I attended NVIDIA's (NVDA) shareholder meeting on June 19, 2008. NVIDIA has an Asian CEO, Jen-Hsun Huang, who comes across as knowledgable and enthusiastic. In San Jose, where so many Southeast Asians, Middle Easterners and Asians drive innovation, most companies still have no diversity in upper management ranks. While NVIDIA appears to be diverse, it's not helping the company's share price, which is down significantly this year.
NVIDIA designs graphics chips and cards. NVIDIA has partner fabs that actually make the chips which are then sent to partner factories to be mounted on video cards for PCs. NVIDIA graphics cards that bear NVIDIA as the manufacturer are referred to as reference cards.
NVDA's most touted product is its GeForce, a video graphics chip (NVDA likes to brag that the "graphics chip was given a soul" by its company). GeForce revenue increased 28%, and overall revenue increased 34%. Revenue numbers looked great, so it is quite possible the stock price is undervalued.
NVDA specializes in the high growth area of gaming, which requires high-end video graphics. It has even partnered with Hollywood movie companies to make films--the higher the graphics requirements, the more NVDA's products will be in demand.
As for competition, I asked my engineering friends why Intel wouldn't muscle in on NVDA's territory if NVDA is basically a fabless semiconductor company. Here is what one engineer said:
Intel did try to make a top-of-line video card at one time to compete with NVIDIA and ATI (AMD) but they failed. Modern day top-of-line video cards that NVIDIA and ATI (AMD) produce are very complex devices that take years of R&D. Video card drivers are notoriously complex pieces of software that also take years to fine-tune. Video card drivers support many if not all of the features of OpenGL and DirectX.
This anti-Intel piece brought some indignation from an Intel engineer, who referred everyone to "Larrabee." The Larrabee will not be available until Q1 2009, so until then, NVDA will be king of the graphics processing unit (GPU).
The highlight of the shareholder meeting was the "annual yearbook" video. It showed several fun pictures of the company and its worldwide employees, including a great Fortune cover with the CEO. It became apparent that NVDA's decision to open up its architecture through CUDA (a set of development tools) is something that should be analyzed in more depth. Like Linux, opening up a technology company's architecture allows hardcore geeks to improve your products for free, but this "free" work comes at a cost, namely less control over the product. Last time I checked, Microsoft's operating system is still king, despite the programming community's swearing that Linux's OS is superior. In any case, several images of "CUDA Everywhere" flashed on the screen.
The employee tidbits in the video yearbook were the most amusing--the video alternated between employees who had been there a few weeks to some who had been there for fifteen years.
After the video yearbook, which was impressively done, the presentation mentioned Quadro (Creativity), Tesla (Discover), and other NVDA products. The CEO stated his goal of making the 2-D into 3-D. Mr. Huang talked about four areas of innovation: photorealism; parallell processing; dimensionalization; and imaging and sensing, all tools to make the 2-D into beautiful 3-D. Mr. Huang compared his company with Nike several times, meaning that he wanted NVDA to be partners with the best video gaming companies and the best gamers, similar to Nike and Jordan, for example.
One slide showed the insides of a GeForce chip, more specifically the GTX 200 chip. It has 1.4 billion transistors, 933 GigaFLOPS of processing power, 240 processing core, and more than 20,000 threads. I have no idea what that means, but it sounds damn impressive.
Mr. Huang mentioned that the world's leading physics simulator used his products, and then took us into a John Madden NFL video game, where a player named "Gibbs" (Washington Redskins fans in the house?), showed how NVDA technology is used in more everyday applications.
Mr. Huang clearly wanted to show that NVDA was more than just a gaming company--he showed that his products help speed up iPod movie downloads (from conversion to finish) through the BadaBoom application, and talked about a new project, Folding@home, a Stanford-NVDA project. Other NVDA chip/card uses involved film, and we saw a clip of Curse of the Golden Flower, which apparently used the NVDA Tegra chip to create its visual effects.
