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School of Business 02/25/2012

The BusinessMakers

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Russ and John host the show about the working class, the entrepreneurs, the ones that create the game-changing gadgets that keep our economy dynamic. Yup, someone’s gonna get rich, but don’t tell Washington! Includes: the BusinessMakers Quote of the Week—a little known comment from Mark Twain; This Week in Business History includes great innovation like the Playboy Club, Kmart and compact disk recording technology; the Jargon Challenge Round—trendy technospeak that YOU should know; and Dumb Moments in Business—Dominique Strauss-Kahn offers a shaky defense.

Full Interview text

Russ: This is the Businessmakers Show, heard on the radio, and seen online at thebusinessmakers.com. This is that show about the working class, the innovators, and the entrepreneurs.

John: That's right. These are the ones who are really making the economy better than it has any right to be, and that's because these people come up with ideas and put them into play. And a lot of these products and services that come along surpass the government's reach to regulate them, because they're so new and so groundbreaking. And I think that's one of the main reasons why the U.S. economy is so dynamic and robust, even in tough times. One of the labor laws, the laws affecting business, you know, we're past the turn of the century and the 1920s and '30s, and even ones that were passed later than that, there's no way that the bureaucracy can catch up with the innovation of the individual.

Russ: That's actually true.

John: And that's why I think the economy is doing better, again, than it has a right to be, because of the fact that these guys are cutting edge, so cutting edge that the government's ability to regulate their industry is left in the dust.

Russ: Yeah. Although, this particularly set of elected officials are trying real hard to always catch up and regulate, 'cause they think that-

John: Well, I think what they're trying to do is they're trying to reverse the course of growth.

Russ: Yeah, I think you're right.

John: I think they're making every attempt, or at least a lot of these guys are making every attempt to turn this country back into some European principate.

Russ: Sure. Because if they allowed growth, John, some people might get rich.

John: I know. Well, the thing is no matter what - and people need to realize this, no matter what economic system you live under, someone's going to get rich over it.

Russ: Yeah, that's true.

John: Okay. Now when you have a statist form of government, where the government controls everything, the people who get rich are the bureaucrats, because they're taking all the money through draft and bribes and everything. That's what happened in the Soviet Union; that's the best example I know how to have.

The other people who get rich are the anointed ones, because, you know, the government can't make airplanes, all right. So they'll have a company making airplanes-

Russ: Yeah, they can't make iPhones or something.

John: -and they'll pick somebody where they can make it. So they'll hand-pick their business partners. And you have to look no further than the annual report, one of the annual reports of GE after Obama got elected, where Immelt just came out and said it, "Things are changing. We're going to have to be more - let them improve our relationship with the government because they're going to become our business partner."

Russ: Right. Right. Sometimes-

John: I mean it's right there in black and white.

Russ: Sometimes, though, they choose partners that don't work out. Like Celendra, they chose that one.

John: That's the trouble, 'cause these companies - that's what happens when you live under what they call a "command economy," with our country. And it's the largest thing still does, you know, we're living under a demand economy.

Russ: Right.

John: Okay, if people demand something then whoever makes that product will probably do okay, unless they can't - don't know how to run their business in the first place.

Russ: Right.

John: But with a command economy you've got some bureaucrats there, twisting dials and turning, you know, the deal, you know, working the levers behind their desk, trying to command the whole, the master of the universe. It just does - there's only one master of the universe, and that person does not live in Washington, D.C.

Russ: It's not in Washington, D.C. Right.

Well, and you're early comment about innovation, driving it, my god, we're right now benefiting from innovation that started really 20 years ago for this sort of horizontal drilling and now this-

John: Yeah, the fracking.

Russ: -fracking technique has actually completely flip-flopped. I mean it's just a paradigm shift of extraordinary proportions. What's happening now, the United States might actually become an exporter of energy, oil and gas products.

John: Right, but we may - that's right.

Russ: Natural gas.

John: Yeah, gas. Yeah, and oil.

Russ: Yeah.

