The Death (Debt) Spiral Consuming Puerto Rico

What I have never understood about Puerto Rico is just how far the group think surrounding our economic problems could play itself out.

Recently, Judge Francisco A. Besosa of the United States District Court in San Juan struck down the "Recovery Act," the infamous Puerto Rico Bankruptcy Law ("Ley de Quiebra Criolla") that was going to give us the leeway to wiggle ourselves out of our debt crisis. In the aftermath of his decision:

Prices on Puerto Rico general obligation bonds dropped on Monday, the first trading day after the court ruling. Yields on a $3.5 billion bond that the commonwealth issued last March traded as high as 10.23 percent, topping yields on similar Greek bonds — suggesting that Puerto Rico is at greater risk of default.

And yet, and yet, just last weekend there was a couple of articles in El Nuevo Dia that were right on target.  In order to solve our financial problems, we must address the root cause.  All you need to do is look at "Puerto Rico's Economy - At A Glance," provided by the U.S. Bureau of Labor Statistics.  Of the roughly one million employed workers in Puerto Rico, almost 26% work for the government.

So, we know what the problem is and what the horrible tasting medicine is that must be taken.  I just wonder how long our group delusion will deny us the cure? Or will we run out of time, default, and let market forces do the job for us?

Puerto Rico Has The Second Highest Income Inequality

After Washington, D.C., Puerto Rico has the highest income equality in the US.

La Perla, Old San Juan

The Census has released a map plotting states' respective Gini coefficients. A Gini coefficient measures the income disparity in a given area; i.e., its gap between rich and poor was lowest.

Among all states and the U.S. territories, the District of Columbia led with a coefficient of .534, followed closely by Puerto Rico at .531. The state with the biggest income disparity is New York.

Most remarkable is that the U.S. continues to have an average rate — .475 compared to 2010's .469 — that rivals El Salvador's.

From Business Insider.

Analysis

Over the past 60 years, Puerto Rico has gone from a place where nearly everyone was broke as fuck, to a place that you ain't nobody unless you rich as fuck.  If you think that things got bad in the US during the "Great Depression," conditions in Puerto Rico were literally third world.

Along comes "Operation Bootstap" and Puerto Rico instantly became a thief's dream; stacks of free money for every crime imaginable.  There was so much cash left over, that even "honest" and self-made men, could even get in on the action, and still come out squeaky clean.  Some even became our most "revered" citizens.

We instantly created a privileged class of citizens.  The "1%" became our ideal, our role models.  As more families distanced themselves from the lower caste, businesses learned that there was a new breed of citizens who wanted to prove to their neighbors that they were no longer part of the "99%."

Just try to reconcile these two recent  headlines: "Puerto Rico's children mired in poverty that dwarfs rest of U.S" and "Puerto Rico Launches New Luxury Mall Project in San Juan."  I wonder who will want to go there most?  The "1%" or the rest of the posers on the island who need to "prove" that they are "entitled" to shop there?

More Bank Consolidation in Puerto Rico

BBVA Sells Out Puerto Rico to Oriental Financial.

Spain's Banco Bilbao Vizcaya Argentaria SA (BBVA) said Thursday it has reached an agreement to sell its business in Puerto Rico to Oriental Financial Group Inc. (OFG) for $500 million.

The sold business is the seventh biggest in Puerto Rico by deposits, with $5.2 billion in assets and $3.3 billion in deposits, BBVA said in a regulatory filing.

San Juan-based Oriental is the fourth-largest bank in Puerto Rico. Via Fox News.

Conclusion

Two quick points.  First consolidation in any industry means less jobs. That sucks. Second, having less banks to choose from means less lending.  It also means a further consolidation of financial power into fewer people. Good for them, bad for anyone who has to do business with them.

Sears' Bad News is Bad News for Puerto Rico

Image via Wikipedia

Sears to close 100 to 120 stores.

Sears Holdings announced that it would close 100 to 120 of its Sears and Kmart stores in a bid to shore up finances. New sales data show that Sears Holdings stumbled during the all-important holiday shopping period. Comparable-store sales were down 4.4% for Kmart and 6% for Sears for the eight-week period ended on Christmas Day, the company said.

Analysis

This is bad all the way through. While Puerto Rico's stores usually out-perform most state-side stores in square foot comparisons, it's hard to imagine that we'll slide through without losing a few stores throughout the island.

Retail is a major jobs provider on the island and any reduction in stores means more unemployment and it's sad to say, but probably more people giving up on legitimate income sources.

Another sector that might be hit by this news are shopping mall management companies. Kmart and Sears are usually anchor stores for many malls. If some of those stores close, they'll create huge vacancies. Who might we be able to attract to fill them?

Everybody wants to buy the newest toys

U.S. retailers racked up a record $52.4 billion in sales over the Thanksgiving weekend, a 16.4 percent jump from a year ago, as early hours and attractive promotions brought out more shoppers, an industry trade group said on Sunday.

In addition, Thanksgiving 2011 witnessed record breaking online retail sales with 39.3 percent increase for the holiday. IBM Coremetrics data showed a growth of 24.3 percent in online sales on Black Friday sales as compared to same period a year ago.

Dondequiera CyberMonday Offers

If you're going to be making some cybermonday purchases at Amazon, please consider linking to them from us. We'll be making a formal announcement soon, but Dondequiera is now part of the Mis Tribus media group. Through our partnership with Amazon, if you use our links, all of your Amazon purchases are donated to Mis Tribus, a non-profit company of Puerto Rico dedicated to creating a sustenable creative community. So please join with me to support Mis Tribus in their mission to give Puerto Rican authors a voice in the new arena of digital publishing.

