Applebees Owner Discusses Obama Care

Here is yet another disgruntled business owner complaining about the regulatory burden of Obama Care.

Earlier this year Papa John’s CEO also addressed the costs of providing health care to his full-time employees. According to “The Papa”, costs will rise about $0.14 on a pizza. Yes, that’s right. 14 cents.

The following interview is with Zane Tankel. See the Huffington Post Article here. He is a franchise owner of forty Applebee’s in the New York area. He talks about his chain of stores, and he addresses how Obama Care will affect his business.

What is Social Entrepreneurship?

Group of Microfinance borrowers in Costa Rica

Group Borrowers in Costa Rica

I was first introduced to the idea of social entrepreneurship in college while exploring different reads at a Barnes and Noble in between shifts of a summer job. I came across a book in the economics section titled Portfolios of the Poor: How the Poor Live on $2 a Day. In that book I was introduced to Muhammad Yunus and the idea of microfinance. Yunus believes that what limits many of the poor from climbing out of poverty is a lack of access to affordable income generation capital. The brilliance of the idea was the simplicity with which he chose to solve the problem. Instead of requiring borrowers to provide collateral. He required borrowers to take out loans in groups. Instead of physical collateral, he insured the loans with social ties. All borrowers were responsible if one in the group failed to repay. I was hooked. I purchased the Economics of Microfinance, and interned with a MFI in San Jose, Costa Rica.

Upon graduation from college I was selected to attend The Social Innovation Program at George Mason University. While raising money to attend the 6-week program, I encountered the same question from just about everyone I spoke with. That question was, “What is this Social Entrepreneurship thing?”

Ashoka Foundation for Social Entrepreneurs Logo

Ashoka, Innovators for the Public

Ashoka, a leading foundation that supports social entrepreneurship, defines the practice as a mix between revolution and traditional business practices and strategies.

Rather than leaving societal needs to the government or business sectors, social entrepreneurs find what is not working and solve the problem by changing the system, spreading the solution, and persuading entire societies to take new leaps.

Social entrepreneurs often seem to be possessed by their ideas, committing their lives to changing the direction of their field. They are both visionaries and ultimate realists, concerned with the practical implementation of their vision above all else.

Each social entrepreneur presents ideas that are user-friendly, understandable, ethical, and engage widespread support in order to maximize the number of local people that will stand up, seize their idea, and implement with it. In other words, every leading social entrepreneur is a mass recruiter of local changemakers—a role model proving that citizens who channel their passion into action can do almost anything.

Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society, seizing opportunities others miss and improving systems, inventing new approaches, and creating solutions to change society for the better.

At its heart, Social Entrepreneurship is about allowing individuals to use their creativity to tackle and solve social problems. It is about mobilizing individuals like you around a cause and solution that is disruptive and transformative. It is about having values and ideals at the core of your actions rather than as hopeful byproduct.

For Example:

Google’s mission is to organize the world’s information and make it universally accessible and useful.

TerraCycle‘s purpose is to eliminate the idea of waste.

The fundamental objective of Johnson & Johnson is to provide scientifically sound, high quality products and services to help heal, cure disease and improve the quality of life.

Frogtek is a for-profit social venture dedicated to creating business tools for micro-entrepreneurs in emerging markets.

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“None of us know all the potentialities that slumber in the spirit of the population, or all the ways in which that population can surprise us when there is the right interplay of events.” -Vaclav Havel

Picture of Vaclav Havel, Czech dissident and President

Dissident and President of the Czech Republic

How Do Republicans Win in 2016?

Moving from election 2012 to 2016

Election 2012 is Over

It’s 11pm on Tuesday November 6th, 2012. The election hasn’t been called for Barack Obama yet, but the writing is on the wall. Obama is trading at 96% on Intrade after hanging around 60% during the months leading up to the election. Romney didn’t have a chance, and everyone knew it before the polls opened this morning.

I’m an independent. I haven’t voted in a presidential election, and I don’t plan on it until I am presented a candidate who doesn’t make me feel like I am choosing the lesser of two evils. Right now the Republicans are unstable, and the Democrats are unsustainable.

We all know the Republicans are already back at the drawing board asking how they win in 2016. Here are three simple solutions:

  1. Get rid of the Tea Party. Don’t mention their name. Act like they don’t even exist. Their ideas make the rest of the party look crazy. As we’ve seen, this constituency has little staying power, and is too radical to provide any ideas worthy of a national platform.
  2. Legalize It. Republicans still and will have trouble with voters under the age of 30. Flip the switch on the Democrats and admit defeat on an unattainable goal. Doing so eliminates one contradiction in the party, frees up resources to tackle other issues like the budget, and radically shifts the party “cool factor”. I’ve never understood why and how the Republican party takes moral stances on issues that involve personal choices.
  3. Embrace Social Entrepreneurship and make it a household word. I hear Republicans bemoan how government is not the solution to our problems. It may not be, but, we do have problems, and we must begin to solve them. One potential solution is social entrepreneurship, individuals developing creative, sustainable business solutions to social problems. That needs to be a term that every Republican knows.

