Frank Boland's blog

Blitzscaling is the business model of this 21^st century’s knowledge/service based economy. The word comes from the German World War II attack concept called Blitzkrieg, meaning “lighting war.” This attack model always had high risk because of the necessity to combine surprise with a strong force.  Another risk: the supply chain had to keep up. It is now a concept used by varied businesses such as DoorDash, Airbnb and Uber. This attack model is moving into high cost businesses with tremendous speed and then rapidly scaling up.

We tend to think of genre in terms of artistic composition. This is especially so with music or literature.  But it’s not that simple. Genre can also be illustrative of a broad context such as writing style … or subject matter. Moreover, every genre has subsets which can enrich the genre with nuance. I learned that years ago when - by chance - I met George V. Higgins. At the time, he was a struggling (had written fourteen books all rejected) writer who was about to become famous and rich.

It was a summer day as my new friend and I walked towards Quincy market to have lunch. He was considerable older than me and very definitely a Boston Braham. I had met him 15 minutes earlier. As we headed toward the market, it seemed as though every other passerby would acknowledged his presence with at least a nod. We were in Boston’s financial district and this man was very well known. He, and two of his former Harvard classmates, had managed what had become one of the largest mutual fund companies in the country. And no, it wasn’t Fidelity Investments. But it was as big.

Ben Gaines and I approached the front door of the Union Club of Boston. Ben was a political commentator from Washington with a heavy Yiddish accent. And I was a 25-year-old Irish kid from public housing with a bad Boston accent. A butler opened the door for us. The club was a total bastion of Boston investment Brahmins. These people were from families that had cities named after them. Peabody. Lowell. Quincy. Once inside the club, we would hear nothing but prep school accents. The word God sounded like “Gawd,”In retrospect, we were both nervous. But I had more reason.

To me an open secret is something known but not acknowledged. Years ago, a client, who was an executive of Coca-Cola, invited me to the company in Atlanta, Georgia. I was surprised by two things. Firstly, that Robert W. Woodruff – the entrepreneur who built the company – had an apartment in the building and secondly, the formula for Coca-Cola was a secret.  I’ve since learned many businesses have, if not a secret, some inner knowledge. In the investment business they’re open “secrets.”

Professor Peter Drucker was sitting on a hard wooden chair center stage. Below him, a large lecture hall was filled with middle age businessmen. They all looked as though they had attended elite business schools and ran major corporations. Most of them did. The professor was there not to give a lecture but to answer questions. It was totally unscripted. Dr. Drucker was the business consultant and they wanted to hear his insights. The respect these men showed when asking questions was astonishing. It was complete deference, exceeded only by the remarkable answers he gave them.

Change is the very essence of the investment business. Because of this reality, every portfolio manager I’ve known has a desk that can only be described as saved chaos. And that’s not including the piles of newspapers on the floor. Some managers even have a library behind their desk. Not in nice wooden cases as you would expect but stacks of books piled high lying sideways also on the floor. It’s because every investment manager knows change in the investment world is constant. After all, you never know when you might feel the need for supporting information to make a better decision.

When interest rates start to move higher, it will be considered a negative for the economy and the stock market. This reality started in in the middle of the last century.  General Motors was the largest corporation in the world, but rising interest rates proved very difficult to overcome. That contrasts sharply with the cash Microsoft, Apple, Facebook and Google generate today… and how little they need it.  It’s the difference between an industrial and a knowledge economy. The former was driven by the cost of money. The latter by the cost of knowledge which is driven by stock options.

Over the years, I’ve always enjoyed going to growth stock conferences. You meet interesting people and learn about upcoming companies. Sometimes, you even learn about yourself. That happened years ago in Baltimore. For whatever reason, I was late at the start of the conference and decided to stand in the back of the room rather than disturb people. By happenstance, I stood next to a man who was intently focused on two 30ish self-proclaimed Harvard Business School graduates explaining their business.

Ever see a movie, or hear a song, and think to yourself, “I’ve seen or heard this before?”  Well there is a new “movie” coming to Wall Street and I know I have seen it before.  In fact, I saw the movie 50 years ago!  One of the advantages of longevity is that you get to experience many things twice.  This soon-to-be released movie is about a bear market in fixed income ... and what really happens.