Friday, May 13, 2016

Advice I Would Share With My Son… If I Had One

I have a daughter of my own, and soon enough I'll "officially" have two step-daughters (although I've
considered them my family for quite some time).  I love our blended family and wouldn't change a thing about it, but there have been times when people realize that I don't have a son of my own that they look at me as if they are sympathetic.  I've had people ask if I ever plan to have more children and if I'd like to try for a son.  I have even had complete strangers approach me when I'm out with my family and make little jokes or comments about how difficult it must be to be the only male in the family or act as if they pity me for having to deal with all girls.

I have to tell you - it isn't a pity.  In fact I feel as if I hit the family lottery and I consider myself very, very lucky to have the family I do.  I have never in my life, even for a single second, thought to myself that I would have preferred to have a son instead of a daughter.  I've heard comments about how I won't be able to pass on my name (do people really care about this in the year 2016?) and how I won't be able to teach a boy how to play baseball (trust me... I'm in no position to act as a mentor for anything that involves athletics).  The thing is, I don't think in those terms.  

Yes it is true there are many differences between boys and girls, and yes there are things about girls I simply won't understand because I never had to deal with some of the same things as they have - but I think I'll manage.  I was a single dad for enough years yet I still figured out how to braid hair, paint fingernails, and coordinate an entire outfit consisting of pink and purple clothing.  I may not have had experience with these things when I was growing up, but I did ok even if my braids still aren't nearly as good as they should be.  At the same time this likely means some of the knowledge I've gained as a male isn't necessarily applicable for my girls, because they just don't think the same way.

Yes I will admit it - I acknowledge that even in a world which is striving to become more and more gender-neutral there are still many inherent differences between boys and girls.  I know my girls are capable of anything, and I know they aren't about to let gender stereotypes get in their way, but I can already tell that their predilections suggest there are certain things they just won't have any interest in.  So when I'm getting excited about a home improvement project or when I'm drooling of a new electronic gadget they just might not care.  When I see a Tesla Model S on the road and start talking about the powertrain or the horsepower they likely will just tune me out and would be more likely to point out the pretty yellow VW Beetle instead.

Differences are ok.  I have no problem with there being differences and we shouldn't push people and make them feel that their differences are a weakness because that simply isn't the case.  Yet I acknowledge these differences and realize there might be a few things I could have taught a boy that just won't be as useful to my girls.  Granted much of my advice could be applicable to anyone regardless of gender, but from the mind of a father I started thinking about what I might try to tell my son if I had one, and this is what I came up with.

The Advice:

  1. Take chances.  There are no rewards without some level of risk.  Many of the most influential and well-regarded people throughout history failed many times before getting it right.
  2. You only get one set of eyes and one set of ears.  Safety glasses and hearing protection might seem like a hassle until you spend 20 minutes removing a splinter from your hand or a piece of sawdust from your eye.
  3. Do everything in your power to ensure the "one who got away" doesn't actually get away. 
  4. Don't confuse correlation with causation.
  5. Apologize if you hurt someone and always be willing to be the bigger person.
  6. The easy way out is rarely the most beneficial in the long run.  Take the harder classes, accept the punishment if you did wrong, and ignore the short term while looking forward to the big picture.
  7. If you have five close friends in High School, chances are you won't even know the home addresses of four of them by the time you graduate college.  Enjoy your friends while they are there, but realize as you evolve, your relationships will evolve with you.
  8. Don't get rid of your Legos.  Ever.
  9. Read the entire magazine - even the boring parts.  If you only read what appeals to you, then you'll never really know what appeals to you.
  10. Go for it.  A year from now you won't remember the feeling of embarrassment if she says no, but I guarantee you'll remember how excited you are if she says yes.
  11. Learn how to sharpen a knife and how to tie a necktie.  You may not need either skill very often, but you'll be glad you have it when the need arises. 
  12. Find your creative side.  Whether it is building, painting, writing, or playing an instrument it is a side of you that will be important throughout your entire life.  It will serve as your therapist, your outlet, and your voice - so embrace it early and often.
  13. Avoid the word "someday".  Define your goals in concrete terms.
  14. Shop at thrift stores.  Not only will you save some cash, but you’ll see things, and people, you had no idea even existed.
  15. Introduce yourself to the new person in the room.  You just might make a friend for life.
  16. Practice.  Most people are not born with specific skills or abilities and had to work to be the best at what they do.  The only thing that sets you apart from those around you is how bad you want it.
  17. Don't ever cheat on her.  She may never know, but you always will.
  18. Before you get that tattoo, look at your school picture from 10 years ago and tell me if you would be willing to be stuck with that outfit and hair style for the rest of your life.
  19. Don't be ashamed of what you like.  If you enjoy it, you shouldn’t feel the need to defend it.
  20. Some teachers are better than others, but you can learn something from all of them - even if it has nothing to do with the subject they are teaching.
  21. Don’t submit to peer pressure.  Leaders make the decisions, followers just take orders.
  22. Save often and keep a backup of your important documents and pictures.  One day something tragic will happen to your phone or your computer and you'll be thankful you were prepared.  You can buy new things, but you can't buy new memories.
  23. Acknowledge when it comes to politics, religion, or love… there is more than one acceptable viewpoint. 
  24. If you aren't comfortable being average then prove it.  The standard pace is designed so everyone can keep up… so don't be average.
  25. You will meet people throughout your life which are toxic and who will poison your relationships, your career, and ultimately your happiness.  Don’t ever feel bad about eliminating these people from your life.  They feed on drama and you are their food source.  Without you they cannot survive.
  26. There will be aspects about yourself you are powerless to change, but they shouldn't get in the way of the things you can.
  27. The time you spend in a gym should be for yourself.  You will always know when you gave it your all or when you cheated.
  28. Buy a nice stereo - it will be worth it.
  29. Opinions are personal, facts are universal.  Learn to separate the two.
  30. If you put it on your head or your feet, don't shop based upon price.
  31. Even if you aren't a famous politician, actor, or athlete you can still make a positive difference in someone's life.
  32. Learn how to change a tire and your own oil.  You may opt to pay someone else due to convenience, but at least you’ll know they did the job right.
  33. Learn to sew on a button and how to cook a meal from scratch.  You'll eventually find yourself needing to know how to do both.
  34. Cynicism and selfishness aren’t attractive and never will be.
  35. Ask questions.  Don't take everything at face value.  Challenge universal truths and don't believe something just because everyone else does.
  36. Never let anyone else define your priorities.
  37. Calculate your next move and the move after that.  Have an exit strategy and a plan… even if it is subject to change.
  38. The only way to solve a disagreement is for at least one person to be willing to admit they were wrong.  If that person is you, then admit it and move on.
  39. Don’t assume you know all the facts before you actually know all the facts.  Experts spend entire careers studying the same subject and they continue to learn something new each day.  You won’t be an expert based upon a semester no matter how hard you might study.
  40. You don't need to understand why flowers mean so much to her… just buy her the flowers.
  41. Always remember that although you are special to someone, you aren't special to everyone.
  42. Hard work is always rewarded even when nobody notices.
  43. Impress others with your words and actions rather than your things.
  44. When a tag says “dry clean only” or “lay flat to dry” it actually means it.  It isn’t a recommendation.
  45. As soon as you have your own place, put together a very basic toolkit.  You don’t want to be the guy who is trying to hang a picture by pounding a nail into the wall with a can of tomato sauce.
  46. People listen to managers because they have to, people list to leaders because they want to.  Be a leader.
  47. If someone asks you a question to which you don’t know the answer, your response should be “I don’t know, but I will find out”.
  48. Nobody will ever be perfect, so give people second chances and they will do the same for you.
  49. Each time you fall in love it will be different.  Don’t ever confuse ‘different’ and ‘better’ and remember you decide whether your future is based upon fate, luck, or action.
  50. If you can purchase someone’s loyalty or integrity, then be prepared to be outbid.

So there it is.  Does this mean I don't have any advice for my girls?  Of course not - and as I said much of this could apply to them as well.  The truth is, this was just an idea I had that was sparked by so many of the comments I've heard over the years.  Eventually I started to wonder if I was missing out on something by not having a son helping me on a carpentry project or someone I could teach how to wire up a three-way light switch.  Perhaps it would be nice to have a boy who expresses interest in electronics or who wants to help me mow the lawn.

But after really giving it serious consideration, I don't think I'm missing out on anything.  Because I have girls that have a way of teaching me things.  I am being introduced to new things and seeing the world through their eyes which is far more fascinating than teaching a boy how to solder or cut a miter joint.  

So am I saddened that I'll never have a son?  Nope... not at all.  Because I have daughters.

