The Texas A&M Corp of Cadets Final Review from last year. It’s not a small gathering and this year’s review is coming up next weekend. Proud of these young men and women.
“Return to Base” – remembering my Dad on his Birthday and wishing he was still with us. Without family you have no courage. I am blessed to have love and support on both sides of my family, unconditionally, which is perhaps the greatest gift of all.
Happy Birthday Dad. You are still very much loved and very much missed, but as a kid from Bridgeport who achieved the dreams of 1000 Romans, there is no question you lived life to it’s fullest. I love you for teaching me that and so much more (much of which I can’t put in a blog post.)
You’re loyalty to God, to Country and to the Family was completely unshakeable. Even when they gave the call to “return to base” for the very last time. Love you Dad. And Happy Birthday.
The Four Way Cross Maneuver by the Fightin’ Texas Aggie Band. Some things at Texas A&M are just unique. Yet for all of our talk of tradition, few schools or companies I have ever encountered embrace the speed of change in today’s world than Texas A&M.
In the newly rebuilt Kyle Field at Texas A&M University!
A panorama of the new field completed for our final home game of 2015.
The Fightin’ Texas Aggie Band.
The new stadium is spectacular!
Aggieland is completely different from the 1990s. Aggieland is exactly the same as it was in the 1990s. Just completely different, core values and leadership focus in tact. Gig’em.
One person gives freely, yet gains even more; another withholds unduly, but comes to poverty.
A generous person will prosper; whoever refreshes others will be refreshed.
Or to put it another way, via Dune-Micheli Patten, A parable by an Unknown Author:
There once was a farmer who grew award-winning corn. Each year he entered his corn in the state fair where it won a blue ribbon.
One year a newspaper reporter interviewed him and learned something interesting about how he grew it. The reporter discovered that the farmer shared his seed corn with his neighbors.
“How can you afford to share your best seed corn with your neighbors when they are entering corn in competition with yours each year?” the reporter asked.
“Why sir,” said the farmer, “didn’t you know? The wind picks up pollen from the ripening corn and swirls it from field to field. If my neighbors grow inferior corn, cross-pollination will steadily degrade the quality of my corn. If I am to grow good corn, I must help my neighbors grow good corn.”
He is very much aware of the connectedness of life. His corn cannot improve unless his neighbor’s corn also improves.
So it is with our lives. Those who choose to live in peace must help their neighbors to live in peace. Those who choose to live well must help others to live well, for the value of a life is measured by the lives it touches. And those who choose to be happy must help others to find happiness, for the welfare of each is bound up with the welfare of all.
The lesson for each of us is this: if we are to grow good corn, we must help our neighbors grow good corn.
Every year at SXSW I feel a little older. It doesn’t help that right before SXSW 2015, where it was my privilege to be a speaker for the third time at the Interactive festival, that twitter sent me a notice congratulating me on being on twitter for 8 years.
8 years on twitter. At least I don’t post photos of every piece of sushi I eat. Although I almost posted a photo of the biscuits-and-gravy I ate this morning. (Shut it – it’s called “carb’ing up” for tennis tomorrow.) Anyway it’s all a blur although I know I can blame Erica O’Grady for getting me on twitter for sure.
But the iphone. It was 2007. Kool Aid? Check. And well….. In Adam Tow’s photo I’m the guy with the brown shirt and arm raised on the left hand side at the back. Yup that’s me. I haven’t always had a beard.
When I heard about iphone dev camp, by rss feed of course, I was on an airplane. My first iphone was purchased by proxy by a great friend named Imelda who was willing to get me one on the first day given I was flying someplace else on the day they were released. We registered on a wiki because what could go wrong, right?
In the end there I was at iphone dev camp 1 when apple didn’t even have an SDK yet. But I was there in San Francisco in 2007. Right after Adam took his photo I had to run around and take my own photo to post to my flickr set from iphone dev camp 2007.
When I got back to Houston I had a bunch of new friends and wound up presenting at Netsquared Houston on the iphone and the good the bad and the ugly. I’ve left the iphone, come back, left again, came back again and right now I really enjoy the camera on my iphone 6. In 2007 this was my presentation on the iphone at netsquared.
At SXSW this year I saw a lot of these folks, but not enough. It’s a marathon and not a race. Now I’m more excited about hexacopters, remote work environments, how best to give people meaningful work, create a great product, and keep our clients not just happy but evangelists. A lot has changed.