Clasificados Online Case Study

Puerto Rico is by far one of the most competitive markets in the world. I'm not only talking about the normal competition for clients that occurs on a level playing field. What I'm talking about is the common use of tactics and strategies that create an unfair advantage.

An example of this emerged from one of the comments shared at the Digital Publicity in an Election Year event. The comment was that people are confused about the ClasificadosOnline.com brand. As an early adopter of free classified advertising, ClasificadosOnline.com essentially wiped out the classified advertising industry in Puerto Rico. Just as Craigslist and other sites wiped destroyed the classified advertising industry in the United States.

The comment shared was that people could not remember the difference between ClasificadosOnline.com and Clasificados.pr. The later of these sites is owned by El Nuevo Dia or Grupo Rangel Ferre. What irritates me about this situation is that without the help of the .pr domain, El Nuevo Dia would have have no chance to compete based on domain names.

.pr Top Level Domain (TLD)

By using their monopoly position, El Nuevo Dia was able to obtain a .pr domain name. Previously, these domains were not being given to anyone. For instance, we tried to obtain dondees.pr way back in 2006 and were denied. At that time, the TLD was being managed from within the University of Puerto Rico. Recently I heard that they lost the rights to manage the .pr TLD.

A quick search led me to www.nic.pr. Nic.pr is:

a not-for-profit corporation, "Gauss Research Laboratory Inc" (GRL-INC), a corporation organized under the laws of the Commonwealth of Puerto Rico, registered with the Puerto Rico Department of State, is the managing organization of the Puerto Rico's Top Level Domain and is the entity responsible for providing a stable and secure management of the .pr domain. It is our responsibility to provide registry services in response to the needs of our customers and stakeholders and to ensure that our systems conform to relevant standards, enabling global interoperability.

So, to some degree the situation for anyone obtaining a .pr domain has significantly improved, but only slightly. When I found their pricing table, I was almost dumbstruck. To buy a .pr TLD, it will cost you $1,000 a year!

Analysis

Beyond the obvious implications of holding back the entire Internet industry in Puerto Rico by demanding such outrageous fees for domain registration, I believe that El Nuevo Dia deliberating found a way to create confusion about the online classified advertising by obtaining a .pr TLD, when really no one could. By the way in case you're wondering the clasificados.or domain was registered March 11, 2009.

Of course, as they say, business is a cut throat game, and only the strong should apply. A free market allows competition to be as devious and underhanded as possible, without breaking the law. However, when you're trying to grow a "knowledge-economy" it really is nearly impossible when the market is so anti-small business.

Flickr Creative Commons Contributor: lamoney

Banco Popular Reports Weak Q3 2011 Results

Last wednesday, Popular Inc. reported a decline in quarterly earnings due to fewer one-time gains and an increase it credit costs.

Popular earnings fell 75% from the second quarter and 94% from a year earlier, to $27.5 million. The company's second-quarter results included a $59.6 million tax benefit tied to the timing of loan chargeoffs, while the third quarter of 2010 featured a $640.8 million gain from the sale of a stake in another business.

During the third quarter of 2011, the $38.2 billion-asset company reported a $4.7 million pretax gain after selling a number of mostly nonperforming construction and commercial real estate loans. Popular also booked an $8.1 million gain from the sale of investment securities, which mostly consisted of Federal Home Loan Bank notes.

Death spiral down the economic toilet

We interrupt our ongoing coverage of Internet Marketing in Puerto Rico to present you with this brief message from our sponsors. Well not really, we wish (hint, hint) but we are going to examine how doing the same things that got us into this mess, will fail to get us out of it. I'll illustrate this by examining the new Banco Popular campaign "Junto Se Puede." First off, let me share my admiration for BPPR wanting to unite us, for together we shall overcome, unfortunately it just won't be done by feel good jingoistic commercials.

According to recent news coverage, BPPR announced that they were spending $1 Million on the new "Se Puede" campaign. In my opinion, spending that kind of money for commercials that aim to make us feel "united" is a waste of money. Just like their last ad campaign, the new commercials contain iconic images which demonstrate why we should feel "united". My question is, "Other than lining the pockets of the agency responsible for the ad campaign, how is this going to grow our economy?"

Most folks in public relations and marketing would state that these quasi-public service announcements are plain old good business. The justification for funding such, usually large, campaigns involves creating good will and promoting a positive brand image. Who can blame them, at $2.25 a share, the board of directors of BPPR would probably consider offering free oral sex to any stock holder if they thought it would rebound the stock price.

The problem with this effort, is that it will not directly contribute anything that can, how did David Chafey put it, oh yeah "...get [us] back on our feet...]. It should be obvious to everyone at this point, that we can not advertise our way out of Puerto Rico's economic recession. That my friends, is trying to use an old strategy on an old problem. We need new solutions, new strategies.

If I would have been given the green light to spend $1 million dollars, I would have dedicated the money towards the research and development of new products and new businesses. However, unlike the failed "Llave de tu negocio" program, I would only fund R&D for products and businesses aimed at a global market. The only way for us to get back on our feet is to create products, that create new small businesses, that grow into big businesses.

Believe me, I know, first hand, the challenges involved in pursuing this goal, but it really is the only thing that will work. In the end, if we don't eliminate the obstacles for startups and begin to create new wealth, we will be stuck in an endless pattern of repeating the same mistakes that got us into this mess.

As it stands, it looks like we're destined to do more of the same as our economy slowly spirals down the toilet. Just last weekend, Coors of Puerto Rico announced a new $500,000 campaign to promote recycling. Our society continues to crash around us and we throw up more feel good advertisements. Unemployment is still on the rise, crime is on the rise, the underground economy is on the rise, while the arts are being slashed everywhere (in both public and private sectors). Why couldn't Coors have taken that money and funded 50 startups aimed at producing products from recycled materials?

