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298ecdb3e9b9f80d191f516f7d60fdec | https://www.forbes.com/sites/forbestravelguide/2020/12/18/34-hotels-serving-last-minute-holiday-meals/?sh=2b0557d5724e | 34 Hotels Serving Last-Minute Holiday Meals | 34 Hotels Serving Last-Minute Holiday Meals
Let a hotel whip up your holiday feast. W Hong Kong
The pandemic has upended many holiday plans, so perhaps this is the year to try something new. Instead of laboring in the kitchen for a big meal, let a hotel take care of your guests for you. We found a host of properties all over the world with last-minute Christmastime culinary offerings, ranging from beach barbecues and socially distant sit-down dinners to expertly made multi-course meals and desserts that you can take home.
Make your holiday merrier by dining at these top Forbes Travel Guide-approved hotels:
Washington, D.C.
The Hay-Adams’ Top of the Hay restaurant will pop up for the holidays. Get up-close views of the White House while savoring a three-course Christmas Eve (choose poached Maine lobster or roasted honey-glazed Muscovy duck) or Christmas dinner (selections include striped bass, rack of lamb or eggplant schnitzel).
Have a Feast of the Seven Fishes. The Joseph, A Luxury Collection Hotel
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Nashville
Visit new spot The Joseph, A Luxury Collection Hotel Christmas Eve for an eight-course Feast of the Seven Fishes featuring linguine fra diavolo studded with razor clams, mussels ‘nduja and black garlic, as well as flounder crudo with persimmon and horseradish-chive cream. On Christmas Day, indulge in rabbit benedict, cacio e pepe, sambuca French toast and more. Through Dec. 25, the hotel also offers cookie-decorating kits and Italian cookies to go.
Las Vegas
There’s a plethora of holiday dining at ARIA Resort & Casino. Michael Mina’s Bardot Brasserie will turn out a family-style three-course menu with dry-aged prime rib. Carbone’s Feast of the Seven Fishes will include lobster, king crab legs and oysters. And Jean Georges Steakhouse will have its regular menu alongside holiday specials like beef tenderloin with potato grain and winter truffle.
Spend Christmas in Charleston. The Sanctuary at Kiawah Island Golf Resort
Charleston
For Christmas Eve, coastal retreat The Sanctuary at Kiawah Island Golf Resort will serve seasonal fine-dining fare at The Ocean Room, relaxed Lowcountry plates at Jasmine Porch and an Italian Feast of the Seven Fishes at Tomasso at Turtle Point. The next day, visit The Ocean Room for a steak dinner or Cherrywood BBQ & Ale House for Southern barbecue (the latter is available for pickup, too).
Uncasville, Connecticut
On Christmas, visit Mohegan Sun to indulge in the supersized peppermint bark pancake at Hash House A Go Go. Hit the casino and then plan for dinner at either BALLO Italian Restaurant (which will have pan-seared duck breast, sweet potato and maple bacon tortellini, and snickerdoodle cannoli) or Todd English’s Tuscany (for braised veal osso buco and risotto alla Milanese). Then retire to the Aspire or Sky Tower luxury hotels.
Enjoy dinner at Bar Margot. Four Seasons Hotels Limited
Atlanta
Four Seasons Hotel Atlanta’s Bar Margot will prepare roasted magret, pan-seared scallops and shrimp, and a snowman-inspired dessert for Christmas Eve dinner or takeaway. Come by Christmas Day for a brunch buffet throughout the hotel’s vast mezzanine that includes breakfast favorites, a carving station, a raw bar and a kids station.
Hanoi
Select a Christmas Eve dinner suited to your tastes at Sofitel Legend Metropole Hanoi: six courses of European and New World cuisine (Angelina), seven courses of French fare (Le Beaulieu), a buffet (Le Club Bar) or a Vietnamese buffet (Spices Garden). Christmas Day will bring a buffet lunch (Le Beaulieu), and multi-course (Le Beaulieu and Angelina) and buffet (Le Club Bar) dinners.
Visit this winter wonderland. The Ritz-Carlton, Lake Tahoe
Tahoe
The Ritz-Carlton, Lake Tahoe’s Home for the Holiday menu lets you enjoy roasted turkey, wild mushroom casserole, panettone and much more from your own dining table. Or dine at Manzanita’s heated terrace for a special Christmas Eve or Christmas Day dinner (which is also available to go).
Budapest
Spend Christmas Eve at Corinthia Budapest with four courses of delights, like bouillabaisse, turkey ballotine and white chocolate mousse. Then on Christmas, dig into a brunch of Hungarian fish soup and slow-roasted suckling pig, or a buffet dinner with sushi, chimney cake and barbecue (like Merguez sausages). The unlimited house wine and beer included with these meals should make you merry.
Order your turkey to go. Fairmont Empress
Vancouver Island
The regal Fairmont Empress will mark Christmas Eve with a four-course menu with creamy Yukon Gold potato and leek soup; turkey breast, ham or king salmon coulibiac; and a black forest gateau with Okanagan preserved cherries. Christmas will bring a five-course meal with heirloom carrots, turkey, pan-roasted sablefish and a chestnut yule log. The Victoria hotel also provides turkey dinners to go, including an option to roast the bird at home.
Try turkey stuffing Benedict. Fairmont Waterfront
Vancouver
Slow-roasted angus rib roast, squash agnolotti and sticky gingerbread pudding will headline the four-course dinners at Fairmont Waterfront, Vancouver’s ARC Restaurant on December 24 and 25. Christmas Day brunch will feature bottomless tasting plates of poached prawns and chilled crab, Liège waffles with caramelized apple and smoked salmon Benedict.
Montreal
The secret to having a delicious holiday meal at home is ordering it from The Ritz-Carlton Montreal for takeout or delivery. Through December, the hotel’s Maison Boulud will put together a five-course kit with green rigatoni with lobster, duck and foie gras pie and braised short ribs. It also includes one of its dessert logs: chocolate, apple maple or citrus.
