“Everything is a Business Model.”
That has been our long-standing primary principle of clear thinking around here. It is as True today as it was the first time I mentioned it years, and years ago.
My life-long chum from up in the Seattle area is visiting for a while – and as I went to bed last night, I was still turning over a lot of memories from “them good old days.”
One of the thoughts rattling around my head on waking this morning was that I can teach an entire economics course using just one simple model. The parking lot.
You see, I have always had a slightly twisted way of thinking about things. Ever since as far back as I can remember, I looked at all kinds of phenomena and asked that incredibly useful question “Why is THAT?”
When my buddy and I were young, we could occasionally ride our bikes from Seattle’s north end of Beacon Hill, down to the waterfront. Often as not, when we did that, it was either to hang out with shirt-tail relatives at station 14 (Cousin Charles) which was down by the grain elevator that used live mid-waterfront. Or, it was up to Station 5. That’s when late Uncle Cliff worked.
The main attraction about these rides was that Station 5 was right next door to the fish bar at Ivar’s Acres of Clams. Mostly, these rides usually had a gastronomic bent to them. A five-piece fish and chips along with a pint of clam nectar was about as good a meal on a cool, cloudy day of bike riding in 50-degree weather as a pre-teen human could find.
What about the parking lot?
This is where things get interesting:
Station 5 is right next to the Washington State Ferry Terminal. And across Alaska Way, under (and just behind) the Viaduct, the elevated freeway that runs through the west side of Downtown, there were a number of parking lots.
These always captured my attention. They were fun to ride, except when the hobos and winos had busted glass on them.
The very first time I ever rode an empty parking lot, they were charging the outlandish sum of 10-cents an hour for parking.
What’s more, by the time I was old enough to get my first job (shelving books in the Seattle Public Library, up the hill from the house) I noticed that the price of parking down by the waterfront had gone first to 25-cents an hour, and then on up to 50-cents an hour for the really prime property. 75-cents an hour and then a dollar followed as the city grew.
“What is THAT?” I constantly asked myself. What’s more, how did Seattle Parking Magnate Joe Diamond figure out that he could rent or buy empty property, and then get people to pay him for the simple “right to park” on it?
In my oldest memories, some of Diamond’s earliest lots weren’t even paved. Esepcially the ones up on the Denny Regrade along Third Avenue where the trollies ran.
Yet, here were people that were lining up to give the lot attendant money just for the placement of a vehicle ON Joe Diamond’s lots. Sheer genius, I concluded.
All Diamond had essentially done, was to recognize an underpriced asset (a vacant lot), put some minimal improvements on it (namely the lot attendant shack) and then market it to all who passed by looking for a place to park.
In about 1973, or so, I was flown down to San Francisco to consider a job doing news on KFRC. The main non-broadcast feature of that trip? I discovered that the cost of parking a car in downtown San Francisco, near the radio station (don’t know if it is st5ill at 415 Bush Street…) was a whopping $6-dollars per day. This was back in the time when Enrico’s was the best nearby Italian joint, and Alioto’s at Fisherman’s Terminal was as good as food got. Not as good as Ivars. I was a Seattle partisan.
Try to find anything near that rate today!
The point about parking lots is, I hope, not lost on you.
Remember: Minimal Asset. Minimal improvements, and Major Marketing. Then someone gets rich. The economy grows. Simple as that.
Ever since I first got this sorted out in my head (must have been age 23, or so) it was clear to me that anyone, in any field could get rich using this SIMPLE approach.
Over time, I saw the huge wisdom of my discovery. Some time in the mid-70’s, I think it was, a writer for the Seattle Times, (back when “Blethen the Younger” had his first silver 911) reporter Richard Buck, I think it was, came out with his famous “Cost of Nothing Index.”
Basically, what Buck had sighted was similar to my Parking Lot Theory, except HE looked at how new-fangled (at the time) minimal customer charges were making a big play (and still are).
What he did was took the price of nothing (a basic phone line, a simple Seattle City Light account, a Seattle Water Department Account) and then he figured out how much it would cost to own a home.
Even before you made a single phone call, or before you turned on a single damn light, or before that first glass of water, you would have paid (back then) on the order of $25-$35 a month for the ACCESS right. Today, it is way higher than that.
Sidebar: This is why credit card companies are so anxious to figure out a way to hoax us with a “service charge” on the theory that we should pay them “something for nothing” too. Back to point…
Economics,. and human thinking (such as it is) is pretty straight-forward stuff, as I was going on about in Thursday’s column about my Substitution Method of Learning.
Now I’m telling you that there really is such a thing as the Substitution Method of Business Models.
We arrive now at the heart of this morning’s elucidation.
I will remind you – as I have many times before – that the World has run out of “new things to monetize.”
That’s why Global Warming is such a great scam. It follows the principles revealed here: Take an underperforming asset (the weather), claim providence over it (regulation and crazy attorneys general as liberal henchmen as “enforcers” – they play the role of the parking lot attendants in our comparison), and then charge as much as is feasible in order to make up a new business.
The simple fact is that the world has – as we’ve covered many, many times – too many people and too much manufacturing capacity.
We live in a world of “physical too much-ness” and that’s why the Storage Unit industry arrived, are you following?
Example: How many computers do you really need, right?
(Confession: In my office I only have five computers and I feel constrained. There’s the four-monitor super computer with SSDs. A Laptop, a Tablet, a Phone, and an old 32-bit Pentium for the ham radio…oh there’s an old Cruise-Reader, too.)
Point is, in terms of physical goods, that build-out is nearly complete and we are running into a real lack of fundamental realization on the physical side. Which is why Windows-10 is around: To keep Microsoft going…am I right? Win 7 was fine. Maybe 10 is faster…but $150 faster? Come on…this is Old George you’re talking to.
And that is precisely why the work of a certain Peoplenomics subscriber, who we will simply call Dr. Pete – who is pulling back the covers on Virtual Reality – is so damn important. Repeat after me: Virtual Worlds are infinitely expandable and inherently resource low.
And just in case you think I am kidding about this amazing human capacity to simply “Make up shit on the fly in order to make a buck…” Go try on this morning;s pièce de résistance:
Long ago, I explained on the Peoplenomics side of this one-loon economics outfit that the whole Climate and then the LBGTQ (and whatever) movements were nothing more than virtualizations in order to keep the economy from imploding.
Moreover, if this BBC story is to be believed, we will really need a tremendous thrust of alternative genderism in order to save the US economy.
That’s because about the time every McDonalds has been strong-armed into a third restroom (which we presume will be labeled “Surprise Us”) the robots will be coming to take the very last of the real jobs out there.
Why next – and don’t laugh – I expect that in an effort to keep the economy of the future alive, even Robots will have to be “assigned a presumptive sex” and treated equally. Because after we run out of robots, where is the NEXT expansion, beyond that? Why mandatory human foibles, of course!
So that, my friend, is why the whole world seems like it’s a crazy and out of control place.
Because it really is. You just need to look at it more clearly.
Write when you break-even,