Charlie Munger on desire:
I had a considerable passion to get rich. Not because I wanted Ferraris - I wanted the independence. I desperately wanted it. I thought it was undignified to have to send invoices to other people. I don’t where I got that notion from, but I had it.
More from Charlie Munger here.
"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
Tuesday, June 2, 2009
McGovern on the Military
George McGovern had a great op-ed in the WSJ yesterday (June 1, 2009):
He makes a lot of good points. For example, I knew we were still spending billions of dollars per month in Iraq and Afghanistan, but $12 billion month?
We now spend $12 billion a month on wars in Iraq and Afghanistan -- two mistaken invasions that have increased violence and terrorism in the Middle East...
There is the terrorist danger, but this is not a military problem. Terrorism is a by-product of military weakness. The terrorist has no battleships, bombers, missiles, tanks, organized armies or heavy artillery.
The only significant terrorist attack on the U.S., on Sept. 11, 2001, was carried out by 19 young men from Saudi Arabia and Egypt armed only with boxcutters. They used these devices to intimidate the crews of four airplanes into surrendering control of their planes. The terrorists then suicidally flew the planes into buildings.
This event, which took place nearly a decade ago, dramatized the limitation of a huge military budget in assuring national security. Nonetheless, our military budget is higher than ever -- $515 billion annually, not including the cost of Iraq and Afghanistan.
This figure is greater than the combined military budgets of the rest of the world. We could defend ourselves with an arms budget half that size. If we directed the $250 billion we could save annually into national health care, improved education, a better environment and restoring our infrastructure, the nation would be more secure, better employed and have a higher standard of life. Or the savings might be used for annual reductions in the national debt.
McGovern and I seem to think similarly when it comes to this issue. I've voiced similar thoughts in the past:
Monday, June 1, 2009
Anthony Bourdain Speaks in Cupertino, CA (Flint Center)
I'm an Anthony Bourdain fan. (I've written about him before here.) Bourdain's unique blend of intelligence and devil-may-care attitude leads to searing, funny commentary on everything from poverty to Cinnabons. Bay Area residents were treated to a 45 minute Bourdain speech--an extended rant, really--on May 28, 2009. Wearing jeans and a sports jacket, Bourdain showed up on stage to wild cheers. He stayed near the podium in the middle of the stage, but never behind it. He didn't have an outline--he spoke from the gut until he ran out of things to say, and then took questions from the audience.
Bourdain started off by saying he's a good example of what not to do or say, but his two saving graces are his curiosity and his willingness to concede when he's wrong. After that disclaimer, we were off to the races. Bourdain began lambasting Alice Waters and Berkeley residents, both of whom are known for favoring organic food. His point was that Alice Waters and affluent Berkeley residents can afford to buy organic and local food, which is more expensive than non-organic food. He suggested that real organic food is homegrown, and if Alice Waters wanted to promote organic food for the masses, she should show people how to grow food in backyard gardens. At one point, he asked, "Do you think that the people lining up around Popeye's Chicken for 99 cent day are there because the stuff tastes good? No! They're there because it's cheap!"
Bourdain then talked about how we're fetishizing our food by focusing on ingredients rather than the actual process of cooking. At one point, he joked that by the time a waiter gets done explaining the food on his plate and where it comes from, he's already finished eating the "damn thing." He compared our focus on ingredients to exotic Japanese porn, by which he probably meant that the actors aren't participating in the spirit of the moment, but are behaving in a detached, grotesque manner.
Although Bourdain admitted to shopping at Whole Foods, he said that these days, organic generally means luxury, and that's not a good development for cooking. After all, real culinary innovation happens when someone takes the table scraps and makes something good out of it. Bourdain said that "cooking" was really the slaves' way of making something good from their masters' table scraps. He had many examples of poverty leading to innovation, mentioning famous chefs and their background. At one point, he asked, "Do you think a rich person looked at a slimy snail on the ground and thought, 'That looks really good to eat?' Of course not! Some poor person was hungry and probably thought, 'If I put enough butter and garlic on that thing, maybe I can manage to choke it down.'"
This is one reason I love Bourdain--he keeps his audience grounded. He believes that innovation comes from starvation, and he reminds us that more often than not, a poor, unknown person is responsible for the food on our plates. (Bourdain believes "The engine of gastronomy is poverty.") You might even say Bourdain's motif is bringing cooking back to the barrio, which explains why he hates celebrity chefs (he's famous for ranting against Rachel Ray). Bourdain did have kind words for Julia Child, though. He said she became famous by demystifying French food and showing people that with some effort, they, too, could make French food.