Enjoy The Peninsula Chicago’s holiday tea at home. www.neiljohnburger.com
Chicago
The Peninsula Chicago is making its beloved holiday tea tradition available for takeout. You’ll receive everything from Palais des Thés teas and egg and truffle salad sandwiches to peppermint-orange scones and chestnut-eggnog macarons. There’s also a Christmas To-Go family-style meal with roasted ribeye or a spiral ham.
Rosemary Beach, Florida
Bask in sun this holiday by venturing over to The Pearl Hotel’s Havana Beach Bar & Grill for Christmas Eve and Day offerings that include roasted butternut squash soup, local grouper, filet of beef and shrimp scampi, and eggnog crème brûlée and chocolate-peppermint cheesecake.
Feast at home in Toronto. Four Seasons Hotel Toronto
Toronto
Pick up a ready-made meal from Four Seasons Hotel Toronto through December 31. Herb-butter turkey, roast beef and ham come with a slew of sides (including maple-mustard-glazed vegetables, and caramelized onion and chive mashed potatoes) and dessert (an apple crumble pie or a chocolate-hazelnut yule log).
The St. Regis Toronto also will help you do the holidays at home with prime rib or whole-roasted turkey takeaway meals that have sunchoke and truffle soup, apricot and chestnut stuffing, and a chocolate praline yule log through December 27. Plus, there are optional wine pairings.
Esteemed chef Mauro Colagreco will be here for the holidays. Gian Giovanoli / KMU Fotografie
St. Moritz
Celebrated chef Mauro Colagreco of Mirazur in Menton has settled into Kulm Hotel St. Moritz for a special winter residency. Stay in a one-bedroom suite or the presidential suite and order his holiday tasting menu via room service. You’ll savor dishes like apple-rosemary cake, beetroot caviar and fish sudachi from plush alpine accommodations.
Boston
InterContinental Boston’s Miel Brasserie will usher in December 25 with a three-course menu providing options like seared smoked halibut, honey-balsamic duck magret and caramel butternut squash tart tatin with gingerbread eggnog ice cream.
Pick up holiday dinner in Beverly Hills. Waldorf Astoria Beverly Hills
Los Angeles
Indulge in egg toast caviar, ahi tuna tartare, tagliatelle with black truffles, roasted Maine lobster, peppercorn-crusted wagyu and bûche de noël with Jean-Georges Beverly Hills at Waldorf Astoria Beverly Hills’ six-course holiday to-go menu.
New Orleans
Reveillon dinner began in the Crescent City in the early 19th century as a way to kickstart festivities after midnight Mass on Christmas Eve. Windsor Court Hotel, New Orleans carries on the French and Creole tradition with a reveillon meal that includes pan-seared scallops and striploin with port wine sauce. The hotel also offers a four-course menu for Christmas Eve and Day.
Try a four-course reveillon dinner at The Ritz-Carlton, New Orleans or opt for the hotel’s Christmas Day Jubilee, a four-course menu that includes a seafood starter and unlimited champagne.
Tuck into turkey Wellington. Atlantis, The Palm
Dubai
Atlantis, The Palm is cooking up everything from fine-dining to family-friendly holiday meals at its many restaurants. Some highlights include a seafood feast at underwater restaurant Ossiano (December 24-25), a Nobu brunch that includes salmon tacos and black cod butter lettuce (December 25) and a Hakkasan dinner of dim sum, crispy duck salad and barbecue wagyu rib-eye (December 21-25), British fare like turkey Wellington at Gordon Ramsay’s Bread Street Kitchen & Bar. If you prefer dinner at home, Seafire will have truffle-stuffed turkey and a surf and turf of prime rib and lobster Thermidor for takeaway.
Spend Christmas Eve relaxed on the sand at Four Seasons Resort Dubai at Jumeirah Beach’s Starlight BBQ on the Beach. The following day, head to Suq for a festive brunch with live music and activities for the kiddies.
Cape Cod
Chatham Bars Inn will prepare its traditional Christmas Grand Feast, but the buffet dishes like grilled swordfish and prime rib will be brought to your table. Or opt for Christmas To-Go, a family-sized takeout spread that includes clam chowder, turkey, bourbon-and-vanilla-glazed sweet potatoes and a dark chocolate cream pie with peppermint Chantilly.
Open this chocolate tamatebako box for more treats. Hotel Gajoen Tokyo
Tokyo
Hotel Gajoen Tokyo’s New American grill Kanade Terrace will dress its table in green and red through December 25 and trot out grilled dishes while a saxophonist performs. The holiday tea will run through Christmas, with strawberry and pistachio trifles and roasted chicken croissant sandwiches. Or just pop by for one of the luscious holiday cakes, like the tamatebako, a white chocolate box that holds delicious treasures like a yuzu-flavored chocolate cake or a shortcake made with rare strawberries.
Philadelphia
Have a decadent home repast thanks to Lacroix at The Rittenhouse. Create an à la carte dinner with the restaurant’s osetra caviar, shrimp cocktail, creamed brussels sprouts, black truffle mac and cheese, prime rib and lamb. Top it off with the Rittenhouse Hot Chocolate Kit, which includes rich Valrhona Manjari chocolate, cocoa powder, milk, whipped cream and vanilla marshmallows.
Order an enchanted black forest yule log. Philippe Vaures
Paris
For Christmas Eve, Hôtel de Crillon, A Rosewood Hotel will craft dishes like pressed foie gras, Bresse chicken and blue lobster in a delicate jelly with tangy apple, walnuts and black truffle. Dessert will be no less spectacular with an enchanted black forest yule log inspired by French author Charles Perrault’s fairy tales on offer through December.
Celebrate Nochebuena in Los Cabos. Montage Los Cabos
Los Cabos
Observe Nochebuena (Christmas Eve) at Montage Los Cabos with a four-course meal at fine-dining Mezcal, a family feast at the beachside Marea or an à la carte dinner at pop-up restaurant Talay. The next day, get a deluxe breakfast with regional fare and jolly bloody marys.
