An Entrepreneurial Story – Coins ’N Things

From BusinessWeek by Kathleen Miller

In 1973, Louis Oliari opened Coins ’N Things, a small storefront between a Dairy Queen and a hair salon in Brockton, Mass. His teenage son Mark had become obsessed with coin trading, and Louis, an engineer and a coin enthusiast himself, figured if he indulged the kid he’d eventually outgrow the hobby and go to college. “The whole idea was that I’d get bored and get this out of my system,” Mark, now 54, remembers.

Today, Coins ’N Things is the largest seller of raw gold to the federal government. In the fiscal year that just ended, the U.S. Mint, which has bars made into coins for collectors and investors, bought $1.86 billion worth of the metal from the Bridgewater (Mass.) company. Not too shabby, considering that Coins ’N Things and the Mint struck their first deal less than two years ago.

The family’s fondness for coins began when Louis Oliari was laid up with a knee injury and his wife gave him a book about coin collecting. Father and son began hoarding pennies from their local bank, assembling complete collections by decade. By age 13, Mark was attending trade shows. Then came the storefront. Business grew so quickly that after Mark finished high school, Louis let him trade coins full-time. It wasn’t long before Louis left his job at Honeywell (HON) to join him.

Several years later, Coins ’N Things expanded into the wholesale metals market, acquiring clients such as hedge funds as well as jewelers and manufacturers that use raw gold. That was Mark’s passion. His father preferred to help coin collectors and “had no conception of where this thing would go,” says Mark. “He’d look in our section where I’m wheeling and dealing, making probably 400 phone calls. He’d say, ‘Wow, you guys are probably doing three or four million dollars a year now.’ I’d say, ‘Dad, that is a good day.’”

The company developed contacts around the world, and Mark and his wife, Patty, also a partner, began thinking about the next step after their kids expressed interest in the business. Three years ago a credit line from Wells Fargo (WFC) gave the self-funded company the capital it needed to go after the ultimate customer: the U.S. Mint. In early 2010 the Oliaris won approval to sell gold to the Mint. “That relationship with the U.S. government—that’s about the biggest stamp of approval you can get,” says Mark.

Every weekday, Coins ’N Things faxes the Mint with the amount of gold it can furnish and the price it wants. The Oliaris compete against four other government-approved sellers, and the Mint orders from the one with enough stock on hand at the lowest price. The family says its extensive network of suppliers often means they win the day. Coins ’N Things gets roughly 40 percent of its gold from a refinery owned by the Canadian government. “You have to know everybody, everywhere,” Mark says.

Annual revenue is now about $6.5 billion, 65 percent of which comes from gold. Mark won’t reveal profits but says the company pockets about a quarter of a percent of its precious metal sales—less for the gold it sells to the government. With 50 employees, including Mark’s two daughters and a son, Coins ‘N Things is still a family affair.

In September, gold hit a record $1,921.15 an ounce, a long way from the $103 it sold for in 1973 when the storefront opened. When Louis died in 2008, Mark finally closed the retail business that sold to collectors. “My father, God love him—he wanted to stay a little coin shop.”

The bottom line: A family-owned metals business has capitalized on the international demand for gold, selling $1.86 billion worth to the U.S. Mint in 2011.

Are Regulations Strangling Commerce?

 

 

 

Pythagorean theorem: 24 words
 

Lord's prayer: 66 words 

Archimedes' Principle: 67 words 

Ten Commandments: 179 words 

Gettysburg address: 286 words 

US Declaration of Independence: 1,300 words 

US Constitution with all 27 Amendments: 7,818 words 

EU regulations on the sale of cabbage: 26,911 words

– Europe's Problems Summed Up (Grant Williams)

 

Is Subaru the Best Car Manufacturer in the World?

BusinessWeek describes how Subaru defies recent trends in the car business.

Subaru plant

In its 22-year history—a period that has spanned three recessions, a global financial crisis, massive U.S. auto bankruptcies, and the departure of Isuzu, a founding partner, from the operation—SIA has rolled out more than 3 million vehicles and has never resorted to layoffs. Instead, it’s given workers a wage increase every year of its operation. Staffers also enjoy premium-free health care, abundant overtime ($15,000 each, on average, in 2010), paid volunteer time, financial counseling, and the ability to earn a Purdue University degree on-site—all in a state that has lost 46,000 auto jobs and suffered multiple plant foreclosures in the past decade. And the truly astonishing thing is how it achieved all this: through a relentless focus on eliminating waste. “This is not about recycling, or a nice marketing to-do,” says Dean Schroeder, a management professor at Valparaiso University who has studied the plant. “This is a strict dollars-and-cents, moneymaking-and-savings calculation that also drives better safety and quality.”