Basically, to get on Bourdain's good side, you have to recognize the hard-working, innovative people who are responsible for much of our food. That's not to say that Bourdain praises poverty. He reminded us that poverty might look fun when we go on short vacations, but the people in those "bucolic" places want an SUV and satellite TV just like the rest of us. Bourdain didn't talk talk much about fixing poverty, but he wants us to remember who makes the food that goes on our tables. After all, it's not rich people who pick the tomatoes and slaughter the animals we end up eating. One of Bourdain's themes is to remind people that our food has a cost, and the cost is keeping lots of poor people in poverty so they can continue doing the dirty work for us. Bourdain then ranted against poor food choices, asking, "What the f*ck is a Cinnabon? It's got, like, a pound of sugar on it, and every time I'm in the airport, I have to deal with the smell overpowering all the other food choices." On a more serious note, Bourdain said we need to be more careful about what we're feeding our children. He said studies have shown if you put vegetables in a McDonald's wrapper, kids will eat it and say it tastes better than ordinary vegetables served on a plate. (Whoa.) He said he uses reverse psychology on his daughter, Ariane, bashing McDonald's every time he can, and telling his daughter that Ronald McDonald may be mentally-impaired. (Bourdain, being Bourdain, used different words.)
Bourdain also called vegetarians "rude." He said that food is the "purest expression of who we are," and when someone offers you something to eat, you shouldn't tell them, "That looks good, but can I have a spinach salad instead?"
Someone asked Bourdain to name his favorite food. Bourdain said his favorite comfort food is a Vietnamese pho bowl. (I agree!)
Another person asked which countries had the best culinary cultures. Bourdain mentioned Spain and had many kind words for the Spaniards. He also said if you were looking for a cheap, diverse selection of food, Singapore is where you want to be. (I agree! Singapore's food scene was one reason I fell in love with the country.)
Bourdain said he married into a North Italian family, and at home, his wife does much of the cooking. He said he married into the kind of family he always wanted--loud, boisterous, and open.
This is one reason I love Bourdain--he keeps his audience grounded. He believes that innovation comes from starvation, and he reminds us that more often than not, a poor, unknown person is responsible for the food on our plates. (Bourdain believes "The engine of gastronomy is poverty.") You might even say Bourdain's motif is bringing cooking back to the barrio, which explains why he hates celebrity chefs (he's famous for ranting against Rachel Ray). Bourdain did have kind words for Julia Child, though. He said she became famous by demystifying French food and showing people that with some effort, they, too, could make French food.
Basically, to get on Bourdain's good side, you have to recognize the hard-working, innovative people who are responsible for much of our food. That's not to say that Bourdain praises poverty. He reminded us that poverty might look fun when we go on short vacations, but the people in those "bucolic" places want an SUV and satellite TV just like the rest of us. Bourdain didn't talk talk much about fixing poverty, but he wants us to remember who makes the food that goes on our tables. After all, it's not rich people who pick the tomatoes and slaughter the animals we end up eating. One of Bourdain's themes is to remind people that our food has a cost, and the cost is keeping lots of poor people in poverty so they can continue doing the dirty work for us. Bourdain then ranted against poor food choices, asking, "What the f*ck is a Cinnabon? It's got, like, a pound of sugar on it, and every time I'm in the airport, I have to deal with the smell overpowering all the other food choices." On a more serious note, Bourdain said we need to be more careful about what we're feeding our children. He said studies have shown if you put vegetables in a McDonald's wrapper, kids will eat it and say it tastes better than ordinary vegetables served on a plate. (Whoa.) He said he uses reverse psychology on his daughter, Ariane, bashing McDonald's every time he can, and telling his daughter that Ronald McDonald may be mentally-impaired. (Bourdain, being Bourdain, used different words.)
Bourdain also called vegetarians "rude." He said that food is the "purest expression of who we are," and when someone offers you something to eat, you shouldn't tell them, "That looks good, but can I have a spinach salad instead?"
Someone asked Bourdain to name his favorite food. Bourdain said his favorite comfort food is a Vietnamese pho bowl. (I agree!)
Another person asked which countries had the best culinary cultures. Bourdain mentioned Spain and had many kind words for the Spaniards. He also said if you were looking for a cheap, diverse selection of food, Singapore is where you want to be. (I agree! Singapore's food scene was one reason I fell in love with the country.)
Bourdain said he married into a North Italian family, and at home, his wife does much of the cooking. He said he married into the kind of family he always wanted--loud, boisterous, and open.
Bourdain says when he's at home, he's a stay-at-home dad; however, he travels 10 out of 12 months of the year.
Someone asked him about his worst travel experiences. Bourdain named Romania and Uzbekistan. He pilloried Romania's handling of his show, saying that the government did not allow him to go to the backroads to meet with the average residents. He started doing robot-like impersonations of the Romanian government officials on the trip while narrating, "Here is our version of classic Romanian culture..." Bourdain said that after he left, the Romanian papers started calling him a "KGB/Mossad" spy. (I can't wait to see that episode--Bourdain is hilarious when he's snarky.)
Speaking of bad experiences, Bourdain said that he knows his audience likes to see him miserable, but when he travels, he wants to have a good time. He doesn't want to speak badly of anyplace, so when he does become snarky, it's not something that's planned.