Have an Italian Christmas feast at Bencotto. Mandarin Oriental, Taipei
Taipei
Mandarin Oriental, Taipei’s Italian establishment Bencotto will whip up a special Christmas menu starring seasonal ingredients. Don’t miss the chance to snap up one of the treats at The Mandarin Cake Shop, like the Red Fantasy, a vanilla sponge cake topped with berry cream, mascarpone mousse and hazelnut crunch.
Savor the holidays in Rome. Rome Cavalieri, A Waldorf Astoria Hotel
Rome
During Christmas Eve and Day, Rome Cavalieri, A Waldorf Astoria Hotel’s dining destination La Pergola will unveil an eight-course Feast of the Seven Fishes with scallops with cauliflower and red mullet with pumpkin. Otherwise, opt for a Christmas Eve meal at Tiepolo Lounge & Terrace or in your room.
Uliveto will serve Christmas brunch with dishes like cannelloni stuffed with ricotta and spinach, herb-crusted veal with truffle sauce and panettone.
London
The Savoy will send you off with a Norfolk turkey, duck fat confit potatoes, oven-roasted parsnips with cumin, a mince pie with brandy butter and more. Available through December 31, the takeaway spread can be tailored to four or eight.
Hong Kong
W Hong Kong puts out a December buffet at Kitchen with dishes like sea urchin egg pudding with salmon roe, honey glazed ham, Brazilian waygu picanha and pan-seared foie gras. At Sing Yin Cantonese Dining restaurant, the Christmas lineup includes lobster and foie gras. If you prefer takeout, a special menu has slow-roasted turkey and a blueberry and chestnut Mont Blanc cake.
Get a glistening crème brûlée bûche de noël. The Langham, Hong Kong
Head to The Langham, Hong Kong for Bostonian Seafood & Grill’s festive four-course dinner with a seafood tower, Australian black angus tenderloin and a milk chocolate and gingerbread crème brûlée bûche de noël. The December 25 buffet brunch will have delicacies like caviar, Iberian ham, poached lobster tail, Christmas pudding and mince pies. To celebrate at home, Main St. Deli has a to-go menu with turkey, prime rib and all of the fixings.
Mandarin Oriental, Hong Kong’s Mandarin Grill & Bar will serve its annual Christmas Day roast accompanied by free-flowing Ruinart Blanc de Blancs Champagne. Or partake in a lavish international buffet at the hotel’s Connaught Room or Clipper Lounge.
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60ea1bdc6061d7f7eab3504a123cbf7c | https://www.forbes.com/sites/forbestravelguide/2021/02/16/celebrating-2021s-hospitality-stars/ | Celebrating 2021’s Hospitality Stars | Celebrating 2021’s Hospitality Stars
This Riviera Maya hotel earned wellness accolades. Hotel Esencia
While the pandemic’s economic effects devastated many industries, travel was among the hardest hit. One in 10 jobs worldwide is in travel and tourism, according to the World Travel & Tourism Council. But despite facing numerous challenges — including openings and closings, navigating fluctuating regulations, dealing with furloughs and layoffs and much more — the hospitality sector demonstrated resilience. Hotels, restaurants and spas pivoted with offerings like workations, inventive alfresco dining options, takeaway high teas and touchless spa treatments all while continuing to care for guests and keep them safe.
As part of the 2021 Star Awards, Forbes Travel Guide wanted to recognize the hardworking, passionate people behind the best properties by presenting some special accolades, all sponsored by Frette. The second annual Employee of the Year prizes celebrate the exemplary staff members who stood out in their service to guests and co-workers. To honor those who shined all the more during the pandemic, FTG introduced the new Hospitality Stars of the Year awards.
Properties in FTG’s worldwide collection were asked to submit nominations for these industry distinctions. FTG received hundreds of deserving entries and took on the difficult task of narrowing down each category to five finalists. An executive committee then chose the winners below.
Master bartender Hisashi Sugimoto pours a drink. The Tokyo Station Hotel
Hotel Employee of the Year: Hisashi Sugimoto, master bartender, The Tokyo Station Hotel
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This 1915 Tokyo hotel is designated an Important Cultural Property of Japan, and it boasts a living legend on its premises. Eighty-year-old Sugimoto joined the property in 1958 and went on to invent many of Bar Oak’s original cocktails, including the Tokyo Station (learn to make it here), which is one of the most popular drinks on the menu. The master bartender also often shares his wisdom with younger staff members looking to hone their skills.
It isn’t simply Sugimoto’s mixology prowess that’s drawn the admiration of thirsty patrons going back more than six decades. “His passion to make his guests happy never fades,” his nominator said, “and he warmly welcomes and keeps attracting his guests with a soft smile.”
Finalists: Manon Danois, housekeeping floor supervisor, Shangri-La Hotel Paris; John Goncalves, concierge, Hotel 41 in London; Ashley Lowry, recreation manager, Hammock Beach Golf Resort & Spa in Palm Coast, Florida; Ricardo Silva Pereira, front office guest service agent, Le Grand Bellevue in Gstaad, Switzerland.
Najla Ceman is a 20-year beauty veteran. Joe Thomas
Spa Employee of the Year: Najla Ceman, therapist, The Spa at Four Seasons Hotel New York Downtown
When the spa closed for nine months, the 20-year beauty veteran didn’t sit idle. Ceman became certified in numerous health-and-safety-related courses to ensure that she was prepared to meet new demands (which included helping to create a safe Nail & Skincare Therapy Menu) when the spa reopened. “Education is important, which is why besides my work and home life, I am currently a college student,” Ceman said. “When the war started in Bosnia, I had just started my first year of college, but I had to leave because the city was under siege. Now, 27 years later, I am following my dreams because I realized it is never too late for anything you truly want.”
