Making jobs in a recession

Daunted by approaching Thanksgiving, with its mandated menus and gratitude? Here's something easy to be thankful for: Jim Purcell's pizza and his foolish midlife itch.

Purcell must be a fool. In a recession, he's starting a restaurant chain. He has tripled down on his idea of an upscale pizza place called Tazinos, opening restaurants in Oak Creek, his home, and in Menomonee Falls and Kenosha. He's got big windows, fashionable colors, carpet on the floors (so you don't see staff mopping). He's got big TVs, so customers don't stay home to see games.

And he's got pizza, basic or suburban-mom kinds like chicken or pesto. It's all-you-can-eat, but he dreads the word "buffet." It suggests, says Purcell, "10 people scarfing over one pizza," and his unbleached-flour product really is a notch or three higher. It's a pizza and salad bistro, the sign says.

Purcell's got plans. The big one is to go national. He has started what he hopes is a national chain. "We have a ton of potential," he says.

So he's nuts, yes?

Restaurants have a dauntingly high failure rate, says Douglas Kennedy, who teaches the business at the University of Wisconsin-Stout. Starting a chain is a second expertise, in franchising. It takes a particular kind of entrepreneurial nerve, he says.

Purcell has it. He says he was soul-searching: "I'm 50 years old. What am I going to do now?" was his thinking. He'd owned a bakery and a pizzeria. He worked for years in the supply business, being grocer and equipment supplier to fast-food chains, eventually through his own company, which he sold. He figures he knows enough about the business side of restaurants, where dreams often falter, to make Tazinos work.

His oldest restaurant has been open a year. Purcell says he's in a "holding pattern" because banks are skittish, but he sees the recession as having cleared the field of competitors. Kennedy confirms there's something to that. "These times of weakness are times of opportunity for a player with a good idea," he said.

Such bright vistas are nice for Purcell. It's more than that, though. "This isn't about me. It's about all these guys," said Purcell of his staff. But in a way, he's wrong. It is about him and people like him who are fool enough to try starting a business. Such people are doing work that benefits us all.

They end up making jobs. Tazinos now employs about 100 people, and Purcell says it's a pleasure to walk into a restaurant and see people he's put to work: "I'm like, 'That guy loves his job.' "

Building one of the restaurants takes about 12 construction workers 90 days, so that's more work, and Purcell says Tazinos spends about 90% of its money, even including equipment, within 100 miles of Milwaukee. This is production that leads to consumption that permits recovery.

Purcell is doing it by betting there's an unfilled need - for a nicer pizza experience below $10 - and filling it. Other people do the actual filling, by mixing dough, managing staff and installing ovens, but none of their supply would ever meet customers' evident demand without someone like Purcell organizing it in the first place.

There are easier, safer ways to make money. "I really didn't want to go out and create my own brand," said Purcell, but other franchises didn't seem to fit. Then, he says, starting a chain could create chances for other people to open a restaurant and make opportunity. "I think I can really make a difference in people's lives," he said.

That sounds almost altruistic. Maybe Purcell means that. But suppose he's in it just for money. Here's a beautiful thing: We all still benefit. He only gets big if the customers stay happy. In getting big, he'll still end up employing many people in jobs that didn't exist before and, if the franchising thing works, creating opportunities for other entrepreneurs.

That's what a recovery looks like. Purcell gets rich by restarting a little bit of the economy. And the pizza's good, too. What a great country we live in.

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Perfect World to Announce Third Quarter 2009 Financial Results on November 16,
2009

BEIJING, Nov. 3 /PRNewswire-Asia/ -- Perfect World Co., Ltd. (Nasdaq: PWRD)
("Perfect World" or the "Company"), a leading online game developer and
operator based in China, today announces that it will release unaudited
financial results for the third quarter ended September 30, 2009, before the
market opens on Monday, November 16, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20090416/CNTH023LOGO )
The Company will host a corresponding conference call and live webcast at
7:00 am Eastern Standard Time (8:00 pm, Beijing time) on Monday, November 16,
2009.
The dial-in details for the live conference call are as follows:
- U.S. Toll Free Number: 1-866-519-4004
- International Dial-in Number: +65-6735-7955
- Mainland China Toll Free Number: 10-800-819-0121
- Hong Kong Toll Free Number: 80-093-0346
- U.K. Toll Free Number: 080-8234-6646
Conference ID: PWRD

