Why The Layoffs At Microsoft Are Bad News For Salesforce.com

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(This post originally appeared on Forbes)

Last week Microsoft laid off 18,000 employees, representing about 14% of its workforce. Microsoft has never had a layoff this big in its history. The move makes a big statement about the company’s future. And Salesforce.com should be worried.

Salesforce.com? Why would the leading provider of cloud based CRM (Customer Relationship Management) applications and services be worried that Microsoft laid off 18,000 people? What does one have to do with the other? And didn’t these two companies just enter into a recent partnership deal?

Yes they did. Not four months after being named CEO, Satya Nadella forged one of his very first partnership deals with none other than Salesforce.com. What an interesting choice. Also interesting is the details of this “partnership.” According to the press release, Salesforce.com’s products will now be better integrated with and enabled on future versions of Windows, Office and SharePoint as well as on OneDrive and just about any device available, mobile or stationary.

My company sells Dynamics CRM. We also provide Salesforce.com consulting services. Both are great products.  But Salesforce.com is more popular. And they have always positioned themselves as an alternative to Microsoft technologies.  But now, with this agreement, Salesforce.com becomes more and more like Dynamics CRM. On the face of things, this seems like a validation of Salesforce.com – the big, giant software company forging a new relationship with the smaller, CRM upstart. But in reality, Microsoft has now taken away most of the differentiating features between Salesforce.com and its own Dynamics CRM offering, making the two services interchangeable in many ways.

Why would Nadella do this? Read More…

Philly, You’re No Houston

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(This post originally appeared on The Philly Post)

Why is Houston doing so well? In an interesting Wall Street Journal piece earlier this week, two urban planning experts say that Houston’s “pro-growth policies have produced an urban powerhouse — and a blueprint for metropolitan revival.” The writers say:

[T]he city’s low cost of living and high rate of job growth have made Houston and its surrounding metro region attractive to young families. According to Pitney Bowes, Houston will enjoy the highest growth in new households of any major city between 2014 and 2017. A recent U.S. Council of Mayors study predicted that the American urban order will become increasingly Texan, with Houston and Dallas-Fort Worth both growing larger than Chicago by 2050.

But really? Is Houston that good? Better than Philly? For the most part, no. But for one big part: yes.

 

As recently as 2010 Philadelphia has had the fifth largest metro area in the U.S. and has consistently been in the top five since 1700. Houston currently has the eighth largest metro area and entered into the top 10 around 2000. Projections are that Texas cities like Houston and Dallas will surpass Philadelphia in the next 10 to 20 years. People are sticking around in this area for the most part, but more are definitely flocking to Houston.

Is it their booming economy? Partly so. The U.S. energy industry has one of the fastest growing sectors in the country and Houston (along with other Texas cities and areas along the Marcellus Shale region) has benefited. Philadelphia’s economy has effectively stayed pace with the U.S., sharing similar GDP and unemployment figures over the past decade. But Philadelphia has some big, profitable industries — namely healthcare and higher education. It has large companies like Comcast, Campbell’s Soup, Vanguard, SAP, Toll Brothers and GlaxoSmithKline anchoring the region. Its startup and tech scene have been growing. There is lots of potential here.

Is it Houston’s location? In Texas, you’ve got miles of land and lots of open space. There are biking trails, botanical gardens, and room to run on the bayou. Galveston Bay is only an hour away from the city and there are plenty of lakes and national parks for fishing, hunting, and hiking. Same here, right? We’ve got the shore, the mountains, the rivers, the national parks. Not only that, but we’re a car drive away from D.C., New York and a list of historical landmarks and national monuments for the history lover. Plus we enjoy the pleasures (and the challenges) of all four seasons. So you can easily argue that Houston’s location is no better than ours.

