Assignment 4: Investment Advice

Questionable Future for Facebook

By Aleksandra Neizvestnaya

Facebook tried to pull off being the company that believes “in something beyond simply maximizing profits,” in its IPO filing in early 2012. However, it soon learned that it could not just live off of this motto. Months after a botched IPO and a falling stock price, investors were worried about the potential of Facebook. In its third quarter earnings call in 2012, Mark Zuckerberg, Facebook CEO, greatly emphasized the fact that “monetization needs to be integrated directly into the core product experience.” Now each of its product teams was responsible for coming up with a revenue strategy for their respective product lines.

Mobile monetization, which is the ability to generate revenue through mobile apps, has been the most important and successful driver of Facebook the past year since going public. In its 2013 third quarter report, mobile advertising represented 49% of total advertising revenue, up from 41% in the second quarter, and just 30% in the first. Also, mobile users are becoming a large part of its total users, making up about 69.6% of total Daily Active Users.

Sure, Facebook’s growth trend is making Wall Street tremendously happy, but for how long? Even a big-time investor like Warren Buffett decided to act cautiously. Buffett advised Zuckerbeg on the IPO, but chose not to buy in to the social networking space. User-based companies are still a mystery for investors, especially with so many infamous examples like Netscape, Myspace, and AOL. How can we really value the future of Facebook? We saw that the $104 billion intrinsic value it had before its IPO wasn’t completely justified in its first year. Not to mention the JOBS Act that Obama signed in 2012, which loosened regulations allowing companies to file for IPO without public disclosure or review.

Speaking of intrinsic value, we can look back to about a decade ago to the dot-com bubble. Companies like Pets.com, which had a valuation of a multibillion-dollar company, went bankrupt because its true value was far less than the stock price indicated. Now most of the tech companies coming into the publicly traded world are starting off just like that; being valued extremely high before having shown any profit. Just in the last month, Snapchat, the two year old company that uses quick-disappearing photos to attract users, rejected an all-cash $3 billion takeover offer from Facebook. So a company that has absolutely no revenue wants more money? If this isn’t deja vu for investors, I don’t know what is.

Facebook’s third quarter results showed $2.02 billion in revenue and $9.3 billion in cash and investments. Revenue has grown about 60% since a year ago, and the stock price has increased by more than 100%. So, I’m not saying that Facebook is all bad. Revenue is estimated to grow to $2.33 billion at the end of the fourth quarter according to 36 analysts. Short-term investment is a total buy looking at current headlines, but I wouldn’t rely on it in the long-term, because let’s face it, its revenue is almost completely dependent on advertising, and where the users go, the advertisers will follow. Unless Facebook has some out-of-this-world product up its sleeve or a plan to move to bigger platforms, it’s not giving us much promising potential into the far future.

In the company’s latest earnings call, CFO David Ebersman noted the decline in daily users among younger teens and stated that Facebook does not expect to “significantly increase ads as a percentage of News Feed stories beyond where we were at the end of Q3.” After blowing away Wall Street’s expectations this past year, this news left everyone puzzled. After this release, the company’s November stock see-sawed between $46 and $50, some days ending below $45.

If young teens leave Facebook, it is worth it to rely on the older crowd? But besides the dwindling user-base, what proof is there that the company will be able to keep up its revenue? In the company’s last earnings call, Zuckerberg talked about building “more efficient technologies and services,” and then says that what they invest most in is the News Feed. What makes the News Feed better than Yahoo News, or even Twitter. As far as I’ve seen, the News Feed is filled with your friends and family sharing their photos, opinions, and daily life issues. At least Yahoo News compiles national and international news, and Twitter lets organizations and officials post real-time world activity. Even so, I’m not saying that Twitter will prove to have better revenue growth than Facebook.

Facebook Investment Podcast

Yahoo: Slowly but Surely

A diversified portfolio includes a mix of securities that will reduce your risk. This signifies that one will need to have securities that follow the market indices and others that do not. However, this is not as simple as it sounds, for one has to maintain their portfolio constantly by buying and selling securities. One security that investors should be considering holding, to diversify their portfolio, is Yahoo (NASDAQ:Yhoo).