If you haven't seen Bourdain's show, "No Reservations" (on the Travel Channel), I highly recommend it. I still haven't read his book, Kitchen Confidential, but I hope to pick it up soon. (A friend loaned me McCarthy's Blood Meridian, but I'm not liking it, so I will probably dump it for Kitchen Confidential.)
All in all, I had a great time hearing Bourdain speak. His genuineness gives Bourdain many loyal fans. One of them even got up on stage to show Bourdain a large tattoo of what appeared to be Bourdain on his leg. Bourdain signed it and hugged him. Not too many celebrities inspire that kind of emotion. Bourdain is an original in a world full of copycats and sycophants. God bless him for being himself.
© Matthew Mehdi Rafat (2009)
Note: I did the best I could to write down Bourdain's words verbatim, but Bourdain speaks quickly and the auditorium was dark, so some of his quotes may be paraphrased.
Someone asked him about his worst travel experiences. Bourdain named Romania and Uzbekistan. He pilloried Romania's handling of his show, saying that the government did not allow him to go to the backroads to meet with the average residents. He started doing robot-like impersonations of the Romanian government officials on the trip while narrating, "Here is our version of classic Romanian culture..." Bourdain said that after he left, the Romanian papers started calling him a "KGB/Mossad" spy. (I can't wait to see that episode--Bourdain is hilarious when he's snarky.)
Speaking of bad experiences, Bourdain said that he knows his audience likes to see him miserable, but when he travels, he wants to have a good time. He doesn't want to speak badly of anyplace, so when he does become snarky, it's not something that's planned.
If you haven't seen Bourdain's show, "No Reservations" (on the Travel Channel), I highly recommend it. I still haven't read his book, Kitchen Confidential, but I hope to pick it up soon. (A friend loaned me McCarthy's Blood Meridian, but I'm not liking it, so I will probably dump it for Kitchen Confidential.)
All in all, I had a great time hearing Bourdain speak. His genuineness gives Bourdain many loyal fans. One of them even got up on stage to show Bourdain a large tattoo of what appeared to be Bourdain on his leg. Bourdain signed it and hugged him. Not too many celebrities inspire that kind of emotion. Bourdain is an original in a world full of copycats and sycophants. God bless him for being himself.
© Matthew Mehdi Rafat (2009)
Note: I did the best I could to write down Bourdain's words verbatim, but Bourdain speaks quickly and the auditorium was dark, so some of his quotes may be paraphrased.
Sunday, May 31, 2009
Basketball: Orlando and Cleveland
Stat of the Orlando-Cleveland series: Ben Wallace, 22 total rebounds in six games. Remember when that would be his nightly production? I'm not blaming any single player for the loss, but Cleveland needs to give LeBron bigger/taller teammates.
When I look at Cleveland's roster, I see no defensive presence. Wallace is only 6'9''. Gibson, Szczerbiak, and Mo' Williams aren't great defenders. In fact, on many teams, they would be sixth men. I've said it before, and I'll say it again: you can't win an NBA Championship without great defense. If you could, Steve Nash's Phoenix Suns would have three rings now.
My prediction? Orlando in 7 against the Lakers. Orlando's success should not be surprising to fans who followed R. Lewis's career in Seattle. He was putting up 20 points a night regularly. With Turkoglu, Lewis, and Alston, Orlando is always a threat to make a three-pointer, which opens the paint for Howard. As we've seen, that inside-outside threat is difficult to handle. Also, between Pietrus and Howard, Orlando brings enough toughness on defense to win the championship. Pietrus's three-point shooting has been a nice surprise, and if he keeps shooting a high percentage, Orlando will always be in the game.
As for the Lakers, they have Gasol, but he's no Howard. Bynum isn't developed yet to make much of an impact (he scored a whopping 2 points in his most recent game). When you really look at the Lakers' roster, they've got Kobe and Gasol, with the occasional trey from "The Machine." That won't be enough to beat Orlando.
In fact, the only way I see the Lakers winning the championship is if the referees hand them the game. I give Orlando seven games to close out the Lakers, not because I think the talent level is close, but because I think the referees help the Lakers. Orlando is still a young team looking for respect, which hurts them when it comes to getting calls.
For example, did you see the ref call a taunting technical on Howard? On church-going, gospel-listening Dwight Howard?! Meanwhile, Kobe has become much better at handling the referees. Did you see him get Artest tossed? Hands in the air, a look of displeasure on his face, as if to say, "I can't believe I'm in the same room as you." And he still got Artest thrown out. If I'm Stan Van Gundy, I tell my team, "No technicals. I don't care how p*ssed you get. No technicals. We get the ball back and score. Forget the refs. If anyone gets tossed, it'll be me, not you."
Orlando in 7 or fewer.
When I look at Cleveland's roster, I see no defensive presence. Wallace is only 6'9''. Gibson, Szczerbiak, and Mo' Williams aren't great defenders. In fact, on many teams, they would be sixth men. I've said it before, and I'll say it again: you can't win an NBA Championship without great defense. If you could, Steve Nash's Phoenix Suns would have three rings now.
