Posts Tagged 'Recession'

August 6, 2009

Punishing Success

Let’s say you worked for years to become a world class athlete. As a kid, you were in the gym while other athletes were at the movies. You were in the weight room on Saturday nights when no one else was there. You shunned pizza and soda in favor of grilled fish and fresh fruit. By the time Letterman hit the evening airwaves, you were well into restorative sleep. You were out the door for your morning runs while other athletes snoozed. As a result of all this, now you perform at an elite level and are very successful at your sport. Suddenly, you find that there are people who have a vested interest in helping you maximize your athletic potential. Your coaches, your managers, and companies who pay you to endorse their products all want to see you do your best. Why? Because doing your best helps them be more successful.

So, they provide you with all the things you need to maximize your potential. You get the best training gear and training regimens. You get the best nutrition. You get the right amount of rest. All these things help you maximize your potential. Thus the relationship is a nice symbiotic cycle – the more success you experience, the more success your coaches, managers, and endorsement companies experience. Win-win. Makes sense, right?

So, imagine the silliness if your coaches, managers, etc., made the decision that because you were so fortunate in your success that you had to “give back” almost half your resources to train the athletes who loafed, stayed out late, partied and gorged on pizza. Because you’re such a hard-working and smart athlete, you don’t need all those resources to participate adequately in your sport, they rationalize. Consequently, you don’t hit your potential, your coaches and managers don’t distinguish themselves, and endorsing companies don’t call you. You then feel that you’ve been punished for your hard work and success.

Sadly, much of our government policy falls under this flawed logic. The IRS just released their latest income tax stats for the year 2007. For that year the top 1% of earners paid 40.4% of all income taxes collected. We all know that right now we’re coming out of a recession and we really folks to invest in businesses and hire people to get the economy moving. So how do the 2007 numbers compare to, say, the 1980’s? During the ‘80’s, we managed to shake off the “stagflation” of the ‘70’s and get the economy rolling again. It was during this time that many technology juggernaut companies were spawned – Microsoft being a good example. So, how much of the income taxes in the ‘80’s were paid by the top 1% of earners? The average for the 10 years from 1980-1989 was 22.2%.

Let’s do some quick math. $1.116 trillion in income taxes was collected in 2007. Of that, $455.3 billion was paid by the top 1% of earners. If they paid 22.2% as in the ‘80’s, they would have paid $247.8 billion in taxes, and right now we’d have $207.5 billion MORE dollars invested in our economy. That would be quite a stimulus package! Our current policy punishes success and chokes off fuel from our economic engines while we’re trying to climb out of a worse recession than we had in the ‘70’s. Not smart.

Some may think that this would simply mean that our government deficit would be $207.5 billion higher. This is not the case at all. These folks that make up that top 1% didn’t get there by being lazy or not putting their money to work. I know some folks in that group, and they WANT to put their money to work! I know one gentleman who had to be told some legal docs for a deal could not be prepared over the weekend because Christmas was on that weekend. These folks are like the world class athlete I mentioned above – by and large they’re disciplined and hard-working. Their money will build new businesses and create more jobs, and the government will collect far more revenue from this new economic activity than it would give up in collections from these top 1% folks. Think about it – how many of us have ever been hired by a “poor” person? Instead of punishing economic success, we should encourage it!

Bottom line, if government policy were to make sense, it would encourage these folks to maximize their economic potential and find the correct balance of revenue to collect and yet still promote economic growth. What would we prefer? That the government collects 50% of $1 trillion or 30% of $2 trillion? Hint: 30% of $2 trillion is a WAY better deal.

At SoftLayer, we think very differently about things. We simply do not punish our customers for succeeding. We empower them to be more successful – why? Because if our customers succeed, we succeed. We get this.

Can we prove this? Perhaps a look at how customers vote with their feet is an indicator. For the past few months, SoftLayer has seen the lowest percentage of customers terminating business with us in our history. If we punished our customers for their success, they would go elsewhere.

July 20, 2009

Thankful

So here I sit cramped in a seat built for a 10 year old on American flight 1492 from New Orleans to Dallas. There isn’t enough room left for a marshmallow I bet. Yep, I am thankful I just left the site of the Microsoft WPC 2009 where I had to do a little booth duty and mingle with some folks that run the coolest companies out there. The show seemed a little different this year. Last year the recession was just getting going and gaining some steam. The big companies still had previously budgeted money to burn and were doing just that. They had very large booths and better swag and Microsoft rented Minute Maid Park in Houston and threw quite the party. This year was noticeably different. I would bet that over 50% of the people that came by our booth were international which tells me that US companies are still cutting back. One very large US Company wasn’t even at the show and they were a flagship last year. One of our much larger competitors was barely existent, a flyer here a business card there and most other companies had much smaller booths and the swag was just not quite as enticing. Thankfully my kids like anything so they will still be extremely happy with the 3 bags of stuff I was able to round up. I am thankful that SoftLayer was able to hand out just over 1000 cool SoftLayer Frisbees (boomers to our international friends) and 200 cooler bags. The boomers were a great hit at the show and as far as I know no one lost an eye in the process of handing them out. Microsoft still put on a great show and “The Party” at the House of Blues was really cool. I just wish one year they would actually send me the email so I could get the wristband instead of standing in the slacker line.

Enter the ton of bricks that hit me. I am extremely thankful and 99% percent sure, no wait, I am 100% sure that I work for the coolest and one of the fastest growing companies out there. Thankfully after a week of spreading the word about SoftLayer I am on this flight back home. Thankful the pilot knows how to fly and land this jet. Thankful the flight attendant just gave me some lukewarm orange juice. Thankful I remembered to take my laptop out of the bag I checked this time but still managed to leave my cell phone in the checked bag! I am off my leash!

Ok so back to my subject.

I am Thankful this is almost my 2 year anniversary at SoftLayer. Thankful the guys that started this place and the great minds they have added along the way are really running a top notch company. Thankful that I wake up every day excited about my company and my role, thankful that SoftLayer lives within our means, and thankful the things we spend money on are for one thing, to make our product better and our customers happy. Thankful we do not waste on the posh extras that some other companies brag about. Thankful that once a customer tries us out and understands what our system is capable of they rarely ever leave. Thankful SoftLayer has great punch and people drink it regularly with pride, both customers and employees alike. Thankful that our products have the ability to help struggling companies in this down economy and we continue to grow because of it. Thankful we are setting sales records and our churn rates are much lower than this time last year. Thankful word is spreading on how we can let a company hold on to their capital for other expenditures and simply pay monthly for their IT needs on demand. Thankful we have a plan and we stick to it. Thankful we know what we are great at and don’t try to be everything to everyone wasting countless hours complicating our business plan. Thankful I can sleep at night knowing I am at a stable company and I don’t have the worries that many people in our country have during this recession. I wish everyone affected by the recession a fruitful second half of the year and hope that everyone can start recovering from the current hardships.

Oh and I am thankful that the flight attendant has moved along to the folks behind me and is finally finished booty bumping me every 3 seconds and thankful we are 45 minutes from DFW!

And I know…… you are thankful……. that this blog is ending……. Thanks for reading…….thankfully……

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