The founder-knows-best phenomenon

USA Today had an interesting article about how founder-led companies perform better than their non-founder-led counterparts, with a 15-year stock price appreciation of 970% vs. the S&P 500 average of 222%. Although most people will not be surprised by it, that's still a pretty powerful number, and have been studied by the investment community. From my point of view, company founders have a deep, emotional connection to the business, which make them great leaders. Other reasons explaining above numbers cited in the article include:

founders having deep industry knowledge...having a powerful presence in the company...having a huge financial stake in the success of the business...not looking for the next job so can take a long-term perspective...being street fighters early on.

Wasting time at work

Working hard at job or hardly working ?

An online survey of 2,057 employees in US by online compensation company Salary.com found about 60% workers, especially who feel bored and underpaid, admit to wasting time at work with the average employee wasting 20% of their working day.

Personal internet use topped the list as the leading time-wasting activity according to 34% of respondents, with 20.3% then listing socialising with co-workers and 17% conducting personal business as taking up time.

Food chain of book publishing business

New York Magazine has a fascinating set of business case studies investigating how New York businesses turn a profit. The one interesting me most in the study about book publisher Random House. On the weekly bases, the country’s biggest trade publisher releases 67 new books, out of its 33,000-book backlist.

According to this study, out of every 8 books, 1 is very profitable, 1 is very unprofitable, and 6 either break even or lose money. On average, for a paperback which retail for about $10, $5 goes to the retailer; $2 covers publisher's overhead costs (buildings, admin, payroll); $1.50 goes to author payments (that is 15%); $1 goes to paper, printing, and binding; only $0.50 is profit (that is 5%). The best ways to make money? Underpay writers. "The most-profitable books are highly successful authors early in their career with a contract that doesn’t reflect their success".

High gasoline price humor

A friend sent me following high gasoline price humor cartoons. Enjoy!

Numbers of our times

Video below (from YouTube) presented many numbers on current global affairs (technology and culture changes). They are simply fascinating.

Today's link - obesity, startup

1) here is a obesity infographics of the percentage of population older than 15, with a body-mass index greater than 30. Out of 27 countries on the list, and US man is on the top with 31%.

2) a recent survey shows between 2005-2006, 0.29% of US population started their own business. The immigrant rate of entrepreneurial activity increased from 0.35% in 2005 to 0.37% in 2006, much higher than the rate for the native-born population, 0.27%.

Midwest region had the lowest level of entrepreneurial activity of all regions - Detroit is 0.13%, Chicago is 0.18%, well below the national average.

Business numbers - heard from local radio station

1) Overall, the shop-lifting in US is costing almost 1.5% of total retail business revenue. In some part of US, it is organized crime. No wonder many companies are joining force, adapting new technology (such as RFID), and building national/regional shop-lifting monitor database.

2) Marketing new products is hard. On average, 85% of new products launched didn't pay off.

The bigger his house, the worse the CEO

In a recent research paper, two finance professors (David Yermack of New York University and Crocker Liu of Arizona State ) identified the primary residences of 488 CEOs of the (US) S&P 500 Companies, and demonstrated that there is a relationship between CEO home-buying behavior and their company's stock performance.

The mean residence of a CEO was 6,145 square feet, 12 rooms, 5.37 acres of land, and a market value of $3.1 million. In 2005, the stocks of companies whose CEOs lived in larger homes (i.e., above the average for all CEOs) returned, on average, 3.35% less than companies whose CEOs lived in below-average homes. And the CEOs who lived in the biggest homes (at least 10,000 square feet or over 10 acres) underperformed their peers who inhabited more modest homes by 6.9%, on average.

Two professors also looked at stock returns for 164 companies whose CEOs bought new homes after becoming CEO. They found a significantly negative stock performance following the acquisition of very large homes by company CEOs on the order of 1.25% performance lag per month.

The explanation for the relationship may be complex, but soon, somebody could use this information when deciding which stock to own.

In retrospect, may be we all should sell Microsoft significantly underperforming stock in 2000, when we knew Bill Gates moved into his gargantuan home in the late 1990s.

Small is beautiful, profitable

Based on its most recent figures (2005), the U.S. Small Business Administration estimates that 99.9% of the country's businesses are small businesses. The U.S. Census Bureau says small businesses employ slightly more than 50% of the workforce.

The recent Intuit Future of Small Business Report cites a 2005 Gallup/CNN/USA Today survey, in which nearly 80% of 18-29 year-old questioned said they'd rather start their own business than work for a big company. The report specifically mentions technology as a driving force behind the growth of small business among young adults.