There are too many names to even begin to give credit to for these adventures and the fact that they have resulted in tangible benefits that went right back to our employees in profit sharing and training and benefits over the last 17 years since I started the company in 1997. Yet “I” didn’t start the company, I jumped off the cliff and my family and friends were like “well look what the hell he did now? Guess we gotta help him till he comes around.” And they did.
Then. And now. Here is a humble thank you to those who keep us alive, pick us up when we fall, put up with us working three days straight without sleep when we get in the zone. And still love us.
Here’s to the ones who love and care for the crazy ones, because we are nothing without you. And I say that with the utmost humility. I am no Steve Jobs. I am not Rosa Parks. I’m a person who is terrified yet at the same time resolutely certain of the outcome.
“Remembering you are going to die, is the best way I know to avoid the trap of thinking you have something to lose. You re already naked. There is no reason not to follow your heart.” – Steve Jobs
“Stay hungry. Stay Foolish.”
Thank you. And thank you Steve for the inspiration….
Frank – I never bested you at tennis. Because you were damn good. And funny. And you helped me learn the game with few words, always a quiet one. You rarely spoke even as partners. Occassionally you ran for a lob to throw us off. But more frequently your offense prevented anyone from hitting a lob in the first place. But you know that. Strategy. Quiet strategy. We noticed. I noticed.
You offered no help as an opponent with your surprisingly fast net play, sly grin. I still learned. Even on the other side of the net I still learned from you. I never told you, nobody need tell you, you know. There are many like me who respect the quiet strong ones. Like you. #respect
May God bless you and your family Frank. God Bless. #peace
From the Houston Chronicle on Frank John Vilece:
Frank John Vilece of Houston, TX, passed away on December 24, 2012. He was surrounded by his three loving children, Kathryn, Frank Jr., and Michael, down to his final breath.
Born in New York, New York on February 10, 1944, and raised in Greenwich Village, Frank graduated from Xavier High School, and then Steven’s Institute of Technology in 1965. Growing up his family spent summers in Lake Carmel. In 1971 he married his late wife, Gail Mansfield Vilece and eventually moved west to start and raise a family and build his career. Frank was a brilliant man who spent his entire career as a mechanical engineer. He took great pride in his ability to create energy and power. With his wealth of knowledge he was able to tackle the most sophisticated engineering project, yet he was humble enough to teach anyone willing to learn his passions.
His greatest accomplishments and joy in life were his three children. He did everything he could to make sure his children were given all the tools they needed to be successful and enjoyed hearing about their many adventures. Frank loved staying active and had a life-long love of learning. Much of his free time was spent on the tennis court. Following tennis events on TV, in person, or playing in leagues around Houston, exhilarated Frank.
Frank is survived by his children Kathryn Vilece, Frank Vilece Jr., and Michael Vilece, as well as his sister Alice Battle and brother Vic Vilece, in addition to numerous nieces, nephews, and cousins.
A Mass will be held for Frank at St. John Vianney Catholic Church, 625 Nottingham Oaks Trail in Houston, on Friday December 28, 2012, at 11am.
In lieu of flowers, the family asks that you make a donation in Frank Vilece’s name to either the American Cancer Society or Vitas Hospice Charitable Fund.
What impressed me wasn’t so much the U.S. Open Trophy in a niche in a side hallway., his intense workouts at a threadbare high school track or his no-nonsense practice sessions on a humble court carved out of a hillside. Rather, what touched me was how he cared, how he sweated the make-or-break details of his grassroots foundation and how he listened and lent support to his young wife who was then struggling in Hollywood.
The kid who was once half-boy and half-wizard was now caring, thoughtful, giving. Ultimately, Roddick was America’s warrior, a ferocious battler whose intensity sucked up all the oxygen in the room. You felt it in row Z.
Now it is hard to imagine the American game without our leader. But there is no choice. Like one of his 144 mph servers down the T. Austin Andy announced his retirement with speed and certainty – and all of a sudden, the American men’s game seems a bit of a blur.
Our wizard has vanished.
