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CEO Daily: The Best in Business Reading

Good Morning.

As long as humans have transacted business, there have been spats (or worse) over transactions and attempts at retribution after disputes. The Wall Street Journal has a superb yarn recounting a most modern incarnation of such a fight. The headline conveys a lot: “One Man’s Bid To Clear His Name Online: 4 Years, $3 Million And Some Dead Turtles.” The initial dispute was pedestrian: Who was responsible for the costs of an environmental cleanup when a building changed hands? The loser in the resulting court battle was incensed by his defeat and took it upon himself to launch a surreptitious Internet campaign to tar the winner as a latter-day Bernie Madoff. In today’s world, reputation consists most of all in what turns up in Google searches and that becomes the locus of the conflict in this article. It’s a combined character study and detective tale, as the wrongly maligned party tries to figure out who is throwing mud at him online. Ultimately, the reporter identifies the perp as a man named Ross Hansen and the key Internet henchman as a Hansen employee whose name, Steven Firebaugh, is revealed because of an embarrassing trip-up: Firebaugh used the same email address for his online skullduggery that he also used to set up “a personal profile on a website that describes itself as a ‘fetish and bondage play destination online for the worldwide alternative dating community.’” Oops. (Both Firebaugh and Hansen deny wrongdoing.) That’s one of many colorful unexpected details in a superbly reported article that reveals just how easy it is for a charlatan to sully your name—and how hard it is to undo it.



Subprime…Pet Finance?

What happens when the techniques of subprime lending are applied to people of modest means whose passion for buying an expensive pure-breed pet is exceeded only by their resistance to reading the contract they sign that explains how the purchase is being financed? Bloomberg’s entertaining-yet-dismaying “I’m Renting A Dog?” is the result. Here’s a representative passage:

One cat lover described buying a Bengal kitten from a breeder in Jacksonville, Florida, at a sticker price of $1,700—then learning they were on the hook for 32 monthly payments of $129, or about $4,100. “They explained to me that not only was this not a loan but a lease in which I would either have to continue making these payments or return the animal,” the customer wrote in a November 2015 complaint. “Also this cat is ruining my credit score.”

The final sentence is droll, but this is a serious subject. And as easy as it would be to blame feckless wastrels buying things they can’t afford, the reporting makes it clear that this business model was conceived precisely to take advantage of a human weakness. “We like niches where we’re dealing with emotional borrowers,” says the founder of a financing entity called “Wags Lending,” which is based in Reno (as it seemingly had to be). This is a fine article and it ends up illuminating a bigger social/financial point: the trend toward leasing (and financing) everything, down even to wheel rims for your car, and the effects that has. As often occurs when a certain type of financing takes off, somebody has identified an opportunity: According to the article, laws that limit interest rates don’t apply to leases, which means Wags Lending and others can charge triple-digit rates. That’s known as a lucrative market asymmetry if you’re the person who identifies it—and gouging if you’re the person who’s paying it.

Emotion In The C-Suite

“This Man Makes Founders Cry,” in Backchannel, is as emotional as the headline suggests. It’s a finely etched profile of Jerry Colonna, a New York venture capitalist who transformed himself into a coach for CEOs, largely those who work for Silicon Valley start-ups. Fortune has written about Colonna before, and he’s a highly sympathetic person, a man who is willing to bare his soul and discuss the depression that has darkened his life. That quality turns out to be integral to his ability to connect with those he advises. This is not a story to read looking for, say, “the five tips to becoming a better leader.” Instead, it’ll make you think about softer qualities and how easy it is to under-rate their importance. The article reminded me a bit of the profiles I’ve read about the music producer Rick Rubin, who has overseen outstanding recordings by wildly disparate artists, ranging from Run-DMC and the Beastie Boys to Tom Petty and Johnny Cash, not to mention Neil Diamond, Shakira, and Sheryl Crow. His secret, according to those pieces, isn’t a particular sonic genius so much as an intangible human ability to create an environment that brings out the artists’ best selves. This article about Colonna reminded me of those portraits. The piece, also, is not without humor, including in the one passage where the writer discusses her own reaction to her subject:

When Colonna listens to your answer, he draws in his lower lip underneath the top in a frown of concentration as he fixes his eyes on you, unwavering but generous. Next thing you know, you are telling him you wanted to be a writer because you were taught the importance of bearing witness as a child when you didn’t feel heard by your parents. And more likely than not, you’re crying. Hypothetically, of course.

Harassment At Kay Jewelers?

Sexual harassment in the workplace was in the business news a lot this past week, with allegations emerging at tech darlings Uber and Tesla. But the best reporting on the subject this week—it’s terrible that there’s so much to choose from—appeared in the Washington Post, with its investigation of what sounds like a toxic culture at Sterling Jewelers, parent of the well-known brands Kay Jewelers and Jared the Galleria of Jewelry. The article is presented as a straight news story, laying out its reporting in plain English: “Declarations from roughly 250 women and men who worked at Sterling, filed as part of a private class-action arbitration case, allege that female employees at the company throughout the late 1990s and 2000s were routinely groped, demeaned and urged to sexually cater to their bosses to stay employed.” The company denies the allegations but seems to undercut the force of those denials by asserting that the class action was originally intended to focus on gender discrimination rather than harassment. How is that supposed to exonerate the company? Ultimately, the article’s bare bones presentation works to its advantage—it’s filled with named sources making seemingly credible assertions—and this article is worth reading for what its deep reporting reveals about a problem that doesn’t seem to be going away.

Nicholas Varchaver