My prediction? Orlando in 7 against the Lakers. Orlando's success should not be surprising to fans who followed R. Lewis's career in Seattle. He was putting up 20 points a night regularly. With Turkoglu, Lewis, and Alston, Orlando is always a threat to make a three-pointer, which opens the paint for Howard. As we've seen, that inside-outside threat is difficult to handle. Also, between Pietrus and Howard, Orlando brings enough toughness on defense to win the championship. Pietrus's three-point shooting has been a nice surprise, and if he keeps shooting a high percentage, Orlando will always be in the game.
As for the Lakers, they have Gasol, but he's no Howard. Bynum isn't developed yet to make much of an impact (he scored a whopping 2 points in his most recent game). When you really look at the Lakers' roster, they've got Kobe and Gasol, with the occasional trey from "The Machine." That won't be enough to beat Orlando.
In fact, the only way I see the Lakers winning the championship is if the referees hand them the game. I give Orlando seven games to close out the Lakers, not because I think the talent level is close, but because I think the referees help the Lakers. Orlando is still a young team looking for respect, which hurts them when it comes to getting calls.
For example, did you see the ref call a taunting technical on Howard? On church-going, gospel-listening Dwight Howard?! Meanwhile, Kobe has become much better at handling the referees. Did you see him get Artest tossed? Hands in the air, a look of displeasure on his face, as if to say, "I can't believe I'm in the same room as you." And he still got Artest thrown out. If I'm Stan Van Gundy, I tell my team, "No technicals. I don't care how p*ssed you get. No technicals. We get the ball back and score. Forget the refs. If anyone gets tossed, it'll be me, not you."
Orlando in 7 or fewer.
Sotomayor a Yankees Fan?
The Boston Globe's Ellen Goodman has a great article (May 29, 2009) on Judge Sotomayor:
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/05/29/a_wise_person_for_the_court/
Apparently, Ms. Sotomayor is a Yankees fan. I'm no BoSox fan, but how can she be accused of being pro-underdog when she's cheering on the Yankees? She should have had the good sense to root for the Mets instead, like Julia Stiles.
Best line in the article? Someone describes Justice Roberts as a "relentless champion of the overdog." Hilarious.
Ellen Goodman makes another good point. She reminds us that Justice "O'Connor...praised her successor, John Roberts, saying, 'He's good in every way, except he's not a woman.'"
I talked about Sotomayor before in this post.
http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2009/05/29/a_wise_person_for_the_court/
Apparently, Ms. Sotomayor is a Yankees fan. I'm no BoSox fan, but how can she be accused of being pro-underdog when she's cheering on the Yankees? She should have had the good sense to root for the Mets instead, like Julia Stiles.
Best line in the article? Someone describes Justice Roberts as a "relentless champion of the overdog." Hilarious.
Ellen Goodman makes another good point. She reminds us that Justice "O'Connor...praised her successor, John Roberts, saying, 'He's good in every way, except he's not a woman.'"
I talked about Sotomayor before in this post.
Saturday, May 30, 2009
Weekend Recap: Book and Film Rec
Last weekend, I saw a great movie and read a good book.
1. The movie, Sin Nombre, is about two immigrants. One is trying to cross the border to get to New Jersey, while the other is trying to escape being killed by his own gang members. The story is about redemption, loss, and perseverance. Catch this one if you can. A review is here.
2. Mohsin Hamid's book, The Reluctant Fundamentalist, is about an immigrant named Changez ("Changez" is Urdu for "Genghis" Khan, the Mongol invader who attacked the Muslim world). Although this story is about a legal immigrant, one wonders if Changez's troubles aren't as woe-inspiring as the two characters in Sin Nombre.
Changez, a Pakistani immigrant, attends Princeton and falls in love with a woman, who, at first glance, appears to be a beautiful "lioness." After 9/11, she changes, trying to burrow herself in the past, which prevents the relationship from moving forward. By this time, she has become an unexcisable part of Changez. In fact, he has willingly given up part of himself to ensure her happiness and acceptance. Despite gaining the trappings of wealth and prestige (and an American Express expense account), Changez eventually returns to his homeland, a fact we are told upfront.
The story begins with Changez telling his story to an American in a cafe in Lahore, Pakistan. Both men are tense and wary of each other, and while Changez tries to reassure his visitor, it is clear the visitor is on guard. Changez is also on guard, something we see as he provides clues about his visitor. For example, he wonders out loud whether a bulge in the visitor's pocket is a gun or a hidden fanny pack commonly used by theft-wary tourists. We do not know who the American is, but the story builds tension bit by bit and leaves us with an ending that will be interpreted by each reader differently. The Reluctant Fundamentalist can be called a foreign policy Rorschach test. Depending on how you interpret the ending, you will know your view of America, the world, and how they interact.
An interview with the author is here.
1. The movie, Sin Nombre, is about two immigrants. One is trying to cross the border to get to New Jersey, while the other is trying to escape being killed by his own gang members. The story is about redemption, loss, and perseverance. Catch this one if you can. A review is here.