How about property values? People tell me that housing is cheap in Houston and it is cheaper than Philly. The average price of a house there is $187,000 vs. $256,000 here. But travel a commutable distance West or South and you’ll find home prices here dropping significantly. It’s actually cheaper to rent in Philly ($1,494 on average vs. $1,598 in Houston) and prices are going down as more rental units are going up. Incomes in Philadelphia are 10 percent higher ($77,000 vs $67,000 for a family). Given these numbers, you can argue that the cost of living in Philadelphia isn’t that much different than Houston.

Houston has worse traffic problems than Philadelphia and two of its neighborhoodsare called “the most dangerous” in the U.S. The city faces the same kinds of union/pension driven budget issues that we do (but not on the same potentially catastrophic scale). The Astros and Phillies have nearly identically lousy records. So why? Why is Houston such a “success” story? What is the real reason for the city’s growth and popularity?

Here’s why: Its taxes and bureaucracy.

If you’re making $50,000 a year and are unfortunate enough to live in Philly then you have the second highest tax burden of anyone in the country with almost 18 percent of your money going to the government. If you are in Houston, you are at No. 33 and paying only 9 percent. You pay no city or state income tax. Your sales tax is higher, but not by a lot.

Not only that, but if you want to start up a business or even run an existing company in Houston you deal with the government much less. “The city and its unincorporated areas have no formal zoning, so land use is flexible and can readily meet demand,” according to the Wall Street Journal piece. “Getting building permits is simple and quick, with no arbitrary approval boards making development an interminable process. Neighborhoods can protect themselves with voluntary, opt-in deed restrictions or minimum lot sizes.” Philadelphia is saddled with a creaky, bureaucratic, bloated and oftentimes corrupt government (although to Mayor Nutter’s credit, the corruption has been much less so. But let’s agree that there’s still a long way to go). The city’s burdens — both from tax and paperwork standpoints — are oppressive to most running, or trying to run, a business here. Don’t believe me? See what Paul Steinke, the manager of the beloved Reading Terminal Market had to say last year.

And that’s why. People move to places where there are jobs. There are jobs in Houston mainly because it’s a better place to run a business. It’s a better place to run a business because there are less taxes and bureaucracy. Philadelphia has all the ingredients to be a good place for business too. But we’re just not as good as Houston.

Why Your Taxes Don’t Matter and Apple’s Do

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(This post originally appeared on Inc.)

Wait, what? Yes, you heard right. Yes, my individual taxes are high. And I’d love a tax cut. But cutting them won’t grow the economy. At least that’s what Howard Gleckman says. And I think he’s right. There’s a much, much better way to do this.

Gleckman, a Resident Fellow at the Urban Institute and editor of the wonky TaxVox uses the recent example of the state of Kansas to prove how cuts in individual tax rates do not stimulate the economy. He writes: “The tax cuts in Kansas have been breathtaking. In 2012, at Gov. [Sam] Brownback’s urging, the legislature cut individual tax rates by 25 percent and repealed the tax on sole proprietorships and other ‘pass-through’ businesses. It also increased the standard deduction (though it eliminated some individual credits as well). In 2013, the legislature cut taxes again. It passed a measure to gradually lower rates even more over five years. By 2018, the top rate, which was 6.45 percent in 2012, will fall to 3.9 percent.”

You would think with all of these cuts, the state’s economy would have improved. But the numbers are different. Gleckman reports that, “From June 2013 to June 2014, all Kansas tax revenue plunged by 11 percent. Individual income taxes fell from $2.9 billion to $2.2 billion and all income tax collections plummeted from $3.3 billion to $2.6 billion, a drop of more than 20 percent. And that brings us to the bottom line. Since the first round of tax cuts, job growth in Kansas has lagged the U.S. economy. So have personal incomes. While more small businesses were formed, many of them were merely individuals taking advantage of the newly tax-free status of those firms by redefining themselves as businesses.”

Again, he’s right. You can’t argue with the numbers. Cutting taxes on individuals didn’t stimulate the economy. And remember the Bush tax “rebate” of 2008? That was a flop too. Why? Cutting individual taxes may be good politics. But bad economics. Forget the individual. Instead, cut Apple’s taxes.