– Bill Simons, The Man Who Chased Geniuses, Inside Tennis, Nov/Dec 2012
“Ching Shih assembled and ran one of the most formidable pirate armadas the world has ever seen. Her forces wreaked havoc not only among the merchant shipping population, but were also incredibly successful at going toe-to-toe with the Chinese Navy in large-scale sea battles. She was tough, well-respected, had a formidable code of honor, and was militarily and tactically superior to a number of Chinese and European naval commanders. And best of all, she was able to get away with everything, keep all of her loot and avoid suffering the indignity of a death by hanging.” – (via @AnonChingShih)
“To understand more clearly what is meant by judgement, imagine a singles match being played by Mr. A and Mr. B, with Mr. C acting as the umpire. Mr. A is serving his second serve to Mr. B on the first point of a tie-breaker. The ball lands wide, and Mr. C calls, “Out. double fault.” Seeing his serve land out and hearing, “double fault,”
Mr. A frowns, says something demeaning about himself, and calls the serve “terrible.”
Seeing the same stroke, Mr. B. judges it as “good” and smiles.
The umpire neither frowns nor smiles;Â he simply calls the ball as he sees it.”
– W. Timothy Gallwey,Â “The Inner Game of Tennis”
Man is not a rational animal, he is a rationalizing animal. – Robert Heinlein
Leadership, I frequently say, is about “making good decisions with limited information.” Not perfect decisions. But good decisions. You don’t have a choice in business: move quickly or die. And unlike CEOs on Wall Street, the small business CEO’s worst nightmare is to fail their employees and customers. I am not afraid of risk or failure as an individual, but I do have obligations and those must be met and that requires leadership during trying times.
There are three major factors that make leadership decisions difficult:
- Speed – you must make a decision and you never have enough information.
- Pressure – the pressure to make the right call, and make it now, is intense.
- Commitment – even if only 51% sure about a decision, commit 100%.
I suspect politicians face the same deadlyÂ triadÂ when making decisions. And worse than letting their employees and family down, politicians risk being pilloried in the media,Â dragged through the hot coals of a PR disaster, and destroying the empire! Why anyone would want to be a politician is beyond me.
So it was with some relief this weekend when I read the letter to the editor in the Houston Chronicle by Charles Hamilton of Spring Texas titled “Thinking Men Think.” It was like someone with common sense finally stepped into the room. From his letter:
Regarding “Let’s give Romney time to sort out his positions” (Page B9, Friday),Â Gail CollinsÂ inaccurately notes a presidential nonqualifying trait inÂ Mitt Romney‘s “not giving a fig” about undocumented workers clipping his lawn.
Non-objectively, she does not compare Obama’s many flip-flops (e.g., closing Guantanamo) with Mitt’s (e.g.,Â abortion)…
Thinking men think. Man’s judgment of other men’s motives is oftenÂ flawed.
Politician’s disparage each other to get elected because we the electorate remember bad stuff better. Witness the oft quotedÂ and paraphrased “you get 10 bad reviews from an angry customer versus 1 recommendation from a happy customer.” Witness “if it bleeds it leads.” Witness Perez Hilton, the Drudge Report, etc… WE have trained the media and the politicians to feed us disparaging remarks about each other.
And the worst of those sound-byte-disparagementsÂ is she “s/he flip-floped on issue _____.” What does that mean in poli-parlance? It is slang for “the politician changed their position” with an implied “you can’t trust them.”
flip-flopping,” by the media, is consistent with the actions of a rational human being. Feel free to ponder “what” changed. Be it pandering to the left or right. But SOMETHING changed in the politician’s world-view to have themÂ logicallyÂ take a new position.Â Â The broad definition of flip-flopper can be painted on President Obama as well as on candidates Mitt Romney and Newt Gingrich. And how does this help move us forward? It doesn’t.
Look, we all benefit from a healthy Presidential Election. Let’s talk about the issues in the primary and in the general election. But if you hear someone say “he is a flip-flopper” the person who is speaking is not thinking withÂ acuity. Don’t we deserve a leader smart enough to move with the cheese?
As Charles’ said – “Thinking men think.” And thank God for that!
From the article:
The first dreams we ever had were to be held. And loved. And to explore this amazing world with love in our lives.
We dreamed of seeing, touching, and experiencing the world around us, with the happiness and comfort that comes from family.
As adults, many of us dream of building a family, and do so.
It’s the day-to-day realities that don’t always feel so dreamy. We get busy, exhausted, and overwhelmed. We’re changing diapers, cleaning up spills, searching for a jolt of caffeine to keep our eyes propped open until we can fall face first into a pillow.
Along the way, we sometimes see some work dreams take a back seat. We worry they may slip away, that we may never get back to them.
There are tough tradeoffs that moms and dads have to make every day. But since my son’s birth, I’ve stopped seeing those tradeoffs as sacrifice.