Finalists: Heriberto Peña, wellness ambassador, The Spa at Four Seasons Resort Costa Rica; Phonthip Uppapong, senior spa trainer, The Oriental Spa, Bangkok; Denise Ward, attendant, The Lodge at Turning Stone Resort Casino’s Skana Spa in Verona, New York; and Hee Wei Feng, therapist, The Spa at Mandarin Oriental, Kuala Lumpur.
Colleagues report feeling more confident after taking one of Wong’s workshops. Marco Polo Hongkong Hotel
Restaurant Employee of the Year: Bruce Wong, supervisor, Marco Polo Hongkong Hotel’s Cucina
Wong is known for going the extra mile when it comes to taking care of guests. For example, he once was conversing with a guest, who lamented that his favorite breakfast, honeydew melon juice and yam congee, was difficult to find. Wong took it upon himself the following morning to depart early for work to purchase the items and arrange for them to be delivered to the guest’s room.
He pays the same attention to colleagues, regularly hosting workshops to enhance the team’s confidence. In addition to working long hours, Wong managed to find time to obtain a level 3 certification in Wine & Spirit Education Trust, among other initiatives, to further bolster his skills.
Finalists: Jorge Blas Vasquez, kitchen supervisor, Bristol Panama; Nathan Gillespie, commis waiter, Ashford Castle’s The Drawing Room in County Mayo, Ireland; Akeel Shah, restaurant director, SingleThread Farms Restaurant in Healdsburg, California; Jeremy Stulak, server, Sheraton Grand at Wild Horse Pass’ Kai Restaurant in Chandler, Arizona.
Meals are served at The Berkeley 999 Drive Thru. The Berkeley
Philanthropic Star of the Year: The Berkeley, London
This award salutes a property that helped others who faced adversity in 2020, whether through an international campaign or a community-based effort.
When COVID-19 forced the London hotel to close during the first lockdown, the property transformed its façade into The Berkeley 999 Drive Thru, serving 500 meals daily to those in emergency services. An additional 250 meals a day were given to the elderly and the more vulnerable in the community, in partnership with Westminster Council. In total, the hotel provided more than 50,000 meals. Staff members, many of whom were furloughed, volunteered to serve food, providing a measure of warmth along with the meals.
In the subsequent lockdowns, The Berkeley continued to support the frontline, offering the Drive Thru the first Wednesday of every month and The Berkeley Blue Lights Club, a program for emergency services personnel that entitles the heroes to hotel benefits and treats.
Finalists: Drake Bay Getaway Resort in Costa Rica; Ocean House Management Collection in Rhode Island; SingleThread Farms in Healdsburg, California; and The Venetian Resort Las Vegas.
Ocean House created a mobile bar cart. Ocean House
Service Visionary Star of the Year: Ocean House Management Collection
This category spotlights a property or brand that implemented a notable reimagined process that improved the hotel experience for staff and guests.
The Ocean House Management Collection (which includes Five-Stars Ocean House and Weekapaug Inn in Rhode Island as well as Forbes Travel Guide Recommended The Inn at Hastings Park near Boston) imaginative services early in the pandemic with input from Harvard University experts. Some of the inventive initiatives included a mobile cart rolling from room to room giving out cocktails and complimentary appetizers to re-create the bar experience; personalized picnics delivered anywhere on the grounds; producing must-visit alfresco dining destinations like the Whispering Angel Culinary Garden, Whispering Angel Winter Igloo and Fondue Village; and private culinary and wine classes and dinners. The group proved that hardships can be an opportunity that sparks ingenuity and makes the guest experience fun and engaging.
Finalists: Kimpton La Peer Hotel in L.A.; One&Only Palmilla, Los Cabos Resort; The Phoenician, A Luxury Collection Resort in Scottsdale; and The Post Oak Hotel at Uptown Houston.
Wellness Star of the Year: Hotel Esencia, Riviera Maya, Mexico
This distinction recognizes a property that spearheaded an inspired wellness initiative, like a noteworthy food program, a fitness and health offering, or a focus on design and amenities that enhance wellbeing.
When the pandemic thrust wellness even more into the forefront, Hotel Esencia devised a way to allow guests to focus on their health in a private and luxurious setting. The boutique hotel introduced Rooftop Wellness suites outfitted with the most up-to-date equipment: a Mirror virtual fitness trainer, a Peloton bicycle, a Technogym weight set, yoga mats and an aromatherapy steam shower. The innovative accommodations also encourage you to experience the jungle landscape on an expansive rooftop terrace with a heated pool, an outdoor shower and a solarium.
Hotel Esencia also incorporated wellness into its dining offerings. Every menu contains healthy choices like bowls of superfoods or roasted vegetables along with fresh-squeezed juices and smoothies.
Finalists: Carillon Miami Wellness Resort; One&Only Palmilla, Los Cabos Resort; The Ritz-Carlton, Bahrain; Sunstone Spa at Agua Caliente Resort Casino Spa Rancho Mirage, California.
This Seychelles resort puts people first. Raffles Seychelles
People First Star of the Year: Raffles Seychelles
This accolade is given to a hotel that demonstrates an exceptional commitment to people and culture, including efforts related to improving staff health and happiness and overall support of the team’s mental wellbeing.
When Raffles Seychelles closed during the pandemic, it saved team members’ jobs by reducing all salaries while continuing to provide housing and meals. Only 10 out of 300 employees were not retained when their contracts were up. And when conditions improved, the property paid a bonus to all employees — a first in the hotel’s 10-year history.
Aside from its pandemic-related efforts, Raffles Seychelles took other measures throughout the year in support of its team. Since the Seychelles has the highest rates of obesity in Africa, the property launched a staff health campaign that included a six-month-long “biggest loser” competition, the introduction of healthy options in the cafeteria and group workouts. Additionally, the end-of-year staff party was changed to sports day where everyone joined in activities such as pingpong, basketball, football, cricket, volleyball and more.