There were only two questions. One person asked about the criteria NVDA uses to give back to the community. Mr. Huang said that the NVIDIA Foundation was independent and involved in diverse areas with no set criteria. NVDA has assisted battered women, schools, and other causes.
I asked the second question, about some specific items in the 10K, focusing on a section on competition from Intel, and who NVDA's major customers were. Mr. Huang talked about "having the courage to take the risk" of innovating into novel areas, and "imagining 'there' five years before going there." He said that NVDA's top customers were Dell and HP.
All in all, a very interesting presentation, but one that could have been done in less time. Some shareholders were getting antsy after more than an hour. The food, by the way, was good--I had some juice and a breakfast burrito.
With respect to the overal market, last week's stock markets swooned, and the Dow fell more than 300 points on one day. Is this the bottom? For long term investors, it may make some sense to wade back into the market and pick up shares of financially sound companies, such as Intel, GE, and perhaps even Pfizer. But short term investors willing to take on some risk may benefit also. I bought 1000 shares of GE on Friday and plan on selling it before Thursday. I predict GE will hit 27.50 at some point next week. Some brave souls willing to wait may want to consider NVDA as well.
Update on June 30, 2008: I picked up another 100 shares of PNK.
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Sunday, June 29, 2008
Thursday, June 26, 2008
Clarence Thomas Gives UGA Commencement Speech
Justice Thomas coined an interesting phrase: "telescopic philanthropy," to refer to someone who cares more about people far away than issues at home. Here is the link to the speech:
http://www.uga.edu/news/artman/publish/printer_080529Thomas_commencement.shtml
I always like quoting Justice Thomas directly because of the criticism he receives from the media. When the media paints a man as polarizing, it's important to look at what he says, rather than what is said about him.
http://www.uga.edu/news/artman/publish/printer_080529Thomas_commencement.shtml
I always like quoting Justice Thomas directly because of the criticism he receives from the media. When the media paints a man as polarizing, it's important to look at what he says, rather than what is said about him.
Tuesday, June 24, 2008
East and West: Singaporean-American Blogger Sued for Defamation
I lived in Singapore for a little while and loved it, so I took a special interest in today's San Jose Mercury News, which had a story about the Singaporean government suing a blogger for defamation. The blog can be found here:
http://singaporedissident.blogspot.com/
Most of the blog has a sensationalist style, but there are two well-written paragraphs where the blogger successfully articulates his position:
This whole matter boils down to one question. A right to free speech and expression. It appears to me as well as anyone watching this case that what the Singapore authorities are trying to say is this. Do not criticize the Singapore judiciary no matter what. Even if the Singapore judiciary were to say, two and two is ten, the Moon is made of cheese and Christmas Day does not fall on December 25th, we have to keep our mouths shut and go about our business as if nothing happened! What the Singapore authorities are trying to say, if I correctly understand it, is that human beings are disallowed from criticizing the judiciary, period! They are above criticism. They are beyond question. They are invincible. Infallible. They are the best, and need no criticism from mortal human beings! That they are Gods.
I, as a human being cannot understand this to be correct, surely. I was born a Singaporean. I lived my life here in Singapore. I am a former Singapore politician. The welfare of Singapore and Singaporeans should be more my concern than that of Central West Africa! Surely. Criticism is necessary for any organization to improve, to get better. Without criticism, there is stagnation. And with stagnation there is no hope. This has always been the case. What I had done and said was for the welfare of Singapore, a country that I care for and a country in which I have a stake, even if I am now an American.
Whenever someone criticizes Singapore, it is usually from a myopic Western perspective. Most people in Western societies equate democracy and free speech with success or, if they are more condescending, with civilization. But being democratic is no surefire avenue to express the majority's will, as we saw with Al Gore's contested election and as we see now with the current war in Iraq. Also, restricting free speech is not an uncommon tactic--Germany bans swastikas, and France just prosecuted Brigitte Bardot for inciting violence against Muslims. As such, the Western media seems to unfairly single out Singapore without providing appropriate context and its different path of Eastern values, which emphasizes cooperation over independence.
