Keep it, trade it or sell it?

Our amazing 2014 Audi Q5 the morning of March 8, 2022

When our 2014 Audi Q5 passed 75,000 miles, (it has now surpassed 100,000), I began to get nervous.  On the one hand, the warranty was gone, so repair costs would fall on us. On the other hand, this had been one of the best cars we ever owned.  We purchased it in 2014, buying into the whole “clean, efficient, diesel” theme being hyped by Audi and Volkswagen.  Later our Q5 would get caught up in VW’s “diesel-gate” scandal; it minimally affected us or the car’s performance, other than about a year when letters with checks and apologies from Volkswagen, who owns Audi, filled our mailbox.

The Q5 happily pulled my other vehicles around. Here it is on a trip to a Lotus meet in Colorado.

The car performed admirably, to say the least. Its relatively low horsepower (240 HP) was offset by over 425-foot lbs. of torque. As Jay Leno once said, “Horsepower sells cars, but torque wins races.” Besides being spunky off the line, pulling a trailer loaded with my 4-passenger Polaris RZR, spares, tools, four adults and gear up Highway 17 from Phoenix into the higher elevations was a walk in the park for the Audi.  I used to laugh as we easily passed large, roaring and belching pickup trucks, gasping due to the long, steady climb.  On top of that, it was exceptionally efficient.   Filling the tank, we loved seeing the “miles remaining” indicator show 585 or more miles.  Sure, the Audi had an extra-large tank, but the number would not change for the first hour or so after we left the gas station, and only then would it gradually begin coming down. Audi claimed 32 MPG and our experience was it may have been better than that.  The 8-speed automatic transmission was tuned for efficiency and it delivered.  Nevertheless, no matter how much we love a car; there is a time to let it go.  How do we recognize that time? Should we keep it, trade it in or sell it?  When we got close to 90,000 miles I knew we were living on borrowed time and a year later I was proven right.

Fears about costly repairs on higher mileage German cars were pooh-poohed by several car expert buddies. They would nod sagely and say something like; “Diesel cars easily go 275,000 miles or more. Hell, at 100,000 it’s just getting broke in.” Still, I worried. We’ve had experience with several new cars over the years.  In most cases, we viewed their passing the 50,000 mile warranty period as the time to begin thinking about letting them go.  Many people take an opposite approach, thinking something like:  “Now that the $313.40 monthly car payment is gone, we’ll set that money aside in a special account for car repairs.  In the long run, we’ll be better off.”  I think that only works in theory.

Here is how it playing out for the Audi.  Our first, out-of-warranty service was for $849, at 53,350 miles.  Up until then, all warranty work was either included or part of the “pre-paid” warranty option. In 2018 our costs were $720 for brake pads and an oil/filter change.  In 2019 we spent $1,540.13 for its 75K mileage service and new tires.  In 2020 the car cost just $698 for its 95K service.

In 2021, things started to go south.  First, it was brake pads at $567.28, then a water pump leak for $1,209.18.  This was followed by a need to replace the front bushings (upper and lower) a cost of over $4,000 if done by Audi.  However, a local alignment and suspension specialist shop (Network Alignment) had done good work on my other cars.  Cheaper than Audi, it still cost us $2,969.59 using original Audi parts.

And then, just as we’re getting the car ready to transfer to my nephew, Audi decides it needs $8,881.91 in additional work.  $2,639.01 to replace the engine mounts, $3,723.11 to fix a newly developed coolant leak, $384.64 for a rear wiper blade (are you kidding me?), and 4 new tires for $1,739.

Kelly Blue Book indicated the trade-in value at about $13,500.  With the $3K already spent on the front bushings and another $2K for motor mounts I’ve got $5K into it and I’ve yet to address the coolant issue (potentially $3K but not urgent – it’s easy to add coolant and the leak is slow).  Plus it will need tires, another $1500 unless I buy some cheapies.  So, it could run over $8,000 and possibly more.