Yahoo is faintly remembered as one of Google’s competitors that was branded a loser in the search engine wars. The company has begun to turn its fate around by taking steps to recreate itself for the modern internet. Its most important step in this process was the addition of Marissa Mayer, A former Google Executive, to serve as its CEO.

Upon her arrival, Mrs. Mayer brought key ideas to improve the company. Some of the ideas such as offering free cafeteria food and providing employees with smartphones, were borrowed from Google. She also implemented original ideas such as redesigning the company’s website and ending telecommuting. Under Mrs. Mayer’s Leadership the company was able to take focus on external opportunities as well.

For example, The company’s acquirement of startups falls into this category, particularly the acquirement of the news reader mobile application Summly created by 17 year-old Nick D’Alosio, which summarizes long articles for users. In addition to acquiring businesses, Yahoo has been bringing in personnel to improve its success. For example, Yahoo corralled from the New York Times, Matt Bai, former chief political correspondent, David Pogue, former tech columnist, and Megan Liberman, former deputy editor. More importantly, the company is in the process of procuring Katie Couric from ABC.

Yahoo has also planned for the future as it plan “to sell $1 billion of convertible bonds maturing in 2018 in a private placement. The company may use proceeds to finance stock repurchases and business acquisitions, among other uses.” (Roy, Somaditya. “Yahoo to Auction Domain Names.”) Furthermore, Yahoo has decided to partner with Starcom, advertising firm, in order to produce personal advertisement video for their users. The main idea behind it is that they will produce advertisements that will attract users and help them get the products they want.

The company has also begun to limit its losses and improve its efficiency. It has decided to auction its domain names that are not of use to them. There are “more than 100 somewhat unusual domain names, such as sandwich.com and crackers.com…the domain names are priced from $1,000 on the low end to as high as $1.5 million.”  Likewise, the company has decided to let go of its employees that are considered to not be performing up to standards. Currently, the number of employees to be let go is at 500.

As a result the success can be measured by the current stock price, which on December 16, 2013, Yahoo closed at $39.73 a share. This about an 152% increase from when Mrs. Mayer first joined Yahoo as CEO on July 16, 2012.

It’s important to remember that this is not high growth stock. In the three month range, Yahoo has slowly increased from about $30 to $40 a share.  Its beta of 0.66 supports this notion for it signifies that it shadows the market index, NASDAQ.

Compared to Google (NASDAQ:GOOG), that has price to earnings ratio of 29.20. Yahoo appears to outperform with its Price to earnings ratio of 34.05. However, the earnings per share reveals the truth. Google’s EPS is 36.75 while Yahoo’s EPS is 1.17, which implies that Google is a clear High growth stock and that Yahoo’s earnings are low.

Yahoo may not be the same dominant company that it was in the 1990s. It is slowly improving and has proved to be quite stable through its low earnings and moderately high beta. Therefore, Yahoo is a worthy stock to diversify one’s portfolio, in order to maintain unsystematic risk low.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sources:

Bauder, David. “Reports: Couric Will Leave ABC News, Head to Yahoo! for Online Interview Show.” The Canadian Press 22 Nov. 2013: n. pag. Factiva. Web. 25 Nov. 2013.

Lazare, Lewis. “Yahoo Partners with Starcom for Targeted Online Ads.” Silicon Valley/San Jose Business Journal Online 11 Nov. 2013: n. pag. Factiva. Web. 25 Nov. 2013.

Miller, Claire C., and Catherine Rampell. “Yahoo Orders Home Workers Back to the Office.” NYtimes.com. New York TImes, 25 Feb. 2013. Web. 25 Nov. 2013.

Perlroth, Nicole. “The Chief of Yahoo Lifts Sales, and Spirits.” NYtimes.com. New York TImes, 28 Jan. 2013. Web. 25 Nov. 2013.

Perlroth, Nicole. “Marissa Mayer Puts Her Stamp on Yahoo.com.” NYtimes.com. New York TImes, 20 Feb. 2013. Web. 25 Nov. 2013.

Roy, Somaditya. “Yahoo to Auction Domain Names.” SNL Kagan Media & Communications Report 15 Nov. 2013: n. pag. Factiva. Web. 25 Nov. 2013.

