The Daily Parker

Politics, Weather, Photography, and the Dog

Dog bites man, Sears edition

The Chicago Tribune points out that Sears' $5 bn in losses could actually help the guy who killed it, Eddie Lampert:

As of the retailer's bankruptcy on Oct. 15, Sears estimated it had net operating losses it could use to offset $5 billion of future taxable income, and separate tax credits of around $900 million. These are the most valuable assets Sears has, and under U.S. tax law, they could disappear in bankruptcy if another company or investor takes the company over.

When a company has accumulated net operating losses, it can use them to offset future taxable income, which in turn cuts into its tax bills. The rule is meant to give struggling companies more breathing room. That means big benefits on the balance sheet. For example, Sears saved $1.7 billion in deferred taxes in 2017, according to its most recent quarterly filing.

While a sale in bankruptcy would often mean a change in control, meaning that such tax benefits are lost, Lampert's stock and debt stakes would help him avoid that. Lampert and his hedge fund ESL Investments Inc., together own about 49 percent of Sears shares, and are among Sears's biggest creditors, having extended it $2.66 billion in debt through various loans.

Creditors who have held debt for 18 months before the filing and whose debt rose in the ordinary course of Sears's business are "qualified creditors" who can thus avoid losing the tax assets even if there's a shift in control towards them.

He profits from destroying the company. Ain't America grand?

Mystery of the rapidly-warming house

I finished unpacking from my move yesterday, with only a few chores left (like finding a home for all the little things in my office that have taken over my desk). Shortly after finishing, I took out the trash, and started to wind down. Then I noticed my house getting warmer.

The previous owners had an Ecobee thermostat, which, because I'm on the Google ecosystem, I will replace with the Nest thermostat that should arrive today. I noticed that this Ecobee had a very strange reading: 63°F. And falling. And running the heater full-blast to try getting the temperature back up to normal.

Once it got to 60°F I shut off the heating system. Other thermometers in my house showed 20–21°C and steady. Plus, if it really had been that cold, I would be shivering or at least wearing a sweater.

When I woke up this morning, the Ecobee told me the house was 44°F—just a degree or two warmer than the temperature outside.

Then I realized what had happened.

As with the Nest thermostat, Ecobees can use multiple small sensors throughout the house for zone coverage. One of those Ecobee sensors was now in a trash bag in the dumpster by the alley, and broadcasting with sufficient power that the main thermostat thought the guest bedroom was freezing cold.

So the heating system is still off, which is fine because (a) Parker has two fur coats and doesn't mind and (b) I can see from other sensors that the house is still around 19°C, which is perfectly comfortable for both of us.

All of this is part of the unintended fun of home automation, and of moving.

My daily living hell

We've known this for 50 years: open-plan offices do nothing good for companies except reduce rent costs, but they do a whole lot of bad. They are not "fun;" they are not "collaborative;" they are not "start-uppy." They just suck:

Over the decades, a lot of really stupid management fads have come and gone, including:

  1. Six Sigma, where employees wear different colored belts (like in karate) to show they've been trained in the methodology.
  2. Stack Ranking, where employees are encouraged to rat each other out in order to secure their own advancement and budget.
  3. Consensus Management, where all decisions must pass through multiple committees before being implemented.

It need hardly be said that these fads were and are (at best) a waste of time and (at worst) a set of expensive distractions. But open plan offices are worse. Much worse. Why? Because they decrease rather than increase employee collaboration.

Previous studies of open plan offices have shown that they make people less productive, but most of those studies gave lip service to the notion that open plan offices would increase collaboration, thereby offsetting the damage.

The Harvard study, by contrast, undercuts the entire premise that justifies the fad. And that leaves companies with only one justification for moving to an open plan office: less floor space, and therefore a lower rent.

As an introvert in a field that requires concentration, minimal distractions, and time to reflect and think about what I'm doing—not to mention, a field predominantly comprising introverts—it's even worse.

I wish I had at least a cubicle.

What to do while waiting for tonight's deployment

We have a deployment at work tonight at 5pm (because in financial firms, you always deploy at 5pm on Friday). Fortunately, we've already done a full test, so we're looking forward to a pretty boring deployment tonight.

Fortunately, we have the Internet, which has provided me with all of these things to read:

Back to planning for next week's post-deployment fixes.

Links before packing resumes

I'm about to go home to take Parker to the vet (he's getting two stitches out after she removed a fatty cyst from his eyelid), and then to resume panicking packing. I might have time to read these three articles:

Moving tomorrow. I just want this to be over...

Sears files for bankruptcy protection

As predicted, Eddie Lampert has succeeded in driving Sears into the ground:

In announcing the news, Sears said Edward Lampert stepped down as CEO effective immediately and remains chairman.

Sears and Kmart stores and online platforms will remain open, though the company also said it would close 142 unprofitable stores near yearend, with liquidation sales at those locations "expected to begin shortly."