It may seem contradictory for a libertarian to defend Singapore when it sues its own citizens for criticizing the government, but Singapore is a unique country, and its actions must be taken in the context of its size and broad-based economic success. First, Singapore is small and has very few natural resources. Its area consists of about 300 square miles--to give you an idea of how small that is, Rhode Island, the smallest state in the U.S., is about 1500 sq miles. Second, Singapore is very diverse--when I was there, I saw Chinese Buddhists, Israeli Jews, Malaysian Muslims, white Christians, and Indian Hindus. As a result of being diverse, both religiously and ethnically, Singapore takes special care to regulate speech to make all groups feel welcome and to minimize chances of a racial riot (a risk it is particularly sensitive to after its 1964 riots). In short, Singapore needs to project an image of harmony to ensure its status as Southeast Asia's banking hub. In exchange for good behavior, Singapore offers its citizens subsidized housing (HDB flats), safety (no drugs are allowed in the country, and gun-related deaths are rare--for a general overview, see http://ije.oxfordjournals.org/cgi/reprint/27/2/214.pdf), and low unemployment (on 1/30/08, the reported unemployment rate was 1.6%).
In some ways, Singapore seems like the polar opposite of the United States. It does not have a 2nd Amendment, freedom of speech, large land mass, and an adversarial system of checks and balances. But it works. In smaller countries, a government can successfully micromanage its population to create stability. For example, the U.S. government and the Fed Reserve just pumped a lot of money into the American economy, but it is having little effect and will probably cause inflation. In a smaller population, a government can pump in a smaller amount of money into its economy and positively affect its entire population, while avoiding massive inflation due to lower population numbers. In simple terms, Singapore can use very little money to build a few good housing projects and solve homelessness, while America needs to do a lot more and spend a lot more to solve homelessness. In addition, with a smaller population, inflation stops more quickly after benefits or monies are given because the monies are expended in a faster and more predictable fashion, whereas in a larger population, granting extensive benefits may lead to prolonged periods of inflation as the money works its way more slowly and more unpredictably through the economy.
This opportunity to effectively micromanage means that smaller countries can be successfully socialist if most of its citizens cooperate and are willing to delegate. While that sounds hostile to anyone who has read Thomas Jefferson, Singapore's system continues to attract major outside investment while providing a high quality of life to almost all of its citizens. Homelessness, a high prison population, murders, poorly performing schools, and large pockets of unemployment are virtually non-existent in Singapore. Singapore's infrastructure is also better developed than most European countries and most American cities--its MRT system is as good as D.C.'s Metro or Germany's U-Bahn. By most tangible measures, Singapore is one of the most successful countries in the world, if not the most successful.
Thus, given the differences in scale, it is unfair to compare small, cooperative, and cohesive Singapore to large, adversarial, and idealistic America. At the end of the day, there ought to be room for a country that gives its citizens free/subsidized housing, safety, and cheap, delicious food, while minimizing unemployment. These are tangible, quantifiable items that Singapore works hard to bring to its people. To borrow from Walt Whitman, Singapore is not large, and it does not contain multitudes. It offers a simple, direct deal--be cooperative, and you will be safe, not homeless, and live in a stable, diverse and rich country. America's deal is different, and not necessarily a superior deal for all citizens. America is unique because it is vast and tries to live up to very high standards in an adversarial system that prizes independence. When it works, it's wonderful--we get to claim Google, we attract the best and brightest from all over the world, and we have freedom and creativity that lead to timeless films and books. But our system is unpredictable--when it doesn't work, we get Watts Riots, a costly war in Iraq, people imprisioned in Guantanamo Bay for six years without due process, many desperately poor people or people one paycheck away from being homeless, and shootings of innocent citizens, like Vahid Hosseini (San Jose, CA) and Alia Ansari (Fremont, CA). Singapore offers a different flavor for people who like to cooperate and don't mind making some intangible sacrifices.