Tax cuts are supposed to generate spending and create jobs. Some believe that putting a few extra dollars in people’s pockets will do that. But people don’t create jobs. Businesses create jobs. They invest in equipment. They hire contractors. They build factories. And it’s only when taxes are reduced for businesses will an economy see the benefits. Tax rates drive their decisions. Smart companies make decisions based on cost. And taxes are an enormous cost. So when corporate taxes are high, companies will respond to maximize their profits. They’ll take their business elsewhere. And the economy will suffer.

Want proof? Read More…

Five Ways to Grow Your Business Using CRM

I’m hosting a webinar with Xero on how to utilize CRM to grown your business. Whether you have a CRM program or not, are expertly acquainted with it or not, or just want to learn innovative ways to increase sales, I’ll be offering something for everyone during this discussion!

I’ve found that although business owners are familiar with CRM applications such as Salesforce.com, SugarCRM and Batchbook as a concept, about only 20 percent of the businesses I work with are fully benefiting from their CRM systems. It’s our goal during this webinar to help you join that 20 percent. This 30-minute webinar will cover what to look for when shopping for a CRM application and how to fully leverage it to grow your business – and more! Plus, if there are any questions you have feel free to leave them here in the comments and I’ll try to address them on the webinar.

Hope to “see” you there!

JUL 22
Tue 4:00 PM – 4:30 PM EDT
Online
Presenter: Gene Marks
Free

The One Way to Tell If You’re a Successful Entrepreneur

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(This post originally appeared on the Huffington Post)

I’m not a very successful entrepreneur. Are you?

You may think so because your business is doing well financially. Or you’ve managed to stick a lot of money in the bank. Or you’re on the cover of Inc. Magazine. But these are not the true indicators of success. The most successful entrepreneurs I know are the ones that are building value and creating assets. And do you know how they do that? They take vacations. Yes… vacations! And for a long time too. Whenever they want. Unfortunately, I’m unable to do this. Which is why I’m not truly successful. And, apparently, I’m not alone.

According to data released last week from Office Depot, a whopping one-third of small business owners in the U.S. are unable to break away for vacation this summer. Sixty percent of them cited financial hardship as the reason. The rest had excuses ranging from “it’s my busy season” to “I don’t have enough staff.” These are not successful business owners either.

Sure, I take vacation. But it has to be planned well in advance. I can never take more than a week at a time. I have to be somewhere accessible. During my vacation I’m always checking in with the office. I’m answering questions when away. I’m sending emails, taking a few calls, talking to my staff. I’m that guy who’s watching “Old Faithful” while responding to text messages at the same time or talking on the phone while his family is going on that Disney ride without him. This is not success. This is the madness of keeping a business running while I’m trying to spend time with my family. I’m earning a living. But I’m not creating value. A valuable company is the true sign of an entrepreneur’s success. Read More…

Is the IRS Scandal Microsoft’s Fault?

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(This post originally appeared on Forbes)

Hmm….maybe Microsoft MSFT +0.95% is to blame for this whole IRS-email thing.

Just last week, “…a second federal judge has now ordered the IRS to explain under oath how the agency lost emails from former division director Lois Lerner, the woman at the heart of the Tea Party targeting scandal. U.S. District Court Judge Reggie Walton told Obama administration lawyers on Friday he wants to see an affidavit explaining what happened with Lerner’s hard drive. The IRS claims her computer suffered a crash in 2011 that wiped her email records at the time clean.”

Ah-hah! It’s a brilliant ploy. Can’t provide emails requested by the courts? Then just blame the computer guys! The computers crashed. It was a blue screen of death. You know what’s it like with Windows, right? We’ve all had this happen to us before. Who hasn’t had their computer crash? Curse you, Microsoft! This must be your fault! You’ve foiled us again!

In other words: you can’t blame Microsoft. Nice try. Read More…

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