Because when we give up something for a time to make sure we’re putting enough focus into our families, we’re not giving up dreams. We’re committing to our biggest, deepest ones.
We’re prioritizing the dreams that make up who we are.
Monica, in her usual fashion, takes over completely, leaving Phoebe in charge of only cups and ice. Phoebe decides to make the most of it; she makes everything imaginable out of cups, and serves every kind of ice.
So the next time Monica gives you cups and ice, just ask yourself, what would Phoebe do, and do that. It’s the hard way out. But worth it.
(Note: video added and minor edits Jan 18, 2016 while writing this post about Dr. Martin Luther King Jr. – EGS)
“The crux of the matter is that in the past, networks have been viewed as objects of pure structure whose properties are fixed in time. Neither of these assumptions could be further from the truth. First, real networks represent populations of individual components that are actually doing something â€“ generating power, sending data, or even making decisions. Although the structure of the relationships between a networkâ€™s components is interesting, it is important principally because it affects either their individual behavior or the behavior of the system as a whole. Second, networks are dynamic objects not just because things happen in networked systems, but because the networks themselves are evolving and changing in time, driven by the activities or decisions of those very components.
In the connected age, therefore, what happens and how it happens depend on the network.”
-Â Â Â Â Â Â Â Duncan J. Watts, Six Degrees â€“ the Science of a Connected Age
RAMSAY GILLMAN (from Chron.com)
Ramsay Gillman, born in Houston, Texas on the 1st of February 1944, the son of Frank and Lula Gillman, died on Friday, the 3rd of June in his home in Houston. He was preceded in death by his father, mother, and brother, Barton Gillman. He is survived by his beloved wife and companion of 35 years, Stevie Gillman, daughter, Stacey Gillman Wimbish and her husband, Frank; son, Jason Gillman and his wife, Brittany; and son, Christopher Gillman. Grandchildren include Grace Wimbish, Frankie Wimbish, Jace Gillman and Cavan Gillman.
At the time of his death, Ramsay was serving as Chairman of the Board of the Gillman Companies, one of the largest privately held automobile dealership groups in the country.
The son of a pioneer automobile dealer, Ramsay began his automotive career working in the parts department of his father’s Pontiac dealership in downtown Houston. After attending theÂ General Motors Dealer Management Institute and other specialized schools, he became an authorized dealer in 1967.
Ramsay served as a Director for the National Automobile Dealers Association (NADA) from 1989 through 1999. He was elected as President of NADA in 1997. During his years as a Director, Ramsay was a member of the NADA Industry Relations Committee, the NADA Regulatory Affairs Committee and was Chairman of the NADA Government Relations Committee in 1993 and in 1999. At the time of his death, Ramsay was serving as a Trustee for the NADA Charitable Foundation and for the NADA Dealers Election Action Committee.
Ramsay served as President of the Houston Automobile Dealers Association and Vice President of the Texas Automobile Dealers Association. In 1984, Ramsay was appointed Vice Chairman of the Texas Motor Vehicle Commission by Mark White, then Governor of Texas and served for 3 years. At the time of his death he was serving as a board member of the Texas Department of Motor Vehicles appointed by Rick Perry, Governor of Texas.
Ramsay received the 1996 Sports Illustrated All-Star Dealer Award, presented by the American International Automobile Dealers Association, for his lifelong contribution to the automotive business and commitment to numerous charitable organizations.
In 1997, the State of Texas House of Representatives passed House Resolution No. 350, officially commending Ramsay for his “outstanding achievements” and years of dedication to the State of Texas, the automobile industry, his community, and charitable organizations. In 2009, The Texas Automobile Dealers Association honored Ramsay with the lifetime achievement Automotive Legends Award.
Charitable organizations that receive support from the Gillman family include the Houston Livestock Show & Rodeo Youth Scholarship Program, the Fort Bend County Women’s Center, which provides shelter for abused women and their children, the Earning by Learning Program, which rewards young children for reading books, the Ronald McDonald House, the Muscular Dystrophy Association and Sickle Cell Association.
Ramsay was an exceptional storyteller, always with a moving or humorous tale for every occasion. He lived life over the top, was a true friend, a great mentor, and enjoyed every phase of living. An expert golfer, ardent outdoorsman, an extraordinary fisherman and proficient hunter, he packed over 100 years of living in the 67 years we were privileged to enjoy his companionship and company.