On a personal note, when I was in Singapore, I felt safer there than here in the United States. Singapore has no history of physical violence or prolonged physical detention against its own citizens or residents. America's government locked up its own residents (Japanese and German internment camps); killed dissidents (the Black Panthers' Fred Hampton and Mark Clark, Kent State); blacklisted "subversives" (McCarthyism); and enslaved minorities. With the exception of suing its "subversives" in court--still an open process--Singapore has no history that requires it to change its cooperative structure. Given its stunning economic success, Singapore should be given the benefit of the doubt, at least for now.
http://singaporedissident.blogspot.com/
Most of the blog has a sensationalist style, but there are two well-written paragraphs where the blogger successfully articulates his position:
This whole matter boils down to one question. A right to free speech and expression. It appears to me as well as anyone watching this case that what the Singapore authorities are trying to say is this. Do not criticize the Singapore judiciary no matter what. Even if the Singapore judiciary were to say, two and two is ten, the Moon is made of cheese and Christmas Day does not fall on December 25th, we have to keep our mouths shut and go about our business as if nothing happened! What the Singapore authorities are trying to say, if I correctly understand it, is that human beings are disallowed from criticizing the judiciary, period! They are above criticism. They are beyond question. They are invincible. Infallible. They are the best, and need no criticism from mortal human beings! That they are Gods.
I, as a human being cannot understand this to be correct, surely. I was born a Singaporean. I lived my life here in Singapore. I am a former Singapore politician. The welfare of Singapore and Singaporeans should be more my concern than that of Central West Africa! Surely. Criticism is necessary for any organization to improve, to get better. Without criticism, there is stagnation. And with stagnation there is no hope. This has always been the case. What I had done and said was for the welfare of Singapore, a country that I care for and a country in which I have a stake, even if I am now an American.
Whenever someone criticizes Singapore, it is usually from a myopic Western perspective. Most people in Western societies equate democracy and free speech with success or, if they are more condescending, with civilization. But being democratic is no surefire avenue to express the majority's will, as we saw with Al Gore's contested election and as we see now with the current war in Iraq. Also, restricting free speech is not an uncommon tactic--Germany bans swastikas, and France just prosecuted Brigitte Bardot for inciting violence against Muslims. As such, the Western media seems to unfairly single out Singapore without providing appropriate context and its different path of Eastern values, which emphasizes cooperation over independence.
It may seem contradictory for a libertarian to defend Singapore when it sues its own citizens for criticizing the government, but Singapore is a unique country, and its actions must be taken in the context of its size and broad-based economic success. First, Singapore is small and has very few natural resources. Its area consists of about 300 square miles--to give you an idea of how small that is, Rhode Island, the smallest state in the U.S., is about 1500 sq miles. Second, Singapore is very diverse--when I was there, I saw Chinese Buddhists, Israeli Jews, Malaysian Muslims, white Christians, and Indian Hindus. As a result of being diverse, both religiously and ethnically, Singapore takes special care to regulate speech to make all groups feel welcome and to minimize chances of a racial riot (a risk it is particularly sensitive to after its 1964 riots). In short, Singapore needs to project an image of harmony to ensure its status as Southeast Asia's banking hub. In exchange for good behavior, Singapore offers its citizens subsidized housing (HDB flats), safety (no drugs are allowed in the country, and gun-related deaths are rare--for a general overview, see http://ije.oxfordjournals.org/cgi/reprint/27/2/214.pdf), and low unemployment (on 1/30/08, the reported unemployment rate was 1.6%).