Friday, May 6, 2016

The Lawn

Mowing my lawn is always an interesting dichotomy.  I often treat mowing as something of a chore… something that I have to plan ahead for as it isn’t a priority.  Because of this, I tend to wait too long before mowing or find excuses to postpone (“oh those clouds look like it may rain”, or “I have some errands to run so I’ll get it done tomorrow).  On the other hand, mowing is one of those things that allows me to get outside and enjoy the spring weather.  Perhaps I’m getting older or perhaps it is just selective memory, but our most recent winter seemed much longer than years past.  Although we didn’t experience record amounts of snowfall, the temperatures and the wind seemed to drag on for weeks longer than it should have, and there were just enough days in the 30s and 40s to tease us into thinking spring was around the corner.  Thus, after a harsh winter I’m happy to be mowing simply because that means it isn’t raining or snowing nor is it cold or windy.  It is just a regular spring day, and that gives me no room to complain.

There is something about a fresh cut lawn – so uniform in height, natural yet maintained, tidy and welcoming.  As such there is always the debate about how much time and energy to devote to that little piece of Earth versus the benefits gained from it.  Many think fertilizing and watering a lawn is a gigantic waste of time not to mention the negative impact upon the environment.  I can’t say as I fully disagree with that notion, and I myself have debated as to how much water should go towards making a lawn “pretty”.  Yet part of me takes pride in looking out across my back yard and seeing a carpet of thick green grass that begs for people to walk barefoot or that beckons us to simply go outside. 

I don’t live next to a lawn-nazi who has turf a golf course superintendent would envy, so it isn’t as if I need to compete with anyone for the best lawn in the neighborhood.  Yet even though it probably doesn’t matter, I do spray my weeds, I do fertilize, I do mow and edge and weed-whack and rake and I’ll even admit it bothers me when I see a dead spot or a thin area where grass has trouble growing.  Am I perfectionist?  Not really – I realize nature isn’t perfect and since I’m not willing to spend 20 hours a week all summer on my lawn, I know it will never be one of “those lawns” that people admire.  It is better than some, not as impressive as others, and I suppose will always struggle from years of neglect by former owners.  Perhaps the only way to ever really fix a lawn is to tear it up and start over, but that is a drastic step that hasn’t found its way on to my ‘to do’ list quite yet.

For now, I’m just going to continue to enjoy what I have and be thankful I don’t have to put too much into it.  I’ll address the major flaws and consider the rest part of the character.  I’ll enjoy the smell of a fresh cut lawn and try to strike a balance between how much green I want on the lawn vs. how much green it will take to pay for the water bill.  I’ll start projects that I need to do or want to do without worrying about a few brown spots, because at the end of the day we all have our blemishes, so the lawn isn’t all that unique.

Thursday, October 1, 2015

Does Competition Exist in the Audio/Video Community?

I have written about some of the various questionable sales tactics that exist in the audio / video community in the past, but as I’ve been doing some shopping lately I’ve witnessed even more head-shaking behavior by several different manufacturers.  For the most part, the industry does a fairly good job in policing itself and in the era of online reviews and blogs it is more difficult to con the consumer than it has been in years past… but as I will show, it most certainly is not impossible.  

Rebadging: A Product by Any Other Name…  

One of the trends I’ve started to notice is simply rebadging one product under the name of an entirely different brand or manufacturer.  This isn’t all that unusual of course and we have seen this occur in a variety of different industries over the years including automobiles, cosmetics, clothing and food. 

Whether it be a Toyota Matrix being sold as a Pontiac Vibe, or a package of ice cream being sold under the Edy’s label in one area but Dreyer’s in another, this type of situation occurs each and every day.  That in itself isn’t really an issue, because over time some companies have purchased other companies and brands have merged, or in some cases (such as mattress sales) the industry uses different brands to prevent direct comparison shopping.  

We have seen situations for years where a manufacturer will produce a single product (lawnmowers, snowblowers, and bicycles for example) and then they will sell that product with different paint colors and badging to different stores.  So while one store offers a Husky snowblower, you might find a Yard Machines snowblower down the street that is identical aside from a few stickers and the color.  Another store might have a Bolens snowblower, while another has a model with the Toro brand.  They might all use the same parts, the same engines, and come from the same assembly line, but to the casual observer they appear as competitors.  

Another example from several years ago was when I noticed some “Scott’s” brand lawn tractors for sale at Home Depot, but a year later that same exact model was sold under the John Deere brand name.  It was obviously the same tractor aside from some decals and badging, but you can bet the John Deere version sold better and it most likely reflected a premium price.  I’ve found this same scenario time and time again throughout the power equipment industry, but there are many, many less obvious examples such as oil filters, canned goods, generic pharmaceuticals, and batteries.