John: There's a lot of that oil - a lot of that shale - a lot of those shale plays are oil-based.

Russ: Right. Right.

John: And then we've got our neighbors up in Canada that are begging us to take their oil and we can't, you know, because of whatever reason you want to choose. You know, they're denied the pipelines that are needed to get the oil to here, so they're going to build their own pipeline and send it to the west coast of Canada, and the Japanese will gladly take it. And the Chinese are always looking for energy. So we're going to get the short end of the stick, mainly because of the short-sightedness, or the deliberate attempt of our boy wonder in the White House to really knock this country down a peg or two. I mean this - I think that's part of his motivation.

Russ: We shall see. We shall see. All right.

John: All right. To be continued.

Russ: But still focused on the positive side of innovation, that's the entrepreneurs.

John: Yeah, let's get some positive here. You know, we're about ready to shoot ourselves here on the air.

Russ: The entrepreneurs. And a shout out right up front to EO Houston, that entrepreneur organization.

John: That's right. They're a perfect example.

Russ: They're the serious entrepreneurs, right?

John: Yeah, right. Yeah. Perfect example.

Russ: Making jobs out there, making products and services.

John: That's right, making money.

Russ: Making it happen.

John: Making products and services that people want, that's what it's all about.

Russ: You bet. And here's our lineup for today. Our own Esther Freedman interviews the founder of Deposit a Gift, Dana Ostomel. But first- That's right, it's time for the Businessmakers School of Business. This is sort of upper education. We can't call it graduate level, but it probably is.

John: It's beyond graduate level.

Russ: Graduate level.

John: That's right. I don't think this is graduate level; I think this is real world level.

Russ: There you go.

John: So if you're in business or you're running a business or you're thinking about running a business, or if you're an employee in a business, this stuff's for you.

Russ: That's right.

John: It's going to - you're going to sound more erudite. You're going to sound smarter than the average person out there that doesn't know this stuff, and that's why we're here.

Russ: All right, and we kick it off each week with the Quote of the Day.

John: Quote of the Day.

Russ: Today I'm choosing a Mark Twain quote. "The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin." Right?

John: That's perfect.

Russ: Yeah. I've seen most of his quotes; I've never seen that one, but I enjoyed it.

John: Yeah, that's a keeper. That's a keeper. Okay. All right.

Russ: There you go. There you go. All right, and that brings us to This Week in Business History. So what happened right here at the end of February?

John: Well, it wasn't right here. It was like, you know, this is what happened in business history, in 1868 here if - I don't think anything ever happened here.

Russ: All right.

John: I mean we're _______. Okay, sorry to be so literal. This week in business history in 1868 the stapler was patented in England by G.H. McGill.

Russ: 1868?

John: A stapler, for goodness sake.

Russ: We're still using them.

John: I know. I know. And unfortunately the staple couldn't be used because the staple itself hadn't been invented yet, so he had to wait another ten.

Russ: Sure.

John: I'm just - okay. This week in business history in 1912, a guy named Albert Berry, and I think he's probably one of the bravest men who ever lived, because he made the first parachute jump from an airplane.

Russ: Wow.

John: It was a biplane that he jumped from, 1,500 feet and landed successfully at Jefferson Barracks, Missouri. That's quite an accomplishment. And could you imagine being the first guy to-

Russ: No.

John: I mean you would have to trust the equipment, you know?

Russ: No, I don't want to be the - I don't want to be the ten-millionth guy either that jumps. I'm not interested in jumping from a perfectly okay airplane.

John: Yeah, my son's been doing that. Kevin. My son, Kevin, has been doing some of that. I don't know how he does.

Okay, this week in business history in 1919 prohibition is ratified. So there you go.

Russ: You know it didn't work out very well.

John: No. Actually more alcohol was consumed during prohibition.

Russ: During prohibition, yeah.

John: That's right. Hey, you deny somebody something, they're-

Russ: They want it.

