Category Archives: Business

State’s premier survey research firm abruptly folds

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Shoutout to Stan Fichtman (PoliticsHawaii.com) for breaking the story of the sudden demise of SMS Research and Marketing Services Inc., a company which was considered the leader in survey research and polling in Hawaii over much of the past half century.

Although perhaps not quite a household name, the company was well known in both the business and political communities for its survey research and political polling.

In a series of posts, Fichtman caught a rumor that the company had gone under, confirmed it had closed its doors, and tracked down evidence of a financial mess that led to its collapse.

“Word on the street – SMS Research shut down”

“SMS Vanishes: State Contracts in Limbo”

“SMS’s Cash Catastrophe: A Tale of Debt and Default”

Fichtman cited documents filed in an Ontario County, New York, court last month charging the company’s most recent owner, Timothy James Carson, with defaulting on a $22,500 30-day loan.

The loan, dated August 24, carried an estimated annual percentage rate of an astounding 528.62%. The lender is identified as Seamless Funding LLC, which does not appear to have an online presence. The loan was to be repaid with daily payments of $655, 13% of the company’s estimated monthly income, or a total of $33,727.50 after 30 days.

Carson pledged all of the company’s assets as collateral for the loan, subject to forfeiture in the event of default, loan documents attached to the complaint show.

A lawsuit alleging the loan was unpaid and in default was filed just days after the expiration of the original 30-day loan term.

The court record does not indicate how the company found itself in such dire circumstances, or how it was reduced to such a lender of last resort.

Carson took over the company on December 1, 2021, following the retirement of longtime company principals, Hersh Singer and Jim Dannemiller, Pacific Business News reported at the time.

PBN provided a brief profile of Carson.

Prior to joining SMS, Carson has held management, sales, sales-engineering, and consulting roles in Silicon Valley, Washington D.C., and responsibilities for the North American and Latin American markets for the last 16 years. This included working with tech companies such as IBM, RSA Archer and SAI Global. Carson started his career working for U.S. Representative Patsy T. Mink and U.S. Representative Ed Case in Washington D.C. where he gained a deep understanding and appreciation of research and evaluation. Carson is a graduate of Punahou School and he received his B.A. from the University of Oregon.

Fichtman reported the company was awarded eight public contracts valued at $4.58 million from 2021 to 2023. It is not clear whether any of the contracted work was incomplete at the time the company folded.

Petland announces it is in the process of closing

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Bad news.

Petland, longtime independent pet store in Kahala, is closing, according to a story in Pacific Business News.

PBN quotes Richard Matsui, son of store owner Ken Matsui.

“In my lifetime, the shifts that I saw was they survived Walmart coming into town,” Matsui said. “They survived Petsmart coming to town. Petco coming to town. But I think it’s a real question about whether or not we would survive in the era of Amazon having that big warehouse opening up. My understanding is that Amazon’s going to start offering same-day delivery. So, you’re going to have this player that’s going to have a convenience level that can’t be beat — same-day delivery to your door — at a cost structure that’s just fundamentally different than any local business here.”

I vividly recall my father’s small restaurant supply business confronting the earlier business upheaval after Costco opened its first store in Honolulu. This was probably somewhere around 1995 or so, a few years before he finally retired at age 85.

Several years before, he had given us a set of good quality plastic chairs to set out on our back deck in Kaaawa. These were commercial quality, better than the plastic chairs normally found in discount stores. This were items he pulled from his Honolulu Restaurant Supply Company inventory, as process he repeated on many holidays.

At some point, to explain the impact of the “big box” stores, he said customers were now able to buy the same chairs at Costco for a lower price than he was offered by the manufacturer after many years as an authorized dealer. It was becoming harder and harder to escape the shadow of Costco and the other national retailers. He retired just a few years later after finishing “one last big job,” which was a complete renovation of the kitchens at what was then the Hotel Hana Maui.

We’re going to miss the convenience of Petland in Kahala, and the benefit of buying from a locally-owned small business.

It’s also personal. If I’m not mistaken, we brought home our first cat, a tiny gray kitten tiger, from Petland’s predecessor, Birdland, in Ala Moana Center in 1969. Meda and I had been married for less than a month, and just returned to Honolulu to enter graduate school. That kitten grew into a great cat. She lived to the age of 19, and died not long after we moved to Kaaawa in the summer of 1988.

