The Decline of CDs and PCs – Trends Affect Us All More Than We Think

The Decline of CDs and PCs – Trends Affect Us All More Than We Think

Do you still have a pile of compact discs? If so, why? When was the last time you listened to one? Like almost everyone else, you probably stream your music today. If you are just outdated, you listen to music you bought from iTunes or GooglePlay and store on your mobile device. But it would be considered prehistoric to tell people you carry around CDs for listening in your car – because you surely don’t own a portable CD player.

As the chart shows, CD sales exploded from nothing in 1983 to nearly 1B units in 2000. Now sales are less than 1/10th that number, due to the market shift expanded bandwidth allowed.

demand for compact discs CDs, statista  sales of personal computers PCs, statista

 

 

 

 

 

Do you still carry a laptop? If so, you are a dying minority. As PCs became more portable they became indispensable. Nobody left the office, or attended a meeting, without their laptop. That trend exploded until 2011, when PC sales peaked at 365M units. As the chart shows, in the 6 years since, PC sales have dropped by over 100M units, a 30% decline. The advent of mobile devices (smartphones and tablets) coupled with expanded connectivity and growing cloud services allowed mobility to reach entirely new levels – and people stopped carrying their PCs. And just like CDs are disappearing, so will PCs.

These charts dramatically show how quickly a new technology, or package of technologies, can change the way we behave. Simultaneously, they change the competitive landscape. Sony dominated the music industry, as a producer and supplier of hardware, when CDs dominated. But, as I wrote in 2012, the shift to more portable music caused Sony to fall into a rapid decline, and the company suffered 6 consecutive years (24 quarters) of falling sales and losses. The one-time giant was crippled by a technology shift they did not adopt. And they weren’t alone, as big box retailers such as Best Buy and Circuit City also faltered when these sales disappeared.

Once, Microsoft was synonymous with personal technology. Nobody maximized the value in PC growth more than Microsoft. But changing technology altered the competitive landscape, with Apple, Google, Samsung and Amazon emerging as the leaders. Microsoft, as the almost unnoticed launch of Windows 10 demonstrated, is struggling to maintain relevancy.

Too often we discount trends. Like Sony and Microsoft we think historical growth will continue, unabated. We find ways to discount market shifts, saying the products are “niche” and denigrating their quality. We will express our view that the market has “hiccuped” and will return to growth again. By the time we admit the shift is permanent new competitors have overtaken the lead, and we risk becoming totally obsolete. Like Toys-R-Us, Radio Shack, Sears and Motorola.

Aircraft stalls when power is too low to climb

Aircraft stalls when not enough power to climb

The time for action is when the very first signs of shift happened. I’ve written a lot about “Growth Stalls” and they occur in just 2 quarters. 93% of the time a stalled company never again grows at a mere 2%/year. Look at how fast GE went from the best company in America to the worst. It is incredibly important that leadership react FAST when trends push customers toward new solutions, because it often takes very little time for the trend to make dying markets completely untenable.

Warren Buffett Is Loading Up On Apple – Why You Should be Wary

Warren Buffett Is Loading Up On Apple – Why You Should be Wary

In February, Berkshire Hathaway revealed it had dumped its IBM position. Good riddance to a stock that has gone down for 5 years while the S&P went up! What did Buffett do with the money? He loaded up on Apple – making that high-flyer Berkshire’s #1 holding. So, isn’t the smart thing now to buy Apple?

First, don’t confuse your investing goals with Berkshire Hathaway’s. It may seem that everyone has the same objective, to buy stocks that go up. But Berkshire is a very special case. As I pointed out in 2014, we mere mortals can’t invest like Buffett, and shouldn’t try. Berkshire Hathaway has the opportunity to make investments in special situations with tremendous return potential that we don’t have. Berkshire’s investment strategy is to invest where it can create cash to prepare for special situations, or to park money where it can make a decent return, and hopefully generate cash while it waits.