Stelter, Brian. “He Has Millions and a New Job at Yahoo. Soon, He’ll Be 18.” NYtimes.com. New York TImes, 25 Mar. 2013. Web. 25 Nov. 2013.

Stevenson, Steven. “How Teen Nick D’Aloisio Has Changed the Way We Read; When a Hong Kong Billionaire Emailed a London Tech Startup to Inquire about Investing, He Didn’t Realize Its Entire Workforce Consisted of a Single Kid Working in His Bedroom. Meet the 18-year-old WSJ. Magazine Technology Innovator of 2013 Who Became an Overnight Millionaire by Inventing an App That May Revolutionize How We Read on the Go.” The Wall Street Journal 10 Nov. 2013: n. pag.Factiva. Web. 25 Nov. 2013.

“Yahoo Grabs Another NYT Staffer.” MediaPost.com 12 Nov. 2013: n. pag. Factiva. Web. 25 Nov. 2013.

“YAHOO PLANS $1 BILLION BOND SALE.” TR Daily 20 Nov. 2013: n. pag. Factiva. Web. 25 Nov. 2013.

“Yahoo To Fire 500 Under-Performers!” EFY Times 1 Nov. 2013: n. pag. Factiva. Web. 25 Nov. 2013.

“Quotes & Info- Yahoo! Finance.” Quotes & Info- Yahoo! Finance. N.p., 16 Dec. 2013. Web. 16 Dec. 2013.

“Yahoo! Inc.: NASDAQ:YHOO Quotes & News – Google Finance.” Yahoo! Inc.: NASDAQ:YHOO Quotes & News – Google Finance. N.p., 16 Dec. 2013. Web. 16 Dec. 2013.

Starwood is A HOT Buy For Investors

Starwood Hotels Worldwide has experienced a massive increase in its stock price over the past few months, which has pushed the multi-billion dollar luxury hotel chain to its market peak. The brand seeks to expand dramatically worldwide over the next few years to the opening of over 30 more hotels worldwide. This has set a large profit growth for the company’s future, and should ultimately lead to an increase in investors for the fourth quarter.

Shares in Starwood (Ticker: HOT) have been perceived as a hot commodity, with the company’s stock  increasing 43% in the past year alone. As of November 6th, its stock price was at a whopping $75.26 a share, which has gradually passed the 75.09 per share from the company’s peak in 2007.  This is also the highest share price in comparison to other hotels, Hyatt Hotels Corp was at $41.99 per share, coming in second, and Hilton Hotels Worldwide is at $21.52.

One major circumstance for why the company’s shares are due to its plans of massive expansion have been confirmed from the company’s third quarter conference call held on November 18th. Three hundred and thirty three hotels are expected to open within the next two years alone and Starwood is now accounted for nearly 1 in 5 of all new-branded, upper upscale and luxury hotel openings or conversions worldwide.

2014 is set to be a big year in development for the company, from setting to own around 30% of property in Africa to building its 100th Sheraton Hotel in Asia Pacific and its 500th hotel worldwide. “Our pipeline of about 400 hotels and 100,000 rooms has translated into about 70 to 80 new properties a year. That number is likely to grow,” Frits D. van Paasschen, Chief Executive Officer, President and Director of the company, said.

Starwood’s rate of occupancy (RevPAR) also remains at an all-time high and is expected to increase during the holiday season. Van Paasschen also mentioned that while the United States and Canada had record occupancy levels, Starwood saw it’s RevPAR rate increased in a similar fashion on a global scale. “As such in North America, we’ve had very steady REVPAR growth between 6% and 7% for the past 2 years in a macroeconomic environment,” he said.

Starwood stated that it predicts 80% of earnings coming from various additional fees the company plans to implement by the end of 2016. The company has already maintained a 74% increase and if it continues to maintain its current up streak, there is a very limited downside risk in investing.

Vasant Prabhu, Vice Chairman and Chief Financial Officer,  assured that while group revenue growth has been slower, it has been steady, at around 3% to 4%. “This, in our view, is healthy, balanced and sustainable revenue growth,” he said. “With no meaningful change in the supply situation evident in the near term, we expect these trends to extend into 2014,” he said.