A Celebration of Ramsay’s remarkable life is to be conducted at eleven o’clock in the morning on Wednesday, the 8th of June, at St. Luke’s United Methodist Church, 3471 Westheimer Road in Houston, where the Rev. Peter Miller, Pastor of Caring Ministries, is to serve as the officiant.
For those desiring, in lieu of customary remembrances, memorial contributions in Ramsay’s name may be directed to the Fort Bend Women’s Center, P.O. Box 183, Richmond, TX, 77406; the Houston Automobile Dealers Association Scholarship Fund, P.O. Box 16550, Sugar Land, TX., 77496-6550; the National Automobile Dealers Charitable Foundation, P.O. Box 9133, Tacoma, WA., 98490-0133.
“Hey wait. You’re the captain of the ship. We can talk about what direction we’re going. But we’re going in a direction. And if there’s a debate about what direction we’re going, it’s my ship, I’m gonna pick at the end of the day. I’m gonna take everyone’s input. But there’s gonna come a point when the ship has to go. Because there’s only a certain number of lemons. And you’re gonna get scurvy and we’re all gonna lose our teeth. And it’s gonna get f*cking crazy. And people are gonna lose their minds. We need to keep the ship moving. You can get your own ship.” -Â Jason Calacanis
“What gets you out of bed in the morning to win? You have to have some love for the game.” -Â Jason Calacanis
So ya, I respect the dude. Passionate? Yes. Overly honest? Yes. Respect? Yes.
As the company has grown over the years, I have hit a number of tipping points that were unexpected and hurt the company. Unfortunately I have been unable to find a book that predicts these moments accurately and I know few people who have organically grown a 30+ employee 13 year old technology and marketing firm. We’re a bit odd. So while there are many sage leaders in the city of Houston, few have ever been “in my shoes” so to speak and most aren’t really sure what we do. In other words, sometimes I am flying blind and changes are clear only in hind sight. I am having one of those moments now and it involves ideas and a very motivated, skilled, enthusiastic and hard working group of employees.
The problem is ideas. Too many of them.
My management philosophy has always been the same. “Hire good people. Train the hell out of them. Let them run.” There can be problems with this. If you train them and they run off to a field to pickÂ daisies, you fire them. But my experience has been that people are a LOT more motivated when they are given the tools and the freedom to do their jobs.
I once worked at a large corporation where I needed a Vice President’s sign off to get a $30 book I needed to do my job. And I had to write up a justification about why I needed the book. I called it a “pre-book-report” at the time. Anyway, I come from a family that consumes books like other people consume Doritos so this blew my mind. My manager, her boss, the VP and I spent way more than $30 in salaries debating the merits of said book. Most of which was made up because none of us had read it. So while the CEO said we were there to “maximize shareholder values” the rest of us didn’t get the memo. So I kept reading books and just paid for everything I needed out of my own pocket.
And I vowed I wouldn’t cripple my employees that way when years later I started a company.
Back to ideas. Thanks to our clients we get to eat. And we help them make a profit using our technology and processes. Everything is thanks to our clients. They expect and deserve the best possible service at the best possible value that we can deliver. That takes training. And I am committed to training. So far this year we sent 11 people to SXSWi, 2 people to SMX, 2 people to DrupalCon, 2 people to NTEN’s NTC, 2 people to the TSG Summit, 2 people to PyCon, we have 4 scheduled to attend Tufte, etc…. Â And it’s only March 19! Perhaps I shouldn’t share this because my competitors can see that the secret sauce over here is training. But I’m not that worried as investor led companies tend to maximize profits for the quarter and therefore lack the discipline and will to invest so heavily in training. Particularly if all of those expenses hit you in the same quarter.
Now, all of those employees are back from cities all across the United States and they are walking in to my office with idea after idea. After idea. After idea. And ideas are good. But it’s too much.
This is compounded because ideas are pretty cliche. You can’t patent an idea, you can only patent an implementation of an idea. Ideas only have value when you take action on them. It is results that create value, not ideas. Yet all of us in life want to provide the ideas and have them get done, usually by someone else.Â And we take it personal when someone shoots our idea down, and people know that, so the more ideas you throw out there the more people nod their heads in agreement. “Why yes, that is a good idea.” And it might be. But we’ll never know unless someone prioritizes it and commits the resources to implement the idea and then evaluates the results.
And some ideas are just bad. For example Ethan Watters expressed these emotions about one idea:
The idea of going to a Shriners meeting and listening to some high school student read her award-winning essay on the value of democracy seemed like an activity that I might encounter in the first ring of hell.