Bottom line, I’ll never again recommend the “keep and repair it” approach, especially once you’ve exceeded the warranty by 15-20,000 miles.  Perhaps, if you’re mechanically inclined and can do your own repairs, it might make sense.  However, given the complexities of newer cars, I suspect that direction is fraught with pitfalls as well. I’m curious as to what others think about this and your experience. Let me know in the comments section below.

Ethics Class Part 2: How it went

University of San Diego campus

My nerves were on edge as I took the wheel of Rich Marin’s Tesla Model X. We were driving from his Escondido hilltop home to old town San Diego for an early dinner. The car wasn’t what was worrying me. My issue was about after dinner when we would drive to the University of San Diego campus and I would guest lecture in Rich’s graduate class on Law, Policy, and Ethics. Agreeing to speak in his class a month before meant choosing a case to study (I chose Theranos), doing the research, and structuring the two-hour class to allow the key ethical considerations to emerge. I also wanted to impart a few invaluable nuggets from my years in business.

My nervousness was mostly due to typical public speaking jitters and so many unknowns – what does the classroom look like, how will the audio/video work, will we arrive early enough or be rushed, how will the audience behave? Knowing myself, nervousness rarely helps bring out my best.  As we rode, I told myself: “You’ve got this; these situations typically go well for you, you’ve done your homework, now just relax and have fun. Things will all work out.”  Slowly I relaxed and by the time we found the classroom, my frame of mind was where it needed to be.

My preparations had involved reading about half a dozen books  and watching the movie. It is the one I mentioned in The Ethics Class Part 1 newsletter and, Rich assigned to the class as preliminary work. The movie, The Inventor: Out for Blood in Silicon Valley” was done in 2019, about two years after Theranos ran into all its trouble, but before Holmes and Balwani were indicted for fraud.  It is terrific and I recommend this documentary.  I also found a link to a video deposition Holmes did in 2017. This was revealing as I was able to hear Homes directly contradict, under oath, nearly all of the claims she’d made about Theranos and its technology.

In addition, one of the subscribers to this newsletter and a good friend, recommended “The Business Ethics Field Guide,” by Brad Agle, Aaron Miller, and Bill O’Rourke. It bypasses all the often boring “why’s” regarding ethics and focused instead on the how’s, creating 13 categories of ethical dilemmas, real-life stories for each situation and a basis for analysis and signposts for finding your way through each of them.

While practicing my presentation with Maggie, she gave me another example, closer to home than I had realized.  Some years ago, while editing a manual for the documentation company where she worked, she found a part number had been entered incorrectly.  She corrected it and sent the document back to the writer on the project. The next day she noticed he’d rejected her correction, forwarding it to the client uncorrected, with the wrong part number.  Confronting him on why he’d not taken her correction, he said it was a matter of “malicious obedience,” justifying his action by saying he’d been instructed, in no uncertain terms, to never make changes to an engineer’s mark-up.  He’d been told technical writers were not to second guess engineers – ever.  Maggie was furious and reported the incident up the chain of command and assumed the manual would be corrected prior to publication.  She was incensed when she later discovered it was not.  Should she contact the client directly and smear her company’s reputation or not? Choosing to be (or not to be) a whistle-blower is a very tough choice.

On the day before the class, Rich told me more about how this single class on business ethics fit into the storyline for the full course, Law, Policy & Ethics.  If you’ve not guessed, legal choices can be unethical and vice versa and policy can go either way as well.  The course will touch on not only ethics but impacts that need to be considered for stakeholders, which include shareholders and creditors, employees and consumers as well as suppliers and competitors. Arbitrage, markets & ethics get a deep dive as do a look at ESG (Environmental, Social and Governance, including anti-discrimination and socioeconomic investing).  He’ll end the class with a look at some of the fundamental concepts in business ethics, individual liberty vs. the common good, and how that affects capitalism, public policy, and civil society.  I hope Rich will be able to get me Zoom access so I can audit the entire course.