Toyota made kaizen—the Japanese principle of constant “change for the better,” with a special focus on efficiency, aka “pushing lean”—famous. SIA, you could say, has instilled green kaizen, or pushing green. Starting in 2002, SIA set a five-year target for becoming the nation’s first zero-landfill car factory. That meant recycling or composting 98 percent of the plant’s waste—with an on-site broker taking bids for paper, plastic, glass, and metals—and incinerating the remaining 2 percent that isn’t recoverable at a nearby waste-to-fuel operation to sell power back to the grid. Within two years, the results spoke for themselves.

There’s always a catch, and at SIA it’s this: All that ultra-efficiency—when applied to employees—can lead to unforgiving schedules. SIA workers, who start at just over $14 an hour and peak at about $25 an hour, put in 47-hour workweeks that include two Saturdays a month at time and a half—good for $50,000 to $60,000 a year in per-employee salary. (That means roughly 100 employee salaries were protected by the aforementioned $5.3 million zero-landfill rebate.) The upside? When the Japan earthquake interrupted the supply of parts in March, slowing down the plant’s breakneck output, SIA was able to keep paying its workers in full to volunteer in town. The downside: “Everyone’s burned out here,” says Kay Tavana, a 48-year-old who installs airbags and headlights. Not that she isn’t grateful for the work and the SIA perks. Working while on chemotherapy for a blood disease, Tavana avails herself of SIA’s free gym to rev up for her shift from 4:30 p.m. to 3:30 a.m.

The cost savings and social programs at SIA wouldn’t amount to much if Subaru’s cars weren’t in demand. From 2008 to 2010, unit sales jumped 41 percent, while last year the company’s 22 percent rise in vehicle sales was double the broader car market’s increase. “You get worker commitment to productivity by offering job security,” says Kristin Dziczek, who studies labor issues at the Center for Automotive Research in Ann Arbor, Mich. “But the best job security is still a product people will buy.”

 

Link: Subaru of Indiana, America’s Scrappiest Carmaker

Steve Jobs Should Shut Down Apple – Michael Dell’s Recommendation

Jobs had a public war of words with Dell Computer CEO Michael Dell, starting when Jobs first criticized Dell for making "un-innovative beige boxes." On October 6, 1997, in a Gartner Symposium, when Michael Dell was asked what he would do if he owned then-troubled Apple Computer, he said "I'd shut it down and give the money back to the shareholders." In 2006, Steve Jobs sent an email to all employees when Apple's market capitalization rose above Dell's. The email read:

Team, it turned out that Michael Dell wasn't perfect at predicting the future. Based on today's stock market close, Apple is worth more than Dell. Stocks go up and down, and things may be different tomorrow, but I thought it was worth a moment of reflection today. Steve.

Source: http://en.wikipedia.org/wiki/Steve_Jobs

Now…

Apple’s market cap — it is an astonishing $186.7 billion dollars — that’s bigger than:

Google $172B
Cisco $131.7B
HP $117.5B
Intel $110.4B
Verizon $85.7B
Amazon $51.7B
Research In Motion $34B
Dell $26.5B

Source: http://www.ritholtz.com/blog/2010/01/5-questions-about-the-apple-islate/

The Blindness of Economics

John Michael Greer describes why conventional economists cannot lead us out of the financial crisis. Excerpts below.

Link: The Archdruid Report: Why Economists Fail

…the profession seems to have become incapable of learning from its most glaring and highly publicized mistakes. This is all the more troubling in that you’ll find many economists among the pundits who insist that industrial economies need not trouble themselves about the impact of limitless economic growth on the biosphere that supports all our lives. If they’re as wrong about that as so many other economists were about the housing bubble, they’ve made a fateful leap from risking billions of dollars to risking billions of lives.

First of all, for professional economists, being wrong is much more lucrative than being right. During the runup to a speculative binge, and even more so during the binge itself, a great many people are willing to pay handsomely to be told that throwing their money into the speculation du jour is the right thing to do. Very few people are willing to pay to be told that they might as well flush it down the toilet, even – indeed, especially – when this is the case. During and after the crash, by contrast, most people have enough calls on their remaining money that paying economists to say anything at all is low on the priority list.

