Success through Chapter 7
Posted on: May 20, 2013
I hope Creative Memories succeeds. Here is why a Chapter 7 liquidation following the “Twinkies Model” is not such a bad outcome.
The retirement money is almost certainly gone or never existed. Nothing that happens is going to make it reappear. New laws that require transparency and limit the power of the banking industry are the only way to prevent misuse of retirement funds.
Like Hostess, the main thing Creative Memories has of value is its brand name. Presumably, another company would acquire the name, perhaps at a bargain basement price.
The Creative Memories brand name is associated with high-quality photosafe products; yet the current company is having difficulty meeting those requirements. Different ownership with additional resources may be better able to meet these needs and may, in fact, be able to develop the brand’s full potential. The Creative Memories strap-hinge album would certainly continue, since it is the core of the product line.
The new owners of the Creative Memories brand might or might not continue with direct sales, but there are plenty of direct sales options for people interested in the career opportunity. Several direct sales companies even offer photo related businesses, including MemoryWorks, Close To My Heart, Heritage Makers, and Send Out Cards.
Digital technology is key for the future. I have no basis for saying so, but I strongly suspect that Panstoria would reintroduce Artisan and take over the software business. They currently have no customers other than Creative Memories, and they will need revenue. Under this scenario, Panstoria would also probably develop their own source for digital products to generate additional revenue.
Albums, pages, and software are now available. Problem solved.
Photography Is Now Antifragile
Posted on: May 14, 2013
The photography industry landscape from KBS+ Ventures illustrates the complex web of relationships that now dominate imaging. No longer can a single company control its own destiny. In fact, the success of any company in imaging is dependent on how effectively it can build relationships with other companies in related businesses.
A few years ago, the situation was much different. Kodak controlled everything from cameras to film to print production. Kodak even had their own facility for refining silver to produce the silver salts required for photographic materials. Similarly, Creative Memories had everything required to preserve family photos, including boxes for storing photos, sleeves for holding negatives, and albums for completed projects.
Now, film is nearly non-existent, cameras make phone calls, and images themselves may exist only in a computer memory chip. These changes have taken place over the past decade and will continue.
Photographic turmoil has led to a new model for the imaging industry – one that no longer depends on the actions of large monolithic companies. Instead, photography relies on an array of interlinked companies, where no one company controls the market. Imaging is now “antifragile,” to borrow a term from Nassim Nicholas Taleb’s book Antifragile: Things That Gain from Disorder. The beauty of this change is that innovation will increase and we can expect that we will gain an ever-expanding array of new products and new choices.
Many companies will thrive. Facebook provides new ways to share images. They generate income through advertising. Shutterfly provides photo books and other photo products. Their sales grow each year. For each company that is failing, we will see another that is healthy and growing.
I’m looking forward to the future.
Preserving corporate memories
Posted on: May 10, 2013
We need a book about Creative Memories so that future generations of companies will understand their corporate heritage. After all, unless companies remember the past, they are condemned to repeat it and I would hate to see any company repeat Creative Memories’ history. Well that’s not exactly what George Santayana said, but the message is the same. We must document and preserve the past so that we can learn from it.
We do not need a book of fluff. Instead we need a real analysis covering what went wrong, why did it happen, and who was responsible. It is not everyday that a company sees sales decline more than 50%, goes bankrupt twice, and raids two pension funds.
Okay, who will write the book?
Creative Memories is owned by the banks. It happened after Creative Memories filed for bankruptcy in 2008 and the banks were able to lay claim to whatever remained. Yes, employees at the time were told that they were being given a share of the new company, but that statement proved to be more fantasy than reality.
Creative Memories is about photography and storytelling. Banks are about finance.
Creating a Board of Directors that has expertise in finance but no experience in photography or storytelling does not help prepare the company for the future. A board without relevant experience lacks the expertise to ask the right questions.
Creative Memories is about emotion. Banks have no empathy.
A company that does not understand emotion cannot possibly understand the importance of memories. Photographs are more than printed pieces of paper or images stored in cameras.
Creative Memories is about growth. Banks are about the next quarter’s profit.
Growth requires investment and long term direction, not maximizing short-term returns. A company can always generate short-term revenue at the expense of the long-term health of the company.
An article recently appeared in Canvas Magazine titled, “How an Employee Stock Ownership Plan can be good for you and your employees.” See page 4. After reading this article, I felt compelled to write an alternative perspective.
In 1998 when I joined the company, Creative Memories heralded the Employee Stock Ownership plan (ESOP) as a good thing. After all, it gave me and other employees ownership in our future. We were Employee-Owners. Every year the company published annual compensation statements highlighting the value of employees ESOP accounts and promoting the ESOP account as part of the total compensation package.
Unfortunately the stock ownership plan transferred risk to the employees without giving them a real say in the future of the company. This risk came about because their was nothing to prevent the company from borrowing money, turning an otherwise debt-free company into a highly-leveraged house of cards, and debt equals risk. Once employees perceive risk, many leave, compounding the debt problem as the company must borrow to satisfy their ESOP obligations.
The banks, who are at the top of the pecking order when financial trouble comes, have little reason not to force the company into bankruptcy. After all, once the company is in bankruptcy, the banks can then take over and extract whatever value remains, leaving little for the future.
There you have it – how an employee stock ownership plan can destroy your company.
Note: See What is a Leveraged ESOP? and Employee stock ownership plan for more information on ESOP plans. The actual details are complex and I have simplified the process for this explanation.
Information is not the problem
Posted on: April 18, 2013
Frequently, when I post links to information about Creative Memories, I receive replies indicating that I should not have posted the information or that the information is somehow responsible for the problems at Creative Memories.
I also receive many emails thanking me for making the information available.
With the latest round of layoffs and bankruptcy, I waited until details appeared in the Saint Cloud Times before posting anything, even though I was aware of what had happened much earlier. If you missed this information, check out WARN letter: Creative Memories to lay off 163 in June and Creative Memories files Chapter 11 lays off employees.
Similarly, when Creative Memories withdrew from ISO Image Permanence Standards, I was accused of being against Creative Memories. Nothing could be further from the truth.
I was with Creative Memories for 14 years. I strongly support CM’s mission and hope that CM succeeds.
I simply refuse to engage in censorship that misrepresents the situation at Creative Memories. My suggestion is to read the articles and decide for yourself what the information means to you. If I have additional insight, I will include my thoughts. If you have a different view, please comment. Feel free to disagree with me, but do not tell me that the information should remain hidden.
If after reading this posting, you still want to bury your head in the sand, please unsubscribe from this blog, unfriend me on Facebook, and remove my connection on LinkedIn.
North Korea has entered the Megapixel Wars with a newly designed 280-megapixel sensor. Their supreme leader Kim Jong-un was reported to say, “Our country has the most megapixels, and we will attack anyone who threatens us with all our megapixels.” South Korea immediately went on megapixel alert, with China attempting to diffuse the situation.
North Korea’s 280-Megapixel Imaging Sensor
The situation was later resolved when it was determined that North Korea had used Photoshop to clone the CMOSIS 70-megapixel sensor, creating a new sensor with four times the resolution. Apparently, no one had explained to North Korea that an effective megapixel deterrent required a functioning sensor. At press time, satellite photos have detected clandestine megapixel research in the western part of North Korea, and President Barack Obama has assured the world that he will protect American interests in the region from the megapixel threat.
For more on North Korea’s use of Photoshop as a military deterrent see North Korea Photoshopped Its Hovercraft Fleet to Make It Look Less Terrible and Sad and A Brief History of North Korean Photoshops.