You can read Rich’s summary and impressions near the end of his recent newsletter here.  My favorite comment from Rich was this: “In twelve years of teaching I have never seen so much student engagement as we had during this debate.” My assessment is completely the same as Rich’s, although with a twist. My best college teaching experiences were always with highly engaged students.  For Wednesday’s class, I tried two approaches I’d used in the past to help move things in that direction.  The first was before the class began.  As students filed in I spoke to as many as I could. I asked where they worked, why they’d decided to enroll in this program, and what it was like taking classes at night while trying to hold down a job. Rich watched me as if he thought I was running for mayor.  The second step was to begin my presentation with an anecdote to subtly communicate it was okay to speak up, and their thoughts and ideas would be welcome. The above, combined with a contemporary and compelling case and the intelligence, preparation, and interest of these students, resulted in the unusually high level of involvement Rich’s comment points to.  The two hours flew by, all the key points were made and it was great fun.  As in nearly every interaction with graduate students in this age group, I came away having learned things I did not know and impressed with the generation who’ll take over for us when ours is gone.

Oh, one last thing.  Theranos and Elizabeth Holmes are about to get hot. Remember, you read about it here first.  An eight-episode series from Hulu called “The Dropout,” will go live March 3. There will also be a “Bad Blood” film based on John Carreyrou’s book directed by Adam McKay and starring Jennifer Lawrence scheduled to show up on AppleTV.   And last, if you have access to Apple Podcasts, you can follow “Bad Blood: The Final Chapter”, where John Carreyrou and Emily Saul discuss the testimony of witnesses in the trial and everything said by the lawyers and judge.

Five things Social Media does, like it or not

Official Trailer for The Social Dilemma

Yesterday my friend Frank Del Monte recommended a new documentary film called The Social Dilemma.  Maggie and I watched it last night and were stunned.  If you’ve ever used Facebook, Google, Instagram, etc. it explains how these platforms work and why you see what you see.  It is an exceptionally well done film and does not talk down to anyone.

This morning I’m alerting my friends to find this film and watch it as soon as they can.  It explains a lot.  Once my “alerting” is completed, I plan to watch it once more then do a longer write up here, detailing why these findings are so incredibly important and the impact I think these platforms are having on all of our lives – and not all for the good. But for right now, please make time to watch this movie.  That way, my analysis will have more impact for you as you’ll have seen what I’m talking about.  Let me predict something: After you watch this, you will be doing what I am, telling your friends and family to watch it, too.  What actions you decide to take are your own.

Is being fired always bad?

One of my best friends has a deep knowledge of cars and motorcycles, so we always have plenty to discuss. Recently, though, our conversation drifted to corporate life. His employer has been promoting him. From leading engineering projects, he now manages people and that includes letting people go. This is disturbing and is upsetting him. After we talked last week, I thought about lessons I’d learned being in a similar spot myself. Letting someone go or being let go, is never, ever fun.

With a near photographic memory and a passion for great engineering, it was no surprise to me a few years back when he began to get noticed and promoted. But more money and bigger titles began moving him further away from solving engineering problems, which he loves, to being closer to and dealing with people. Someone once said, “The world would be a nice place if it wasn’t for other people.” While my friend is not one to suffer fools gladly, he’s able to keep those feelings to himself, and is respected as an intelligent, thoughtful and fair leader.

However, the impact of the Coronavirus on his company’s business has forced him in the past month to lay off almost a third of his team. It has been brutal and I sensed how difficult this was for him, no matter his stoic attitude. Firing an employee is one of the most difficult and unpleasant duties a manager has to perform and most avoid it for as long as they can. “Well, we may have let ‘so-and-so’ go too soon,” said no one, ever. The number of euphemisms for this occurrence are many: sacked, canned, axed, expelled, furloughed, fired, laid-off, let go, released, down-sized, discharged, RIF’d (reduction in force), re-organized, involuntarily-separated, lost one’s job, pink-slipped, dismissed, got the boot, kicked out, retired, removed, and cut loose among others.