Apple is the #1 most cash-rich company on the planet, and with the new tax laws it can repatriate that cash. This is an opportunity for a “special dividend” to investors, and that is the kind of thing that Buffett loves. He isn’t a venture capitalist looking for a 10x price appreciation. He wants a decent 5% rate of return, and hopefully dividends, so he can grow cash for his special situation opportunities. Apple, the most valuable company on any exchange, is exactly the kind of company where he can place a few billion dollars without driving up the price and let it sit making a solid 5-6%, collect dividends and maybe get a few kickers from things like the cash repatriation.

Second, let’s not forget that Buffett’s IBM buying spree lost money. If he was a great tech investor, he never would have bought IBM. He bought it for the same reason he’s buying Apple, only he was wrong about what was going to happen to IBM as it continued to lose relevancy.

I pointed out in May, 2016 that Apple was showing us all a lot of sustaining innovations, with new rev levels of existing products, but almost no new disruptive innovations. The company that once gave us iPods, iTunes, iPhones and iPads was increasingly relying on the next version of everything to drive sales. Lots of incremental improvement. But little discussion about any breakthrough products, like iBeacon, ApplePay or even the Apple Watch. In a real way, Apple was looking a lot more like the old Microsoft with its Windows and Office fascination than the old Apple.

By October, 2016 Apple hit a Growth Stall. While this may have seemed like “no big deal,” recall that only 7% of the time do companies maintain a 2% growth rate after stalling. Is Apple going to be in that 7%? With the launch of the less-than-overwhelming iPhone X, and the actual drop in iPhone sales in Q4, 2017 it looks increasingly like Apple is on the same road as all other stalled companies.

In the short term Apple has said it is milking its installed base. By constantly bringing out new apps it has raised iTunes sales to over $30B/quarter. And it has a dedicated cadre of developers making over $25B/year creating new apps. So Apple is doing its best to get as much revenue out of that installed base of iPhones as it can, even if device sales slow (or decline.) For Buffett, this is no big deal. After all, he’s parking cash and hoping to get dividends. Milking the base is a cash generation strategy he would love – like a railroad, or Coca-Cola.

But if you’re interested in maintaining high returns in your portfolio, be aware of what’s happening. Apple is changing. It’s not going to falter and fail any time soon. But don’t be lulled by Berkshire’s big purchases into thinking Apple in 2018 is anything like it was in 2012 – or through 2014. Instead, keep your eyes on game changers like Netflix, Tesla and Amazon.

Walmart’s Surprising Tumble – Analysts Never Learn, Will You?

Walmart’s Surprising Tumble – Analysts Never Learn, Will You?

On February 20, 2018 Walmart’s stock had its biggest price drop ever. And the second biggest percentage decline ever. Even though same store sales improved, investors sold off the stock in droves. And after a pretty healthy recent valuation run-up.

What happened? Simply put, Walmart said its on-line sales slowed and its cost of operations rose, slowing growth and cramping margins. In other words, even though it bought Jet.com Walmart is still a long, long way from coming close to matching the customer relationship and growth of Amazon.com. And (surprise, surprise) margins in on-line aren’t an easy thing — as Amazon’s thin margins for 15 years have demonstrated.

In other words, this was completely to be expected. Walmart is a behemoth with no adaptability. For decades the company has been focused on how to operate its warehouses and stores, and beat up its suppliers. Management had to be drug, kicking and screaming, into e-commerce. And failing regularly it finally made an acquisition. But to think that Jet.com was going to change WalMart’s business model into a growing, high profit operation any time soon was foolish. Management still wants people in the store, first and foremost, and really doesn’t understand how to do anything else.

All the way back in 2005, I wrote that Walmart was too big to learn, and was unwilling to create white space teams to really explore growing e-commerce (hence the belated Jet-com acquisition.) In 2007, I wrote that calling Walmart a “mature” competitor with huge advantages was the wrong way to view the company already under attack by all the e-commerce players. In July, 2015 Amazon’s market cap exceeded Walmart’s, showing the importance of retail transformation on investor expectations. By February, 2016 there were 10 telltale signs Walmart was in big trouble by a changing retail market. And by October, 2017 it was clear the Waltons were cashing out of Walmart, questioning why any investor should remain holding the stock.