“People first — always,” said Salwa Razzouk, general manager. “If someone in the hospitality industry has not understood this, then they must be in the wrong profession.”
Finalists: Acqualina Resort and Residences on the Beach in Miami, Four Seasons Hotel at The Surf Club in Miami, Four Seasons Resort Palm Beach and Royal Mansour Marrakech.
Stay at these VERIFIED hotels with confidence. Waldorf Astoria Beverly Hills
Health Security Star of the Year: Hilton Luxury Brands, Conrad and Waldorf Astoria, Americas
In honor of the new Sharecare VERIFIED™ with Forbes Travel Guide health security platform, FTG recognizes a brand or property that took smart, proactive steps to enhance guest and employee health safety.
In response to the pandemic, Waldorf Astoria and Conrad in the Americas swiftly developed new luxury service manuals with detailed videos and illustrations to thoroughly describe modifications made to the guest experience with safety in mind. The brand also created a robust cleanliness and disinfection program. Its VERIFIED™ hotels include Conrad Fort Lauderdale Beach, Conrad New York Downtown, Waldorf Astoria Beverly Hills, Waldorf Astoria Chicago, Waldorf Astoria Las Vegas, Waldorf Astoria Los Cabos Pedregal and Waldorf Astoria Orlando.
Finalists: Acqualina Resort and Residences on the Beach; Hotel Nikko San Francisco; The Murray, Hong Kong; and Wynn Resorts Las Vegas.
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5b7ef1f24c46ed0f561618bf7e2de4f7 | https://www.forbes.com/sites/forbestravelguide/2021/02/16/how-to-make-the-iconic-tokyo-station-cocktail/ | How To Make The Iconic Tokyo Station Cocktail | How To Make The Iconic Tokyo Station Cocktail
Hisashi Sugimoto pours a Tokyo Station. The Tokyo Station Hotel
Tucked in The Tokyo Station Hotel — an elegant 1915 property that resides in the city’s landmark train hub — you’ll find the handsome Bar Oak with dark wood paneling, leather seating, bottles of liquor glowing on the shelves and, if you’re lucky, Hisashi Sugimoto behind the bar.
The 80-year-old Sugimoto has been shaking and mixing cocktails at the Tokyo hotel for six decades. The local icon won Forbes Travel Guide’s 2021 Hotel Employee of the Year award for his dedication to the craft and his guests. During his long tenure, he has conceived a number of the menu’s stalwarts, including its most popular drink, the Tokyo Station.
Take a sip of the Tokyo Station. The Tokyo Station Hotel
The master bartender created the libation in 1989 for the 75th anniversary of the train station. “We wanted to make a memorial original cocktail,” Sugimoto says. The building itself inspired the drink. “The red bricks go to the color of cocktail, using Tanqueray and Suze [a French aperitif], [which have] the same initials as Tokyo Station. Also, a cut of lime expresses the color of pine trees planted in front of the station.”
The reason why the Tokyo Station is the most-ordered drink could be because of its balance of sweet-sour grenadine, bitter herb liquor and refreshing gin. Or perhaps sentimental forces are at play. “Since our hotel reopened in 2012 after five years of closure for renovations, many guests who remembered the old time order the cocktail to reminisce about the good old days,” he says. “Also visitors from all over Japan and overseas like it with the symbolic name as a memory of Tokyo. Even for the younger generation, the taste is smooth, easy to drink and enjoyable.”
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Bar Oak. The Tokyo Station Hotel
Tokyo Station
5/6 ounces Tanqueray London Dry Gin
2/3 ounces Suze
1/3 ounces fresh lime juice
1 bar spoon simple syrup
1 bar spoon grenadine
1 wedge fresh-cut lime
Put all the above ingredients (except the fresh lime) in a shaker and shake. Pour into a glass and garnish the edge with the lime wedge.
Tip: When you’re halfway through the cocktail, squeeze the lime into the remainder. This will add a sharp freshness and transform the drink. The two tastes of the Tokyo Station are supposed to mimic a train coming and going.
This week, we revealed our 2021 Forbes Travel Guide Star Awards. Click here to see the list of winners.
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e07aac2f3dd90ee6ad13c2119eaeb5bc | https://www.forbes.com/sites/forbestravelguide/2021/02/17/waldorf-astoria-maldives-ithaafushi-wins-hotel-instagram-of-the-year/ | Waldorf Astoria Maldives Ithaafushi Wins Hotel Instagram Of The Year | Waldorf Astoria Maldives Ithaafushi Wins Hotel Instagram Of The Year
Spanning three islands, the luxury hotel affords privacy with 119 villas, each equipped with an ... [+] infinity pool and stunning ocean views. Waldorf Astoria Maldives Ithaafushi
Waldorf Astoria Maldives Ithaafushi transports you just through its Instagram feed. Scrolling past photos of beachside hammocks, treetop restaurants, secluded overwater villas, pastel sunsets and seemingly endless turquoise waters can make you feel like you’re at the Maldives hotel.
This is one of the reasons why Waldorf Astoria Maldives Ithaafushi won Forbes Travel Guide’s 2021 Hotel Instagram of the Year honor.
As part of the annual Star Awards, FTG’s editorial department determined five nominees (including Airelles Gordes, La Bastide in the French Riviera; Condado Vanderbilt Hotel in Puerto Rico; Four Seasons Resort Orlando at Walt Disney World Resort; and Grand Hotel Tremezzo in Lake Como) from its highest-performing luxury hotel posts on FTG’s own Instagram account for 2020. The team sought out feeds that radiate personality, engage with followers, have an overall stunning aesthetic and spur wanderlust. Then readers and followers were asked to select their favorite in an online poll. Thousands voted, and the Maldives resort emerged as the winner.
To celebrate the second annual winner (Montage Los Cabos took home the award last year), we take you on a tour of Waldorf Astoria Maldives’ most Instagrammable spots:
Waldorf Astoria Maldives Ithaafushi
Watch the sun sink into the Indian Ocean at Amber champagne bar over bubble, champagne cocktails and light bites.