An Investment for You – Your Kids – and Your Grandkids

 

An Investment for You – Your Kids – and Your Grandkids

If you’re a forward-looking type person, don’t like high risk – and think for the long term, buying Amazon (AMZN) is a great investment. High capital spending for strong revenue growth, while trading off profits and short-term investors’ happiness, has been Amazon’s motto since it went public in 1997 and it has been successful at this strategy ever since.

Jeff Bezos, Amazon’s founder and CEO started the company as a modest online bookstore based out of Seattle in 1995. The company slowly began selling digital content like videos and software and with time provided a marketplace for other online retailers to sell their products.

Today, Amazon has grown its business in so many directions, that it is hard to think of the company as just an Internet retailer. Amazon has its hands in cloud computing, television, advertising, publishing, digital content, software, and enough projects to fill up the rest of this page.

All of these activities pit the Internet giant in direct competition with Apple, Google, Netflix, Wal-Mart, eBay, and various fortune 500 companies. Rumors about Amazon’s future ambitions are plentiful, and while some seem unattainable, Amazon’s record of success sends shivers down the spines of the competition as the rumors emerge. Is Amazon looking into its running own mailing service with drones? Is a smartphone in the works? Or a quick trip to space? While these are a diverse set of businesses to commit to, Bezos’s brilliance and determination should not be underestimated as Amazon is on its way to hitting $100 billion in market capitalization.

Amazon’s stock has doubled in the past two years and increased by fifty percent over the last twelve months, while currently trading above $380. In the height of the financial crisis in November 2008, Amazon’s stock halved from around $70, and hit a low of $35.03. Within a year the stock completely recovered and almost doubled from pre-crisis levels. This is in contrast with the NASDAQ (^IXIC) that recovered after a year, but only managed to hit pre-crisis levels.

Its stock aside, Amazon’s revenue growth over the last four years has been remarkable, as the chart shows. This year its projected yearly revenue is expected to come in just under $75 billion.

Amazon’s revenue breakdown is fairly complicated as the company does not report on sales of specific items, and products like cloud computing and the kindle. However it can be broken into two categories, Electronics and merchandise accounted for 60 percent and media for 36 percent in last years earning report.

**there is a chart that i had trouble attaching to this document showing Amazons growth**

If you don’t want to trust Amazon’s raw numbers and reassuring growth, perhaps look to its visionary founder Bezos, who was named 2012 business person of the year by Fortune magazine and is considered a genius in his realm by his peers and competitors. Bezos, currently the nineteenth richest person in the world has stuck with three basic ideas that fuel Amazon’s continuing growth. Put the customer first. Invent. And be patient. These principles along with Bezos’s reluctance to listen to Wall Street’s demands for profits has allowed Amazon to grow at the rate it has without having to worry about getting punished by investors dumping its stock. Bezos places his faith in the loyalty of consumers, ahead of the sharks of Wall Street.

To put Amazons remarkable performance in more perspective, a $1,000 investment in Amazon when it when public sixteen years ago would be worth close to $240,000 today. Neither eBay, Yahoo, Google, LinkedIn nor Facebook come anywhere near close to this astronomical growth; $1000 in Google would only be worth around $12,000 today. Likewise a $1,000 investment in eBay and Yahoo would be worth under $70,000.

These numbers are remarkable, considering that Amazon is not even close to its potential market capitalization and its stock is still undervalued. According to Nielson, a leading global information and measurement company, E-commerce will be the fastest growing segment of the retail industry by 2017 and is projected to grow at a pace of eleven percent a year. Amazon already has its big foot in the door and is currently the largest Internet retail company in the world. According to the trade publication Internet Retailer, “Amazon sells more online than its next twelve biggest competitors combined.” This includes companies like Wal-Mart, eBay, Apple, Overstock, and Intel.

When taken out of context, Amazon’s net losses could be worrying, but a long-term investor should know that the company’s net losses arise from its immense growth. Amazon is investing heavily in its long-term business projections, including acquiring new warehouses to lower shipping expenses, Amazon Web Services (AWS) that has grown at a faster pace than all its competitors, and the kindle, which just recently saw its best sales over thanksgiving weekend.