It really is possible to watch trends and predict future markets. And that can lead to good predictions about the fates of companies. The signs were all there that Walmart shouldn’t be going up in value. Hope had too many investors thinking that Walmart was too big to stumble – or fail. But hope is not how you should invest. Not for your portfolio, and not for your business. Walmart should have dedicated huge sums to e-commerce 15 years ago, now it is playing catch up with Amazon.com, and that’s a race it simply won’t win. Are you making the right investment decisions for your business early enough? Or will you stumble like Walmart?

Warren Buffett’s Painful IBM Lesson – Have You Learned It?

Warren Buffett’s Painful IBM Lesson – Have You Learned It?

This February, Warren Buffett admitted he had no faith in IBM. After accumulating a huge position, by 4th quarter of 2017 he sold out almost the entire Berkshire Hathaway position. He lost faith in the IBM CEO Virginia (Ginni) Rometty, who talked big about a turnaround, but it never happened.

Mr. Buffett would have been wise to stopped having “faith” long ago. All the way back in May, 2014 I wrote that IBM was not going to be a turnaround. CEO Rommetty was spending ALL its money on share buybacks, rather than growing its business. The Washington Post made IBM the “poster child” for stupid share buybacks, pointing out that spending over $8B on repurchases had maintained earnings-per-share, and propped up the stock price, but giving IBM the largest debt-to-equity ratio of comparable companies.

IBM was already in a Growth Stall, something about which I’ve written often. Once a company stalls, its odds Virginia Rometty, CEO IBM. Growth?of growing at 2%/year fall to a mere 7%. But it was clear then that the CEO was more interested in financial machinations, borrowing money to repurchase shares and prop up the stock, rather than actually investing in growing the company. The once great IBM was out of step with the tech market, and had no programs in place to make it an industry leader in the future.

By April, 2017 it was clear IBM was a disaster. By then we had 20 consecutive quarters of declining revenue. Amazing. How Rometty kept her job was completely unclear. Five years of shrinkage, while all investments were in buying the stock of its shrinking enterprise – intended to hide the shrink! CEO Rometty continued promising a turnaround, with vague references to the “wonderful” Watson program. But it was clear, Buffett (and everyone else) needed to get out in 2014. So Berkshire ate its losses, took the money and ran.

Have you learned your lesson? As an investor are you holding onto stocks long after leadership has shown they have no idea how to grow revenues? If so, why? Hope is not a strategy.

As a leader, are you still forecasting hockey stick turnarounds, while continuing to invest in outdated products and businesses? Are you hoping your past will somehow create your future, even though competitors and markets have moved on? Are you leading like Rometty, hoping you can hide your failures with financial machinations and Powerpoint presentations about how things will turn your way in the future – even though those assumptions are made out of hole cloth?

It’s time to get real about your investments, and your business. When revenues are challenged, something bad is happening. It’s time to do something. Fast. Before a bad quarter becomes 20, and everyone is giving up.

Netflix – Demonstrating Why Good Strategy Matters

Netflix – Demonstrating Why Good Strategy Matters

On January 23 Netflix’ value rose to $100B. The stock is now trading north of $250/share. A year ago it was $139/share. An 80% increase in just 12 months. And long-term investors have done very well. Five years ago (January, 2013) the stock was trading at $24/share – so the valuation has increased 10-fold in 5 years! A decade ago it was trading for $3/share – so if you got in early (NFLX went public in June, 2002) you are up 83X your initial investment (meaning $1,000 would be worth $83,000.)netflix profits 2017 statista

Back in 2004 I wrote that Blockbuster was dead meat – because by going after streaming Netflix would make Blockbuster obsolete. Netflix was using external data to project its future, and thus its strategy was not to defend & extend its DVD rental business but to spend strongly to grow the replacement. In 2010 I wrote that Netflix had projected the complete demise of DVDs by 2013, and was thus investing all its resources into streaming in order to be the market leader. At the time NFLX was $15.68. Over the next year it took off, tripling in value to $42.16. By cannibalizing DVDs it’s strategy was to leave its competition in a dying marketplace.