In some ways, Singapore seems like the polar opposite of the United States. It does not have a 2nd Amendment, freedom of speech, large land mass, and an adversarial system of checks and balances. But it works. In smaller countries, a government can successfully micromanage its population to create stability. For example, the U.S. government and the Fed Reserve just pumped a lot of money into the American economy, but it is having little effect and will probably cause inflation. In a smaller population, a government can pump in a smaller amount of money into its economy and positively affect its entire population, while avoiding massive inflation due to lower population numbers. In simple terms, Singapore can use very little money to build a few good housing projects and solve homelessness, while America needs to do a lot more and spend a lot more to solve homelessness. In addition, with a smaller population, inflation stops more quickly after benefits or monies are given because the monies are expended in a faster and more predictable fashion, whereas in a larger population, granting extensive benefits may lead to prolonged periods of inflation as the money works its way more slowly and more unpredictably through the economy.
This opportunity to effectively micromanage means that smaller countries can be successfully socialist if most of its citizens cooperate and are willing to delegate. While that sounds hostile to anyone who has read Thomas Jefferson, Singapore's system continues to attract major outside investment while providing a high quality of life to almost all of its citizens. Homelessness, a high prison population, murders, poorly performing schools, and large pockets of unemployment are virtually non-existent in Singapore. Singapore's infrastructure is also better developed than most European countries and most American cities--its MRT system is as good as D.C.'s Metro or Germany's U-Bahn. By most tangible measures, Singapore is one of the most successful countries in the world, if not the most successful.
Thus, given the differences in scale, it is unfair to compare small, cooperative, and cohesive Singapore to large, adversarial, and idealistic America. At the end of the day, there ought to be room for a country that gives its citizens free/subsidized housing, safety, and cheap, delicious food, while minimizing unemployment. These are tangible, quantifiable items that Singapore works hard to bring to its people. To borrow from Walt Whitman, Singapore is not large, and it does not contain multitudes. It offers a simple, direct deal--be cooperative, and you will be safe, not homeless, and live in a stable, diverse and rich country. America's deal is different, and not necessarily a superior deal for all citizens. America is unique because it is vast and tries to live up to very high standards in an adversarial system that prizes independence. When it works, it's wonderful--we get to claim Google, we attract the best and brightest from all over the world, and we have freedom and creativity that lead to timeless films and books. But our system is unpredictable--when it doesn't work, we get Watts Riots, a costly war in Iraq, people imprisioned in Guantanamo Bay for six years without due process, many desperately poor people or people one paycheck away from being homeless, and shootings of innocent citizens, like Vahid Hosseini (San Jose, CA) and Alia Ansari (Fremont, CA). Singapore offers a different flavor for people who like to cooperate and don't mind making some intangible sacrifices.
On a personal note, when I was in Singapore, I felt safer there than here in the United States. Singapore has no history of physical violence or prolonged physical detention against its own citizens or residents. America's government locked up its own residents (Japanese and German internment camps); killed dissidents (the Black Panthers' Fred Hampton and Mark Clark, Kent State); blacklisted "subversives" (McCarthyism); and enslaved minorities. With the exception of suing its "subversives" in court--still an open process--Singapore has no history that requires it to change its cooperative structure. Given its stunning economic success, Singapore should be given the benefit of the doubt, at least for now.
Stocks Update
The WSJ mentioned Colonial BancGroup (CNB) in an article today titled, "Small Banks Get Tempting." Author Peter Eavis said that CNB was an "intriguing prospect," but it would probably take two to three quarters (9 months) before the stock would rebound. He mentioned that the bank's charter had changed from federal to state, "allowing it to replace the Office of the Comptroller." I don't think anyone quite understands that all banks are regulated by the Office of the Comptroller if their funds are FDIC-insured. Either I'm wrong, or financial journalists aren't doing their homework.
Pinnacle Entertainment (PNK) took quite a beating today and yesterday. I only have 100 shares, and won't add anymore just yet, but I am surprised the stock is down this much. As Mr. Eavis might say, PNK looks like an "intriguing prospect" at these prices.