Flickr Creative Commons Contributor: Lynda W1

Step Two - Unite

Okay, so we know that Puerto Rico is under utilizing the Internet to conduct marketing. We know that in order to market on the Internet, we have to remove the negative stigma that it has among marketing and advertisers. We also know that we are clearly at a transition point for marketing in Puerto Rico.

The signs are everywhere, or more correctly, since there are a large number of billboards that are empty or contain obsolete ads, there are very few signs. Conclusion: Advertising budgets have been decimated and therefore marketers are unable to buy advertising like they used to. It's also noticeable in El Nuevo Dia. The number of advertising pages has dropped considerably. And while we can mostly ignore the empty billboards, because they make up such a small percentage of overall advertising spending, a shrinking Dia is alarming. Making up 60% of all ad dollars spent, if the Dia shrinks it means that the advertising community is hurting.

A slippery slope

Finally, we also know that the advertising and marketing community still refuses to deal with the obvious conclusion to this dilemma. With shrinking advertising budgets, they need a more cost effective way to reach their target demographics. I wonder if such a magic medium exists? Is there a mass media available that allows me to accurately target audiences in a very effective way?

Aha, I know, what about the Internet? I bet they are actively pursing all manners to get their messages out over the Internet. Well we know, from looking at all of the known metrics (and here), that local advertisers and marketers are NOT using the Internet. I wonder, why not?

Oh yeah, tee hee, I wanted to share another set of metrics with you. I wonder who comes out as the leading authority on Internet Marketing and Internet Advertising in Puerto Rico? Yes, it's true! I bet you didn't see that one coming did you? Really sad when you think about it, but none the less, it is what it is.

While I know that I've mentioned it somewhere, but after nearly 800 posts I can't seem to find it, so I'll repeat myself. It's probably either here or here. Anyway, the reason that the advertising community doesn't want to accept the Internet, is because they see it as a slippery slope to reduced profitability. If they begin to sell their clients on Internet marketing campaigns that cost a tenth (a hundredth?) of what they now charge for their current services, they believe that it will cannibalize themselves.

Their fear is that by selling services that are much cheaper than billboards, radio spots, television commercials, and full page ads in the Dia, they lose revenue. Guess what folks? I know you already are! Didn't we just cover that above, you know the smaller El Nuevo Dia and empty billboards.

What to do now?

Kind of makes you wonder though. If most companies are shrinking their advertising budgets, how are they getting their brand messages out? I guess they're not! Which is another nail in our economic coffin. If you accept the maxim that advertising equals sales, then we must conclude that since advertising is down, then revenues and profitability are also down.

In a way, I think that Banco Popular has it right, "Juntos se Puede." However, in my opinion, I think that they are going about it in all the wrong ways. More on that, in my next post. In many ways, it's gut check time. It's time to check our personal interests, our egos, and our "What's in it for me?" attitudes at the door and enter into a grass roots reinvention of marketing on the Internet in Puerto Rico.

It is time for everyone in the marketing, advertising, and technology community to band together and admit that the rules have changed. Marketing budgets will never return to what they were in their hey day in Puerto Rico. That means that, like it or not, the Internet must receive a larger amount of advertising dollars, but it also means that we've got to admit that the "faith" that we've placed in past technology leaders was done in vain (good word choice, don't you think?)

Step Two in Improving Internet Marketing for Puerto Rico

So I guess, what I've concluded is that we need to form a non-denominational group of participants in this new world of Internet Marketing for Puerto Rico. What I mean by non-denominational, is that this has to be a group of people organized around the belief that what is good for everyone is good for me, and that therefore means that no one "owns" the group that has a direct benefit from the success of the group. I've seen too many attempts at organization which have turned into a land grab for the credit of improving things.

You may not realize it, but Puerto Rico has a disturbingly empty technology community. In most large cities through out the world, technical user groups abound. For every key technology, there is a very active and organized user group. There are nearly NO user groups in Puerto Rico. Of course, this stems directly from our old friend the "zero-sum mentality." The hidden message behind the odd absence of user groups in Puerto Rico is that if I share technical knowledge with my peers or competitors, I'm giving them the tools to take away some of my pie.

Of course, nothing is further from the truth. What most people don't get is that ideas, or knowledge for that matter, is nothing with out execution. If I tell you how to market more effectively on the Internet, you still have to do it.

Recently I got a heads up about organizing a PodCamp in Puerto Rico. While I have a mixed set of emotions, as described above, maybe a regularly scheduled set of non-conferences is just what we need. If that's not it, then we'd better come up with something else, and quick. Every moment that we ignore the huge pink elephant in the room (Internet marketing and advertising is THE way out of our advertising slump), the more revenues and profits will decline. Which is the exact opposite of being helpful.

Flickr Creative Commons Contributor: @dipek

The sales confusion paradigm

Consulting recently with a client has revealed to me, yet another obstacle explaining why Puerto Rico is unable to use information technology strategically. The scenario is simple.

Imagine a person in charge of information technology for a small to medium sized business. The business is growing and now needs to improve their information technology capability. The company already has several companies they use or have used in the past to meet their IT needs. With a general understanding of what is needed, the IT person calls his sources and asks for help, or more simply, a proposal to meet the new need. The IT provider gladly receives the new lead and generates a proposal that will solve the company's problem.