But, investors weren’t as sure of the Netflix strategy as I was. They feared cannibalizing DVDs would cut out the “core” of Netflix and kill the company. By October, 2011 the stock had tumbled to $12 (a drop of over 70%.) But, with the stock at new lows after a year of declines I optimistically wrote “The Case for Buying Netflix. Really.” I told readers the stock analysts were wrong, and the Netflix strategy was spot-on.

Netflix went nowhere for the next year, trading between $9 and $12. But then in December, 2012 investors started seeing the results of Netflix strategy, with fast growing streaming subscriber rates. By January, 2014 the stock was trading north of $52, so those who bought when my article published made a 400% return in just over 2 years! By March, 2015 NFLX was up another 23%, to $62 when I told readers “Netflix Valuation Was Not a House of Cards.” The Netflix strategy to dominate streaming by offering its own content may have shocked a lot of people, due to the investment size, but it was the strategy that would allow Netflix to grow subscribers globally. That has driven the last jump, to $250 in just under 3 years – another 400%+ return!

Strategy matters- to company performance, and thus long-term investor returns. Netflix has been a volatile stock, and it has had plenty of naysayers. These were people looking only short-term, and fearful of strategic pivots that have proven highly valuable. If you want your company, and your investment portfolio, to succeed it is imperative you understand external trends and use them to develop the right strategy. And heed my forecasts.

Are You Adaptable Like Facebook?

Are You Adaptable Like Facebook?

InvestorPlace.com declared Snap stock will be a big disappointment in 2018. Bad news for investors, because SNAP was an enormous disappointment in 2017. After going public at $27/share in early March, the stock dropped to $20 by mid-March, then just kept dropping until it bottomed at just under $12 in August. Since then the stock has largely gone sideways at $15.

This was not unexpected. As I wrote in April, Snapchat was not without competition and was unlikely to be a long-term winner. Even though Snapchat and its Stories feature grew popular with teenagers 14 to 19, in August, 2016 Facebook launched Instagram Stories as a direct competitor. In just 7 months – just as SNAP went public – Instagram Stories had more users than Snapchat. It was clear then if you wanted to make money on the photo and video sharing trends, investors were better off to own Facebook stock and avoid the newly available SNAP shares (stock, not pix!)

Now the situation is far worse. Facebook launched WhatsApp Status as another competitive product in February, 2017 and it took less than 3 months for its user base to exceed Snapchat. As the chart below shows, by October, 2017 Stories and Status each had 300 million users, while Snapchat was mired at 180 million users. With only 30% the users of Facebook, Snapchat has little chance to succeed against the social media powerhouse.

Statista Facebook vs Snapchat

Statista

Facebook is now a very large company. But, it has shown it is adaptable. Rather than sticking to its original market, Facebook went mobile and has launched new products as fast as competitors tried to carve out niches. The question is, are you constantly scanning the horizon for new products and adapting – fast – to keep your customers and grow? Or are you stuck trying to defending your old business while upstarts carve up your market?”

Retail Transformation Continues and Will Impact Your Portfolio

Retail Transformation Continues and Will Impact Your Portfolio

Business Insider is projecting a “tsunami” of retail store closings in 2018 — 12,000 (up from 9,000 in 2017.) Also, the expect several more retailers will file bankruptcy, including Sears.

Duh. Nothing surprising about those projections. In mid-2016, Wharton Radio interviewed me about Sears, and I made sure everyone clearly understood I expect it to fail. Soon. In December, 2016 I overviewed Sears’ demise, predicted its inevitable failure, and warned everyone that all traditional retail was going to get a lot smaller. I again recommended dis-investing your portfolio of retail. By March, 2017 the handwriting was so clear I made sure investors knew that there were NO traditional retailers worthy of owning, including Walmart. By October, 2017 I wrote about the Waltons cashing out their Walmart ownership, indicating nobody should be in the stock – or any other retailer.