Nothing against the Shriners, but that is an idea that if you told me you were doing that I would say “hmmm, sounds interesting.” Yet I would be thinking: “No, that does NOT sound like a good idea for me and NO I do not want to test that idea.” But I wouldn’t say that.
A few years ago I judged a Tech-Transfer event for MBA students who presented a case on if an academic patent should be commercialized for the university where the research was done. I kid you not – this one patent was for a nanotech etching machine that was less than half the size and more expensive than one that was commercialized and in use in industry. It is hard not to look at that idea, shake your head, and think “was that just some dude who wanted to frame a patent for his wall?” I guess it’s academia so they have more wiggle room, but sheesh. This is an example of a bad idea that wasted time and money.
Testing ideas is expensive.
As a CEO your dream is someone walks up and says
“I had this idea so I prototyped it and the initial results look promising. Can we schedule a time to go over the results?”
And sometimes that happens. It really does. And those people get promoted at our company much faster than others. But more often than not you are presented with an idea like it is a sacred object and expected to immediately commit resources to test it. And there are simply too many ideas. And never enough resources.
(Sidebar: You actually get a LOT of innovation from the sales team (yes really) because they talk to prospects and see actual needs before people who only work with products we already support. Because no one within the company already knows X new product, a sales person with initiative will self install (read: prototype). That is how we started offering WordPress and Drupal as new product lines and THEY ARE GREAT!)
I was pondering the expense of organizing and testing all of these ideas while on a long walk with the dog this morning. A few possible solutions came to mind:
- Set up a DIGG type ranking system for idea submission and have employees vote the ideas up or down.
- They talk about this a little in Groundswell. But Idunno, I rarely see committees find the best possible idea. They usually blend everything until you get a compromised version of mush. Or whoever can write the best python script wins the vote. I love Amazon reviews, but I rarely write one. Does that mean my ideas don’t have value because I won’t use that particular tool?
- Require employees to write-up the idea and present it in an organized fashion at a scheduled time.
- Schedule office hours.
- This is probably something I should do as a CEO as I am a little too accessible at times which prevents me from getting my work done. But again, will I miss a Eureka moment? What is it that I do that could possibly be more important than working with our employees?
- Say “no” to everything.
- Saying “no” to everything has actually worked well for me in the past. If the employee Â isn’t motivated enough to overcome the first “no” then they aren’t that committed to the idea. Or so goes the thinking. But people are very different culturally. Extroverts ask me the same question 10 times while introverts won’t ask at all! Won’t this method bubble the “squeaky wheel” ideas up to the top? I doubt those are the best ones.
- Make them run it by their manager first.
- Otherwise known as the “hide behind hierarchy” method. Would this not break the spirit of an employee if they felt the CEO was inaccessible? What if they had an issue with their manager at a personal level, but had a good working relationship, but didn’t want to share? And do I really want to be the type of founder who is unwilling to talk to any employee? The answer to that is a resounding “no!” I spend more time with employees than I do with clients because I know developing our employees is what it takes to get to great customer satisfaction!
I’m at a loss here. I see we have hit this point. I feel like I am drinking from a firehose and I can’t keep up. While ideas alone are worthless, the implementation of a good idea has definite value!
My question to anyone who has made it this far in the post is “do you know of a system that has been tested and works for a CEO of a high growth company to handle employee ideas?” And I specifically do not want ideas. What I need is knowledge of a system that has been tested and works. Even if that system is a behavior modification on my part.
In 2006 Rick Perry passed an uneven business income tax in the state of Texas. This is in conflict with the Texas state constitution which states you can not have an income tax without a referendum. And for five years he has been able to get away with it. To the detriment of small business and preventing the creation of jobs in our state.
It is not tax that breaks a business man’s soul. It is inequities.
First things first:
“Render unto Caesar the things that are Caesar’s” – Matthew 22:21
One of the first rules of business is “Never ever EVER mess with the government.” GangsterÂ Al Capone learned this the hard way going to jail for tax evasion instead of murder.Â I say this first to emphasize thatÂ I pay my taxes. All of them. Promptly. I collect sales tax and employee deductions and submit those promptly. And I pay them not out of fear of enforcement, but out of obligation as a proud American. Same reason I vote. It’s the right thing to do.
So why this blog post then? Why poke the ant-hill? Because I read about this tragedy in Austin a few weeks ago. For some reason it really hit me hard. From the article.