His experience made me think back to the fall of 1985. After leaving Open Systems, I was offered a management position at AT&T. Arriving too early on my first day at the office of my new employer, I killed time at a nearby breakfast place, grabbing a newspaper and cup of coffee. I opened the business section and the headline at the top of the page screamed, “AT&T announces 24,000 person layoff in Information Systems Division.” Humm, “That does not sound good – that’s the area that had just hired me,” I said to myself. Scanning the story I noted the announcement would impact 6% of AT&T’s total workforce, but would directly hit the 117,000 Information Systems division. Perhaps my first day will be my last, I thought, setting some sort of personal record

Entering the office suite of Area Vice President Gil Rainier at the top floor of the AT&T building, I held the newspaper up and said, “What’s going on with this?” Not expecting this sort of greeting, he hesitated and then said, “Well, it’s one of the reasons you’re here.” He went on to explain. His regional branch offices weren’t just in Mpls/St. Paul area, but included St. Louis, Kansas City, Milwaukee, and Chicago, each with 100-120 employees each. He’d been ordered to downsize those branch offices to between 25-30 people each along with taking his area staff down from 30-40 to less than 25. Gil explained, “I know most of these people personally. We’re friends. I can’t do this objectively, so I am wondering, if along with your other responsibilities, you could help us make these painful reductions?” It was my first day on the job; it was impossible to say no.

Amazingly, before the reduction in force could be implemented, I’d had time and budget to hire one of my top past colleagues. Together we constructed a plan to exceed the Midwest Area’s annual quota for selling AT&T computers and equipment. Managing that effort is a story I’ll leave for another time. Just when we had moved into full execution mode on our sales plans, the layoffs began. My team continued on the plan and I put the cloak of doom over my shoulders and headed to the branch offices.

AT&T was not heartless. It cushioned the layoffs with a generous “separation package.” I don’t recall the exact details, but it was close to one month’s salary for every year you’d been with the company. So if you’d been with the company for ten years, you got almost a year’s pay in a lump sum after signing the “I won’t sue” paperwork. Plus, AT&T covered health insurance for two additional years or until you found other employment. A softened blow is still a blow and many of the meetings were full of tears and anger. Employees told me AT&T was the only placed they’d ever worked and after twenty plus years, could not imagine what they would do. They frequently wept, feeling a major part of their lives was over. Sometimes they yelled and screamed. AT&T had not only been a workplace, it was where they met and socialized with some of their best friends. They had few ideas on how they would go on and I felt ill-equipped to deal with the despair, frustration, and hopelessness they expressed.

But here is what I told my friend: For years after I left AT&T, it was impossible to attend an industry conference, trade show or event, and not be approached by at least one of these former AT&T colleagues. They’d begin by asking if I remembered firing them from AT&T. They told me how much they’d hated me and the company for doing that. But here was the surprise. Every single one said, in only slightly different words, “that was the best thing to ever happen to me,” or “that was the day my life changed for the better, and I’ve never been happier.” They all told me, in retrospect, how much they’d been stagnating at AT&T. They’d lost themselves in this behemoth company where their efforts were unseen, largely unappreciated and disconnected from what made a company successful. They told me how they were now working at a place where the impact of their contributions was obvious. They knew the value they were adding and so did those around them. This was a feeling they hadn’t had before. They were thrilled. And of course, it made me feel better, too.

I’m sure not everyone managed through it with such positive results, but I came to see things like forcing people to wake up and change to not be entirely negative. Everyone is afraid of ambiguity and the unknown. Being let go is never fun. But venturing out, whether you take the step yourself or are pushed, can sometimes turn your life around.

Epilogue: In the spring of 2020 we had a market crash and a national quarantine which precipitated the closure of many businesses and resulted in innumerable lost jobs. This take is not about hourly and day workers whose lives have been turned inside out and for whom I have the utmost sympathy and compassion. This story speaks to people who can and will bounce back. For those people, fold your damaged ego gently and put it in your pocket for later.

https://www.sun-sentinel.com/news/fl-xpm-1985-08-22-8502040337-story.html (link to an achieved story from the SunSentinel in 1985 about the announced lay-off).