Waldorf Astoria Maldives Ithaafushi
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For the ultimate getaway, book The Private Island, you own 344,445-square-foot playground with with two villas, five swimming pools, an overwater spa and an entertainment center with a cinema.
Waldorf Astoria Maldives Ithaafushi
Head to the treetops to dine in Terra’s seven bamboo pods for upscale fare and panoramic vistas.
Waldorf Astoria Maldives Ithaafushi
One of the resort’s hidden gems is the adults-only Mirror Pool.
Waldorf Astoria Maldives Ithaafushi
Retreat to a Reef Villa, which is surrounded by a tropical garden and has an expansive wooden deck suspended over the water.
Waldorf Astoria Maldives Ithaafushi
Unwind at the Maldives’ largest spa, a tropical oasis.
Waldorf Astoria Maldives Ithaafushi
Paddle your way (don’t worry, boat transport also is available) to one of the two Stella Maris Ocean Villa duplexes for a secluded, romantic getaway in the middle of the ocean.
Waldorf Astoria Maldives Ithaafushi
Get uninterrupted views of the Indian Ocean, an infinity pool, a Jacuzzi and ample indoor and outdoor living space in this three-bedroom overwater villa.
Waldorf Astoria Maldives Ithaafushi
Whether you want a private candlelit dinner or an intimate wedding, this pavilion offers an unbeatable backdrop.
Waldorf Astoria Maldives Ithaafushi
While away the afternoon at the family Lagoon Pool, featuring live DJ, refreshing cocktails, wood-fired pizzas and a delicious tapas menu.
Waldorf Astoria Maldives Ithaafushi
Spread out in a three-bedroom villa with two infinity pools and vast outdoor areas that’s steps from the beach.
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baf79e1bc4a6d4711d6e546dd8697d51 | https://www.forbes.com/sites/forbestravelguide/2021/02/24/plan-a-2022-vacation-to-this-revamped-capri-classic/ | Plan A 2022 Vacation To This Revamped Capri Classic | Plan A 2022 Vacation To This Revamped Capri Classic
Escape to Capri. Romain Reglade
As Oetker Collection readies to unveil Geneva’s The Woodward (which made our list of the year’s most anticipated new hotel) this spring, the company announced yesterday that its next opening will be Capri’s storied Hotel La Palma in April 2022.
Hotel La Palma’s history runs deep — built in 1822, it is the first and oldest hotel on the Italian island. In its heyday, it drew the likes of Audrey Hepburn, Sophia Loren, Grace Kelly, Jacqueline Kennedy Onassis and Brigitte Bardot.
Oetker — whose properties include Forbes Travel Guide Five-Stars Jumby Bay Island, a private Antigua paradise, and The Lanesborough, a stately London manor — hopes to recapture its classic allure.
“Honestly, I cannot think of anything more exciting than opening a beautiful masterpiece hotel in one of the most sought-after and glamorous destinations in the whole world,” says Timo Gruenert, Oetker Collection’s CEO. “The hotel will pay homage to la dolce vita, and we will make sure that it is going to be right at the epicenter of Capri’s vibrant social scene.”
Here are some of the reasons to be excited about Oetker’s 11th hotel and its first in Italy:
Peek inside the bathroom. Oetker Collection
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The Design
Hotel La Palma enlisted Rome-based Delogu Architects to revamp the rooms and lobby, and New York-based Tihany Design undertook reimagining the restaurant, pool and spa.
Among the updates, the hotel will reconfigure its 80 accommodations into 32 rooms and 18 suites to provide for more space. Each one will have a balcony or terrace. Some of the original features will remain, like the arched windows and domed ceilings, and the spaces will sport bright pops of color like terra cotta, lime and ocean blue as well as Mediterranean patterns.
The bedrooms retained some of the original features. Oetker Collection
The Restaurant
Following the pandemic’s dominant culinary trend, comfort food will be on the menu at the hotel’s Gennaro’s restaurant. Chef Gennaro Esposito, who helmed the heralded Torre del Saracino in the Sorrento Coast’s Vico Equense for the last 23 years, will evoke 1950s Capri with unfussy, authentic Italian cuisine.
The restaurant will sit next door to one of Capri’s most famous nightclubs, Taverna Anema e Core, so expect a relaxed, festive mood among revelers carbo-loading for the evening ahead.
Bianca will be a hot spot. Oetker Collection
The Rooftop
Esposito also will oversee the culinary offerings at rooftop restaurant and bar Bianca. With views of the water and Capri Village, Bianca will be a hot spot where you can catch the sunset with an Aperol spritz and linger into the wee hours.
Dine at La Palma Beach Club. Oetker Collection
The Beach Club
Beach clubs reign in Capri, so of course, the hotel had to create its own. A short drive to Capri’s southern coast, La Palma Beach Club will reside in the lovely Marina Piccola. The Tihany-designed club will welcome all (not just those staying at the hotel) to soak up the sun, savor long lunches from Esposito and sip sundowners.
Each room comes with a terrace. Oetker Collection
The Other Offerings
For those who don’t feel like trekking to the beach club, the hotel will have a new pool deck. You also can unwind at the spa, which will be outfitted with three treatment rooms (including a couples suite), a sauna, a steam bath and ice shower, a relaxation area and a gym. Plus, there will be three onsite boutiques to help you dress the part for your Italian escape.
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f3fd2aced9cae23c062ad823dd7ad49e | https://www.forbes.com/sites/forbestravelguide/2021/02/26/6-dishes-to-eat-at-cape-cods-new-five-star-restaurant/ | 6 Dishes To Eat At Cape Cod’s New Five-Star Restaurant | 6 Dishes To Eat At Cape Cod’s New Five-Star Restaurant
Sink into the tender American wagyu. twenty-Eight Atlantic
Cape Cod gained its first Five-Star restaurant — twenty-eight Atlantic clinched the inaugural honor in Forbes Travel Guide’s 2021 Star Awards.
twenty-eight Atlantic, which resides in the area’s only Five-Star hotel, Wequassett Resort and Golf Club, joins an elite group. Only 73 restaurants worldwide hold the coveted Five-Star title. The top rating is given to outstanding properties with virtually flawless service and top-notch facilities.