John: They want it. Okay, this week in business history in 1923 Time magazine debuts. Henry Luce, famous entrepreneur, saw the need for a weekly news magazine, and he gave the people what they wanted.

Russ: Wow, 89 years ago.

John: Eighty-nine years ago and he was - he kind of ran that thing with an iron fist and kind of did his own selective editing on some things, but he by and large built a very successful company. And that's that.

Russ: Okay.

John: This week in business history in 1924 the song "Happy Birthday to You" was published by Clayton Summy. And the interesting thing about "Happy Birthday" is if you ever watch a TV show or watch the movies or something and they sing "Happy Birthday," if you look at the credits at the end it's copyrighted by SCAP or BMI, one of those licensing organizations that controls the rights of music. And somebody somewhere that's related to Clayton Summy, he gets like $100.00 or something.

Russ: Well, and that's exactly why when you go to a restaurant and they come and sing "Happy Birthday" they don't sing the - they're not supposed to sing the original "Happy Birthday;" they always do their kind of own little flavor because of that very same reason.

John: That's right. That's right. So if you sing "Happy Birthday" at your house-

Russ: You've got to send this guy $1.00.

John: You better hope there's not an intellectual property lawyer who's sitting around the table, 'cause you'll get sued.

Okay, this week in business history in 1933 the New York City premiere of King Kong, that iconic ape that-

Russ: Yeah. Climbed the Empire State Building.

John: He climbed the - well, yeah, climbed the Empire and he got shot down. And a lot of people got shot down in their lives, so why should we mourn King Kong?

All kidding aside, it was a good movie. I wonder why the animal rights people didn't get all over this one, but it was a fictitious ape, you know. Who cares?

Russ: Yeah.

John: Okay. This week in business history in 1935 nylon was discovered by Dr. Wallace Carothers. Now the importance in nylon was women's stockings and other things was made from silk. And in 1935, the beginning of World War - it was almost the beginning of World War II, that Japan was starting to overcome countries in the Far East. Something had to be invented to replace the silk.

Russ: Right, to take the place of it. Yeah.

John: And it just goes to show that, you know, innovation is caused in many times because of some shortage of a product, whether it's a natural shortage or whether it's because of some sort of international conflict somewhere. And that's what happened with nylon. Nylon, I'm not saying that's what created the actual invention or what motivated the actual invention, but we should be very happy that this product came along when it did.

Russ: You bet.

John: Okay, this week in business history, in 1942 the birthday of Lou Reed of Freeport, New York, a rock vocalist, the Velvet Underground. He was the lead singer of Velvet Underground.

John: This week in business history in 1960 the first Playboy Club featuring bunnies. Now these were women who wore little bunny outfits, sexy little-

Russ: Right.

John: These weren't those actual furry little thing with big ears, okay? So the Playboy bunnies, this opened - the first one opened in Chicago, which is where Hugh Hefner was originally based.

Russ: Right. You know, you and I talk sometimes about how we know that the younger members of our audience, like entrepreneurs often don't know a lot about the history items, they might know about this one because there was a recent attempt at a TV series that I think didn't last but maybe two or three episodes, but at least they saw the commercials.

John: Right. Yeah. Okay, this week in business history, in 1962 K-Mart opens. Very successful company, one of the first of the big box stores out there that was able to compete with, you know, Montgomery Wards and-

Russ: Well, they took over Sears.

John: -and Sears and all these companies. And now they're - where are they?

Russ: Well, they're - they don't have their name out there anymore, but they went with the Sears name.

John: No. Yeah, K-Mart. Yeah, they - Sears is a better name just than K-Mart.

Russ: Yeah. Yeah, but even sears is not necessarily-

John: Yeah, they're closing their stores. I know, it's just, you know, you can't hold back the hands of time and, you know, people are shopping differently than they used to.

Russ: That's right. That's right.

John: Okay, this week in business history in 1965 the Temptations' "My Girl" reaches number one.

Russ: What a great song.

John: What a great group they were.

Russ: Yeah, they were. And a great song too.

John: Yeah, that's right.