The company has earned the praise of being called a “serial monopolist” by Stanley Druckenmiller a former chief strategist of billionaire George Soros. So as long as Amazon’s monopolistic ambitions do not get entangled with regulators, you should put your faith in Bezos and Amazon, because they have faith in you.

Thumbs up for Facebook Investments

Written by Nina Thomas

As we near the end of 2013, many things are coming to an end. For some people it’s the Fall semester of college, for others the fad diet that they are now tired of.   But one thing that will not come to an end is Facebook.  This company has stood the test of time and for many people across the globe, it has become a part of everyday life.  Starting originally as a social network primarily for students at Harvard, this website has expanded on a global level.  There are 1.19 billion monthly active users of Facebook to date.

The question we’re left with is whether a company we love to use is a company we can love to invest in?

The answer to the question above is yes.  However, it is very important to invest with your head instead of choosing to invest in Facebook because you like it.  But whoever wishes to invest would need to be willing to wait.  This is because I believe investing in Facebook is a smart decision but the Facebook stock will need time to rise enough for you to actually generate profit from it.

When Facebook first announced its IPO, the cost was $38 per share.  This was considered to be a very high initial public offering.  Unfortunately this number dropped dramatically to $24.  Many people believed this was because Facebook was too optimistic about how much their stock was actually worth.  This number is around 30% less from where it started.  It was in September 2013 that the stock hit an all-time low of $18, devastating many investors.

Luckily, Facebook quickly responded to this huge plummet by changing the way it approached advertisements, their primary sources of revenue.  Now advertisements come up on your newsfeed instead of only being shown on the side of your newsfeed.  Previously, Facebook was not generating enough revenue from advertisement sales.  This was combated by the introduction of mobile advertisements as well.  Previously, revenue that came from mobile sales ads accounted for 0% of Facebook’s revenue.  Now mobile sales account for 41% of all Facebook revenue.   This is because it tends to be more convenient for people to pull out their smart phone on the go instead of a computer.

There is hope that Facebook’s stock can perform as well as Google did when it was first announced in 2004.  The only problem with this is the fact that Facebook’s initial public offering was much higher than Google’s.  In fact it was nearly three times more expensive for buyers.  This means that if Facebook wants its stock to perform nearly as well as Google’s stock was able to, it would need to perform exponentially better.  Another thing to keep in mind is the fact that although Facebook and Google are both Internet based, they are not the same type of company.

Because of Facenook’s new advertisement approach, Facebook’s stock is now priced at $51.91.  This is great for the people who were willing to stick things out when Facebook’s stock was first announced.  Although for those who we were not willing to wait, this is bad news.

Luckily for people who still want to invest, Facebook’s stock is very sticky.  This means that many people get “stuck” on Facebook.  Because of Facebook’s influence, now is the perfect time to invest.  You may not be able to reap the rewards immediately, but five years down the line Facebook should expand and grow.  This is because of its resilience to stay afloat that has been demonstrated to us in the past that I believe Facebook will continue to show in the future.

Click here for the podcast.  

 

 

Professionalism In An Unexpected Place

What do you imagine is unique to walk in and sit down inside a barbershop? Is it the employees, the other customers, the owner, the entertainment, etc?  Well, Mickey J’s Barber & Beauty, a barber shop located in the Bronx, NY, has all those features and one more, professionalism.  At 1833 Westchester Avenue, in the Parkchester section of the Bronx, Mickey J’s barber shop from the outside resembles any other local barbershop.   However, inside the shop there is a different atmosphere evident from the very beginning.  Something meaningful and moving greets you as sit down.  Christmas songs playing on the television and later a Malcolm X documentary takes over which had many customers eyes fixed.

Mickey J’s Barber Shop is situated below the #6 train line between an auto insurance office and an Application Support Center.  Amongst the few big businesses, most shops located on Westchester Ave are commercially owned by small business owners.  There are mostly restaurant and office shops, and to name a few there are Spanish, Jamaican, American restaurants, grocery stores, deli’s, real estate  office, hair supply shops, clothing stores, few barber shops, even a funeral home, and a host of other stores.  So, it is clear, Westchester Avenue is an eclectic busy stretch of road that boasts neighborhood stores.

