Rehab Hardrock and the Destruction of a Brand

Nightclubs rise, nightclubs fall...just the way of the entertainment industry. And while people are fickle and move on to new things quickly, it doesn't help if your making it easy for them.

I'm planning to go out to Las Vegas in January and have been watching a show on TruTV called Rehab: Party at the Hardrock. I liked watching the show because I love business and its like getting a crash course in everyday operations of a nightclub. Watching how the staff handled things and worked together to reach their fiscal goal was really something unique.

If you've never watched the show, the former general manager (GM), Justin got married and left the show and his position as the GM. When this happened, Matt, the Director of Nightlife at the Hardrock decided to take his spot as the "man in charge" both in the club and on the show. Due to Matt's "Torquemada & the Inquisition" management style, I saw this as a perfect opportunity to discuss both the principles and role of management within a company and why Matt is 100% ineffective as a manager.

Management's role in any business is the same: to lead and direct its employers into one orchestrated effort to make profits. Throughout history, you've had two styles of management: machiavellian and inspirational. Machiavellian management is based on Machiavelli's medieval work "The Prince" in which he says that it is better to rule by fear than by love. Interesting concept, considering Machiavelli by the time of his death was exiled from Italy...

Inspirational leadership works to inspire employee cohesion and morale. This is more of the leadership style that management great Peter Drucker, Steve Jobs, and Jack Welch have used to achieve their success. It is based on the fact that people will do their job better if they love the people, the environment, and the work they are doing. It's sole purpose is to bring out the best in people through communication, incentives, equity, and leadership.

Now that we're briefed on management itself, Rehab's success was based on Justin's leadership (former GM). Justin's management style was strict, yet fair and supportive. The employees worked together, formed friendships, and went above and beyond their call of duty. Rehab's present success is due to its past management action.

Now that Matt's in charge, its a regular occurrence during pre-shift meetings to threaten everybody that they will be fired. How does that style inspire people? Well, it doesn't. We've all had crappy bosses before and if we think back to their management style and how we responded, we pretty much would do just enough so that we wouldn't get fired. Helping other people was just too risky, as if we messed up something helping them, then it was our ass on the line.

The atmosphere this creates is an atmosphere of stress among the employees at Rehab now and the worse part about it is that the employees are pissed off when they deal with the customers who then spread that vibe to other customers. Its a vicious circle, one that starts from the top. There's an old saying that a company in nothing more than the shadow of the one man in charge and it stands true at Rehab.

The worse part about the whole Rehab situation is that most businesses can go on for a long time operating inefficiently simply because the only people who can see it happening is the employees. But they are televising this!!! Every disgusting act of management on Matt's part on how miserable the employees are is filmed and shown on National TV! Talk about destroying a brand! You can't help but feel tension and hatred when you watch the show, which is why I stopped. If you're feeling tense just watching it, how do you think it would feel to be there and have to deal with pissed off bartenders and a very rude staff? Its not their fault, they aren't their behavior, they are a reflection of their leader who is nothing less than inadequate.

In the end it comes down to this whether its a business or a human being, where you are today is a result of your past actions. Where you are tomorrow is a result of today's actions. Rehab's success today is not attributed to Matt's management, its because of Justin's. And I'd be willing to wager that Rehab's success in the future will start to decline to area competition (Wet Republic) unless Matt's management style changes (highly unlikely) or there is a change in management. One thing is for sure, that a great show about a great nightclub business is now nothing more than a celebrity version of Jerry Springer.

The Stock Market is a Lot Like Baseball

The stock market has always amazed me. It's such an integral part of our economy, our jobs and our financial futures yet the average person has very little knowledge as to how it functions. You would think that such an important aspect of our daily lives would have been taught to us in school, yet we walk away with only basic economic concepts.

The underlying fact is that because so many people know little about it, investing can be a daunting and in the case of Madoff, be a harmful experience. So much relies upon what we have already accumulated, yet we still aren't where we want to be. Understanding the stock market and how it functions can help us make investment decisions with a little more confidence.

The stock market can be compared to the World Series. There are two teams, announcers, an audience and a whole bunch of other components that really tie the two together concepts together in similarities.

In the stock market there are buyers and sellers, these can be likened to the two teams playing. There are two teams playing against each other and only one will win. The fundamental truth here is that in order to buy a stock, someone has to sell it to you. That means that the person selling it to you thinks no more economic value will be extracted from it while you think there is still potential. One of you is wrong.

Another component in the stock market is mutual funds. Mutual funds are the employees who work in the back office for the championship team. They'll get a ring if their team wins, but their bonus is never as big as the players themselves.

The audience can be likened to index funds, they're just there to watch be at the game and win over time just for being there. However, they don't really see any immediate benefit besides exposure to the game.

The announcers are like Wall Street, calling the play by play and reporting on recent happenings. They sway between excitement to lethargy depending on what is happening in the moment. However, as knowledgeable as they may seem, they cannot be relied upon to accurately predict the long term outcome. The only thing they do is broadcast and sometimes point out arbitrary facts.

Now that all the basic components of the stock market have been described, we need to talk about the game itself. Now while a typical World Series game lasts nine innings, the stock market world series is game that doesn't end. So how is a winner determined? The winner is determined depending upon the individual time horizon of the players on each team.

So if you are buying Procter & Gamble for a long term investment and it drops in the short term, you haven't lost the game yet until your time horizon has been reached. This allows there to be multiple winners and losers all simultaneously, making the game a little more fair to the participants involved.

Also, unlike the World Series where only one game is played at a time, there are many games being played all at once in the stock market depending upon what stock you are talking about. Each stock has its own game being played. So there is the Johnson & Johnson game being played along side the Procter & Gamble game and so on and so forth. As an investor, you will find yourself playing in different games on all different teams depending upon the position you've taken in your portfolio. Some you may feel are going to be winners making you a buyer, while some you may feel is going nowhere or down, making you a seller (or even a short).

This sort of competitive play goes on in all the different markets associated with the stock markets (derivatives, CDS's, futures, etc.) and it is up to you as an investor to decide what games you want to be in and what your role is going to be. Are you a player, a back office manager, or an audience member? It depends upon your strengths and comfort level in the games you are a part of.

(This article originally posted on April 19th, 2010 on Technorati. Read the original article here.)