John: This week in business history in 1968 singers Johnny Cash and June Carter wed. And they had-

Russ: It went down in a burning ring of fire.

John: A ring of fire. And they were portrayed in a movie not too long ago.

Russ: That was pretty good.

John: Which is not bad. Not bad at all.

This week in business history in 1969 the first test flight of the supersonic Concord occurred. And it's a good idea, unfortunately, the environmentalists in the United States prohibited supersonic flight of commercial airliners, so when the Concord came to the U.S. it had to slow down and couldn't fly to other - it could fly, but it couldn't fly supersonic speed.

Russ: So it took away some of the value.

John: Yeah, took away some of the value. If commercial airliners could go supersonic speeds it would - a flight from New York to L.A. would probably run about an hour, hour-and-a-half maybe, something like that. Which would be pretty cool

Russ Caper: Pretty cool. Yeah. Right. Yeah.

John: Of course, all those cows in the Midwest would get spooked, you know.

Russ: Right. Right.

John: Okay. This week in business history in 1981 Walter Cronkite, America's anchorman, signs off as the anchorman of CBS News. And you know who took over?

Russ: Uh, yeah.

John: Dan Rather.

Russ: Dan Rather.

John: Dan Rather, right, who had a fairly long run until he falsified-

Russ: Yeah, got in trouble. Right?

John: -falsified evidence to nail George W. Bush on his National Guard service. Now he didn't falsify personally the memos, but he took - he knew - they all knew they were, you know.

Russ: Right.

John: This week in business history in 1983 the compact disc recording technology was developed by Philips and Sony and introduced into the market.

Russ: Yeah, well they - CDs lasted a long time.

John: They still do.

Russ: Yeah, the media upgrade phenomena is always interesting. It's real interesting now, though, what's replacing it, you know, is like MP3/MP4 players and stuff.

John: That's right, all 1s and 0s.

Russ: So you ask what's going to replace those, well, probably another better format, maybe.

John: Format, right. Yeah.

Russ: That's compressed more or takes up less space and has higher fidelity.

John: Mm-hmm. This week in business history in 1995, this is unbelievable, Yahoo! is incorporated.

Russ: Ah, yeah. Wow. Yeah, Jerry Filo and what's his name, Yang, put together and, boy, had a really good run, that appears to be kind of petering out.

John: Slowing. Yeah, slowing down. Right. Yeah, this just - that just goes to show it's - no matter how new the concept is, sooner or later-

Russ: Or how big you get. Yeah.

John: Yeah. Someone, sooner or later someone's going to come up with a better mousetrap.

Russ: You bet. You bet.

John: This week in business history in 1998 gay rights, a big gay rights moment, Oncale v. Sundowner Offshore Services. This was a Supreme Court decision which ruled that federal laws banning on the job sexual harassment also apply when both parties are of the same sex. And why wouldn't it?

Russ: Yeah, which is interesting.

John: I mean why did this thing have to go to the whole, the Supreme Court.

Russ: Which is interesting that at one time it was not sexual harassment if it was a same-sex person harassing you.

John: Yeah. Right. Yeah.

Russ: Yeah, so it's-

John: So now it's, you know, it took - I mean what a waste of energy.

Russ: Right.

John: All right. Okay.

Russ: All right, and that wraps up today's history lesson.

John: I hope so. I don't think there's anything more ridiculous than that last one, you know.

Russ: Yeah. It was a good lesson, nevertheless.

John: Yeah, it is.

Russ: And that brings us to the Jargon Challenge Round, also known as our vocabulary lesson.

John: That's right. That's right.

Russ: I get to go out and choose a new phrase or word, jargon word, and John guesses the meaning.

Okay, you ready? Today's word is a two-word noun.

John: A two-word noun.

Russ: Yeah. A phantom vibration.

John: Phantom vibration.

Russ: Yeah.

John: Okay. You know like when you're - you hear about this when someone has a limb amputated, like an arm or a leg, there's that phantom feeling, you know, because even though the arm and the leg aren't there anymore, you know, there's such a memory of nerve responses from that appendage that people swear that - or think that they still have it when they really don't.