Now here's where the situation gets complex and confusing. The IT person doesn't really have decision authority, he (and it is predominantly a he) can only recommend a solution. The owner of the company is where the buck stops, he (and it is predominantly a he) asks the IT guy to get some competitive proposals. So the IT guy diligently gets the proposals, but in all honesty, doesn't really understand the solutions being proposed. When the owner asks for a recommendation, the only advice he can give is to go with the sales pitch that seems to make most sense.

Honesty disclaimer

Now for purposes of simplicity, I want you to assume that all of the proposals are on the up and up. Let's not be naive and accept that sometimes a decision is made based on the kickback offered to the IT guy. However, that is not the case in this scenario, or at least I hope not.

Enter the sales confusion paradigm

Enter a third party. Unsatisfied with the IT guy's explanation of the needs, proposals, and justifications, the owner asks a friend to evaluate the situation and help him make a decision. Don Dees to the rescue!

After struggling through the proposals and sitting through a few meetings. It finally dawns on our hero that what he's stepped into the middle of, is a case sales confusion. On one side of this nasty equation is a sales team that wants to sell as much as possible. If we examine, only briefly, it is easy to understand their motivation. They are compensated (motivated) by sales. The more they sell, the more they make.

On the other side of the equation we have the unprepared IT guy. He's a good guy who understands enough to solve his company's IT needs, but really doesn't understand WHY the solutions he owns work their magic. Of course he can't really admit to his boss that he doesn't REALLY dominate the situation. On the other hand, if he claims ignorance to the sales team, it's like giving them a blank check and asking them to "do what's best" for his company. Yes, I'm implying that sales people do not always operate in the best interest of their client's pocketbook.

The problem

It's really an unfair battle when you pit a well informed and motivated sales team against an adequate, but ill-prepared IT guy. Hopefully the solution being proposed is actually going to solve the company's problem, but let's just say that sometimes all a client really needs is an aspirin to get rid of a headache and the sales team is pushing Morphine. If the solution requires software development or implementation, then let's also hope that the IT provider actually has the talent necessary to complete the job. Unfortunately for us, those hopes were ripped apart in a long history of unsuccessful IT-related projects.

A battlefield of Roman proportion

I'm ashamed to admit it, but the IT landscape in Puerto Rico is filled with the dead and rotting carcasses of the sales confusion paradigm. Over the last twenty years, unsuspecting IT Guys have been asking their "trusted" IT providers for help. What has been the result? Instead of these two parties developing a mutually beneficial, long term relationship based upon trust, the IT providers have been throwing their clients to the lions. Surrounded by an environment where truth, honesty, and a criminal mentality, our IT industry is composed of predators and victims.

Now consider for a moment when a small company doesn't even have an IT guy. Imagine what happens when a predatory IT provider is pitted against the technology guy in the office who seems to know the most about computers. Unfortunately, it is like trying to fight a hungry lion with your hands and feet.

By the way, do you think we live in violent times? Now imagine people paying to watch the unwitting IT Guys being devoured by IT provider lions! Getch'yer peanuts and beer folks, it looks like we're up for an exciting afternoon of torture and suffering.

Flickr Creative Commons Contributor: David Paul Ohmer

Top Ten Fast Food Joints in Puerto Rico

Just how much fast food do we eat? Have you ever wondered? Like any segment of the business world, the fast food industry has a trade journal that tracks just that kind of thing. According to QSR Magazine the top ten quick service businesses for 2008 are:

2008 Rank	Chain	Segment	2007 Sales ($Mil)
1	McDonald's	Burger	$ 28,666.1
2	Burger King	Burger	$ 8,781.0
3	Subway	Sandwich	$ 8,200.0
4	Wendy's	Burger	$ 7,956.0
5	Starbucks	Snack	$ 6,560.9
6	Taco Bell	Mexican	$ 6,100.0
7	Pizza Hut	Pizza	$ 5,400.0
8	KFC	Chicken	$ 5,300.0
9	Dunkin' Donuts	Snack	$ 4,792.0
10	Sonic Drive-In	Burger	$ 3,608.8
12	Domino's Pizza	Pizza	$ 3,206.9

Out of these top ten establishments, we have stores for the top nine, to my knowledge we don't have any Sonic's on the island. So I had to go down to number 12 to find the next chain that has stores here. Anyway, anyway you look at it, that is a lot of fast food.

We have more Burger Kings than McDonald's, so it's likely that one and two are switched locally. Never the less, aren't you proud that Puerto Rico is doing it's fair share to make this more than a $140 Billion industry. Brings a tear to my eye, arteriosclerosis to my heart.

By the way, if you ever wanted to stop or reduce the amount of fast food you eat, try watching Super Size Me. This documentary explores the theory: "What would happen if you ate nothing but fast food for an entire month?" Filmmaker Morgan Spurlock does just when he decides to document himself eating nothing but McDonald's for 30 days. WARNING: You'll never step up to the counter of a fast food (oh sorry quick serve) restaurant again after seeing this. I know I don't!

You can watch the introduction to the documentary here:

Or you can watch the whole movie online at Google Video here. It's also available as a free download here.

20 Business Blogs for Puerto Rico

I just came across an interesting web site, it's focused on using word of mouth advertising to push specific products. In their latest campaign, they are pushing a new book by the founder of the web site. The book is called 'A Word of Mouth Manual, Vol. II' and it is written by by Dave Balter.

