Zig vs. Zag

At the Kelsey Group's Directory Driven Commerce 2006 conference this week in Los Angeles, Seig Fisher, CEO and founder of Valley Yellow Pages articulated his company's strategy to the chagrin of the technorati in the audience.

See, Seig is old school. When I say old school, I mean one-room school house with a stern school marm teaching the three R's using a coal-oil lamp.

Valley Yellow Pages (which is one of the largest independent Yellow Pages publishers in the US) has a unique Internet strategy. They ignore the Internet and focus solely on their print directory business.

When every other publisher has tried at least one internet product set, Valley sticks ink on dead trees.

AT&T, Valley's largest competitor, paid roughly $100 million for the domain name YellowPages.com. Meanwhile, Valley's print books grow year after year and the profits roll in.

While I don't find this strategy particularly exciting or leading edge, it makes money. Loads of money.

The print strategy will probably not carry Seig for the next two decades, but by that time, a company with an Internet strategy will have paid through the nose for the deep market penetration that Valley has achieved.

See, it's all about picking a strategy and sticking to it.

That is one of the toughest business strategies of all.

33 Random Observations About Business

This has nothing to do with local online advertising or Yellow Pages. However, when I received my friend, Matt Michel's Comanche Newsletter, I felt that this was something worth passing on to you.

Matt has compiled 33 observations on business. There is an awful lot of truth in this list.

Make it a wonderful day.


1. More businesses close from a lack of cash than a lack of profits. Cash is king.



2. Sales covers up a lot of inefficiencies. Strong sales buys time to fix most problems.



3. Most hiring mistakes are mistakes of rushing to fill immediate need. Be slow to hire.



4. Conflict is inevitable. Politics is not. Someone with time for politics does not have enough to do.



5. People usually live up to your expectations. Do you expect a little or a lot?



6. The lowest bidder is usually the bidder with the most oversights.



7. Overnight success takes years to achieve.



8. The more successful you become, the more you will be copied and criticized. No one resents a failure.



9. If you think everyone is out to get you and act like it, they soon will be.



10. People usually charge what they believe they’re worth. Service contractors need more self esteem.



11. Simple is superior.



12. The worst thing a company can do to its customers is fail to survive.



13. The second worst thing a company can do to its customers fail to charge enough to serve customers well.



14. Some people are simply not employable. They’re called small business owners.



15. The workload always expands to fill the office staff’s available hours. Focus on what’s important.



16. Act fast. Think faster… Think first.



17. Don’t fix your weaknesses. Hire people who are strong where you’re weak. Play to your strengths.



18. The only person you can safely make fun of, is yourself.



19. When a willing buyer agrees to a price asked by a willing seller, the price is perfect.



20. Your integrity can never be taken from you. People don’t “lose” their integrity, they give it away.



21. Some things are black and white. Some things are right and wrong. Some people do not care. Avoid them.



22. When someone goes out of his way proclaiming his honesty, wonder why.



23. Salespeople put the company first by putting the customer first.



24. Managers put the customer first by putting employees first. It’s impossible for front line employees to treat customers better than management treats them.



25. Good coaches accept blame for losses, while refusing credit for victories. Credit goes to the team.



26. The purpose of a businesses is to increase owner wealth. Businesses accomplish this by getting and keeping customers.



27. Success begins with the first step. Get moving.



28. Incompetence and indifference are bigger problems than corruption.



29. Mistakes are the tuition of experience from the school of hard knocks. Avoid remedial education.



30. The customer is not always right, but is always the customer. Treat the customer like he’s right, even when he’s wrong.



31. A company’s self inflicted damage usually exceeds the impact of competition.



32. Customers care about their problems, not yours. Focus on theirs and keep yours to yourself.



33. Implementation is everything.



© 2006 Matt Michel

Yellow Pages green with Web envy

Following is an article from the Globe and Mail pointing out that print Yellow Pages are under attack by the likes of Google and Yahoo.

Not exactly a news flash, yet the directory publishers continue to roll along with rate increases.

What does the future hold for the tree killers? Time will tell.





BMO Nesbitt Burns analyst Tim Casey had a bit of fun with Marc Tellier on Tuesday. As the Yellow Pages boss waited to make his speech to an investor conference, the analyst took a poll.