The Competition Really Isn’t   

As is the case with many industries we also see this same rebadging scenario within the consumer electronics industry, and just like with garden tractors or snowblowers sometimes the appearance of a competitor can be deceiving.  For instance, you can purchase an Onkyo home theater receiver that is practically identical to a model sold under the Integra name.  Both are made by the same parent company and in some cases they share the same chipsets, specifications, and features – yet the Integra model can run hundreds of dollars more.  Someone buying an Integra might feel they are getting a better, more exclusive product, and I’m sure the salesman will try to present it that way, but they might have a hard time explaining why a few years ago when Onkyo had to issue a recall due to some defective components, that Integra had to do the same.

The thing is, Integra is typically sold via a select dealer network which includes custom installers.  So these installers can sell a unit to a customer as part of a home theater room install and they can explain that they are the exclusive dealer in the region.   Integra limits pricing to MSRP with very little room for adjustment, so if the customer happens to shop around they will find no matter where they look they will be spending about the same.  Now think about an installer that jacks up the price of an Onkyo, and then the customer types the model number into Google only to find out they spent $1200 for a receiver that retails for $799 on Amazon.  In this case, it makes sense for Onkyo to offer a standalone product under a different brand.  They can offer a different warranty (Integra will come with a full three year warranty while the Onkyo twin will only include a year) and they can ensure it is only sold via a select number of hand-picked installers who cater to that specific customer market.  

Another example of this is Runco, a high-end brand of home theater equipment (primary televisions and projectors).  Runco is a subsidiary of Planar technologies, and as one might expect there have been numerous products sold under both the Planar and Runco names that were practically identical aside from minor cosmetic differences or changes in firmware.  In the past, Runco sold televisions that were essentially rebadged NEC (Pioneer) models, and rumors of them rebadging products from others live on in many audio and video discussion forums.  In some cases this may be justified if there are significant changes from the base model or when they are simply outsourcing for select components and then enhancing them, but one starts to wonder at what point is someone merely paying a significant price premium for a product that just happens to carry a high end brand name?  

The R&D Problem   

The problem with some of these boutique manufacturers is they tend to cater towards a high-end segment.  A company like Sony or Samsung might offer numerous different models of televisions or home theater receivers designed to appeal to consumers at all pricepoints, but the bulk of their volume will come from the end-user community who purchases a device, takes it home, hooks it up, and uses it.  On the other hand a company like Runco is more likely to sell their products through dealers/installers who work with a client to design a system and then the dealer handles the installation of the system.   Because this high-end market is significantly smaller than that of the mass-market segment, companies who sell these high end products know up front that their sales volume will be much lower.

So how does a company cover all of their research and development (R&D) costs when they know they will only sell a limited number of units?  It seems there are two possible options – number one they simply raise the price of the end product to compensate, so the percentage of that product devoted to R&D ends up being significantly higher than it would be on a mass-market product.  The second option is to lower R&D costs by either outsourcing some of the development or engineering, or by building upon existing technology.  Both of these options are used with great success in the market, and I’ll talk about each next.  

Raise Prices to Capture Costs   

In the first scenario a company simply raises the price of the product to compensate for their R&D, which logically results in a product being more expensive (often significantly more expensive) than the competition.  In some cases this increased cost may even be justified because the product is a substantial improvement over standard offerings, but I have seen many times where the more expensive product isn’t actually superior to one sold at a much lower pricepoint.  If you think about it, this is a difficult situation as a large company who sells millions of units every year will obviously have a much larger R&D budget.  They can spend a lot more to develop new products knowing the costs will be distributed over a much larger number of units sold.  On the other hand, a small niche company will not have as large of a budget and will not produce as many products, therefore they are not as able to absorb losses if a product fails in the marketplace.  In some cases the only way to compete is to charge significantly more for their product while trying to convince the consumer that the price is justified.  

The Example   

To use an example, let’s pretend there are two companies developing projectors for the home theater market.  For this example, the companies are called “Epsomate” and “Rumcorp” (of course any resemblance to existing companies is purely coincidental).  

Epsomate spends $20MM in R&D to develop their latest projector.  They expect to sell 250,000 units worldwide, and the cost of components including assembly in their new design will run around $1200.  So if we forget about marketing, administrative, or other expenses, Epsomate would need to see each of those 250,000 projectors for at least $1280 just to break even.  

Now let’s look at Rumcorp.  Because they wish to be an industry leader, then tend to spend more on R&D than their competition in an effort to produce a higher end product.  In this example they spend $30MM in R&D to develop their latest model.  However, since Rumcorp is a much smaller high-end company, they can expect to only spend a fraction of the amount of projectors that Epsomate might sell, and in this case they predict they will see around 20,000 units worldwide.  The cost of components including assembly is higher due in part to smaller volumes (suppliers are less likely to give discounts for smaller quantities) and due to them specifying components with tighter tolerances.  In this example cost of components including assembly is $1600. Again we exclude marketing, administrative and other general expenses which results in Rumcorp needing to sell each of those 20,000 projectors for at least $3,100 just to break even.