I’m not saying any of these will happen. To all of my Hampden-Sydney friends out there disappointed about the loss, you heard it here first, make these changes and the Republican party will be competitive again. Continue on this path and the Republican party may be extinct by 2020.

Most People Believe X. But the Truth is X!

Peter Thiel, Paypal and Facebook Investor

Peter Thiel, Paypal and Facebook Investor

Well…I got home from work around 12:30 tonight, and I started to dive into notes from a class that Peter Thiel taught at Stanford (Thanks Pat Stanley!).

At the end of the first class Thiel poses a question to test and see if you are indeed moving from 0 to 1. Read the notes (after reading this post first of course) if you want to know what that is exactly.

The academic version is: What important truth do very few people agree with you on?

or

The business version is: What valuable company is nobody building?

The Gini App was inspired by two simple questions. Do consumers know? What would they do if they knew?

I was in the middle of an $1,800 sales hour during the opening week of the restaurant I currently manage (I will not name it right now due to social media policy concerns). Trust me, that’s a ton of the product we serve. While I was scrambling around the kitchen watching in awe as the line of people stretched outside and around the building in the 100+ degree heat, I wasn’t even thinking about work. I was thinking about the paychecks behind the smiling faces and sweating bodies in the kitchen.

Weeks later, after sales had slowed and the store shifted into the normal swing of things I started doing the math. All of the lowest employees started out at $7.25 an hour. Today is almost six months after the store opening and not one employee has seen a raise. The store sold $112,000 worth of product the first week it was open. Since the first week, the store has leveled off to around $40,000 a week, and sales are starting to ramp back up for the holidays. Over the course of the year the discrepancy between wages paid out and profits collected becomes pretty significant. Sales versus wages paid out to employeesI don’t know about you, but to me that looks like the local economy is effectively being taxed by corporate America. Remember, that is just one location. Those corporate profits will not be spent at locally owned restaurants, on local produced products, and on local people. That is less money in circulation to hire local employees. Most importantly, I realized the opportunity that outside businesses provide smaller economies is only good if the balance is right. After all, that is a cost that we as consumers should factor in to our purchasing decisions.

In response to Peter Thiel’s question I would say that capitalism is not and does not function correctly for low skilled labor jobs. We need a radical new approach to find a balance between labor and capital.

Wouldn’t it be nice if we could see those numbers and start playing positive sum games rather than zero sum games.

I think it would.

Ehhh…It’s now around 6 am and I have to be back at work at 11am. At least I have Tuesday off! I’ll probably have another post then.

What is a Fair Wage?

QE3 is an asset switch?

What is Bernake Thinking?

While doing a little research on the fair wage movement, I came across an article that addressed the problems of QE3 (Quantitative Easing) and why stimulus money will not affect our problem of aggregate demand. The article points out that QE3 is a questionable tactic for a couple of different reasons. First, QE3 is nothing more than trading bank assets and will have very little impact on demand for products. QE3 is meant to lower interest rates and encourage consumers and companies to spend. Second, Ellen Brown, the article author, suspects some political motivations for the policy. QE3 drives up the stock market and commodities market in anticipation of the new policies. Stock prices are driven up with expectations of more money in the market, and commodities are driven up due to the potential for inflation.

So what? I hope I haven’t lost you already. I promise I will let you know what QE3 and fair wages have in common.

What makes the Fed think that QE3 will be effective? According to a June 18th article by Susanna Kim, Median Household net worth is down 35% as a result of the housing boom and bust. That is a huge drop in household net worth. Furthermore, households have experienced wage stagnation. Dylan Matthews writes that wages for people with some college has fallen by a third and earnings for high school dropouts has fallen by 66% since 1969. Now, we may need to have a discussion about how people need to finish high school and college, but that is irrelevant right now. Most of the largest employers in the United States consist of jobs that don’t require a high school or college education. Here is a look at the top 10 employers (# of employees).

Low skilled U.S. employers

U.S. Companies with the most employees

So how will individuals, who are underwater in their homes with stagnating incomes, be able to spend their way out of this economy? The general consensus is that wealthy individuals cannot spend our way out of this economic stagnation. Their numbers are limited. As Nick Hanauer  points out that he can only buy so many cars or go out to eat so many times. It will take a larger middle and lower class to get out economy kickstarted.