Another look back at the NextEra deal

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All the public discussion of the pending global settlement of Lahaina Fire litigation has made one thing clear: Hawaiian Electric, one of the nation’s smallest electrical utilities, has limited financial resources to contribute to the overall settlement. This “ability to pay” apparently was taken into account during settlement negotiations, which recognized that pushing Hawaiian Electric into bankruptcy would create a whole new set of problems for the entire state.

That sends me back to a question I raised a year ago: Would Hawaii have been better off if Next Era Energy’s proposed purchase of Hawaiian Electric in 2014 had gone through?

You may recall that Next Era, one of the country’s largest energy corporations, offered to purchase Hawaiian Electric for a bit over $4 billion. The deal was nixed by the Public Utilities Commission in July 2016 in the face of almost united political opposition from the state’s political establishment.

Admittedly, I never understood exactly what was behind the politics of the opposition. To me, it seemed a lot like the 1950s when the Big Five companies, at the center of the island’s suger-era power structure through their network of interlocking directorates, tried to keep national retailers from pushing into Hawaii. Sears was the first major firm to break through the political and economic blockade and open up a store in Honolulu in 1941.

Although I never heard it discussed, there may have been deep concern within Hawaii’s Democratic-controlled power structure that NextEra, based in Florida, would be pushing far more conservative political ideas reflecting those Florida roots and the far-Right slide of Florida policy makers?

But as a much larger entity, NextEra would have brought its deep corporate pockets into Hawaii, which would have undoubtedly rattled existing relationships in business and government.

But it would also have brought the financial strength to borrow funds at lower costs, meaning additional resources that could have potentially been available to mitigate fire risks, and would have certainly been able to fund a larger contribution to the Lahaina Fire settlement.

Given the experience of the past year, would a different decision be made today?

See:

In hindsight, was it a mistake to reject NextEra Energy? August 20, 2023

Brainstorming about local organized crime

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At the beginning of last week, Civil Beat’s Madeleine Valera had a good story looking at the state of organized crime following the racketeering conviction of former Honolulu business owner Michael J. Miske Jr. (“The Miske Criminal Enterprise May Be Gone But Other Powerful Crime Networks Remain“).

Valera’s story looked at the history of local organized crime, some well-known figure of the past, as well as taking a quick look at recent crimes associated with illegal gamerooms, as well as at least one well-known prison gang.

I have a feeling that organized crime has, by and large, grown past the stage of rival gangs of drug-dealing thugs, although those still obviously exist. Crime, like business, has gone global, has become entrenched in the corporate world, and utilizes technology and financial tools to both enrich and protect its profits.

Focusing local gangs like WestSide, North Shore Boyz, and La Familia, it seems to me, misses the “big picture.”

Remember the wise words attributed to the famous gangster of the 1930s to the 1950s, Willie Sutton. He was asked, “Why do you rob banks?”

“Because that’s where the money is,” Sutton replied.

So where is the money now?

So I sat down and quickly tried to list out areas in which organized crime groups could, and probably are, actively involved. I’ve often used this kind of brainstorming to loosen up my thinking and try to see beyond the things we already know.

Here’s my initial list for discussion purposes. Feel free to suggest additional categories, or local examples of any of these.

• Cybercrime
• Drug trafficking
• Gambling
– Cock fighting
– Game rooms and security/protection
– High stakes gambling
– Sports gambling
• Weapon sales and trafficking
• Fraud
-Health care fraud
-Bank and credit card fraud
-Tax and securities fraud
• Trash hauling
• Extortion/Protection
• Construction fraud
• Labor racketeering
• Human trafficking (Laborers, sex workers, foreign fishing crews, etc)
• Money laundering via real estate, cash businesses
• Bid Rigging
• Public corruption
• Campaign finance fraud
• Counterfeit products
• Prostitution
• Predatory lending
• Insurance fraud
• Identity theft
• Bankruptcy fraud and “bust outs”
• Organized retail theft
• Fencing of stolen property
• Aerial fireworks
• Environmental crime (hazardous waste dumping, etc)