Restaurant owners dead in apparent murder-suicide: Yoli and Michael Amr ran Mama Roux and founded Gumbo’s
He offered his Louisiana cooking skills to the kitchens of places such as Gumbo’s andÂ Mama Roux. She brought her personality to the hostess stand.
On Monday, they told workers they were going out of business.
By Wednesday morning, they were dead.
Police said they do not yet know a motive for the deaths.
A Texas corporation listing Yoli Amr as the owner â€” Dixie Roux Inc. â€” had its charter revoked Jan. 28 for violations of the franchise tax portion of the state tax code, according to documents on file on the Texas secretary of state’s website.
I do not know the motive for the tragedy in Austin. But I think all of us would speculate it was the failure of the business. I can’t imagine having to lay off my entire staff of 32 people. That would be horrible. The fact that they shut down on a Monday and were gone by Wednesday suggests that was the event that triggered it. And the reporter mentions the Franchise Tax based revocation of their license which suggests, but doesn’t convict, the new tax as part of the problem.Â (Note “Franchise” does not mean franchises like Subways. It applies to all businesses doing business in Texas)
At a high level it sounds like their business, like many in our fourth year of recession here in the states, was having money problems.
It is hard to run a small business. I say this from experience, or maybe I’m just a bit slower than the average bear. But it takes all of my energy. I don’t want sympathy, I chose this path. But y’all need us crazy business owners. From SBA small firms create jobs:
- Represent 99.7 percent of all employer firms.
- Employ just over half of all private sector employees.
- Pay 44 percent of total U.S. private payroll.
- Have generated 64 percent of net new jobs over the past 15 years.
- and the list goes on…
So what is the new revised “Franchise Tax” law and why do I call it a Texas Business Income Tax? Why didn’t Texas just pass an income tax? That isn’t politically prudent. And oh ya, Income Tax is against the Texas Constitution without a referendum. Specifically:
Sec.Â 24.Â Â PERSONAL INCOME TAX; DEDICATION OF PROCEEDS. (a)Â A general law enacted by the legislature that imposes a tax on the net incomes of natural persons, including a person’s share of partnership and unincorporated association income, must provide that the portion of the law imposing the tax not take effect until approved by a majority of the registered voters voting in a statewide referendum held on the question of imposing the tax. The referendum must specify the rate of the tax that will apply to taxable income as defined by law.
In 2006 the Texas State Legislature wanted to reduce property taxes. I own a home and pay taxes on that as well and being somewhat fiscally conservative I liked the idea at the time. It is described on the Office of the Governor – Rick Perry site as:
The commissionâ€™s work culminated with a proposal to reform the franchise tax and for the state to buy down school property taxes. Working from the Texas Tax Reform Commissionâ€™s recommendations, Governor Perry called a Special Session in 2006 to address school property taxes. The commissionâ€™s plan was passed by the Legislature, and in May 2006, Governor Perry signed into law a package of bills that has provided tax relief of over $16.4 billion in school property taxes.
In other words, toÂ reduce property taxes you must increase business taxes. Take $100 from Small-Business-Employer-Peter and give $10 each to Homeowner-Voter-Paul. OK, I get that. I’ll pay my share. But calling it a tax cut really galls me.
So what did they come up with? The euphemistically named “Margin Tax.” This Texas business tax increase of 2006 is described by Politifact as:
…in a 2006 special session, engineering a tax overhaul that reduced local school property taxes. To help districts offset the loss of revenue, the Legislature revamped the franchise tax, increased the cigarette tax and modified how the state taxes used-car purchases. Perry signed the overhaul legislation into law in May 2006.
A key goal of the new franchise tax, often called the margins tax, was to apply it to companies that had largely avoided the old corporate franchise tax. As expected at the time, businesses paid more in total after the overhaul of the franchise tax than before, although less than was forecast. Franchise tax revenue had totaled $5.8 billion in 2006 and 2007. In 2008 and 2009, the first two years of the revised tax, total revenue was $8.7 billion.
However, the 2006 changes didn’t affect all businesses the same way, said Dale Craymer, president of the Texas Taxpayers and Research Association… (more)
Yes, you read that right. Business Taxes in Texas went from 5.8 Billion to 8.7 Billion looking at a two year period. Which by the way is less than was projected.