Of course, the food is central. Fresh New England seafood dominates the menu at the bright, nautical-inspired dining room, whose oversized windows peek out at Pleasant Bay. And inviting outdoor seating puts you even closer to the ocean.
Executive chef James Hackney. twenty-Eight Atlantic
Overseeing the kitchen is Leicestershire, England, native James Hackney. Prior to arriving at twenty-eight Atlantic, he worked at the famed L’Espalier in Boston, Five-Star Blantyre in the Berkshires, La Vieille Maison in Boca Raton and Charlie Palmer’s Aquaterra in Palm Beach. But hospitality is in his blood: he started his career working at his parents’ country inn.
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We asked Hackney to share the hits on his Five-Star menu. Here’s what you should order when twenty-Eight Atlantic opens for the season in April:
Start with this buttery appetizer. Kristina K Photography
Uni Egg Custard
Ingredients: uni chawanmushi (egg custard), local steamed lobster tail, lobster oil, Calvisius imperial oscietra caviar
“The uni egg custard is a wonderful entry into your twenty-eight Atlantic dining experience,” he says. “This appetizer encompasses the true essence of oceanic flavors with the buttery notes of caviar combined with the local uni and lobster.”
Get a taste of the ocean’s best. Kristina K Photography
Bluefin Tuna
Ingredients: oyster by Steve Wright, sea bean, Calvisius imperial oscietra caviar, local tuna, lychee gel
“Taken straight from the ocean waters of Cape Cod, this fresh oyster, along with the richness of the tuna and the delectable caviar, serve up the perfect bite. This is twenty-eight Atlantic’s take on modern coastal cuisine.”
Try a more earthy bite. Kristina K Photography
Forged Mushroom
Ingredients: hen of the woods mushroom, spinach, morel mushroom, charred baby leeks
“The forged mushroom vegetarian entrée serves up a magical experience. The earthy flavors of the mushroom combined with the sweet spinach provide the ideal balance on the plate.”
A must-try dish. Kristina K Photography
Lobster Carbonara
Ingredients: black pepper bucatini, bacon corn cream, corn, peas, Asmallgood pancetta, locally caught lobster, farm-fresh egg yolk and Belper Knolle cheese
“The lobster carbonara has become the signature dish at the restaurant. Incorporating homemade black pepper bucatini, notes of bacon, fresh vegetables, locally caught lobster and the buttery yolk on top, this dish delivers all of your favorite foods in each orchestrated bite.”
American Wagyu
Ingredients: beet puree, Mishima wagyu, sea beans, local oysters, herb emulsion, smoke
“The American wagyu plate is twenty-eight Atlantic’s unique version of surf and turf. This dramatic plate is delivered to each table with a glass dome of wood chip smoke and enlivens your senses as the server releases the smoke before departing the table.”
End on a light and sweet note. Kristina K Photography
Pavlova
Ingredients: meringue, vanilla-bean-whipped ganache, Valrhona dark chocolate mousse and strawberry compote
“Designed to mimic the shell of a sea urchin, the meringue offers the perfect vessel to feature the most ripe seasonal fruit. It provides the ideal ending to every meal.”
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afd7a0847fb985e7140105967071af2c | https://www.forbes.com/sites/forbestravelguide/2021/03/03/look-inside-four-seasons-hotel-dohas-new-lavish-suites/ | Look Inside Four Seasons Hotel Doha’s New Lavish Suites | Look Inside Four Seasons Hotel Doha’s New Lavish Suites
Peek through the windows in the Presidential Suite. Four Seasons Hotel Doha
Fresh off of a March 2020 redesign that included an updated look for its guest rooms, lobby and restaurants, Four Seasons Hotel Doha recently debuted two new lavish suites.
Renowned designer Pierre-Yves Rochon — who created the stylish interiors of Waldorf Astoria Beverly Hills and Four Seasons Hotel George V, Paris — did last year’s renovation of the Four Seasons Doha. When he tackled the new Presidential and Royal suites, he brought in the same influences: Doha’s sky, sea and sand. The light, bright spaces are bathed in white, blues and beige, and both have fantastic vistas of the sparkling Arabian Gulf.
The Royal Suite’s living room feels airy. Four Seasons Hotel Doha
“We were inspired by Doha and its relationship with the outdoors,” Rochon says. “We researched the local culture and the artistic elements that might tie into the story of the hotel. I wanted to bring a new dimension of modernity to the property and enhance the guest experience with uplifting design elements and spaces.”
The grandest the two is the top-floor Royal Suite. Stretching over two levels, the 2,799-square-foot penthouse feels like its own spacious abode. The double-height living room is airy and expansive, and a formal dining room accommodates 14. A dedicated elevator provides privacy. And if you need some fresh air, three balconies and three terraces get you closer to the water and city outside.
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Unwind in the Presidential Suite’s entertainment lounge. Four Seasons Hotel Doha
The 2,241-square-foot Presidential Suite wraps around two sides of the 17-story tower. Get glimpses of the water through floor-to-ceiling windows in the living room and the 10-seat dining room. Though, you may spend more time binging Netflix in the entertainment lounge, which comes with a 75-inch LED television.
The two Doha hotel suites have numerous common luxurious amenities. Both offer two bedrooms, each with a marble bathroom carrying Hermès amenities, as well as a guest powder room. Their living rooms feature a grand piano. They are equipped with an office, for those in town on business. And they have fully-decked-out kitchens, so there’s no need to go elsewhere for a meal — especially with a chef on call. And if you need anything else, a butler will be available to you around the clock.