So at this point the Rumcorp projector already needs to retail for at least 240% more than the Epsomate projector.  That in itself limits their market, but when you also consider efficiencies of scale that Epsomate may have and how they can use some of the technology from their latest projector on several models designed for the business community or for the educational segment you start to realize how the smaller custom segment is at a disadvantage.  Then you start to realize that a full page advertisement in Sound and Vision magazine is going to cost just as much for Rumcorp as it does with Epsomate, meaning their marketing expenses may not be substantially different (although there is a chance Rumcorp would forego any marketing and instead focus upon training their dealer network).  

Next you realize that the Epsomate model will be sold through a variety of brick and mortar stores as well as online from numerous different sources while the Rumcorp model will only be sold through a pre-selected integrator/installer network where price-matching and comparison shopping is all but impossible… and you suddenly realize it is entirely feasible that the Rumcorp projector may end up costing three or four times what the Epsomate projector costs regardless of the performance.  

So what happens when someone decides to compare the two projectors side by side and they realize the differences in performance are rather minor?  What happens when the high end projector produces a better picture, but not substantially improved over the projector that costs a fraction of the Rumcorp? What happens when a typical consumer cannot discern a difference between the two at all, or what if an actual industry analyst is unable to consistently pick the more expensive projector during blind testing?  

The truth is, price isn’t always indicative of quality, and when it comes to audio and video equipment, often times the increased cost of a higher end brand has more to do with dealer markup and higher profit margins than it does with better components or design.  This is why when you read unbiased reviews and when you compare specifications on some high-end equipment you often find the higher end brands fail to impress.   It isn’t that they aren’t good products, but they often aren’t good values. 

Most people aren’t willing to spend four or five times more for a product that has only a marginal improvement in performance, especially when that marginal improvement is practically undetectable outside of a lab.  Of course those that do spend much more for the boutique brand products may attempt to justify their purchases by proclaiming they can discern a massive difference or that some random engineer from an obscure website did a review and was very complimentary, but that is fairly typical of self-proclaimed videophiles, who much like their audiophile brethren like to equate price and exclusivity with performance and quality.


So if the boutique manufacturers are unable to compete by raising prices to offset their R&D costs, if they are unable to justify the much higher price of their products based upon name brand alone, or if the cost to develop their own in-house product is simply too expensive there is always another option.

This route involves reducing costs by letting someone else handle the actual R&D.  This is done a few different ways, but primarily it comes in the form of a company outsourcing their development and engineering, or in other cases a company may borrow (license) technology from other firms to use as a starting point for their own enhancements.

More than a decade ago I worked for a computer company called Gateway, and to many people Gateway was a PC manufacturer.  However, what most people didn’t know is that Gateway was essentially nothing more than a specifications company who assembled PCs.  Gateway didn’t manufacture motherboards or processors.  They didn’t build CD drives nor did they write device drivers.  Gateway didn’t even produce the metal cases the PCs were shipped in nor did they produce their own keyboards, mice, or speakers.

Each and every component of a Gateway PC came from another vendor who designed that component to meet the specifications that Gateway required.  So basically what Gateway did was purchase motherboards from one supplier, processors from another, cases from yet another, cables from this supplier, power supplies from that supplier, and cables and cd/dvd drives and software and hard drives and everything else from dozens upon dozens of suppliers.  They shipped all of these materials to a production facility where the parts were assembled into a case, software was loaded, the final PC was put into a box and it was ultimately shipped to the consumer.

That isn’t to say that Gateway didn’t have a hand in the design, because they worked with suppliers to design the cases and components and picked the features they wanted included or excluded.  They picked the colors and the styles and decided where the logo would be… but they never actually built the individual components.  In fact, some of the suppliers that Gateway used also supplied other PC manufacturers that were direct competitors to Gateway.  I worked in an engineering and testing lab and can still recall working with one of the suppliers (Tottori SANYO) on a new laptop design.  When we were presented the mockup of the laptop it was actually shipped to us with a Dell power brick.  The final production model (Gateway Solo 2100 for those interested) was practically identical to a laptop produced by Dell, and aside from the exterior plastics, BIOS screens, and the labels – it was in effect the same computer.  In fact, some of the removable components such as the CD-ROM drive or floppy drive were actually interchangeable between the Gateway and Dell systems.  