2. Mohsin Hamid's book, The Reluctant Fundamentalist, is about an immigrant named Changez ("Changez" is Urdu for "Genghis" Khan, the Mongol invader who attacked the Muslim world). Although this story is about a legal immigrant, one wonders if Changez's troubles aren't as woe-inspiring as the two characters in Sin Nombre.
Changez, a Pakistani immigrant, attends Princeton and falls in love with a woman, who, at first glance, appears to be a beautiful "lioness." After 9/11, she changes, trying to burrow herself in the past, which prevents the relationship from moving forward. By this time, she has become an unexcisable part of Changez. In fact, he has willingly given up part of himself to ensure her happiness and acceptance. Despite gaining the trappings of wealth and prestige (and an American Express expense account), Changez eventually returns to his homeland, a fact we are told upfront.
The story begins with Changez telling his story to an American in a cafe in Lahore, Pakistan. Both men are tense and wary of each other, and while Changez tries to reassure his visitor, it is clear the visitor is on guard. Changez is also on guard, something we see as he provides clues about his visitor. For example, he wonders out loud whether a bulge in the visitor's pocket is a gun or a hidden fanny pack commonly used by theft-wary tourists. We do not know who the American is, but the story builds tension bit by bit and leaves us with an ending that will be interpreted by each reader differently. The Reluctant Fundamentalist can be called a foreign policy Rorschach test. Depending on how you interpret the ending, you will know your view of America, the world, and how they interact.
An interview with the author is here.
Friday, May 29, 2009
Netflix's Annual Shareholder Meeting (2009)
[Note: this 2009 post caused an uproar in the online community, leading to a small Facebook revolt and support from star Marlee Matlin. Within a few weeks, Netflix announced it would enable online captioning by 2010 (but didn't provide specific benchmarks). The real surprise? As of November 7, 2009, not a single mainstream media outlet had formally covered either the issue of online captioning or Netflix's response. Finally, on February 24, 2011, Netflix announced 80% of its streaming content would be captioned by the end of 2011. Thank you to everyone who supported the online captioning campaign.]
[Note: A major media outlet did eventually cover the issue of online captioning--a year later. See here for June 20, 2010 NYT story.]
Netflix, Inc. (NFLX) held its annual shareholder meeting yesterday at its headquarters in Los Gatos, California. The meeting lasted less than half an hour and around fifteen non-employees attended. As usual, only cookies, water, and soda were offered.
The meeting consisted of CEO and Founder Reed Hastings answering shareholder questions. There was no presentation.
I like Reed Hastings. He has great ideas on education reform, and he is smart enough to have caught the eye of Microsoft (MSFT), which placed him on its board of directors. When it comes to annual meetings, however, Mr. Hastings seems like he can't wait to get back to work. That's a laudable trait in a CEO, and most mathematicians (he majored in math) aren't known as overly social animals anyway.
Shareholders' comments were generally half-question, half-compliment. One shareholder praised Netflix's compensation factors, also known as "performance factors." (See 2009 proxy statement, pages 14-15: "to attract and retain outstanding performers, it must provide a challenging work environment. To this end, the Company strives to maintain a high-performance culture.")
Netflix also evaluates employee performance based on several factors, including judgment; innovation; impact; curiosity; communication; courage; honesty; selflessness; and passion. It's unusual for a company to openly tell shareholders that it bases compensation partly on goals like "honesty." Netflix rightfully deserves compliments for having a multi-faceted compensation analysis that includes an ethical component.
Another shareholder asked what the company was doing now that more players were entering the streaming video business. Mr. Hastings answered that Netflix "is always having to compete," and businesses like www.hulu.com were changing the competitive landscape. At the same time, he said, "It's a big landscape," and while there will be "more competition in the future," Netflix was continuing to add subscribers at a healthy rate. Mr. Hastings also said that the most competition came from cable and satellite companies.
Another shareholder asked what Netflix would look like in five to ten years. Mr. Hastings answered that he didn't have a crystal ball, but Netflix currently had millions of subscribers and he hoped to to keep increasing its customer base.
I asked two questions. Page 10 of Netflix's 10K states that Netflix had issues with Starz Play service:
Many of the [streaming video] licenses provide for the studios or distributor to withdraw content from our service relatively quickly...For example, in December 2008, certain content associated with our license from the Starz Play service was withdrawn on short notice.
I asked why Starz Play revoked its license in 2008. Mr. Hastings said he didn't know about that (perhaps he didn't understand my question) and said Netflix currently had a good relationship with Starz Play. When I later pointed him to the 10K, Mr. Hastings said he did not want to comment. He reiterated that Netflix currently has licenses for Starz Play. [Update: when I followed up on the Starz Play question, I read out loud the relevant section in the 10K to Mr. Hastings. He appeared to understand my question the second time and immediately said he had no comment.] I was a little stunned, because Mr. Hastings was not willing to answer a question about a publicly disclosed fact. I realize as a small shareholder, Mr. Hastings doesn't owe me answers on every question I ask, but the Starz Play revocation seemed like an important issue, and an issue that might impact the share price. Although I didn't say it, I was thinking, "If Netflix doesn't want to answer reasonable questions about its company, why did it go public?"