The company said it has commitments for $300 million of debtor-in-possession financing from its senior secured asset-based revolving lenders and is negotiating a $300 million subordinated DIP financing with ESL Investments, where Lampert is chairman and CEO. The hedge fund held about $2.5 billion in Sears debt as of September, the result of multiple attempts to keep the chain afloat.

Negotiations over the fate of the fallen company continued over the past week, as it faced a critical $134 million of debt that is maturing today.

So, after killing the 132-year-old company, Lampert stands to make millions from its demise. And 68,000 people will soon be out of work.

UpdateCrain's has an obituary.

Other things I'm reading

If the Kanye West–Donald Trump crazyfest didn't do it for you, there are plenty of other things to take a look at this lunchtime:

That's all for now. Enough crazy for one Friday.

The end is nigh for Sears

Oh, Sears. You've come to represent much that is wrong with American corporate culture, especially a CEO who embodies the Dunning-Krueger Effect with every syllable he utters.

Crain's Joe Cahill argues that Eddie Lampert, while Sears' proximate cause of death, didn't act alone in its murder:

There's no denying the hedge fund mogul who thought he knew more about retailing than the retailers made critical errors that turned Sears' struggles into an inexorable decline. But Sears started down the wrong path long before Lampert appeared. And its sad fate isn't so much a story of operational missteps as one of missed opportunity. In short, Sears chose to imitate Walmart when it should have tried to pre-empt Amazon.

Like so many established companies threatened by newcomers with innovative business models, Hoffman Estates-based Sears tried to beat the interlopers at their own game, rather than looking ahead to the next big thing. The company that recognized the potential of railroads to support a nationwide retail operation and foresaw that postwar suburban sprawl and shopping malls would redefine retailing for a new generation failed to appreciate the implications of internet technology for the industry it dominated for more than a century.

As for Lampert, he showed no better vision than his predecessors. When he took control of Sears by merging it with Kmart, the combined company still had an opportunity to carve out a strong presence in e-commerce. Amazon had already emerged as the leading internet retailer, but with $8.49 billion in 2005 revenue, it was one-sixth the size of Sears, and barely profitable.

Meanwhile, two other Crain's stories outline the thousands of other victims of this crime: the company's pensioners and all of the malls about to lose their anchor tenants.

Press reports reckon the company has less than 48 hours to live.

The Big Disruption

I started reading Jessica Powell's online novel The Big Disruption last week. It's hilarious. And it has a lot to say about the archetypes of software development.

The premise is that the monarch of a fictional country has been exiled to California, where he found work first as a janitor at Stanford and then at a hot startup. He applies to a Google-like company and gets hired—but by accident, as a product manager.

Sample:

Arsyen washed his hands and returned to the cubicle, armed with his new vocabulary.

When Roni asked Arsyen about prioritization, Arsyen asked, “Is this on the roadmap?”

When Sven suggested adding images of attractive women to the car dashboard, Arsyen rubbed his chin.

“Does this align with our strategy?”

When all three looked to him for an opinion in how best to implement Symmetry Enhancement, Arsyen stood and put his hands on his hips.

“Does this align with the strategy on our roadmap?”

No one seemed to notice anything was amiss. If anything, it seemed like product managers just asked questions that other people had to answer.

“Good brainstorm, everyone. Let’s break for lunch,” Roni said. “Oh, and Arsyen, this is still very confidential, so let’s get this whiteboard cleaned off.”

Arsyen jumped up and began to wipe the whiteboard clean as Sven and Jonas scooted their chairs back to their desks. Arsyen was pleased that product managers seemed to have some janitorial tasks in their role. Maybe this wouldn’t be such a stretch after all.

I can't read it at work because I would have to explain why I'm laughing so hard.

Go Dutch!

As in, "nice work, Dutch military, for unraveling a GRU operation and blowing 300 GRU agents worldwide:"

Dutch authorities have photographs of four Russian military intelligence (GRU) operatives arriving at the Amsterdam airport last April, escorted by a member of the Russian embassy. They have copies of the men’s passports — two of them with serial numbers one digit apart. Because they caught them, red-handed, inside a car parked beside the Organization for the Prohibition of Chemical Weapons in The Hague — the GRU team was trying to hack into the OPCW WiFi system — Dutch authorities also confiscated multiple phones, antennae and laptop computers.

On Thursday, the Dutch defense minister presented this plethora of documents, scans, photographs and screenshots on large slides at a lengthy news conference. Within seconds, the images spread around the world. Within hours, Bellingcat, the independent research group that pioneered the new science of open source investigation, had checked the men’s names against several open Russian databases. Among other things, it emerged that, in 2011, one of them was listed as the owner of a Lada (model number VAZ 21093) registered at 20 Komsomolsky Prospekt, the address of the GRU. While they were at it, Bellingcat also unearthed an additional 305 people — names, birthdates, passport numbers — who had registered cars to that very same address. It may be the largest security breach the GRU has ever experienced.

That's a great way to fight back: exposure. This is an example of the integrity and ingenuity which almost led to the Dutch controlling the world instead of the British way back when.