A live and archived webcast of the conference call will be available on
the Investor Relations section of Perfect World's website at
http://www.pwrd.com .
A telephone replay of the call will be available after the conclusion of
the conference call through 10:00 am Eastern Standard Time, November 23, 2009.
The dial-in details for the replay are as follows:
- U.S. Toll Free Number: 1-866-214-5335
- International Dial-in Number: +61-2-8235-5000
Conference ID: 7973 (PWRD)

About Perfect World Co., Ltd. (http://www.pwrd.com )
Perfect World Co., Ltd. (Nasdaq: PWRD) is a leading online game developer
and operator based in China. Perfect World primarily develops online games
based on proprietary game engines and game development platforms. The
Company's strong technology and creative game design capabilities, combined
with extensive knowledge and experiences in the online game market, enable it
to frequently introduce popular games that are designed to cater to changing
customer preferences and market trends promptly. The Company's current
portfolio of self-developed online games includes massively multiplayer online
role playing games ("MMORPGs"): "Perfect World," "Legend of Martial Arts,"
"Perfect World II," "Zhu Xian," "Chi Bi," "Pocketpet Journey West," "Battle of
the Immortals" and "Fantasy Zhu Xian;" and an online casual game: "Hot Dance
Party." While a substantial portion of the revenues are generated in China,
the Company's games have been licensed to leading game operators in a number
of countries and regions in Asia, Europe and South America. The Company also
generates revenues from game operation in North America. The Company plans to
continue to explore new and innovative business models and remains deeply
committed to maximizing shareholder value over time.
For further information, please contact:

Perfect World Co., Ltd.
Vivien Wang
Investor Relations Officer
Tel: +86-10-5885-1813
Fax: +86-10-5885-6899
Email: ir@pwrd.com
Web: http://www.pwrd.com

Christensen Investor Relations
Kathy Li
Tel: +1-212-618-1978
Fax: +1-480-614-3033
Email: kli@christensenir.com

Roger Hu
Tel: +852-2117-0861
Fax: +852-2117-0869
Email: rhu@christensenir.com

SOURCE Perfect World Co., Ltd.

Perfect World Co., Ltd., Vivien Wang, Investor Relations Officer,
+86-10-5885-1813, +86-10-5885-6899, ir@pwrd.com; Christensen Investor
Relations, Kathy Li, +1-212-618-1978, +1-480-614-3033, kli@christensenir.com;
Roger Hu, +852-2117-0861, +852-2117-0869, rhu@christensenir.com

Financial Models: When Everything Goes Up, Risk Goes Down

Here's how standard risk metrics continue to be dangerous.

Morgan Stanley has highlighted that the positioning beta, a measure of risk, for emerging market bond funds appears to have come down against their benchmarks.

Yet as Morgan Stanley's Regis Chatellier points out, a prime reason for this has been because market volatility for emerging markets has come down. There hasn't been a major change in funds' actual positioning.

Morgan Stanley: After reaching a peak this summer, net risk exposure – as captured by our positioning beta – has fallen to the point where EM funds are now neutral relative to their benchmark (see graph of positioning beta exposure on the left). This fall in beta risk exposure is largely due to a decline in EM bond volatility rather than a change in funds’ positioning. In fact, EM funds have been simultaneously overweight selective high-beta credits which have seen their volatility decreasing (in particular Argentina) and have increased their exposure to low-beta credits (notably Mexico), the combined result being a sharp decline in beta exposure versus benchmark.

We're not faulting Morgan Stanley, their technical piece clearly states the situation and in fact highlights the issue. We're just hoping that fund managers don't truly view themselves as positioned with less risk right now just because almost everything went up in the last few months and volatility came down. Volatility can change quite quickly.