How do we get more money in the hands of the individuals most likely to spend it? I do not think government action is an efficient or appropriate way to achieve this goal. Tax breaks should not be given and raising rates is tricky. People need to make more money. I believe the only way for people to make more money is to correct the demand problem, and in order to do that we must have a conversation that includes the question, “What is a fair wage?”. I think most people realize that a government imposed wage of $7.25 per hour isn’t the answer. I would argue that a government imposed wage is not even part of the equation. Companies are becoming fabulously rich because they are only required to pay employees that low wage. They are not passing those wage savings along to the consumer. Instead, they parlay those gains into huge profits for their shareholders.

Here’s a hypothetical:

You walk into a restaurant. You look down at your phone and notice that the business pays hourly employees on average $7.50/hour. You also notice that the company or business owner collects around $700,000 a year from that individual business. While on your phone, you are presented another eating option. The food is similar, but the second option pays employees an average of $9/hour. The owners still collect around $400,000 per year. If you had those options, quality being similar, which would you choose? Can you intelligently make that choice now?

Better wage information in the marketplace and enlightened consumers will force large service and good providers to pay employees more or risk losing business as a result. That conversation needs to start now! Share this post if you agree.

Launch

Welcome to the Launch post! Thanks for visiting.

The concept of The Gini App is simple: use information technology to provide more transparency and better information in the marketplace for consumers.

Economic inequality is a problem. Richard Wilkinson points out that highly developed economic societies with smaller gaps between rich and poor have better health, fewer social problems such as violence, drug abuse, teenage births, mental illness, and obesity. Also, economic inequality has an impact on social mobility. In more unequal countries like Great Britain and the United States it matters more who your father is that in the Scandinavian countries. If you step back from any political affiliations you have and just think about it, the assertion makes sense. He also jokes, if you want to live the “American Dream”, you better move to Denmark.

Currently I manage a corporate restaurant and see the reality each day. Since the store is new the majority of the employees started out at minimum wage, $7.25/hour. The total wages of the employees (including three salaried managers) at the store is only about 20% of net profits, and the store is sending the corporate office around 30% in net profits. Many of the employees are on some sort of government assistance. Some are trying to invest in themselves by continuing their education. Almost all find it difficult to pay their bills and survive on such a meager wage. One of my employees has ovarian cancer. She doesn’t have health care coverage, and can’t work as much because of her condition.

I believe there is a connection between employee pay and the connection that the employer has to his employees. I have experienced this discrepancy first hand. When I was in college I worked as a crew member for a franchise restaurant location. Now I manage a corporate location of the same restaurant brand. Both stores, the franchise and corporate location, have similar sales numbers; however, I was paid more as a crew member for the franchisee than I started out making as a manager for the corporate location. That is unacceptable, and I think many consumers would agree if they knew the facts.

There are two potential movements to solve the problem of income inequality in the country. We can take a top down approach where we demand the government tax individuals who make huge fortunes. I don’t think this is a very attractive or efficient option. On the other hand, we could take a bottom up approach by allowing individuals to decide with their purchasing dollars.

How do we do it?

Last year I was sitting in on a pitch session with Wed3, an angel investment group in Charlotte, NC. During one of the pitches, a potential investor made a comment.

He said, “Have you ever heard of the Golden Rule?”

The pitch maker was hesitant and nodded, not knowing if they were on the same page.

The investor expanded, “You know the golden rule, He who has the gold makes the rules.”

This brought some laughter to the room, but I’m sure that much of that laughter had a measure of discomfort about it. There were probably about 10 different people in the room looking for funding. They knew that their chances of acquiring funding were already small, but if they did get funding, they would be required to submit themselves to the rules and whims of their investors.

The Gini App flips the idea of the “Golden Rule” around. Much like entrepreneurs looking for funding, businesses are competing for consumers to spend dollars on their goods and services. With that mindset in place, consumers with better information can start demanding that businesses who want their business play by the rules of the consumer. Using the information that The Gini App provides, consumers could start taking their purchasing dollars to businesses who take care of their employees and have a more equitable business model.

The purpose of this blog is to attract, inform, and mobilize individuals who share this vision of where we are, and where we could go.

I will need capital to develop a minimum viable product. As soon as The Gini App has interest from 1,000 people, I will launch a crowdfunding campaign to raise the necessary capital.

You can stay involved and informed in a number of different ways. Subscribe to the email list with the link right here on the side, or feel free to follow The Gini App on Facebook or Twitter.

Stay tuned for updates and posts explaining the concept!