Open Positions
CNB = -2.51
EQ = -2.15
EWM = -3.61
GE = -6.00
IF = -8.04
PFE = -7.84
PNK = -13.72
Average of "Open Positions": losing/negative average of 6.27%
Closed Positions:
Held more than seven days but less than one year:
PPS = -2.8
WYE = +2.4%
Held less than 7 days:
ICE (+2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%) (Overall record in this category is a 3.78% average gain)
Daytrades:
PFE = +0.5%
Average of "Closed Positions" sub-categories, except for Daytrades: up/positive 2.09%
Combined Total Averages, excluding Daytrades: losing/negative 4.18%
Compare to S&P 500: losing/negative 5.15%
[from May 30, 2008 (1385.67) to June 24, 2008 (1314.29)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Pinnacle Entertainment (PNK) took quite a beating today and yesterday. I only have 100 shares, and won't add anymore just yet, but I am surprised the stock is down this much. As Mr. Eavis might say, PNK looks like an "intriguing prospect" at these prices.
Open Positions
CNB = -2.51
EQ = -2.15
EWM = -3.61
GE = -6.00
IF = -8.04
PFE = -7.84
PNK = -13.72
Average of "Open Positions": losing/negative average of 6.27%
Closed Positions:
Held more than seven days but less than one year:
PPS = -2.8
WYE = +2.4%
Held less than 7 days:
ICE (+2.0%), MMM (0.5%), MRK (0.1%), PFE (1.3%), SCUR (15%) (Overall record in this category is a 3.78% average gain)
Daytrades:
PFE = +0.5%
Average of "Closed Positions" sub-categories, except for Daytrades: up/positive 2.09%
Combined Total Averages, excluding Daytrades: losing/negative 4.18%
Compare to S&P 500: losing/negative 5.15%
[from May 30, 2008 (1385.67) to June 24, 2008 (1314.29)]
The information on this site is provided for discussion purposes only and does not constitute investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence.
Reno Automobile Museum, Part 2
The cars above are just beautiful. Chrysler and Mercedes seemed to have the best designs. The Ford Edsel didn't look that bad--certainly not bad enough to be associated with failure. One advertising campaign was especially interesting--to demonstrate the toughness of a car, a company drove it off a cliff, and even after it bounced several times on rocks, it was still drivable. The older cars all looked heavier and larger than modern cars.
What stuck out the most was the car companies' willingness to experiment with designs and engineering (I saw a V-16 engine). Today, I like to say, without pleasure, that Ford and GM are slowly going bankrupt. GM is probably worth nothing without GMAC, its car loan unit. In fact, GM is probably closer to a bank than a car company. Meanwhile, Toyota innovates with hybrids and other models and does a better job of managing production and employee costs. It's sad to see the state of American car companies today and compare them with how robust they were back in the day. Part of me thinks that Kirk Kerkorian isn't buying Ford shares because he thinks there's an imminent turnaround--he's buying a large minority stake out of pure nostalgia.
Reno: National Automobile Museum, Part 1
The original R.V. (above)
Reno, Nevada, has lots to see and do. You can walk along Truckee River, relax at the Siena Casino spa, grab a classic grilled cheese sandwich off the main drag at the Peppermill, or just hit the slots at the Silver Legacy. You can also see some very old cars, and gain an insight into why car companies today aren't doing very well. In the old days, cars looked better, and American car companies were not afraid to innovate. Here is the link to the Museum:
http://www.automuseum.org
Monday, June 23, 2008
More Random Thoughts: Is it Amoral to Pay Less?
My last posting on coffee, tips, and massages surprisingly garnered the most comments so far. A masseuse read my posting about the small business in downtown San Jose and said she was "appalled" at the post, and it was amoral to pay the masseuses so little because they could not afford a reasonable living making minimum wage + tips. To read the full exchange, go back one post and click on "comments." I put my response below. It is slightly unnerving to me to hear people say that offering cheaper products or services is somehow amoral.