1. 37 Signals - Signal vs Noise, Jason Fried
2. 800-CEO-READ Blog, Todd Sattersten
3. Brand Autopsy, John Moore
4. ChrisBrogan.com, Chris Brogan
5. Church of the Customer, Jackie Huba
6. Culture Buzz, Emmanuel Vivier
7. Digital Influence Mapping Project, John Bell
8. Duct Tape Marketing, John Jantsch
9. Flybridge Ventures, Jeff Bussgang
10. Greg Verdino's Marketing Blog, Greg Verdino
11. How to Change the World, Guy Kawasaki
12. Influential Marketing Blog, Rohit Bhargava
13. HBSP : Game Changer, Bill Taylor
14. SHIFT PR, Todd Defren
15. Seth's Blog, Seth Godin
16. The Social Customer Manifesto, Christopher Carfi
17. tompeters!, Tom Peters
18. Trend Hunter, Jeremy Gutsche
19. Six Pixels of Separation, Mitch Joel
20. What's Next in Marketing, Mitch Caplan
21. Creating Passionate Users, Kathy Sierra (I just had to through this one in, it has such great information I'd be ashamed to leave it out.)
    

What's the web site? Oh yeah, it's called BzzAgent.com. If you want to learn about word of mouth marketing, then you can start by downloading the PDF of the book for free, starting at this page. You'll have to visit one of the 20 blogs to get access to the PDF, but if you're already convinced, you can pop over to Amazon and buy a limited edition print copy.

Between the 20 blogs listed and the 'A Word of Mouth Manual, Vol. 2', you've got a lot of reading to catch up on. I'll wait here until you're finished.

The demise of newspapers is not overrated

Late last year Entrepreneur magazine predicted that newspapers would be extinct within ten years. While this might be something you can't really see when you consider the Darth Vader-like death grip El Nuevo Dia has on the market here, elsewhere, however, this prediction is advancing quite nicely, thank you very much.

The last two months have seen a bloodbath at some of America's largest newspaper publishers, with substantial job cuts hitting a number of papers, including a high proportion of newsroom positions. The layoffs have visited McClatchy, Media General, the Tribune Co., the Wall Street Journal, and the Washington Post, among others.

For those of you keeping score at home, here are how the layoffs stacked up:

Media General got things started in late May with its announcement that it would cut 810 positions across its properties in the southeast. As part of the reductions, the Tampa Tribune (along with its sister broadcast station WFLA-Channel 8) lost about 110 positions, or about 8% of the total 1,326, including at least 50 in the newsroom. Why for such drastic action? Media General's total revenues fell 10% in the second quarter compared to the same period in 2007, to $204.8 million.

The Washington Post cut 100 newsroom positions--or about 12% of the total 800--through a combination of voluntary buyouts and attrition. This followed two earlier rounds of buyouts in 2003 and 2006.

Gannett has also cut hundreds of positions since May, including 50 at USA Today, 55 layoffs at four newspapers in New Jersey, 150 buyouts at the Detroit Free Press and Detroit News (about 7.5% of the total 2,000) and an unspecified number of graphic design positions company-wide. This week Gannett announced that total revenues tumbled 9.9% in the second quarter of 2008 compared to the same period in 2007, to $1.72 billion, with President and CEO Craig Dubow admitting that "the weakening economy had a dramatic impact on our results."

In mid-June McClatchy announced that it was cutting 1,400 jobs, or about 10% of its work force--the single biggest cut in the mid-summer purge (so far). McClatchy's restructuring plan follows an earlier reduction of 13%--or around 2,000 employees--from 2006-2008. The company will have shed over 20% of its workforce in three years, when the second round of cuts is complete.

The Tribune Co. is hitting all its big properties. The Chicago Tribune is cutting 80 newsroom positions, or about 14% of the total 578, and an unspecified number of jobs in other divisions like ad sales and production. Meanwhile, the Los Angeles Times is cutting 250, including 150 positions in the newsroom, or about 17% of the total. The Baltimore Sun is cutting 100 positions across its various divisions. Several of Tribune's smaller papers were hit especially hard: the Hartford Courant is losing 57 and the Orlando Sentinel 50 from its newsroom.

I think you get the idea here. But guess what? That's not the end of it. There were cuts announced at the Orlando Sentinel, Tampa Tribune, the Daytona Beach News-Journal, the Palm Beach Post, the Atlanta Journal-Constitution, the Wall Street, the Boston Herald, and the New York Times.

Conclusion

While I think that, like most other business trends and technologies, it's going to take some time before we start to see this at El Nuevo Dia, I think that it's coming. I've been noticing that the Dia has been on a bit of a diet lately. Many times throughout the week, the number of pages printed seem to be less and less. This is not a good sign for them. Between the lost revenue in their classified department, and now the shrinking paper, I bet they are in the red and losing blood quickly. While their sister paper Primera Hora has already let some people go, I've yet to see any from the Dia, but I'm guessing it's only a matter of time.

The demise of newspapers is a little alarming when you consider that we now have less journalists covering the news. Maybe it's retribution for the shitty job they've down covering the Bush administration and the Iraq conflict, but remember, less is always less. So less journalists means that there are fewer chances now that someone will have the balls to write the things that need to be written.

Help us Obi-Wan Blogobi, you're our only hope

While we may be less professionally prepared, the blogging community is quickly becoming our last hope. By separating the economic incentive from the desire to communicate the news (or at least from a bloggers limited perspective and reach), we can easily see a complete transformation of the news industry in progress. I see some real similarities between what is happening with news generation and what happened with Open Source Software and the rise of a community of developers motivated by scratching their own itch rather than a paycheck. Of course the dis-similarities make the two industries unique enough to demand much more research and analysis to better understand what new business models might be possible; business models that can potentially save the journalism industry.