So how do you explain the Franchise Tax law and why it is unfair? Well first because you can’t pass an income tax, they passed a “Margin Tax” where Government is going to classify each business and define how to calculate their margins. Um…. call me a skeptic but my experience has been government isn’t exactly an expert at defining the costs of running a business.
For a grocery store the following are NOT considered valid costs of running a business. I repeat, these grocery store expenses are the ones that are NOT allowed.
The following costs are not allowed asÂ COGS:
- rent paid for the distribution center;
- rent paid for the grocery store space;
- refrigerated display cases;
- shelving for grocery display;
- compensation paid to cashiers and baggers;
- the cost of cash registers;
- credit card company fees; and
- grocery bags.
Cash Registers? What are we to do? Wander into an unheated warehouse with no employees with food stacked on the floor and leave money on the floor as we leave the building carrying half rotten food in our hands?Â So lets get one thing straight. The Texas Franchise Tax, called the Margin Tax, is in fact the Texas Business Income Tax with big government in charge of itemizing your Profit and Loss statement.
But wait, it gets worse. The tax rate is either 0.5% for a retail establishment or 1% for a service business. It can be double for the exact same type of service and generally favors larger corporations over small business. A recent editorial in the Chronicle explained the double taxation of small service stations:
Texas requires incorporated businesses with more than $1 million in sales (in 2012 this figure rolls back to $600,000) to pay a business tax called the franchise or margin tax. Even though $1 million sounds like a lot of money, many small businesses fall into this category. The state provides different methods to calculate the tax based on the classification of businesses. Service industries use one method, retail businesses use another and trades such as plumbers and roofers use a third method. Which method do you suppose the auto repair business is required to use? The worst possible one.
The independently owned auto repair shops in Texas are taxed at twice the rate applied to dealership-owned shops or franchise stores because of an outmoded classification system.
So if I have my Chevy fixed at the local family owned repair shop, that locally owned business pays twice as much tax as if I had paid to have it repaired at the Dealership (do we still own GM?) I don’t know about you, but that just seems wrong to me. It’s cheating plain and simple and should not be tolerated.
In business you have net profit, which is all of your sales minus all of your costs. This is what Corporations get taxed on by the Federal Government. It works pretty much like your personal taxes. Not everything is deductible so you always show more net profit on your corporate tax returns than you actually have at the end of the year (travel is only 50% deductible on the justification that you went to Odessa on business to party it up, but whatev…). So while someone may not like the Federal Income Tax, it is at least consistent. If it is bad, it is bad for everyone.
Want more jobs? Give us a level playing field and leave us alone. I realize Atlas Shrugged isÂ puerile, but there are some truths in there. Get rid of the euphemisms. Speak clearly. Level the playing field. Then leave us alone. Regulate and tax us, but regulate and tax us fairly. You run the government and we’ll run the businesses and create jobs. OK?
The Texas Franchise Tax, what I shall pin to the Governor who passed it as Rick Perry’s Texas Business Income Tax, is a huge business tax increase and it just isn’t fair to small business. It needs to be scrapped and fixed from the ground up. Send me a tax bill. Raise my taxes. Pass a fair income tax. Fine. I’ll pay them like I always do. But Texas, please send me the same tax bill you send the other businesses. That is only fair.
Closing thoughts: In the course of writing this blog post I learned of the amazing work Yoli and Michael Amr did with animals. And read the heart felt comments on these posts. I am sorry I did not get a chance to meet them. In their honor I made a donation to Williamson County Animal Shelter. I also learned about some amazing resources to help entrepreneurs and anyone considering suicide. Don’t do it. We need you here. We really really need you here.
Less fairy tale than fable about the consequences of collective hypocrisy, Andersenâ€™s story bears a message that has become a proverbial truthâ€¦ Choosing to ignore what is in plain sight and blindly acting as if there were nothing wrong are the targets of Andersenâ€™s satirical barbs. That it takes an â€œinnocentâ€ child to divine the truth that â€œHis Majestyâ€ is unable to discern is a reminder of the stultifying effects of social proprieties and the way in which culture and civilization produce duplicity and hypocrisy.
Most people can agree that authenticity is of great value. We’d rather be â€” or follow â€” a leader who is for real than one who is faking it. Acting in a way that feels truthful, candid, and connected to who you really are is important, and is a leadership quality worth aspiring to.
On the other hand, being who you are and saying what you think can be highly problematic if the real you is a jerk. In practice, we’ve observed that placing value on being authentic has become an excuse for bad behavior among executives. (more)