Friday, November 25, 2011
Alfa's genius
Reading auto history, ran across an interesting story.
In 1953 Italy was still suffering from WW2. Alfa-Romeo had been making expensive luxury and sports cars since 1920, and wanted to expand into middle-priced and middle-volume production in order to provide more jobs and more profit.
Instead of trying to sell stock to professional investors, which probably wouldn't have worked, they decided on a closed-loop way to expand the company. They designed a family car, the Berlina, and started advertising that it was ready for production. If you wanted it to get into production, you could help by buying an interest-bearing bond. The real 'return' on the bonds, however, was specifically exciting to car lovers: 200 of the bond buyers would be selected at random to receive a new Berlina for free.
The bond sale worked.
Alfa grew to a mid-sized company and lived (more or less) happily ever after. Its current sedan, the 159, appears to have taken some retro flavor from the Berlina.
Perhaps Italy and other troubled bond-sellers (including US) should take another look at the closed-loop idea. Stop trying to sell bonds to China, which will enslave you. Stop trying to sell bonds to the Goldman Mafia, where the bonds will become just another way to counterfeit multiple layers of bets to further enrich Goldman. Instead, find a way to get your own fucking population excited about buying your bonds. Find an equivalent of the Berlina raffle that will appeal to people who like your company or country. Nothing abstract or meaningless like "supporting the fucking Constitution". The reward has to be real and attractive, like the Berlina. ¶ 5:15 PM
In 1953 Italy was still suffering from WW2. Alfa-Romeo had been making expensive luxury and sports cars since 1920, and wanted to expand into middle-priced and middle-volume production in order to provide more jobs and more profit.
Instead of trying to sell stock to professional investors, which probably wouldn't have worked, they decided on a closed-loop way to expand the company. They designed a family car, the Berlina, and started advertising that it was ready for production. If you wanted it to get into production, you could help by buying an interest-bearing bond. The real 'return' on the bonds, however, was specifically exciting to car lovers: 200 of the bond buyers would be selected at random to receive a new Berlina for free.
The bond sale worked.
Alfa grew to a mid-sized company and lived (more or less) happily ever after. Its current sedan, the 159, appears to have taken some retro flavor from the Berlina.
Perhaps Italy and other troubled bond-sellers (including US) should take another look at the closed-loop idea. Stop trying to sell bonds to China, which will enslave you. Stop trying to sell bonds to the Goldman Mafia, where the bonds will become just another way to counterfeit multiple layers of bets to further enrich Goldman. Instead, find a way to get your own fucking population excited about buying your bonds. Find an equivalent of the Berlina raffle that will appeal to people who like your company or country. Nothing abstract or meaningless like "supporting the fucking Constitution". The reward has to be real and attractive, like the Berlina. ¶ 5:15 PM