My point in all of this is that it isn’t unusual to a company to outsource some of their development.  They might dictate the specifications and they may customize numerous aspects of the final product, but in many cases they won’t actually handle the final design, engineering, or production of a component or even an entire unit.  In Gateway’s case, assembling a laptop was simply a matter of installing a processor, some memory, and a keyboard to match what the customer ordered, and much in the same way an electronics company might outsource the production of a CD changer or an amplifier assembly to a company that can produce that unit at a lower cost due to their production capacity.  

The Blatant Fraud  

As I have shown above, outsourcing isn’t unusual nor is it indicative of any nefarious behavior.  It is a common tactic used successfully across a variety of industries, so in theory it is nothing to be ashamed of.  In most cases companies that outsource do so in order to minimize costs or to leverage the expertise and intellectual property of another firm.  Then they incorporate the technology into their own products which are sold under their own label.  I completely understand why this happens.  I understand why there is a need for it, and I understand the efficiencies that can be gained by outsourcing.

What I cannot understand however, is outsourcing to a company and then essentially just taking their design – putting a new name on the front of it, and selling it at a price which is exponentially higher.    For instance, a few years ago an electronics company by the name of Lexicon was caught red handed rebadging an Oppo Blu-Ray player that retailed for $500 inside of their own aluminum enclosure which they then priced at $3,500!  Lexicon claims that it is “one of the world's premier manufacturers of home theater and professional electronics”, but does that claim justify them jacking up the price of a Blu-ray player by $3,000 (700%!) just because their nameplate was slapped on the front?  

Lexicon did try to claim they used the Oppo player and then in turn did some enhancements to it, but unfortunately for them, the experts at Audioholics not only disassembled both the Oppo and Lexicon players to verify they were identical inside, but they even took it a step further by performing detailed tests on the two devices to verify they were identical in both components as well as performance.  So in this case Lexicon was caught and their fraud was shown to the world, but how many consumers purchased a $3,500 Blu-ray player under the belief they were getting the best possible technology available to them only to be handed a $500 player inside of a $3,000 aluminum box?  

Obviously Lexicon isn’t alone here but they are one of the more egregious examples.  I don’t feel it is entirely unfair to call this type of behavior fraudulent, because there is clearly zero justification for the 700% increase in price which is one prime example why I would never do business from a company like Lexicon.  However if it were not for Lexicon’s pure laziness in this case, would anyone have really noticed?  If Lexicon would have had Oppo redesign the primary circuit board and if they would have rearranged the components (and perhaps even designed their own chassis instead of just using a stock Oppo design), chances are nobody would have ever realized they were the same product.

They also could have simply tweaked the Oppo design to add features or customize it in some small way by modifying the audio processor and claiming their own engineers simply built upon the existing Oppo platform. Sure many of us would still be skeptical, but at least they would have some small defense for their increase in price.  

In fact this type of behavior happens all the time. If you take the time to open up the cases of modern electronics, you often find circuit boards, power supplies, or other components which have been produced by third party companies, and often those components (with very minor changes) may appear in multiple different brand name products.  Many people are aware of Chinese electronics assembly companies like Foxconn who produce products for companies such as Apple, Acer, Dell, HP, Samsung, Sony, Vizio, Amazon, Microsoft, Nintendo, Toshiba, Motorola and many, many more. 

Other companies like Quanta Computer product products for several different PC companies from the exact same building so it isn’t a stretch to assume in some cases they share components or even assembly lines. This is why it pays to do research on products before purchasing them, and when possible it is always a good idea to do comparison testing with your own eyes and ears.  Even if you can afford to pay 200 or 300% more for the same product being sold under an exclusive name, with a bit of research and a dosage of skepticism, you won’t have to.

Thursday, June 6, 2013


As children we are continually encouraged to remain curious. Parents and educators alike foster our
creativity and our curiosity and push us to never stop seeking answers. As we become adults we have college professors and employers who continue to reward curiosity and who suggest incredible advancement is science and medicine are due to nothing other than human curiosity.   We hear positive terms like “visionary” and “inquisitive” attached to those who are naturally curious, and we are taught that asking questions is important.

Then one day you decide to observe a liver transplant procedure and suddenly the only questions being asked are “where did you get that lab coat” or “how did you get past security” and people start tossing around words like “fanatic” or “felony”...  suddenly it becomes obvious that maybe curiosity isn't such a big deal after all.

Monday, December 31, 2012

Give Credit Where Credit Is Due

A lot of people receive preapproved or prescreened credit card offers in the mail, and I am no exception.  I sometimes receive several in a week, and on more than one occasion I've received several in a single day.  Thus throughout the years I started to wonder how many of these applications are actually sent to me in a given year... and in 2012 I decided to find out.  Therefore, beginning on January 1st I began collecting and documenting each and every prescreened credit card offer that arrived in my mailbox not only to determine how many of these offers I received, but also to document the differences between the offers.