Nine years ago, Mickey J opened his barbershop as a sole proprietor.  But, prior to opening Mickey J’s Barber & Beauty, Mickey J, the hairstylist born and raised in the island of Jamaica, had studied business management and attended Long Island Beauty School.  In the early parts of the interview after talking with him on his major in business management, Mickey J admitted that, “running my own business is more like a challenge; the challenge is academically because you have to deal with people on a one-on-one basis as you interact with customer’s intelligence.” So though, he majored in business management, the salon business was the last thing on his mind while living in Jamaica.  Until he arrived in the United States did he realize that “the key is survival and to survive I had to step back to move forward.”

Professionalism is the key to which Mickey J conducts the business of his barbershop.  In the shop, signs with ‘no profanity’ rules and words of advice are posted on each station mirror.  That was a unique observation as other nearby barber shops/hair salons did not have any kind of rules posted. One of his examples of being professional in the business is having customers greeted and attended to as they enter.  Another example is having his employees always sanitizing their hands, at the station, before moving on to another customer.  Though these things may seem small, Mickey J understands that they are very important to the business growth.  Professionalism also extends to the clients who come into the barber shop.  And a situation that was described involving general unprofessional customer behaviors is where customers sometimes request and have done a specific hairstyle that they know they may not afford.  In Mickey J’s Barber & Beauty, the professional style when handling that type of situation is remaining calm and composing oneself while explaining to the customer that that type of behavior is unacceptable and will not be tolerated again.  The customer service goes a long way as the barber shop caters to their many other hair and grooming needs by selling hair products, combs and brushes, and facial creams.

With six employees, including Mickey J, he stressed the importance of having his employees grow the business and be a positive representation of the business via the professionalism he instills in them.  In addition, if any employee steps out of line and goes against the rules governing the business, they are spoken to in private about their actions immediately before having the same behavior repeated and spiraling out of control and negatively affecting the professionalism of the business.  All the staff dressed appropriately and always greeted and briefly talked to any customer walking in.  Open seven days, customers visits are usually based on appointments, with the exceptions of few walk-ins.

When challenges and issues come up in the business, it is vital, according to Mickey J, that the staff all come together to focus on the necessary parts of the business that would help it grow and expand.  And one of those key necessities is of course, clients.

What sets Mickey J Barber & Beauty shop apart from competing barbershops/hair salon?  Without sounding egotistical, Mickey J responded with, “Salons in the neighborhood were further away and heard of my settings and after coming in to see what things were like, they changed their floors, they put televisions up, and other similar things.”  He quite bluntly states that he does not have any competition as he governs his business very professionally than other shops where you will find customers walking inside cursing and behaving in other unethical ways.  This is an indication that the barber shop is respected and influential in a neighborhood where quite a few other barber shops/hair salons exist.

Mickey J accounts his spirituality and belief in God as the reason behind the profiting of his business.  He goes in to add that, “Once you believe and have faith in everything that you do, God works miracles.”  So though sometimes the business may experience slow days, Mickey J does not resort to giving up on his customers and employees, rather, he prays harder for the business to improve operations.  Though figures were not disclosed, he reassured me of profits by simply stating, “This business is very profitable and bills are paid.”

The impact that this neighborhood barber shop has on the Parkchester community is both intimate and candid.  A keen observation was made that showed how couple of regular clients walked in appearing unhappy and distanced.  But while getting their hair done, Mickey J and his other employees would seriously be talking with the clients and sharing laughers.  In the end, they got up from the chair looking happy and much more upbeat after the conversations.  It becomes so much clearer how much the clients admire Mickey J and the entire staff and essentially, does not see them as only barbers but more so, as a support group that they know they can turn to in bad and good times.

