Things I learned in Palm Springs this week…

I spent the past two days at the Ernst & Young’s Strategic Growth Forum in Palm Springs which brought together hundreds of CEO’s and investors – it has been a great event. What I like most about these types of meetings are all the factoids one gathers – granted they are buried among all the platitudes of self-proclaimed successes and words like “alignment, vision, synergy, innovation, blah blah blah.” You get the story. But between the lines I heard some really interesting things. Here are some of them:

• Magic Johnson of Magic Johnson Enterprises (and the Lakers) raised a $1 billion fund focused on urban real estate opportunities, a $550 million fund to back growth companies in the inner city, and next week will announce yet another fund – he also told some funny stories about Larry Bird

• It costs $1 million a day to run an offshore oil drilling rig

• Lee Scott, former Wal-Mart CEO, said that at 12:01am on the first day of each month Wal-Mart experiences the largest spike in sales as government benefits hit people’s accounts

• At Wal-Mart they sell mostly large bags of pasta in the first few days of each month; at the end of the month they sell mostly small bags of pasta when people realize they did not buy enough pasta that month

• The top six IT companies accounted for 33% of all M&A activity in 2008 (this year it will be closer to 50%) so if you are selling an IT company, there is a really good chance you already know who the buyer is

• Of the more than 7,000 private equity and VC-backed companies, only 500 have a real chance of being a public company so expect a lot of M&A over the next two years as investors look to get their money back

• Doug Leone of Sequoia thinks the “dream gene has been activated again”

• Carol Tome, CFO of Home Depot, claimed that home improvement expenditures have historically been about 4.5% of annual GDP but spiked earlier this decade to 6.8%; it is now languishing around 2.5%

• 4% of Home Depot’s customer base accounts for 30% of its revenues

• Howard Schultz, CEO of Starbucks and a great guy, took 10,000 employees recently to New Orleans and conducted 50,000 hours of community service

• Starbucks will spend $300 million to see that all of its employees have life insurance – and there are 200,000 employees

• Starbucks has the largest WiFi network in the USA

• The accountants strike again: FASB 141R will require medtech and biotech companies to “mark to market” milestones payments on a regular basis which will cause accounting havoc for these companies

• Cerberus thinks it will ultimately recover 40% of its bankrupt Chrysler investment – but only because of its ownership of Chrysler Financial

• The average private equity-backed company was only 2.2x leveraged (I doubt this last one, frankly)

 Oh, and Palm Springs is really beautiful.


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2 responses to “Things I learned in Palm Springs this week…

  1. This post is factoid heaven. I loved the Wal-Mart ones and also the Starbucks ones. I hope Starbucks’ efforts to take care of their employees keeps them from depending on large bags of Wal-Mart pasta for their central nutrition.

  2. Kevin Fechtmeyer

    Impressive blog. I like your style.

    Good Flybridge newsletter too. I will consider a similar Halloween picture if our employees don’t start shaping up.

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