The trend is unmistakable, and undeniable. The question is – what are you going to do about it? In July, 2015 Amazon became more valuable than Walmart, even though much smaller. I explained why that made sense – because the former is growing and the latter is shrinking. Companies that leverage trends are always worth more. And that fact impacts YOU! As I wrote in February, 2017 the “Amazon Effect” will change not only your investments, but how you shop, the value of retail real estate (and thus all commercial real estate,) employment opportunities for low-skilled workers, property and sales tax revenues for all cities impacting school and infrastructure funding, and all supply chain logistics. These trends are far-reaching, and no business will be untouched.

Don’t just say “oh my, retailers are crumbling” and go to the next web page. You need to make sure your strategy is leveraging the “Amazon Effect” in ways that will help you grow revenues and profits. Because your competition is making plans to use these trends to hurt your business if you don’t make the first move. Need help?

Hallmark- Unsung Innovation based on Trends

Hallmark- Unsung Innovation based on Trends

Here in late 2017, the biggest trends are: the 24 hour news cycle, animosity in broadcast and online media, fatigue from constant connection and interaction, international threats and our political climate. The holiday season is in the background struggling for attention.

How are people tuning out of this cacophony to get in the mood for the holidays?

The answer: Christmas movies!  And which channel has 75% share of the new movies in 2017?  If you have watched any TV since October, you’d know that it’s The Hallmark Channel.  THC has produced over 20 original movies for the 2017 Christmas season and has seen viewership grow by 6.7% per year since 2013.  THC is on track to surpass the 2016 season in viewership and its brand image is solidly wholesome.

Starting in October, THC runs seasonal programming with its successful “The Good Witch” series (no vampires!) and continues with “Countdown to Christmas” featuring original Hallmark-produced content.

Hallmark spent decades preparing to capture the benefits of these trends.  It had become a source of family oriented, holiday-themed programming especially popular in recent years.  Once only an ink and paper company, Hallmark expanded strategically in the 1970s with ornaments and cultural greeting cards and again in 1984 with its acquisition of Crayola drawing products.  The company moved into direct retail in 1986 and ecommerce in the mid-1990s.  Hallmark eCards was launched in 2005.

Hallmark capitalized on branded media content originally to support the core business and it now generates profits as a standalone business.  In 2001, the Hallmark Channel was launched.  The Hallmark Movie Channel was developed in 2004 which became Hallmark Movies and Mysteries in 2014.  This year, the Hallmark Drama channel was launched further leveraging the brand.

Many companies sponsored radio shows in the 1920s through the war years.  Serials featuring one company’s products appeared in 1928 on radio.  In 1952, Proctor and Gamble sponsored the first TV soap opera featuring one company (“The Guiding Light”).  But The Hallmark Hall of Fame was there first on Christmas Eve in 1951 sponsoring a made-for-TV opera, “Amahl and the Night Visitors.”

Written by Gian Carlo Menotti in less than two months and timed for a one hour TV slot, “Amahl” has become, probably, the most performed opera in history.

 

Hallmark wasn’t the first mover in sponsored media content, but it had learned to experiment with new media. The company was positioned to take advantage of the trend toward family friendly broadcast content and this year was ready to give the nation a place to rest and escape from the chaos.  A bit like the story of Amahl and Christmas itself.

Once just a card company, Hallmark followed market trends to expand its business and become a leader in content marketing which is now one of the hottest areas in all marketing.  And both the new video content and large library were ready for the current trend- streaming video!

Facebook’s Path To Communication Domination

Facebook’s Path To Communication Domination

Facebook shareholders should be cheering. And if you don’t own FB, you should be asking yourself why not. The company’s platform investments continue to draw users, and advertisers, in unprecedented numbers.

sms messaging is declining

With permission: Statista

People over 40 still might text. But for most younger people, messaging happens via FB Messenger or WhatsApp. Text messages have thus been declining in the USA. Internationally, where carriers still frequently charge for text messages, the use of both Facebook products dominates over texting. Both Facebook products now are leaders in internet usage.

And as their use grows, so do the ad dollars.

digital advertising now greater than tv

With permission: Statista

As this chart shows, in 2017 ad spending on digital outpaced money spent on TV ads. And TV spending, like print and radio, is flat to declining. While digital spending accelerates. And the big winner here is the platform getting the most eyeballs – which would be Facebook (and Google.)