Since January, I have documented a total of 69 offers that have arrived in the mail.  Initially I thought about attempting to document offers received via email as well, but I soon realized that would include hundreds of such offers, so I opted to limit this experiment to only offers that happen to appear in my physical mailbox.  I then used a spreadsheet to list details such as introductory interest rate, regular interest rate, annual fee, balance transfer fee, as well as any particular "bonus" offered with the card such as airline miles, cashback bonuses, or points per dollar spent.

Yes... I apparently have far too much free time.

The Offers

Here is a summary of some of the more interesting facts about the prescreened offers I received:

  • 57 of the 69 offers included a introductory APR of 0%.
  • A shortest intro APR offered was for 12 months; the longest for 18 months.
  • The lowest, regular (non-intro) APR was for 9.99%; the highest was for a whopping 25.24%!
  • 61 of the 69 offers had no annual fee.  The few cards that did include an annual fee were typically travel cards that offered airline miles for every dollar spent.  The annual fee for these cards ranged from a low of $95 to a high of $150 although in most cases the fee was waived for the first year.
Now as far as which banks were responsible for the offers I received, the breakdown is as follows:
  • Discover: 23
  • Citi / Citbank: 16
  • Capital One: 14
  • American Express: 11
  • HSBC: 2
  • Comenity Bank: 2
  • Chase: 1
It should be noted that in mid-2012 Capital One bought HSBC, so I could have listed those as the same company for a total of 16 offers.  Either way Discover is the clear winner here with a total of 23 offers out of the 69 I received.

If you prefer a visual reference, here is a pretty chart showing the final outcome taking into account conjoined companies:

Factors Impacting The Number of Offers

There are a few specific items I need to point out regarding the total count of prescreened offers showing up in my mailbox.  First of all I currently hold three credit cards.  I have a Wells Fargo Visa, a Chase Freedom Visa, and a Menards card issued by HSBC (aka: Capital One).  My relationship with these companies most likely impacts the number of offers coming from them, as I wouldn't expect to get a lot of offers from companies that I already hold cards with.

I have been told that Wells Fargo does not currently send prescreened offers to non-Wells Fargo customers therefore if someone isn't a Wells Fargo customer and doesn't receive offers from Wells Fargo I wouldn't exactly be shocked.  In the interest of full disclosure I should mention that I do in fact work for Wells Fargo, but I do not work in the Credit Card line of business so don't quote me on how they handle their prescreening process.

As to my Chase Visa card, I should note that prior to me having a Chase card, I would get prescreened offers from Chase about as often as I do from Discover.  Apparently these people don't give up easily.  Capital One on the other hand doesn't seem to care that I have a HSBC issued Menards Card, because they continue to send me prescreened offers on a regular basis.

In years past, I have had cards from Capital One, Citibank, Discover, and retail (store) cards issued by Wells Fargo and GE Financial.  The Wells Fargo card was from a furniture store, and the GE account was for a carpet purchase.  The cards from Discover and Capital One were closed upon my request because I rarely used them and they were simply taking up room in my wallet.  The store accounts were opened at the time of the purchases due to 0% APR offers, and they were closed within the interest free window in order to prevent any interest charges being applied to the accounts.  I only mention these cards because I have an account history with these companies which may or may not impact the number of prescreened offers I receive from them.

My Credit Profile

I will admit if you would have asked me how many prescreened credit card offers I receive in the mail over a one year period, I would have guessed at least 150.  When the total count showed me that I actually receive less than half that amount I was somewhat surprised, but I cannot state if my estimates were based upon past experience, or if perception simply doesn't match reality.

I don't believe my actual credit score has changed much in the past few years, so I doubt that has anything to do with the number of offers arriving in my mailbox.  I monitor my credit report on a regular basis and have good to excellent credit.  My credit score ranges from high 700s to low 800s depending upon the credit bureau and when I happen to check (the most recent score I have seen was in the upper 700s).  I've never been late on any payments and I have verified my credit reports do not show any late or missing payments.  

That said, I have noticed over the past year my credit score appears to have dropped a bit which I attribute to the fact that some of my older accounts are dropping off my credit history due to them being closed.  This likely impacts my credit utilization, and because I no longer have a car loan that I'm paying on a monthly basis I'm assuming there is some impact due to fewer types of credit being used.  

