Vulture Capitalism

One of the issues in the current presidential campaign is the roll of venture capitalists, or, as our president who has never worked in a real business likes to call it, “vulture capitalism.” I was a small cog in venture capital firm and I am proud of that work as is, I suppose, anyone who has actually done that kind of work.

My company acquired 6 different companies, the largest of which was Huffy Services. I clearly remember walking into their Dayton offices for the first time. When we walked down the main hallway, I knew that all of the people on the right were going to lose their jobs and a lot of them on the left.

The right side was accounting, payroll and software development. They had 5 software developers. I replaced all of them and did not get paid anywhere close to what their senior developer got paid. They had about a dozen people entering manual worksheets. I wrote new software so that the twins in our office were able to do what those dozen did. Later, we moved it to an OCR process and then a totally electronic reporting system by web or smart phones. The billing department had almost a dozen people and my new software allowed them to do that work with two. Payroll was at least a half dozen and, again, my new software eventually got that down to one person. That one person will likely read this blog. I forget how many people were on the accounting team, but they all lost their jobs. I developed a direct, automated link from our custom software to our JD Edwards corporate accounting. All in all, dozens on that right side lost their jobs.

The left side, Operations, was not quite as bad. All of the senior administrators lost their jobs. Some of the best service coordinators were offered jobs in Dallas. Only one of those took the offer but she is still working with the company in Dallas eight years later. I remember one of the service coordinators who was only scheduling 16 Lowes stores (we were servicing 5 or 6 thousand stores) and in those stores, the same person worked there every day. The CEO used to like to joke that she could finish her day’s work before she finished her first cup of coffee. She was the niece of one of the senior people. She lost her job. The new scheduling software I wrote allowed the job to be done better with far fewer people so only a fraction kept their jobs. One of those people who worked with the company until last year will also, likely, read this blog. I consider myself friends with those people.

So, all in all, a large percentage of the white collar employees lost their jobs. How could I be proud of that? Well, the office workers were all overhead and not producers. The upside is that the 3,000 field workers who were actually producing got to keep their jobs. Without the purging and re-organization of an inefficient operation, they would have all lost their jobs. So, yes, some of it was painful, but on the whole, it was quite worthwhile.

All of the companies we purchased had a few things in common: Their software systems sucked, they were grossly inefficient, and they had to either re-organize or dissolve. So, you can point to all of the bad things that happened, or you can see the big picture which is that we allowed those companies to continue to function and provide better service for our clients at a better price because we were more efficient.

Some people will only hold up the bad and criticize good people who are doing useful work. You want some people in Washington who understand the current business changes in charge. When the Democrats tout Bill Clinton as the great American business president, remember that he had the good fortune to be president when software actually started to help. Before that time, computers did not really help white collar employees as a whole. During that time, supervisors went from supervising 5 or 6 employees to twice that number. That lead to a lot of restructuring, but it was all necessary to make America competitive in the global, competitive market.

The President Obama is telling everyone that his 700 BILLION in Medicare cuts is only all saving from waste and abuse. That’s a laugh. First, he will never achieve that number--that is pure fairy dust. And, if he achieves even a fraction of that savings, he will leave behind far more bodies than Romney ever managed to do. The costs are salaries, drugs, medical equipment and facilities so you have to cut those in order to save money. Those proposed savings are jobs and pay. One topic for another day is how ObamaCare will make the coming shortage of doctors much worse because of the “free” care and those cuts.

But just remember when Obama berates Romney for being a “Vulture Capitalist” the president has no idea what he is talking about while at the same time he is proposing something much worse then anything Romney has ever done.