"Pick up your handsets," Mr. Casey instructed, "and address the following question: What is your primary source of information for local businesses in your household?" Each member of the audience had a small voting machine and three choices: the Yellow Pages directory, a search engine like Google or Yahoo, or another on-line directory.

Fifteen seconds later, the results were in. The winners: Google and Yahoo.

Not quite fair, Mr. Tellier responded. A bunch of BlackBerry-addicted stiffs from Bay Street aren't exactly representative of the Canadian public. With other crowds, the Yellow Pages business is growing. Like who? Sushi eaters, apparently. " 'Sushi' is a fast-growing heading [for advertising]," Mr. Tellier said. '' 'Tattoo parlours' is one of our fastest-growing headings. Walk by any university campus today and you'll see who's getting tattoos."

You can see Mr. Tellier's problem. He runs a great business and has a gold-plated stock valuation to match (that's true even after a 10-per-cent drop in the unit price this year). Yellow Pages enjoys operating profit margins of about 40 per cent with little competition. But most investors don't give a damn whether John's Sushi Emporium just bought a half-page ad. What worries them is, how much longer until the Internet starts to eat Yellow Pages' business?

Mr. Tellier is nothing if not a good salesman -- how could he be otherwise, when he's tapping the equity markets so frequently? So, naturally, he's got answers. Google's great for a lot of things, he'll point out, but it's not as handy as Yellow Pages' own sites if you want to find, say, a plumber in Toronto. Yellow Pages has also been buying specialty Web names, like http://www.doctors.ca, in the hope of turning them into new revenue sources. Other initiatives are in the works.

But for all of that, Yellow Pages still gets more than 90 per cent of revenue from putting ads on dead trees. This summer, Veritas Investment Research sent a summer intern to the library to count pages in the yellow books in five major cities. Their finding: The number of advertising pages fell 8 per cent in 2006. Conclusion: "Unmitigated decline," Veritas analyst Neeraj Monga wrote.

The report stirred up a hornet's nest of controversy on Bay Street, where the coverage of Yellow Pages normally ranges from positive to sycophantic. But even some of the bulls are starting to concede the end is in sight for the company's growth phase. Blackmont Capital's Barbara Gray figures the company will run out of growth by 2010 (nonetheless, she rates the stock a "buy").

If she's right, what does that say for the stock's value? Most analysts think the company will produce between $1.25 and $1.30 in distributable cash a unit in 2007. If we assume Mr. Tellier can squeeze out 5-per-cent growth until the end of the decade, after which the business levels off, and then calculate the present value of that cash flow, Yellow Pages could be modestly undervalued. (In that scenario, the units are probably worth between $16 and $17. Yesterday, they closed at $14.68.)

But that involves a pretty big assumption-- that the business will never decline, but merely stagnate. If you assume even a modest drop in cash flow, starting in 2011, the numbers begin to change quickly, and Yellow Pages starts to look overpriced (Mr. Monga reckons they'd be fairly valued at $13). And that, it seems, is a view that's starting to take hold among investors, if not with Mr. Tellier. "How many other media companies will come here today that have growing franchises?" he boasted at the BMO conference. True, but for how much longer?

RHD's Swanson "Real" degree

An article on Forbes.com discusses the misleading information in an RHD press release about the CEO's degree.

I think it's unfortunate and regrettable, but I seriously doubt that there was ever any intention to mislead the public or investors. It's not like a degree from St. Cloud State University made a bean's worth of difference in his performance.

Dave Swanson is one of those guys who has risen from an entry-level position to the executive suite by consistently producing top-drawer results for his investors, employees and advertisers.

Give the man his due. Dave Swanson's degree is from the school of hard knocks where he holds masters degrees in integrity, leadership and vision.

Rock on Swanny.

Two Weeks to Networking Event

The major networking event for the Yellow Pages industry is coming up in two weeks in Los Angeles.

I will tell you that virtually EVERY important contact I have in the Yellow Pages industry (and I have a lot of wonderful contacts) has either started at a Kelsey conference, or it's been renewed there.

People contact me regularly about contacting YP executives. This is where you can sit down and have a beer with them in a relaxed, upbeat setting.