Journalism, as pointed out by Al Gore in his new book "An End of Reason," is a critical piece of the democratic process. Without a well-informed citizenry, special interests will have it easy when they want to manipulate the remaining news mediums to their benefit. This my friends, is a very dangerous path we are on. In order for our democracy to have any chance of surviving we must find a way to keep its citizens informed. The Internet seems like that way. If that seems to be the simple answer, (for now), then we should begin to transform our news consumption habits. While you may not think of Dondequiera as a news source, I'd ask why not? Did you know that I studied journalism in a previous life and almost decided to work in that profession? Did you know that I've been blogging (writing) for 7 years now? What makes Dondequiera any different than El Nuevo Dia? Sure they have more reach and can cover more topics, but we are talking about quantity, not quality here.

I think that everyone should start to examine how they are incorporating blogs and other amateur news mediums into their lives and start to give them the support necessary to keep them around. Whether that is supporting the businesses behind those mediums (i.e., buying their products), making donations, telling your friends to subscribe to their RSS feeds, or beginning the two way conversation so essential to an informed citizenry; they need our help. The more choices we have when it comes to our sources for news, the better; let's all work together to grow as many as possible.

Flickr Creative Commons Contributor: iboy_daniel

Does this explain it all?

A fascinating article in the New York Post, proposes the following: Those who believe they were born with all the smarts and gifts they’re ever going to have approach life with a “fixed mind-set.” Those who believe that their own abilities can expand over time, however, live with a “growth mind-set.”

Your like so what? Well I'll tell you so what! Have you every thought that you're perfectly content with the job you have? No, well have you met someone who was? Have you ever concluded, with a sigh of relief, "I'm glad I don't have to study anymore." What's the first thing that comes to your mind when you encounter a new challenge, a new skill that you need, or a task that you've never done? If it's oh I don't know. It's not my job, it's outside of my training, or I don't think I can do it because I've never done it before, then you might have a fixed mind set. Not you, fine! What about your peers or your subordinates? Sorry boss, I can't do that with out going to training.

The Times article reveals that after three decades of painstaking research, the Stanford psychologist Carol Dweck believes that: "Society is obsessed with the idea of talent and genius and people who are ‘naturals’ with innate ability. (Or had the good fortunate to be born with a certain last name)” Oh yeah, that sounds nothing like most of the people I come into contact with. Oh you haven't worked in the pharmaceutical industry, then you clearly can't work on our computer systems. Oh sorry no banking experience, nope, no way you can understand our computer systems. Yeah I guess that whole Masters in Computer Science doesn't provide me any basis on how to learn new computer systems.

Dweck continues: "People who believe in the power of talent tend not to fulfill their potential because they’re so concerned with looking smart and not making mistakes. But people who believe that talent can be developed are the ones who really push, stretch, confront their own mistakes and learn from them." Now that clearly is NOTHING like most people here. The typical Puerto Rican or Puerto Rican company is so completely immobilized at the prospect of making a mistake or not looking smart, that if a task, idea, or opportunity comes along that is outside of their comfort zone, it must simply be ignored.

Finally Dweck concludes that: "People with a growth mind-set tend to demonstrate the kind of perseverance and resilience required to convert life’s setbacks into future successes. That ability to learn from experience was cited as the No. 1 ingredient for creative achievement in a poll of 143 creativity researchers cited in “Handbook of Creativity” in 1999.

Conclusion: Well, it explains a lot!

In a culture where image is everything and vanity is the number one motivator, we let our obsession with looking smart and avoiding mistakes dominate our lives. When considering Dweck's research it is now clear that these beliefs must be a major contributing factor to the lack of [innovation, research, invention, market growth, market creation, and global focus] here on the island. In addition, it explains why, when it comes to technology, there is a herd mentality of follow the leader. Since technology is complex, ever-changing, and hard to understand, most managers (leaders) refuse to make bold decisions that place the necessary importance and risk on technology. The exact strategy that all companies need to stay competitive. With a lifestyle mentality, business owners are content to have risen to as high as they believe their abilities can take them (Peter Principle), so they become fearful of losing what they have. They become risk-averse, exactly as identified in the classic business article 'Why good companies fail' .

In addition, for the same reasons, it prevents nearly all of our companies from researching and developing new products. It also blocks nearly all of our "entrepreneurs" so that they conclude that since company 'x' is successful, then that must be a good idea for a business. Therefore they conclude that it is a good idea to start a business to offer almost exactly what company 'x' provides. Listen people: Puerto Rico doesn't need any more online classified ad sites. I'm not saying give-up and let ClasificadosOnline.com 'own' the market. I'm saying unless you're bringing something new to the game that can disrupt their guerilla marketing strangehold on the market, don't waste your time. They have too much of a head-start for anyone to displace them with the exact same product and marketing strategy.

In a previous life I worked for a large wireless telecommunications company. We spent hundreds of thousands of dollars launching a web-based system to sell cellular telephones. Before we launched the project I asked the director in charge of the project, "How many phones do you think we'll sell from the website?" His answer: zero. So I asked, "Why are we spending the money then?" His answer: because our competitor has a web site to sell telephones. While this director was not stupid his decisions clearly illustrate a fixed mind set. Instead of changing the game, bringing something new to the market, all he could come up with is that's what my competitor did, so I have to as well, EVEN THOUGH HE BELIEVED IT WOULD BE A COMPLETE FAILURE. Is it any wonder our economy sucks so badly?

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Burlington Coat Factory Enters Tough Market

Do you remember what is like when you first starting your family? Or can you imagine what it will be like trying to start one in this economy? Well, when Mrs. Don Dees and I were newlyweds, uhh, a few years back, we remember fondly shopping at Burlington Coat Factory. They had cheap, but good quality, crap at a good price. Just what the valued oriented shopper is looking for, which was the case for us back then; still is I guess.