Densil, the only hairstylist there that really caters to female cuts, notes that the atmosphere is “Pleasant and everyone is like family and gets along really well together.  He went on to further explain that if hair is on the floor by a specific barber’s station, another barber who is not busy with a client or doing something else would clean it up.  Interesting is that, gospel music is usually played every Saturday morning until twelve noon.  That is known to get the employees blood flowing and get them in the right frame of mind and mood to do their jobs as professionally as possible.  Densil also said that, “When a new person employee comes in, we try to show them the ropes of how things operate in this barber shop, especially if they are coming from one of those shops that are loud and disorganized.”   While interviewing Densil he demonstrated much enthusiasm and motivation for his job and genuine smiles that were unrelated to the fact that he is being interviewed.

A pastor by the name of Mike, who has been a longtime customer of Mikey J for over thirty years, sat in the chair getting his hair done by Mickey J.  As he sat in the chair he looked very comfortable and relaxed.  For Pastor Mike, he finds key how well Mickey J sanitizes his equipment’s after he finishes with each customer.  Pastor Mike son and grandson also come to this barber shop all the way from Long Island because of Mickey J’s loyalty and friendship shown to their father and grandfather and mostly because he experiences the same warm and comfortable atmosphere as Densil had described.

Nick, an employee working there for three years, admits that his customers motivate him the most.  As Mickey J mentioned before, and Nick reiterates, that “just to give someone a haircut, you would be surprised what difference it makes…just for them to come in and chit-chat over a simple haircut.  Further along, while sitting and leaning back Nick reminded me that the overall professionalism within the business really sets it apart from many others as well as the punctuality of himself and his co-workers being on time for each appointment.  After talking with Nick, his customer of about ten years, Jovanni, walked in.  Other than Nick, Jovani pointed to Mickey J as the reason why he keeps coming back.  Jovani also mentioned that the quiet environment is key for him, though at times he finds it hard to always obey the ‘no profanity/cursing rules.’  Much like Pastor Mike, Jovani has a pretty good friendship with Nick.  The third Mike in the shop, also a barber who has been working there for one year, and has known Mickey J for over twenty-five years, seriously said, “I know Mickey as a classy, clean, by the book guy.”  He told me if I take a look at other barber shops/hair salons and compare it to Mickey J Barber & Beauty, that speaks for his motivation.”  Mike thinks the rules posted up about no profanity language is telling of what kind of barbershop Mickey J is running and what kinds of people are willing to come in after seeing those signs.  The family-oriented and professionalism themes are repeated in Mike’s remarks.

Mickey J’s Barber & Beauty thrives on the professionalism of its owner, staff, and customers.  The business offers the neighborhood a unique and special experience that transcends to customers outside the neighborhood.

https://docs.google.com/presentation/d/1TBtxKFryHlfTI7YQqOYZ1OXFC3R7NNN-HFuOK7CHEzg/edit?usp=sharing

 

El Vagabundo: The Wanderer

When the sun is out, it is nothing more than an empty spot in front of Capital One on 41 street and Queens Blvd. However once it’s 8 pm, the smells of grilled chicken, steak, and fresh tortillas can be traced to an aluminum Ford truck that has occupied the empty spot. This is the food truck that is named El Vagabundo but is referred to by Sunnyside locals as the taco truck on 41 street. The owner Mr. Rahul Rodriguez and his two companions operate the food truck. Its goal, aside from making profit, is to come out every day of the week in order to the serve the area authentic Mexican food.

Mr. Rahul did not always own or had intentions to own a food truck. When he came to the United States from Puebla, Mexico, Mr. Rodriguez began to work with food. His first job was at a party venue as a cook and then proceeded to work in the food truck industry for 17 years. He recalls the majority of his knowledge stems from working in a Greek food truck located by St John’s University.  At this establishment, he learned how to operate the components of the truck and how to interact with customers. Little did he know that this knowledge would prove to be helpful in the long run.

During an impulsive buy about ten years ago, of the 1980s aluminum Ford truck; El Vagabundo just happened to land in his lap. He began by taking over the spot on 40-20 Queens Blvd, Sunnyside, NY from a friend, who was in the same industry.  He admits that when he started he didn’t have a taste for tacos nor did he expect to sell them for a living.