___________
Rebecca,
Thanks for your post. I hope your school/business is going well.
Like you said, people always want bargains. They will complain about Walmart and "exploitation" in front of their friends, but still clip coupons and go after the best deal possible.
I am not sure that paying less for a product is "amoral." Most poor(er) people charge less for certain services, because they work out of their home, or just don't have the resources to offer a more professional-looking experience. At the end of the day, Walmart and other cost-conscious companies have lifted many people out of poverty abroad, and going for the cheaper option usually means some poor person, somewhere, gets to have a job.
You are correct that when a consumer chooses a cheaper product of service, someone down the chain makes less money. But this person needs to differentiate his or her business or go extinct, and that "creative destruction" is one major source of innovation and promotes superior customer service. In any scenario, someone gets hurt. Consumers who choose to pay more help support the upper-middle-class lifestyle but hurt the chance of lifting someone out of poverty, even if it's not in the U.S. Liberals oftentimes don't understand that by advocating more laws and more expensive products, they hurt the poor and help the rich.
Most important, a little shop in San Jose won't hurt your massage business. Your business appears to be more upscale, so you won't be after the same clients that the downtown San Jose shop attracts. Therefore, both stores can co-exist. In the Bay Area, there are several upscale spas in Saratoga and Los Gatos offering the same basic services as the cheaper shops in downtown San Jose. But some people won't be seen in the "lower-price" shop, because they equate low-cost with being "lower-class." For example, I have a good friend who spends $1000/wk on clothing. When I suggested she try a Vietnamese-immigrant-owned place for her pedicures so she could save 80 dollars on what looks to me to be the exact same service, she scoffed. She wouldn't be seen dead in that place and said it might not be clean. In any business, you have to decide who you want as your customers and then proceed based on that goal. There is nothing "amoral" about buying services from lower-income groups or immigrants who offer cheaper services with very little reduced quality.
___________
Rebecca,
Thanks for your post. I hope your school/business is going well.
Like you said, people always want bargains. They will complain about Walmart and "exploitation" in front of their friends, but still clip coupons and go after the best deal possible.
I am not sure that paying less for a product is "amoral." Most poor(er) people charge less for certain services, because they work out of their home, or just don't have the resources to offer a more professional-looking experience. At the end of the day, Walmart and other cost-conscious companies have lifted many people out of poverty abroad, and going for the cheaper option usually means some poor person, somewhere, gets to have a job.
You are correct that when a consumer chooses a cheaper product of service, someone down the chain makes less money. But this person needs to differentiate his or her business or go extinct, and that "creative destruction" is one major source of innovation and promotes superior customer service. In any scenario, someone gets hurt. Consumers who choose to pay more help support the upper-middle-class lifestyle but hurt the chance of lifting someone out of poverty, even if it's not in the U.S. Liberals oftentimes don't understand that by advocating more laws and more expensive products, they hurt the poor and help the rich.
Most important, a little shop in San Jose won't hurt your massage business. Your business appears to be more upscale, so you won't be after the same clients that the downtown San Jose shop attracts. Therefore, both stores can co-exist. In the Bay Area, there are several upscale spas in Saratoga and Los Gatos offering the same basic services as the cheaper shops in downtown San Jose. But some people won't be seen in the "lower-price" shop, because they equate low-cost with being "lower-class." For example, I have a good friend who spends $1000/wk on clothing. When I suggested she try a Vietnamese-immigrant-owned place for her pedicures so she could save 80 dollars on what looks to me to be the exact same service, she scoffed. She wouldn't be seen dead in that place and said it might not be clean. In any business, you have to decide who you want as your customers and then proceed based on that goal. There is nothing "amoral" about buying services from lower-income groups or immigrants who offer cheaper services with very little reduced quality.
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