was quoted this week on Bloomberg TV saying he feels $200 a barrel oil is going to happen sooner than most analysts think. As oil prices continue to increase (we are only $1.00 and change away from another all time high) people see "vacation" drives or boat excursions as some of the first "expendables" when looking for ways to cut expenses from their housing budgets.
7. Boat repossessions in Florida are at an all time high. Inventory of used and new boats in marina yards are at an all time high. If you own a house, a car, and a boat, the first thing to cut loose is the boat when you are a strapped homeowner. Stocks for boat manufactureres are down 60 to 80% across the board. This is one durable goods sub-sector of the stock market which is actually in the crapper with homebuilder and lender stocks.
8. Last week a front page article in the Key West Citizen told of Scientists discovering raw sewage in the waters of our reefs. As documented on this blog and others by first hand observations, our reefs are dying quickly. Complaints are numerous on sightseeing snorkel trips to Sand Key and other nearby reefs which now look like moonrock instead of the heatlhy colorful coral which was flourishing and protecting many fish species just a short 15 years ago.
9. In 2004 and 2005 we had 8 hurricanes brush or directly hit the Keys. If you don't think foreigners and American tourists who lost deposits due to forced evacuations haven't traded stories on Internet travel sites, then you simply ignore one of the best "free" business research methods I know for any business anywhere. Find out what people are saying about our product or service. Go online.
10. Foreigners hate George W. Bush, and right now, America is the nation most feared on the planet thanks to an uncompromising, stupid, foreign policy directed by corporate policy. There has never been a time in my life where "The Ugly American" has been bigger in Foreigners minds. Thanks to Neo-Cons expending all the 9-11 good will the world sent our way, we no longer are a country where foreigners feel wanted, nor do they love us for our meddling in other countries.
11. As jobs get tighter in Construction due to the fall off in housing starts, you will hear more and more calls to boot immigrants out of the country. Indeed, without the immigrant workforce in Key West, whether illegal or legal, this town would fold as more businesses would not be able to find Americans who are willing to work for minimum wage or thereabouts.
11. Minimum wage increased, by law, from $5.15 to $5.85 just recently. This time next year, that will rise to $6.30 per hour. Two years from now, minumum wage will be $7.25. (Senator Ted Kennedy is calling for a minimum wage of $9.50 by 2009.)
This is the fastest rise in minium wage ever. And this will pressure inflation of prices on everything you buy at the store and if you own the store, from your suppliers. As minimum wage forces more cutbacks on businesses everywhere in the USA, unemployment will rise sure as the sun rises and sets every day. Get ready for massive layoffs and further rising prices.
12. The goverment has inflation clocking in at 3%, give or take a few percentage points. However, Austrian school economists see US inflation running at a current real rate of 8 to 10% at this time in history when oil and food stocks are seeing double digit gains in prices year over year for the past four to five years. Tell a local cab driver that "inflation is in check" (as the Fed would have you believe) after he or she has to fill up their gas tank at the end of every shift with Key West gas which costs 100% more than it did not even three years ago.
13. Lastly, fewer hotel rooms are on the market. And the new ones coming online will cost more to stay. Look at the Santa Maria condo/hotel. It is empty during the week. Its $400 a night rooms draw no buyers while a half-block away, rooms going for $150 at any of six smaller motels are busy. Although there are plenty of "vacancy" signs all over Key West . . . even during season this year . . . the hotel and motel rooms which are more reasonably priced were selling out during high season.
This week, the Key West Citizen ran a front page photo of the demolished Atlantic Shores with accompanying story of rooms which used to cost $175 during high season tells us the new prices of the new rooms will go for more than double.
Question: Do you think the owner of the Atlantic Shores is doing the right thing when he could simply look right across the street at those empty Santa Maria condos which aren't renting during the week?
A price wall has been hit. $300 to 400 a night in Key West is way too much. Tourists are voting with their wallets. A room is a room. You don't come down here to spend all your money on a room which sets you back 3 or 4 C notes a night. A room doesn't entertain you. It doesn't get you actively invloved with our beautiful outdoor surroundings. Who needs to overspend on a room when you can rent cheaper digs and use the savings to buy a four course meal at one of our 5 star restaurants, or pay for a couple of jet ski rentals for a few hours?
. . . and there are other factors I could quote to you, Mr. Whiner, the writer of the nasty email to me.
But I feel just these few facts I've stated to you will go right over your head. You strike me as the type who expects riches to come to you easily, as long as observers of failing economics will shut their mouths and not try to to warn others of the new reality. By blaming me, instead of market and ecological forces, for your downturn in business, you show an immaturity that sets you up to be fleeced by moneyed people who study markets, marketing, business and money.
All I can say is "educate yourself".
Smarten yourself up.
And always question authority.
Especially question those who look at you as their next commission check.
And don't believe a damn thing coming out of the mouths of our politicians . . . especially this dangerous bunch in power for the past 7 years. These guys have set you up . . . and tens of millions more hard working Americans . . . as their fall guys by using your ignorance against you.
Blame me all you want, but if you persist in your stupid prejudices and short sighted opinions, you will only continue to wipe out your wealth.
Be a man. Look yourself in the mirror. Admit your mistakes. I didn't bend your arm to buy your business in a declining tourist market with the worst Housing Crash since the Great Depression while oil and food prices are skyrocketing. I am not the cause of your pain. You are.
'Nuff said.
p.s. Buy any number of books from either Gary Halbert or Dan Kennedy on marketing. Put their smarts to work for you in your business. Quit blaming others for your immaturity and sloth.
1 comment:
Thank you for the nice post.
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