However, business was not great when El Vagabundo first started. The business faced great resistance from the community. Mr. Rodriguez shared that “People look at you differently, and they ask you a ton of questions. But they don’t buy anything. They just ask questions and walk away”.  He goes on to say that this is normal and advises that when one opens/runs a business, they should go into the situation with their glass half empty not full and be patient. Meaning they should keep an open mind and learn as much from the experience as they can.

The difficulties did not stop there for El Vagabundo. According to Mr. Rodriguez, El Vagabundo faced discrimination from the police. This was brought on by Mr. Rodriguez’s nationality, Mexican. He told stories of the police giving him tickets for conducting business and trying to trick him into moving his truck next to the park, which was illegal and resulted in being towed away. He specifically recalls that on his first day, a police lieutenant issues him a $115 ticket and he only made $125 for the night, leaving him with a profit of $10. Despite being unwelcomed by the local authorities, Mr. Rodriguez continued to be polite and friendly to them, for as he stated “They were just doing their job.” Eventually, the local police officers became accustom to El Vagabundo and left Mr. Rodriguez alone.

El Vagabundo endured past those ordeals and has continued to serve its customers. It has been able to bring in revenue in a spot that was thought by others in the industry as a place that could produce a maximum of $250 weekly. However, its revenues surpass expectations; in colder climates Mr. Rodriguez expects to bring in a minimum of $400 weekly. While during warmer climates Mr. Rodriguez expects to bring in a minimum of $900 weekly. Regardless of climate, its most active days are Thursday, Friday, and Saturday.

The revenues acquired were partly aided by its location, Sunnyside, NY. According to the census of 2000, the median household income in Sunnyside has ranged from $34,000 to $43,000. The ACS report of 2006 – 2010 identified that the median household income ranged from $40,000 to $55,000.  Therefore, Sunnyside is a considered a middle class neighborhood, which signifies that locals have expendable income to spend in surrounding venues. In addition, since El Vagabundo is surrounded by bars and conveniently by the 7 train, it can take advantage of commuters and those enjoying the night life.

The clientele basis has also played a part in helping El Vagabundo gain revenues. Its clients stem from different ethnicities and range from different age groups. In some instance, customers have dedicated their loyalty to it. One customer confessed “I live in Flushing and I come here three a times week. They’re the best tacos I’ve had since I was in South Texas.” In other instances, the groups of customers enjoying their meals in front of it, attract others passing by. One woman approached El Vagabundo for the first time, and claimed “I need to get something from here. Customers keep coming and coming.” However, the key factor to maintain its clientele basis is Mr. Rodriguez and his companions. They have an ability to remember the clients, their preferences and to connect with them on a personal level.

Its rarity to contend with competitors contributes to its increased revenues. For it is the only food truck within a five block radius. The closest food truck, which also happens to sell Mexican food, is located on 46th street and right off Queens Blvd. Mr. Rodriguez mentioned that the owners of that truck were his relatives.

However, El Vagabundo has also had to focus on its expenses in a shifting economy. It has had to make adjustment according to their budget. Mr. Rodriguez tells that originally he used to use a high quality steak but as the 2000s progressed it shot up in price. That is when he had to switch to a less expensive alternative but not one of low quality. For similar reasons, tongue, which is offered in most Mexican venues, cannot be found on its menu. Tongue sells for $6 per pound and is an ordeal to prepare. Mr. Rodriguez explains that he would not make any profit if he was to sell tongue tacos for the current price of $2.50. Therefore, he favors pork and chicken for the prices for those meats do not fluctuate often.

El Vagabundo translates to the vagabond which is a person who wanders. The name is rather fitting for a food establishment on wheels. However, it seems that El Vagabundo has found its home in Sunnyside, NY and has no intentions to leave. As Mr. Rodriguez said “I’m going to stay here until they kick me out.”

 

Mr. Rodriguez His Companion
Mr. Rodriguez (right) and His Companion (left)

Loyal Customers
Loyal Customers
Tostada
Tostada
Tacos
Tacos

El Vagabundo 40-20 Queens Blvd Sunnyside, NY
El Vagabundo
40-20 Queens Blvd
Sunnyside, NY
Simple Menu
Simple Menu

 

7 train in the background
7 train in the background
The kitchen
The kitchen