I then mentioned Netflix's failure to add captions/subtitles to its online streaming videos. Netflix's "instant play" option doesn't include captions, making its online video option unusable for many users. As a result of not offering captions, Netflix is alienating its hearing-impaired, deaf, and senior citizen customers. According to some estimates, there are 34 million hearing-impaired persons in the United States. One would think Netflix would think better than to alienate such a large customer base.
I asked what Netflix was doing to make its website and online video accessible to everyone. Mr. Hastings said other online streaming sites didn't offer captions, and mentioned hulu.com as one of them. He said as time progresses, captioning technology will become more widespread, and Netflix would then incorporate it into its own technology. He also said that customers can continue to receive DVDs through the mail, and most DVDs contained captions.
Unfortunately for Mr. Hastings, I use hulu.com to watch Simpsons episodes. Except for a few episodes, every Simpsons episode I've watched had captions. Obviously, the technology exists to make online video accessible to everyone, so I wasn't quite ready to let this topic pass. I gave Mr. Hastings another chance to explain how he would make his business accessible to everyone. I mentioned that hulu.com did indeed offer captions, and I said (paraphrased), "It sounds like you're not planning to do anything to add captions to your site. Am I correct in understanding that you don't plan on making your online videos accessible to the disabled?" Mr. Hastings said he would check out hulu.com, but essentially agreed that adding captions wasn't an active agenda item. Now, I don't want to go Kanye West on anyone, but it didn't feel like Mr. Hastings or Netflix cares about deaf people.
Mr. Hastings is making a poor business decision by not maximizing his site's accessibility. First, Netflix has already signed up the "low-hanging fruit." In order to keep growing and to justify its relatively high P/E, it will now have to maximize its customer outreach efforts. By not even trying to make online video accessible to the disabled, Netflix is losing goodwill and a large potential customer base.
Second, although Netflix wants to grow its online video business, it is subject to the whims of the studios and other content providers. Netflix doesn't have much leverage over the studios, who control their online content and may wonder why they should license content to Netflix. The December 2008 Starz Play incident shows just how vulnerable Netflix is to having its access unilaterally cut off. To encourage content providers to grant Netflix licenses on reasonable terms, Netflix needs to add something of value. Providing captions for online content may be one low-cost method of offering value to content providers. (I don't know exactly how much it would cost to create online video captions, but there are plenty of people in English-friendly countries who would be willing to do the work.)
Third, being insensitive to the disabled will harm Netflix's public image. I am surprised that Microsoft's good corporate citizenship in this area hasn't rubbed off on Mr. Hastings. Although Microsoft gets a lot of bad publicity, it is actually at the forefront when it comes to offering tools to assist the disabled. Here is a list of the awards it has received as a result of its work on behalf of the disabled. Here is one relating to the hearing-impaired community:
Microsoft was recognized among 12 companies and two educational institutions for "extraordinary efforts in promoting equal access to telecommunications and media for consumers who are deaf, hard-of-hearing, late-deafened or deaf-blind..." "TDI commends Microsoft for its special commitment and allocation of resources over the years to introduce and offer accessible and usable software applications for all Americans. With this technology, deaf and hard-of-hearing Americans can fulfill their potential as full, active participants in the general mainstream—regardless of differences in culture, language and communication."
Bet you didn't know about Microsoft's good reputation in the disabled community. That reputation has created lots of Microsoft supporters willing to speak up when others bash the company. In short, there is no need for Netflix to alienate an entire community, especially not one that contains millions of potential customers.
I understand that Mr. Hastings founded Netflix, controls much of the stock, and probably feels like he doesn't need to listen to anyone. At the same time, Netflix needs to more carefully manage its reputation so it maximizes its customer base. It already has many loyal fans and will probably keep growing (though its rate of growth may not be as high as some shareholders would like). Despite my criticism, I love Netflix and am a huge fan of the company. The algorithm that recommends movies has pointed me to many wonderful films I might have never found on my own, like Germany's Ali: Fear Eats the Soul, China's Shower, and Iran's Children of Heaven.
Mr. Hastings did shake my hand after the meeting and told me he wished he had better answers for me. He gets points for that gesture. I hope he will actually do something about Netflix's inaccessible features. In the meantime, I will not be adding to my small position in the stock. Absent a buyout, perhaps from Microsoft, Netflix looks fairly valued to me.
Bonus: I also blogged about last year's annual meeting here, calling it one of the strangest meetings I've attended.
Disclosure: I own an insignificant number of Netflix (NFLX) shares.
