Thursday, December 07, 2006

Nothing Can Stop An Idea Who's Time Has Come

December 6, 2006

Nothing can stop an idea who’s time has come. This statement has applied to many companies and people over the years. The perseverance of great individuals and companies has brought to fruition many things that are considered today to be very basic. These things did not come easily, and there were hardships and challenges along the way.

Recently, I had the opportunity to see Mr. Gordon Morton speak. His speech centered around innovation, and the fact that most innovations have many hurdles along the way. What is compelling however is the fact that NOTHING CAN STOP AN IDEA WHO’S TIME HAS COME.


How do I know that the idea of satellite radios time has come? I know this because:

-Consumers want and demand better sound quality
-Consumers want and demand better variety.
-Consumers want and demand more for their money, but are willing to pay for quality.
-Traditional Radio does not offer this.
-I-Pods and MP3 Players require users to spend countless hours downloading.
-The best talent in the business is a part of it.

Challenges come when a revolution is happening. The status quo is easy, and it is human nature to initially rebuff change. However, it is also human nature to be curious, and that is what has already happened to satellite radio. The curious consumers have tried, loved, and adopted satellite radio. They tell a friend, and the idea begins to take root. Those tied to the traditional methods will fight to save their traditional ways, but there is no holding back AN IDEA WHO’S TIME HAS COME.

Take Clarence Birdseye for example. In 1910 while studying biology in the arctic he noticed that freshly caught fish froze solid almost immediately when placed on the ice, yet they still tasted fresh when they were thawed. The fast freezing happened so quickly that ice crystals were minimized and the structure and texture of the fish remained intact.

Birdsey took this concept and developed flash freezing methods. The idea was seen as awesome, and was heralded as an answer to world hunger. People now had the ability to keep foods longer, and consumers were thrilled with the idea. Then the challenges began. Fresh food markets saw Birdseye’s product as a threat. They began to talk bad about the freezing process. They stated that the nutrition was taken away by freezing (something that was untrue). They spoke of the huge expense to keep the food frozen, and slandered the taste of the frozen food. They were used to the status quo, and lacked the vision to accept change, and make changes themselves to maximize the Birdseye ideas. Those that failed to see the greatness of the idea soon fell by the wayside. Those that were intuitive enough to see that the IDEA’S TIME HAD COME took advantage of it. They modernized their stores. They saw the value in being able to sell corn in the off season. They understood the greatness that this idea represented.

Birdseye knew however that his idea was great, he maintained his composure and continued to expand his business…..always keeping a tight focus on what he was doing. He developed freezer programs for stores, and developed freezer railroad cars to broaden his reach. HE HAD AN IDEA WHO’S TIME HAD COME and nothing was going to stop it. It can be argued that Clarence Birdseye was the father of not only frozen food, but frozen food shipment, as well as the modern supermarket.

There are many stories that are similar…..The Toni Permanent, the microwave oven, and even the radio itself. Friends of Marconi were on the verge of having him committed to an insane asylum because of all of his banter about sound traveling on waves. How long would we have waited for the radio had that happened.


In my opinion this applies not only to the concept of satellite radio, but to the equities themselves. The idea of satellite radio has now taken root. People who try it love it, and they refer friends and family. The concept is sound, and satellite radio delivers unprecedented value in terms of variety for the money. Despite the campaign of terrestrial radio, satellite radio will march on. Despite the RIAA filing suits, and demanding exorbitant fees, satellite radio will thrive. Despite the statements of those that want to stay with the status quo, satellite radio will continue to grow.

The equities are now getting to the point of seeing there initial seeds take root. In the third quarter both Sirius and XM reported narrower losses. Both companies are on the verge of Cash Flow Break Even. Both companies are projected to report narrower losses each quarter going forward. Both companies are projecting huge revenue growth going forward as well. The negative press will try to argue differently. The shorts will argue that losses continue. The nay-sayers will point to lowered guidance. All of these people lack the vision to understand what is happening. They do not see the 95% of the U.S. population that has yet to be exposed to this form of entertainment and subscribe. They do not see that satellite radio has gone from no listeners to nearly 24 million in only 5 years. They do not grasp the growth potential. They do not grasp the amounts of revenue that will be generated. They look at next week instead of next year.

The transition from a stock price based on subscriber numbers, content deals, and partners to a stock price based financial metrics is happening. Some want to hang on to the old ways, and some have seen the new metrics that determine real value. As that balance shifts towards the financials, the volatility will ease. Day traders will lose the swing factor, and shorts will begin to lose the ability to argue based on hypothetical situations. As the next few quarters pass, and it becomes clear to the masses that the TIME HAS COME for these equities, the ones that see that 3 year vision will be at a distinct advantage.


12/07/2006 12:41:00 AM

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