The same rule applies to professorships at universities, positions at brokerages, and many of the other sources of income open to economists. When markets are rising, those who encourage people to indulge their fantasies of overnight wealth will be far more popular, and thus more employable, than those who warn them of the inevitable outcome of pursuing such fantasies; when markets are plunging, and the reverse might be true, nobody’s hiring. Apply the same logic to the fate of industrial society and the results are much the same; those who promote policies that allow people to get rich and live extravagantly today can count on an enthusiastic response, even if those same policies condemn industrial society to a death spiral in the decades ahead. Posterity, it’s worth remembering, pays nobody’s salaries today.

Second, like many contemporary fields of study, economics suffers from a bad case of premature scientification. The dazzling achievements of science have encouraged scholars in a great many fields to ape science’s methods in the hope of duplicating its successes, or at least cashing in on its prestige. Before Isaac Newton could make sense of the planets in their courses, though, thousands of observational astronomers had to amass the raw data with which he worked. The same thing is true of any successful science: what used to be called “natural history,” the systematic recording of what nature actually does, builds the foundation on which science erects structures of hypothesis and experiment.

Economics is particularly vulnerable to this sort of malign feedback because its raw material – human beings making economic decisions – is so complex that the only way to control all the variables is to impose conditions so arbitrary and rigid that the results have only the most distant relation to the real world. The logical way out of this trap is to concentrate on the equivalent of natural history, which is economic history: the record of what has actually happened in human communities under different economic conditions. This is exactly what those who predicted the housing crash did: they noted that a set of conditions in the past (a bubble) consistently led to a common result (a crash) and used that knowledge to make accurate predictions about the future.

Watch out for this “Internet Marketing” Scam

I have been burned by a simple "internet marketing" scam that is very frustrating and irritating.

Here's how it works:

You click on a link to a sales page that has the most amazing list of DVDs to teach you how to make $100,000 a month selling stuff on the internet.

Just so you won't perceive this sales pitch as a ripoff, you will be given this package of stuff FREE!

But… you must pay for shipping with a credit card, which is a small charge. In the fine print in the agreement, it will state that you will be subscribed to a monthly newsletter for $29.95 a month (or more).

So you receive the newsletter (some of them are well written) and see a charge on your credit card.

With some of these "marketers", you will find it very difficult to cancel the subscription. Note: The more hype you see in the sales page, the more likely it is to be a scam.

The honest marketers are hoping you will like the newsletter and continue to subscribe. The others are con artists who hope you won't notice the credit card debits. They will avoid providing a way to the subscription to be cancelled. And they will teach you how to get rich doing the same scam, using content from their newsletter!

I hope you don't fall for this scam. Free lunches aren't free.

How US Leaders Have Failed

Ben Stein blasts the policies that have pushed the U.S. into this precarious economic position.

Link: How to Ruin the U.S. Economy by Ben Stein

1) Have a fiscal policy that creates immense deficits in good times and bad, burdening America’s posterity with staggering burdens of repaying the debt.

2) Eliminate regulation of Wall Street and/or fail to enforce the regulations that already exist, instead trusting Wall Street and other money managers and speculators to manage other people’s money with few or no regulations and little oversight.

3) Have an energy policy that disallows producing our own energy and instead requires that we buy energy from abroad, thus making our oil prices highly volatile and creating large balance of payments deficits, lowering the value of the dollar and thus making the problem get progressively worse.

4) Have Congress mandate that banks and other financial entities lend money to persons they know in advance to have poor credit ratings or none at all.

5) Allow investment banks, insurers, and banks to bet their entire net worth and then some on the premise that borrowers known to be improvident will in fact repay those loans.

6) Allow the creation of large betting pools called "hedge funds" that can move markets and control the outcome of trading, thus taking a forum for savings and retirement for families and making it into a rigged casino game that exists primarily to fleece suckers like ordinary working men and women.

7) Have laws that protect corporate officers from being sued for misconduct but at the same time punish lawyers in the private sector who ferret out such misconduct and try to make accountable the people responsible for shareholder and investor losses. If one of those lawyers gets particularly aggressive in protecting stockholders, put him in prison.

8) Appoint as head of the United States Treasury Department a man whose whole life was spent on Wall Street, who became fantastically rich through his peddling of junk bonds at his firm while the firm later sold short those same sorts of bonds.

9) Scare Americans into putting up $750 billion of their hard earned money to bail out the billionaires and their friends who created the market for loans to poor credit risks (The "subprime" market) and the unbelievably large side bets on those loans, promising that such a bailout would save the retirement savings of Americans, then allow the immense hedge funds to make the market crater immediately afterwards.

10) Propose to save the situation by surtaxing the oil industry, which is owned by our fellow Americans, mostly in their retirement plans, thus penalizing Americans for investing in companies that efficiently and legally produce an indispensable product.