Update on June 1, 2009: unfortunately, this doesn't apply to online video, but if you have a complaint about a television show not being captioned, the following link shows you how to make an effective complaint:
http://www.hearinglossweb.com/Issues/Access/Captioning/Television/file.htm
Update on June 13, 2009: Netflix finally issued a statement re: captioning:
Captioning is in our development plans but is about a year away...I would expect to deliver subtitles or captions to Silverlight clients sometime in 2010...
It appears Netflix has changed its tune somewhat, but if you read the comments on the Netflix post, many readers are questioning Netflix's explanations and statements.
As of today, the Facebook group, "Netflix Watch-Instantly Needs Closed Captions!" had 983 members--most of whom joined after my review of Netflix's annual meeting was published.
Update on June 18, 2009: Here is my follow-up post to this story. The pro-captioning Facebook group continues to grow--"Netflix Watch" has 1,129 members.
Update on August 29, 2009: "Netflix Watch" now has over 2,000 members.
Update on April 18, 2010: Netflix has finally captioned some online videos, but only 100 so far. More here. Looking at hulu.com's options, which include online captioning and transcripts, I am still not happy with NFLX's slow progress. I guess it's a start, and better than nothing. Thanks to everyone who helped NFLX realize the importance of online captioning.
[Note: A major media outlet did eventually cover the issue of online captioning--a year later. See here for June 20, 2010 NYT story.]
Netflix, Inc. (NFLX) held its annual shareholder meeting yesterday at its headquarters in Los Gatos, California. The meeting lasted less than half an hour and around fifteen non-employees attended. As usual, only cookies, water, and soda were offered.
The meeting consisted of CEO and Founder Reed Hastings answering shareholder questions. There was no presentation.
I like Reed Hastings. He has great ideas on education reform, and he is smart enough to have caught the eye of Microsoft (MSFT), which placed him on its board of directors. When it comes to annual meetings, however, Mr. Hastings seems like he can't wait to get back to work. That's a laudable trait in a CEO, and most mathematicians (he majored in math) aren't known as overly social animals anyway.
Shareholders' comments were generally half-question, half-compliment. One shareholder praised Netflix's compensation factors, also known as "performance factors." (See 2009 proxy statement, pages 14-15: "to attract and retain outstanding performers, it must provide a challenging work environment. To this end, the Company strives to maintain a high-performance culture.")
Netflix also evaluates employee performance based on several factors, including judgment; innovation; impact; curiosity; communication; courage; honesty; selflessness; and passion. It's unusual for a company to openly tell shareholders that it bases compensation partly on goals like "honesty." Netflix rightfully deserves compliments for having a multi-faceted compensation analysis that includes an ethical component.
Another shareholder asked what the company was doing now that more players were entering the streaming video business. Mr. Hastings answered that Netflix "is always having to compete," and businesses like www.hulu.com were changing the competitive landscape. At the same time, he said, "It's a big landscape," and while there will be "more competition in the future," Netflix was continuing to add subscribers at a healthy rate. Mr. Hastings also said that the most competition came from cable and satellite companies.
Another shareholder asked what Netflix would look like in five to ten years. Mr. Hastings answered that he didn't have a crystal ball, but Netflix currently had millions of subscribers and he hoped to to keep increasing its customer base.
I asked two questions. Page 10 of Netflix's 10K states that Netflix had issues with Starz Play service:
Many of the [streaming video] licenses provide for the studios or distributor to withdraw content from our service relatively quickly...For example, in December 2008, certain content associated with our license from the Starz Play service was withdrawn on short notice.
I asked why Starz Play revoked its license in 2008. Mr. Hastings said he didn't know about that (perhaps he didn't understand my question) and said Netflix currently had a good relationship with Starz Play. When I later pointed him to the 10K, Mr. Hastings said he did not want to comment. He reiterated that Netflix currently has licenses for Starz Play. [Update: when I followed up on the Starz Play question, I read out loud the relevant section in the 10K to Mr. Hastings. He appeared to understand my question the second time and immediately said he had no comment.] I was a little stunned, because Mr. Hastings was not willing to answer a question about a publicly disclosed fact. I realize as a small shareholder, Mr. Hastings doesn't owe me answers on every question I ask, but the Starz Play revocation seemed like an important issue, and an issue that might impact the share price. Although I didn't say it, I was thinking, "If Netflix doesn't want to answer reasonable questions about its company, why did it go public?"
I then mentioned Netflix's failure to add captions/subtitles to its online streaming videos. Netflix's "instant play" option doesn't include captions, making its online video option unusable for many users. As a result of not offering captions, Netflix is alienating its hearing-impaired, deaf, and senior citizen customers. According to some estimates, there are 34 million hearing-impaired persons in the United States. One would think Netflix would think better than to alienate such a large customer base.
I asked what Netflix was doing to make its website and online video accessible to everyone. Mr. Hastings said other online streaming sites didn't offer captions, and mentioned hulu.com as one of them. He said as time progresses, captioning technology will become more widespread, and Netflix would then incorporate it into its own technology. He also said that customers can continue to receive DVDs through the mail, and most DVDs contained captions.