Looking at the trends, Facebook investors should feel really good about future returns. And if you don’t own Facebook shares, why not?

What Business Leaders Can Learn From Bitcoin Fanatics

What Business Leaders Can Learn From Bitcoin Fanatics

What Business Leaders Can Learn From Bitcoin Fanatics

On August 15, Bitcoin rose to $4,000, I wrote a column about the crypto-currency. At the time, I thought Bitcoin was reasonably obscure, and I doubted there would be many readers. I was amazed when the column went semi-viral, and it has had almost 350,000 reads. But even more amazing was that the column generated an enormous amount of feedback. From email responses to Facebook remarks and Tweets I was inundated with people who, largely, wanted my head.

I found this confounding and fascinating. Why would an article that simply said a crypto-currency was speculative draw such an enormous response? And why such hostility? Just as I had not anticipated much readership, I certainly did not anticipate the reaction. These factors led me to research Bitcoin owners, and develop some theories on why Bitcoin is such a big deal to its enthusiasts.

1 – Bitcoin owners want the value to increase

I made the mistake of thinking of Bitcoins as a form of cash. Something to be spent. But I discovered most owners are holding Bitcoins as an asset. Because there are technical limits on how many Bitcoins can be created, and how quickly, these owners see the possibility of Bitcoin value increasing. As “investors” in Bitcoins, they don’t want anything (like a negative column) to put a damper on Bitcoin’s ability to rise.

Such speculation is not uncommon. Many people buy land, gold, silver and diamonds because they expect limited supply, and growing demand, to cause the value to rise. Other people buy Andy Warhol prints, vintage automobiles, signatures of historical people or baseball cards for the same reason. I prefer to call this speculation, but these people refer to themselves as investors in rare assets. Bitcoin investors see themselves in this camp, only they think Bitcoins are less risky than the other assets.

Regardless the nomenclature, anyone who is buying and holding Bitcoins would be unhappy to hear that the asset is risky, or potentially a bad holding. But unlike all those other items I mentioned, Bitcoins are not physical. To some extent merely owning the other assets has a certain amount of its own reward. One can enjoy a diamond ring, or a Warhol print on the wall while waiting to learn if its value goes up or down. But Bitcoins are just computer 1s and 0s, and really a new kind of asset (crypto-currency.) These investors are considerably younger on average, a bit more skittish, and considerably more outspoken regarding the future of their investment – and those who would be negative on Bitcoins.

While wanting their asset value to rise makes sense, it is rare that speculators have been as passionate as those who responded on Bitcoin. I’ve written about many companies I feared would lose value, and thus were speculative, but those columns did not create the fervor with responses like those regarding Bitcoin

2 – Confusion between Bitcoin and Blockchain technology

Blockchain is the underlying technology upon which Bitcoins are created. I have now read a few hundred articles on Bitcoins and Blockchain.

I was struck at just how confusing authors on these topics can be. They will say the two are very different, but then go on at great length that if you believe in Blockchain you should believe in Bitcoins. Few columns on Blockchain don’t talk about Bitcoins. And all Bitcoin authors talk about the wonders of Blockchain.

There is no doubt that Blockchain technology is new to the scene, and shows dramatic promise. Many large organizations are investigating using Blockchain for uses from financial transaction clearing to medical record retention. This is serious technology, and as it matures there are a great many people working to make it as trustworthy as (no, more trustworthy than) the internet. Just as the web requires some rules about URLs, domain naming, page serving, data accumulation, site direction, etc. there are serious people thinking about how to make Blockchain consistent in its application and use – which could open the door for many opportunities to streamline the digital world and make our lives better, and possibly more secure.

There were many, many people who disliked my skeptical view of Bitcoins, and based their entire argument for Bitcoinvalue on their belief in Blockchain. I was schooled over and again on the strength of Blockchain and its many future applications. And I was told that Blockchain technology inherently meant that Bitcoins have to go up in value. Buying Bitcoins was frequently referred to as investing in “Internet 2.0” due to the Blockchain technology.