So when we recently heard that Burlington Coat Factory was going to open a few stores in Puerto Rico, it brought back fond memories. Although I'm sure this has been in the making for years, I think they are entering a tough market at the worst time in the last 40 years. With stiff competition from WalMart, K-Mart, Marshalls, Sears, and recently JC Penneys, they will face an uphill battle.

Not only that, this will be the first locations outside of the U.S. mainland for the Burlington, New Jersey-based company which operates 383 stores in 44 states. Which means they need to understand the cultural translation of their marketing very quickly.

According to them, they are an “off-price” discount retailer, which offers a wide selection of current season, high quality, brand name and designer merchandise at prices up to 60% lower than those at other department stores. Hmm, that's a pretty bold claim when they are stacked up against WalMart, the king of cheap crap.

Together the local stores will feature apparel, shoes and accessories for the entire family, baby clothes, furniture, toys, home decor items, and gifts, as well as a selection of its signature coats. One of the first stores is scheduled to replace the old Pueblo Xtra in Plaza Centro Mall in Caguas. Right now, there is no word of when the first store is scheduled to open.

President Bush Boosts Porn Industry

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Starbucks Coffee losing steam in Puerto Rico

Either our economy is much worse than anyone is actually saying or Starbucks Coffee is guilty of over-zealous expansion, because this week they announced that they would be closing three stores. According to a report from the Forbes web site, the stores will be closed in June, and all of the employees would be transferred to other stores.

Although the Chicken Little in me wants to say it's the former, I have to be honest and say that it's probably a little bit of both. As I've said before, Starbucks growth in Puerto Rico has been surprising for many people, but of course, if you've traveled to any major city in the Unites States it isn't that much of a surprise. In the heart of most cities like New York, Boston, or Portland, you'll commonly find what seems like a Starbucks on every other corner. Of course, much like when I predicted that Macy's wouldn't do well here in Puerto Rico, what people missed is that it was never about the coffee (just as I missed that Macy's was never about their merchandise). What Starbucks offered was a unique experience unmatched in the marketplace. It made you feel special when you finally figured out how to order what you wanted; you joined an exclusive group that made you feel superior to those that were clueless (just as some believe when they are walking around with a Macy's bag in their hand).

According to Starbucks spokesman in Puerto Rico, Adolfo Santana, the stores struggled financially because they were too close to other Starbucks locations. There's probably some truth to that, but I think when Outback, Ruby Tuesdays, and TGIFridays are also closing stores, the poor economy has to be equally responsible. The conclusion: for this market Starbucks may have reached its limit, especially in the San Juan metroplex.

What will be curious to see is if they continue with plans to open additional stores in other locations. If you check our map of Starbucks locations, there are at least three locations that I would open if I were Starbucks. The locations, in this order of priority, are: Mayagüez, Ponce, and Aguadilla or Arecibo.

Flickr Creative Commons Contributor: hlkljgk

Ohh the humanity. Trivia contest bombs.

Ahh, what a disaster. Well we didn't get any takers for the free Palco tickets. Pity. According to Tom Peters, one of a hundred such business gurus, those companies that learn to "Fail Faster," succeed. If the trivia contest was any signal, LOL, we're going to start succeeding VERY soon.

Anyway, we learned a few lessons:

1. Launching a short time limit contest on a Friday in the summer, uhh, maybe that wasn't such a good idea. But we had no choice, we didn't get the tickets till late Thursday night.
2. Once again, we are frustrated and stumped on our inability to generate any response from readers of the blog; as well, we still don't get many users to enter Events or Ratings over on DóndeEs.com.
3. In the end, this is a numbers game, just like everything else. Successful sales is a numbers game. For example, in order to make 5 sales a week, you need to visit 25 potential clients. In order to get 25 appointments, you need to talk to 125 business owners. In order to talk directly with decision makers (business owners, usually), you have to make 625 calls. All assuming a 20% success ratio.
   
   So it is with reaching and joining into a conversation (engaging in some sort of interaction) with Internet Users, in a very interesting article I found about "Nuggets from Social Media workshops as of late…", Sean O'Driscoll shared some powerful insights into the social sphere, the most pertinent to our trivia fiasco is:
   

   "Let’s assume we can generally agree that ~70% will lurk, 20% join, 9% will be regulars and 1% participate in the community in extreme ways."

   Looking at out traffic numbers for yesterday, we had approximately 107 visits to the blog, it could be more, but we don't have anything else to go on, but Google Analytics. So yesterday, the blog got 107 visits, if Sean's assumption is right, means that maybe only 9% are regulars, 9 visitors, and only 1% will participate in extreme ways, that's (holy crap) 1 visitor. So you see why point number one is so valid.
   

On the bright side, did get quite a few number of users to register over on DóndeEs.com, for the family ticket give-away. So thanks everyone for your support. For those who actually won tickets and attended the game, we hope that you enjoyed the courtesy tickets. And for everyone that is registered on DóndeEs.com or a fan of our DóndeEs.com Facebook Page, maybe soon we'll invite you all for a Palmolive bien firiiita. Very soon.

Flickr Creative Commons Contributor: s-t-r-a-n-g-e

Liberty Cablevision Misses Their Mark

Crema, Cremita, Avena, or if you prefer Oatmeal, was never a big item for breakfast in the childhood home of Señor Don Dees. Nope, for me it was cold cereal. Which now that you think of it makes no sense at all. In the midwest of the United States were I grew up, it's cold over half of the year, but we eat cold cereal. In Puerto Rico, where it's bake your brains hot, well, pretty much all year long, mothers give children hot cereal. Go figure!