Unfortunately for Mr. Hastings, I use hulu.com to watch Simpsons episodes. Except for a few episodes, every Simpsons episode I've watched had captions. Obviously, the technology exists to make online video accessible to everyone, so I wasn't quite ready to let this topic pass. I gave Mr. Hastings another chance to explain how he would make his business accessible to everyone. I mentioned that hulu.com did indeed offer captions, and I said (paraphrased), "It sounds like you're not planning to do anything to add captions to your site. Am I correct in understanding that you don't plan on making your online videos accessible to the disabled?" Mr. Hastings said he would check out hulu.com, but essentially agreed that adding captions wasn't an active agenda item. Now, I don't want to go Kanye West on anyone, but it didn't feel like Mr. Hastings or Netflix cares about deaf people.
Mr. Hastings is making a poor business decision by not maximizing his site's accessibility. First, Netflix has already signed up the "low-hanging fruit." In order to keep growing and to justify its relatively high P/E, it will now have to maximize its customer outreach efforts. By not even trying to make online video accessible to the disabled, Netflix is losing goodwill and a large potential customer base.
Second, although Netflix wants to grow its online video business, it is subject to the whims of the studios and other content providers. Netflix doesn't have much leverage over the studios, who control their online content and may wonder why they should license content to Netflix. The December 2008 Starz Play incident shows just how vulnerable Netflix is to having its access unilaterally cut off. To encourage content providers to grant Netflix licenses on reasonable terms, Netflix needs to add something of value. Providing captions for online content may be one low-cost method of offering value to content providers. (I don't know exactly how much it would cost to create online video captions, but there are plenty of people in English-friendly countries who would be willing to do the work.)
Third, being insensitive to the disabled will harm Netflix's public image. I am surprised that Microsoft's good corporate citizenship in this area hasn't rubbed off on Mr. Hastings. Although Microsoft gets a lot of bad publicity, it is actually at the forefront when it comes to offering tools to assist the disabled. Here is a list of the awards it has received as a result of its work on behalf of the disabled. Here is one relating to the hearing-impaired community:
Microsoft was recognized among 12 companies and two educational institutions for "extraordinary efforts in promoting equal access to telecommunications and media for consumers who are deaf, hard-of-hearing, late-deafened or deaf-blind..." "TDI commends Microsoft for its special commitment and allocation of resources over the years to introduce and offer accessible and usable software applications for all Americans. With this technology, deaf and hard-of-hearing Americans can fulfill their potential as full, active participants in the general mainstream—regardless of differences in culture, language and communication."
Bet you didn't know about Microsoft's good reputation in the disabled community. That reputation has created lots of Microsoft supporters willing to speak up when others bash the company. In short, there is no need for Netflix to alienate an entire community, especially not one that contains millions of potential customers.
I understand that Mr. Hastings founded Netflix, controls much of the stock, and probably feels like he doesn't need to listen to anyone. At the same time, Netflix needs to more carefully manage its reputation so it maximizes its customer base. It already has many loyal fans and will probably keep growing (though its rate of growth may not be as high as some shareholders would like). Despite my criticism, I love Netflix and am a huge fan of the company. The algorithm that recommends movies has pointed me to many wonderful films I might have never found on my own, like Germany's Ali: Fear Eats the Soul, China's Shower, and Iran's Children of Heaven.
Mr. Hastings did shake my hand after the meeting and told me he wished he had better answers for me. He gets points for that gesture. I hope he will actually do something about Netflix's inaccessible features. In the meantime, I will not be adding to my small position in the stock. Absent a buyout, perhaps from Microsoft, Netflix looks fairly valued to me.
Bonus: I also blogged about last year's annual meeting here, calling it one of the strangest meetings I've attended.
Disclosure: I own an insignificant number of Netflix (NFLX) shares.
Update on June 1, 2009: unfortunately, this doesn't apply to online video, but if you have a complaint about a television show not being captioned, the following link shows you how to make an effective complaint:
http://www.hearinglossweb.com/Issues/Access/Captioning/Television/file.htm
Update on June 13, 2009: Netflix finally issued a statement re: captioning:
Captioning is in our development plans but is about a year away...I would expect to deliver subtitles or captions to Silverlight clients sometime in 2010...
It appears Netflix has changed its tune somewhat, but if you read the comments on the Netflix post, many readers are questioning Netflix's explanations and statements.
As of today, the Facebook group, "Netflix Watch-Instantly Needs Closed Captions!" had 983 members--most of whom joined after my review of Netflix's annual meeting was published.
Update on June 18, 2009: Here is my follow-up post to this story. The pro-captioning Facebook group continues to grow--"Netflix Watch" has 1,129 members.
Update on August 29, 2009: "Netflix Watch" now has over 2,000 members.
Update on April 18, 2010: Netflix has finally captioned some online videos, but only 100 so far. More here. Looking at hulu.com's options, which include online captioning and transcripts, I am still not happy with NFLX's slow progress. I guess it's a start, and better than nothing. Thanks to everyone who helped NFLX realize the importance of online captioning.
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