11) Insist that the free market requires that banks and insurers with friends of the Secretary of the Treasury be saved but allow other entities not so fortunate to fail, thus creating total uncertainty and terror among financial institutions, and demolishing all of the confidence built up in financial circles since the days of FDR.

12) Then have the Republican candidate say he would keep on the job the Treasury Secretary who facilitated the crisis, failed to protect the nation from the crisis, got the taxpayers to pony up to save his Wall Street buddies, and have the Democratic candidate, as noted, say he would save the day by taxing the stockholders of energy companies.

There, that should do it.

11-year old Starts Recycling Business

An 11-year old green entrepreneur — some good news from Virginia.

Link: Galax Gazette – Galax, VA

HILLSVILLE – One of Carroll County’s youngest entrepreneurs, an 11-year-old recycler, received recognition from local government officials Tuesday.

Typically, businesses owners recognized by the Carroll Board of Supervisors have more longevity than 11-year-old T.J. Stroupe, who collects old cell phones and printer cartridges from about 73 businesses and government offices in the Twin Counties for recycling.

T.J.’s mother, Tina, gave him a recycling startup kit for his 11th birthday, which fulfilled his dream of owning his own business, a dream he’s had since he was age 7.

Stroupe has said he would use the money he makes from recycling the e-scrap on his home schooling education and saving up for an acre of land that he and his mother could live on.

Instead of throwing away cell phone and ink cartridges, so they end up in the landfill, Stroupe has convinced more than 70 businesses to turn over their old items to him.

“It’s kinda tellin’ other people, ‘Hey, don’t just throw them away – you can give them to me,’” he said recently. “Every year people throw millions and millions of these things away.”

Cell phone batteries leak in the landfill making them “dangerous to the earth,” Stroupe said.

The recycling business has at least encouraged people to think about what they throw away.

A web site for his company has been posted at http://tjsrecycling.com.

via Journey Reflection

Reducing Junk Mail and Spam Email

From the blog of Tim Ferriss (author of the 4-Hour Work-week), some advice about getting removed from mailing lists.

Link: » How to Do The Impossible: Create a Paperless Life, Never Check Voicemail Again, Never Return Another Phone Call….

…get removed from junk mail lists and common commercial mailing lists. There are a few ways to do this: 1) Get remove from the most common junkmail lists (this costs a few dollars in some cases) and check alternative strategies at www.stopjunkmail.org, 2) Use LifeLock, or another identity protection service, which automatically removes you from large mailing lists, one of the most common vehicles for identity theft. Last, we’ll have your mail forwarded to special processing centers, where it is all scanned and emailed to you. One popular service is called Remote Control Mail, and there are two big benefits to the time-focused and mobile-minded: relevant postal mail is funneled into e-mail, so you can check both email and postal mail at once (“batching” both at the same time); you can travel freely whenever and wherever without ever missing a letter.

Do Real Estate Developers Dictate Environmental Policy?

Below is a letter to the editor from the 5/12/2007 edition of the Atlanta Journal Constitution.

Link: Saturday Talk | ajc.com

Balanced board crucial to our river

I would like to express my grave concern that the Georgia Board of Natural Resources is becoming a rubber stamp for development and destruction of our state’s rivers and streams.

I am a member of the Georgia Women Fly Fishers, a group dedicated to advancing the sport of fly fishing and promoting conservation. We fish regularly in the Chattahoochee and have first-hand knowledge that development runoff causes degradation of the river with every rain. This problem is only getting worse.

It is alarming that Gov. Sonny Perdue, despite his claimed goal of wanting to make Georgia a fishing paradise, has removed all voices from the board that oversees the Department of Natural Resources that advocate for clean water and public green space.

We must have balanced representation. Having a board dominated by big developer interests at a time when water is our most precious and declining natural resource is not only bad for tourism, it is contrary to the greater public welfare and common sense.

JOY …, Smyrna

The explosive growth of the Atlanta metropolitan area has created huge wealth for many real estate developers. Environmental regulations increase the cost and complexity of real estate development. Many elected officials from the governor down to the small town boards have been influenced by the developers and their representatives to ignore the impact of unfettered development on streams and natural areas.

Governor Perdue provides another disappointing example of a politician committing to a position to get elected and then making appointments that contradict that position. Perhaps when enough attention is focused on these elected officials, they will not sell out defenseless streams and natural areas so thoughtlessly.

When do we stop sacrificing natural resources, like clean water, that are essential to the health of future generations?