Anyway, some of my favorites were the obligatory Captain Crunch (with Crunchberries), Frosted Flakes (Zucaritas), and Fruit Loops. But probably my all time favorite was Lucky Charms. A delightful concoction of toasted oats and marshmallows. I mean come on, when you're a kid getting your Mom to let you eat marshmallows (read candy) for breakfast was pretty clever.

But in this classic post by Seth Godin, he uses a story about how a teenager he was talking to about Lucky Charms wasn't even aware that they were "Magically Delicious." Which is, of course, the slogan General Mills uses in all of their advertisements for the cereal. See here for an example: Don't you just love YouTube? The point here is that General Mills has spent millions drilling that slogan into everyone's head and yet, a typical teenager doesn't even associate "Magically Delicious." with Lucky Charms. Here's Seth's take (which is as sweet as marshmallows in the morning):

"Some marketers are still relying on the idea that they can drill a catch phrase or benefit or USP or differentiation into our heads through ceaseless ads. It sure worked on me.

Is this the core strategy behind the growth of your business?

Not sure it's going to work any more."

Liberty Cablevision's 100% Campaign

Recently I started seeing some intriguing advertisements (teasers actually) announcing something BIG and NEW. I was hmm, I like big news, I wonder what it is? In terms of marketing, I was right where the advertiser wanted me. However, when I finally got to see the big news, the only thing big about it was the amount of money they were spending. The ads were from Liberty announcing that "Con Liberty puedes disfrutar el mundo al 100%." I was like uh huh, and so what? Where's the marshmallows? Where is anything in this new ad that zaps me in the ass like a cattle prod to call Liberty immediately?

So let me get this right, I think? I only subscribe to Liberty's BitTorrent choking Internet service. They have 3 products VoIP, cable, and Internet. So I'm only enjoying 33% of my world? But you want to know the real killer? We were actually talking seriously about upgrading to there triple offer of all three products. If they had announced some inspiring offer, I'd have called immediately to upgrade. Instead they have started drilling into my head that with Liberty I enjoy 100% of my world. Here's news for you Iberty, I enjoy my world just fine without you.

Conclusion

At times marketers can really hit the mark, as an example the old ladies advertising SunCom or Mr. I-lim-i-tado. Both of these ads had people copying them when they come on the television, repeating them voluntarily, and even copying them. Unfortunately for Liberty, I'm afraid that your new campaign misses the mark by 100%.

Flickr Creative Commons Contributor: kaibara87

Dark Future for Puerto Rico

This morning as I was just about to start writing about the 10 things you can do to survive the energy crisis, when the lights went out at home. I then had a very bad premonition. A premonition so bad that it's been haunting me all morning. And because I'm such a giver, I thought I would share my premonition and bum out the rest of your day too.

Just imagine for a second that petroleum continues to rise in price. And if you didn't already hear, it hit another record high yesterday to $138,54. This was mostly based on continued instability in the Middle East and the subsequent prediction by Morgan Stanley that prices may reach $150 within a month.

Puerto Rico's Economy

The 2008 energy crisis is killing Puerto Rico's economy. A continuation of that trend will only accelerate that effect and place it on life-support. There are three basic legs to the Puerto Rican economy: Government, Tourism, and Manufacturing (specifically Pharmaceuticals); extremely high energy costs would take away two of those legs (tourism and manufacturing). And no one can stand on one leg for too long before falling down completely, well unless Puerto Rico's economy is a flamingo.

We are already starting to see the impact of rising petroleum on the airline industry, which counter to what you are hearing in the local news, will directly impact the tourism industry. If you look at any Caribbean islands tourism strategy, adding more flights is ALWAYS at the top of the list, maybe second only to adding more rooms. So it only goes to follow that less flights, means less tourists. Remember less IS ALWAYS less.

One of the main reasons so many manufacturing facilities are closing up shop, beside the disappearance of the last vestiges of 936, is the rising price of energy on the island. An important component of the newly signed incentives package that the Governor signed is a subsidy to pay for energy. If petroleum prices continue to rise it will nullify the impact of the incentive or it will bankrupt the government. Either way, rising energy cost will force more manufacturing off the island.

Way too little - Way too late

So a monkey could have predicted last week's' pronouncement by Acevedo Vila and Fortuño that they were "committed to seeking alternatives that would alleviate Puerto Rico's dependence on oil." But the time have made those pronouncements was probably about 8 to 12 year's ago. Of course it is hard to fault anyone when big oil continues have their way with the executive and legislative branches of the United States, as was just witnessed by the Senate successfully stopping a vote on the climate change bill.

According to the Governor, 74% of Puerto Rico's energy is produced by the burning of petroleum, where as the average use of petroleum in the United States is only 4%. Reasonably speaking, it will take decades before Puerto Rico is about to reduce the amount of petroleum it consumes to produce energy. And unfortunately, by then our economy may be completely unplugged from life support.

My Premonition

So as I sat there momentarily shocked by the blackened house, it hit me. Imagine what it would be like if black-outs in Puerto Rico became MORE frequent. Imagine what it would be like if gasoline was $3.00 a liter. Stop and consider for a moment having to drastically rearrange your life, just so that you could save energy, save gas, live closer to work, or move off Puerto Rico, just to make ends meet.

I'm now beginning to believe that it wasn't Rogelio Figueroa who was smoking something when I dogged his suggestion that making Puerto Rico independent from foreign oil was the key to Puerto Rico's long term economic security. And also my hat goes off to Gabriel Pagan over at "I can't spell" for nailing the same solution.

Flickr Creative Commons Contributor Today: ArtNow314