So phantom vibration is when you've experienced a vibration for like the idling of a car or something for over a long period of time, and then when it ceases to go away you still might sense it.

Russ: I think I'm going to have to say no. You're a loser today.

John: I'm a loser. Yeah, I do more - I guess these more often than not.

Russ: I know. I thought you would get this one for sure. It is actually the perception of a cell phone's vibration in the absence of an incoming call or text message. You know, like you have it in your pocket and maybe you have a little indigestion or something and you go, "Oh, what - what."

John: Or a heart attack.

Russ: You're going, "What's that? What's - am I getting a call or a heart attack?"

John: "Is this - I'm experiencing a heart attack."

Russ: Right.

John: Yeah, it is - you're right, I didn't get it. That's actually a better explanation than I could ever come up with.

Russ: Yes, it is. Well, I like it when you admit defeat, actually, instead of arguing.

John: Well, and I'm very humble. Very humble.

Russ: All right. Good deal. All right. And that brings us to Dumb Moments. Do you have one for us?

John: Well, first of all, if you have any children listening, you know, we're talking about something that's kind of of a sexual nature.

Russ: Adults only.

John: Adults only, so we're going to give you five seconds to-

Russ: Yeah, cover their ears up.

John: Or leave the room.

Russ: Yeah.

John: Okay, here we go. All right. All right, this is a guy named Dominique Strauss-Kahn.

Russ: DSK.

John: DSK. He was a former head of the International Monetary Fund. As we all know, awhile back he was in New York City, he got accused of sexually assaulting a maid and he was held under a bond or something, and he was bailed out and he went back to - 'cause they figured, they thought - everybody - they later determined he was kind of set up.

Russ: Yeah, well, they dropped the charges.

John: They dropped the charges, right. So anyway, so you'd think he'd learn his lesson. But he was arrested by the French police earlier this week on criminal charges relating to an illegal prostitution racket. Now the former IMF Fund, and this is according to The Daily Mail, a U.K. newspaper we're getting this report from, the former International Monetary Fund chief, he learned that there was evidence linking to him, and this is in quotes, "complicity and pimping and misuse - combined with misuse of corporate assets." Now the corporate assets come from an allegation that the money to pay for these parties came from a building company executive who is also accused of using his firm's fund to entertain these so-called guests.

Russ: Yes.

John: All right, now Dominique Strauss-Kahn has admitted to attending these sex parties, not only in Paris, but like all over the world, but he denies that the women he cavorted with were prostitutes. His reasoning for denying not knowing they were prostitutes, and this is a quote, is because the women were all naked at the time. He couldn't tell whether they were prostitutes or not.

Russ: He actually said that?

John: Yes. Right. And the really great line in this whole story so far comes from his lawyer, who has stated in that quote, "At these parties people were not necessarily dressed, and I defy you to tell the difference between a naked prostitute and any other naked woman."

Russ: So DSK's defense was he just went to a party, and he just-

John: Yeah, he's been to many parties. So apparently these parties were set up by this building company exec. I guess it was, you know-

Russ: Who hired prostitutes.

John: Yeah, right. Yeah.

Russ: DSK just thought they were just women in there socializing, right?

John: Yeah, because they were all-

Russ: 'Cause he couldn't tell.

John: They were all naked.

Russ: That qualifies.

John: Okay, now you can bring everybody back into the-

Russ: Bring the children back into the room.

John: Yeah. Okay. So I consider that a dumb moment.

Russ: I do too. All right.

All right, but before we wrap up today's School of Business it's time for the very popular PKF Texas Entrepreneurs Playbook. So let's welcome Mr. Greg Price.

Russ: All right, and that wraps up today's School of Business. Stay tuned then for Esther Freedman's interview of Dana Ostomel, the founder of Deposit a gift.

This is the Businessmakers Show, heard on the radio and online at thebusinessmakers.com.

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