It is clear that without Blockchain you could not have Bitcoins. But the case demanding one owns Bitcoin because it is built on Blockchain (“the technology of the future” as it is referred to by many) is still being developed. To them I was the one who was confused, unable to see the future they saw built on Blockchain. There were hoards of people who were almost religious in their Bitcoin faith, indicating that there was yet still more underlying their passion.

3 – As trust in government declines, there is growing trust in technology

More than ever in modern history, people have little faith in their government. In the USA, favorable opinions of Congress and its leaders are nearly non-existent. And favorable opinions for the current President started out below normal, and have gotten considerably worse. It is reported now with some regularity that Americans have little trust in the President, Congress, Courts – and the Federal Reserve.

There were, literally, hundreds of people who sent messages talking about the failure of government based currencies. Most of these examples were South American, but still these people made the point, loudly and clearly, that governments can affect the value of their currency. Thus, these Bitcoin investors had lost faith in all government backed securities, including the U.S. dollar, euro, yen, etc. They believed, fervently, that only a currency based on technology, without any government involvement, could ever maintain its value.

Today if someone is asked to give personal information for a census on their city, county, state or country they will often refuse. They want nothing to do with giving additional information to their government.

But these same people allow Facebook, Google and Amazon to watch their most private communications. Facebook records their emotions, their personal interactions, friends, complaints and a million other things going on in users’ lives to develop profiles of what is interesting to them in order to send along newsfeeds, information and ads. Google has recorded every search everyone has ever done, and analyzes those to develop profiles of each person’s interests, concerns, desires and hundreds of other categories to match each with the right ad. Amazon watches every product search made, and everything purchased to profile each person in order to push them the right products, entertainment, news and ads. And they all sell these profiles, and a lot of other personal information, to a host of other companies who do credit ratings, develop credit card offerings and push their own items for sale.

People who have no faith at all in government, and don’t believe government entities can make their lives better, leave their cookies on because they trust these tech companies to use technology to make their lives better. They believe in technology. Are these folks losing privacy? Maybe, but they see a direct benefit to what the technology operated by these tech companies can do for their lives.

For them, Bitcoin represents a future without government. And that clearly drives passion. Blockchain is a bias free, regulator free technology platform. Bitcoin is a government free form of currency, unable to be manipulated by the Federal Reserve, Exchequer of the currency, European Central Bank, Congress, Presidents, the G7, or anyone else. For the vocal Bitcoin owners, they see in Bitcoin a new future with far less government involvement, based on Blockchain technology. And they trust technology far more than they trust the current systems. They claim to not be anarchists, but rather believers in technology over human government, and in some instances even religion.

Leadership lessons from my Bitcoin journey

Often we try to explain away feedback, especially negative feedback or feedback that is hard to interpret, with easy answers. Such as, “they just want their asset to go up in value.” That is a big mistake. If the feedback is strong, it is really worth digging harder to understand why there is passion. Never forget that every piece of negative feedback is a chance to learn and grow. It is almost always worth taking the time to really understand not only what is being said, but why it is being said. There could be a lot more to the issue than face value.

If things are confusing, it is important to sort out the source of the confusion. If I’m talking about a currency, why do they keep talking about the technology? Saying “they don’t get it” misses the point that maybe “you don’t get it.” It is worth digging into the confusion to try and really understand what motivates someone. Only by listening again and again and again, and trying to really see their point of view, can you come to understand that what you think is confusing, to them is not. They aren’t confused, they see you as confused. Until you resolve this issue, both parties will keep talking right past each other.

You cannot lead if you do not understand what other people value. Their belief system may not match yours, and thus they are reaching very different conclusions when looking at the same “facts.” While I may trust the Fed and the ECB, and even banks, if others don’t then they may well have a very different view of the future.

When leaders lose the faith of those they are supposedly leading, unexpected outcomes will occur. Leaders cannot lead people who don’t trust them. Using the power of their office to force their will on others, and forcing conformance to existing processes, methods and systems can often lead to strong negative reactions. People may have no choice short-term but to do as instructed, but they may well be plotting (investing) longer term in a very different future. Failing to see the passion with which they are seeking that different future will only cause the leadership gap to widen, and shorten the time to a disruptive event.

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