GM = Government Motors?

Someone hypothesized that with the U.S. government as the majority shareholder in General Motors, it is inevitable all federal vehicle purchases will be made from the same. I disagree with this notion, for a variety of reasons.

First, federal procurement regulations would have to be changed by an act of Congress, something that no politician would do at this time, given the public condemnation of bail-out funds. The regulations require that a Request For Proposal be drawn up delineating relevant requirements, and the lowest-cost bidder who meets the specifications will win the contract. Sure, there are those who would point to Halliburton's no-bid contracts in Iraq, but those RFPs were structured in such a way and with sufficient specificity that Halliburton was the only viable company that could meet the specs. I doubt that a request for a vehicle could be tailored such that GM is the only vendor with a product that passes the bar. They have competition in every segment; and those competitors have lobbyists too.

Second, President Obama himself has stated publicly that GM will have to survive through product development, pricing, and promotion. A sweet-heart deal with the government would only serve to hinder their progress toward building desirable automobiles. It's a well known fact that when presented with a captive market, there is no incentive to improve quality in all its facets (fitness for use, quality of conformance, and specifications). Competition has marked the forward progress of product design since the square wheel and competition will save GM.

Besides, everyone is already dealing with the firestorm of health care reform and I doubt that any public official is ready to launch another stimulus plan, covert or otherwise, to the automotive industry.

A burning issue

Last night, Ranjan was discussing the business-speak that will be required of the class and in particular he mentioned "burn rate" as part of the lexicon to be acquired. His remark triggered a thought, a concept of two very different burn rates.

It's July 1969 and humankind for the first time has extended a slender thread to another planet. Neil Armstrong and Buzz Aldrin, cocooned inside a paper-thin, foil-covered polyhedron known as the Lunar Excursion Module, are using a computer with less processing power than an iPod to land at the Sea of Tranquility. When Armstrong looked down on final descent, he saw that they were about to crash into a boulder-strewn field. Taking manual control, and with Buzz Aldrin calling out altitude and velocity numbers to monitor the burn rate, Armstrong piloted the LEM over the rocks and touched down safely with 25 seconds of fuel left.

Fast forward to the year 2000. A group of Internet entrepreneurs have secured $260 million in venture funding based on a business plan that offered to deliver practically anything ordered over the Internet by bicycle messenger. Kozmo.com was a revolutionary concept, one that promised to change the way that people have engaged in consumer transactions since the formation of money. Arrogant and idealistic, the founders, both investment bankers, were salivating at the prospect of an IPO. They were calculating their net worth, even when the company was losing 10 times its revenue. Regardless of the massive burn rate, they spent substantial sums on company parties, treating their 4,000 employees to lavish extravagance. Their dreams of a house in the Hamptons died on April 14, 2000, the day the Internet bubble officially collapsed. When the company folded, they returned a mere $15 million to their creditors and equity holders, leaving them smashed on the crags of business failure. As to the founders, Joseph Park and Yong Kang, they landed safely. Park founded another web site, Askville, which was bought by Amazon.com and Kang has returned to his roots as an investment banker.

While dramatic nonetheless, this view of "burn rate" pales in comparison to that airless day 40 years ago.

Introduction to Me

This blog will journal my experiences, thoughts, ideas, and opinions that may erupt with Krakatoan ferocity as a result of BUS 501 - Business Perspectives, a graduate class taught by RonJon, the famous surfer from Cocoa Beach, Florida. But is he really a famous surfer? Can any "celebrity" surfer reside on the Space Coast? The coastline south of Canaveral is all beach break, with gentle waters lapping at the shore like an old hound dog at the creek; there are no curls except when a Category Three rolls up from Nassau. I think I'll call him Ranjan, the business Doppelganger of RonJon, a man who can hang ten on a balance sheet with far more acuity than a wall of water at Waimea.

I contemplated forming a bilateral relationship with my readers, a covalent bond between me - hydrogen, first in the periodic table, fusion-injected star fuel, the closest humans have come to a searchlight with E = MC squared lumens - and you - oxygen, sputtering one atom at a time from a green paint-chipped iron bottle, down a polyethylene tube and into the nostrils of a liver-spotted lifelong smoker. Together we could make the most amazing substance on this planet, two of me for every one of you. We could be solid, liquid, or gas. We could support the marketplace of ideas with our surface tension. With time, we could erode the solid rock of ritualistic business concepts into dust and build our own fluid sacrament of capitalism. But then I would no longer be the stuff of galaxies; instead of burning brightly, I would be extinguished.

So, dear reader, I cannot give your words a sounding board because, as the title says, it's all about me.