One mistake I made in years past is to close old credit cards and open new accounts when there was a tempting bonus offer.  For instance at one point I had a Capital One card with a fixed 5.9% APR, however because I rarely used the card I closed it and opened up a different account with another card issuer because of a $300 cash bonus.  Because I don't typically carry a balance on any of my credit cards, I generally don't care about the APR of a card, however the cycle of opening and closing credit card accounts can have a negative impact upon a credit score.  Because of this, I plan to keep the cards I have even if I only use them several times a year.  

The Never-ending Sales Pitch

It seems clear that Discover, Capital One / HSBC, and Citi are very determined to give me a credit card and on more than one occasion I received multiple offerings from these companies within a one week period.  In fact, I received an offer from Discover on April 16th, and a second offer from them two days later on April 18th.  The offers themselves were identical, so I could see no reason why they were so quick to send a follow-up mailing.

As mentioned previously, Discover was responsible for sending me a total of 23 prescreened offers throughout 2012 or an average of two offers per month.  I am convinced that they are single-handedly keeping the US Postal Service in business.

Speaking of Discover, their typical offer included a 0% intro-APR for 12-15 months with a regular APR of 9.99%.  However in May I noticed their regular APR moved upwards to 10.99% and in July it moved up to 12.99%.  In August the APR reached a peak of 14.99%, but two short weeks later in September they were back down to 9.99% where they have remained until the end of the year.  I'm not sure what drove the varying interest rates, but it seems odd that an APR would slowly rise only to drop 5% in a matter of two weeks.  I guess this is one case where it clearly pays to keep track of the various offers before sending in an application.

The Outliers

If this little experiment has taught me anything, it is that there are vast differences between offers when you look at the details.  Late in the year I received two offers issued by Comenity Bank for the "Express NEXT" card (a store credit card for the Express clothing stores).  This wasn't exactly shocking to me because I had recently signed up for a rewards program in my local Express store, and shortly thereafter the prescreened offers showed up.  The disturbing aspect of this was that the regular APR for this card is a whopping 24.99% which was second only to an offer received from Sears.

Speaking of Sears, their offer (issued by Citibank) not only was the highest APR of any card received throughout the entire year at 25.24%, but they didn't even include any type of intro APR.  They were nice enough to offer a $10 statement credit after the first purchase, but honestly... I find this offer insulting.  I realize store-branded cards typically hold higher APRs than regular bank-issued, non-branded cards, but a card with an APR above 25% is simply insane especially considering the card offers no significant benefits on top of a traditional card.

I realize Sears has been losing billions of dollars a year for the past few years (yes that is billions with a "B"), but if they want to stay in business and build brand loyalty it probably isn't a great idea to attempt to return to profitability on the backs of their credit card holders.  To make matters worse I hold a Sears loyalty card with VIP status meaning I have spent thousands of dollars with Sears in a one-year time frame... and this is the way that loyalty is rewarded?  I'm underwhelmed Sears... but that really isn't anything new.

The Fine Print

I of course am not about to list all of the fine print for each of the offers I received, but I will provide a little insight as to my methodology.

First, if the regular APR was listed as a range (for instance 9.99% - 12.99%) I always listed the lowest APR in that range to correspond to a person with good to excellent credit.  Obviously not everyone would qualify for the lowest APR, but this was one way to level the playing field.

Next, most APRs were listed as varying with the market based upon the Prime Rate.  I documented the APRs at the point the offer was received, but if the Prime Rate happens to change, it is assumed some of the APRs would as well.

Finally, I didn't list all of the bonuses that are included with each offer.  I did document them in my spreadsheet for comparison sake, but I didn't take the time to outline each here for space reasons.  Most of these offers were for point or mileage bonuses after charging so much on the card within a specific time period.  For example it is very common to receive 10,000 bonus miles or $100 statement credit if $1,000 is charged within three months.  A few offers included gasoline gift cards, cashback bonuses, or bonus miles upon an approved application as well.

Stop The Madness

As fun as this process is, I really have no desire to receive dozens upon dozens of these offers each and every year, and because of the ever-increasing threat of identity theft, I'm forced to shred these offers rather than just chucking them in the trash.  Therefore, I will be putting a stop to most of these offers by following the recommendations of the Federal Trade Commission.

The FTC advises anyone who wishes to stop such prescreened offers to call toll-free 1-888-5-OPT-OUT (1-888-567-8688) or visit  Either of those options should remove your name from the mailing list for five years, which for most people is probably a good thing although if you do decide you want a credit card you may have to reach out to a card issuer rather than waiting for them to reach out to you.  However as a bonus, you will probably save several trees due to the massive reduction in junk mail arriving in your mailbox.

Do you have a question or comment about this post?  Sound off in the comments and I'll do my best to respond.