Sleep in the Royal Suite. Four Seasons Hotel Doha
“We’re thrilled to usher in the new year with the completion of these deluxe retreats,” says general manager Jeff Rednour. “Since our reopening last March, we’ve been blown away by the positive response extended by our guests and the community, which only fuels our commitment to offer an incomparable hospitality experience.”
The previous renovation included a redesigned marble lobby, a more open space with handmade and bespoke Italian furnishings, including a hand-blown glass chandelier.
Enjoy meals in the Royal Suite. Four Seasons Hotel Doha
The popular Seasons Tea Lounge also got a makeover. The atrium-like winter garden opens up into a terrace to bring the outdoors in. While the lounge was fashioned to look like a Parisian café, you’ll find subtle Middle Eastern touches, like a marbled floor inspired by Islamic mosaic tilework, Oriental sofas, silk cushions and cashmere patterned fabrics.
A new addition to the luxury hotel was The Study, an alfresco bar adjoining the Library and Cigar Lounge. Inspired by Ernest Hemingway, it invites you to think and reflect amid the backdrop of palm trees and the sea with a Papa-approved whiskey and soda.
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030b204d4568f11607b720f01d464ed2 | https://www.forbes.com/sites/forbestravelguide/2021/03/09/rob-dyrdek-shares-his-top-family-travel-spots-and-wellness-regimen/?sh=324c64682517 | Rob Dyrdek Shares His Top Family Travel Spots And Wellness Regimen | Rob Dyrdek Shares His Top Family Travel Spots And Wellness Regimen
Rob Dyrdek is always working on his next venture. Rob Dyrdek
Rob Dyrdek classifies himself as a “do-or-dier,” someone who believes reaching success requires a relentless work ethic and an unwavering belief that you can determine your own destiny. The credo explains his wide-ranging career. While most may know Dyrdek as a television personality on shows like MTV’s Ridiculousness, his career started at age 16, when he became a popular professional skateboarder. He used all the information he gleaned in the spotlight to launch his first company at 18, which began a lifelong pursuit of building businesses.
His latest entrepreneurial effort is Mindright – Good Mood Superfood, plant-based, gluten-free bars that purport to help boost your mood with antioxidants, nootropics (supplements that enhance cognitive functions like memory) and adaptogens (natural substances that help fight stress and fatigue).
Forbes Travel Guide found out what this usually-on-the-go entrepreneur is doing during the pandemic; how he practices daily wellness; his favorite destinations to visit with his wife, Bryiana, and two children, both around his L.A. home and abroad; and where he plans to travel to once restrictions ease.
Some of Dyrdek’s businesses. Rob Dyrdek
What have you been doing to stay busy during the pandemic?
My life has never been a question of staying busy; it has always been about finding time to execute my ideas. The pandemic has given me a consistent daily structure that allowed me to really increase my output while still staying balanced. I believe that it’s on you to design your life and determine where and how you spend time to achieve this balance.
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The pandemic lockdown gave me a lot of additional time for both future ideas and quality family time. I had time to develop my book, The Machine Mindset, as well as create new family traditions like making matching tie-dyed outfits.
Did you learn any personal lessons from this past year?
I believe that last year really reinforced my personal philosophy that everything in life happens for you, not to you. This way of thinking will always lead you to adapting and evolving towards your goals and dreams, regardless of the circumstances.
I know that you are into wellness. How have you been practicing wellness during the pandemic?
The daily consistency really allowed me to take my wellness routine to another level. Being able to do the same thing every day really allowed me to optimize my health.
Every day, I wake up at 4:30 a.m. and immediately give thanks for all that I have. I do a 20-minute meditation, a 10-minute brain-training program and 60 minutes in the gym. I also schedule breaks and family time throughout the day to give me further balance. I track how I spend my time each day and rate how I feel about my health, life and work from zero to 10 each day. This data provides a lot of insight on what I need to evolve to feel better and be more balanced overall. It also gamified wellness for me, which motivated me even further.
The Maybourne Beverly Hills is one of Dyrdek’s favorite local hotels. Rob Dyrdek
What are your go-to spots in L.A. with the family?
We love going to the Franklin Canyon Reserve. It’s a hidden gem in Los Angeles. This park is hidden in plain sight right at the top of Beverly Hills. There is a portion of the reserve that has a small pond that is filled with turtles, fish and ducks of all types. The entire park itself makes you feel like you’ve been transported in time the moment you arrive. It is the ultimate place for a walk or hike in L.A.
What are some of your favorite hotels?
We love The Maybourne in Beverly Hills—formally the Montage. The hotel is very special since we chose to have our wedding there, but it also has the best spa in the world. It is really a place that my wife and I love to go to relax and rejuvenate.
What are your essentials when packing for a trip?
It is always about comfort and convenience when I am packing for travel. This includes making sure I have a fresh sweatshirt, sweatpants and Lusso Cloud slippers as well as my multipacks of vitamins and Mindright – Good Mood Superfood bars.
Dyrdek likes checking into Chileno Bay. Chileno Bay Resort & Residences, Auberge Resorts Collection
What are your favorite family travel destinations?
There is no doubt that Cabo San Lucas in Mexico is our go-to spot. It’s an easy trip from Los Angeles and the perfect place to get away. Chileno Bay Resort is the perfect resort for a family vacation.
Where do you want to travel to once travel restrictions are lifted?
Our favorite place to vacation is Bora Bora, and we look forward to taking our kids there for the first time once the restrictions are lifted. Bora Bora is the ultimate tropical island destination — it’s the place you dream of when you dream of an island oasis.
What are you working on next?
My next big project will be a new digital show and podcast, Build With Rob. Unlike a traditional interview podcast format, Build With Rob will feature conversations with my co-founders from the Dyrdek Machine portfolio of companies.
Each show we will focus on one big lesson I’ve learned throughout the process of creating a startup business to share with other entrepreneurs. Creating successful companies with amazing entrepreneurs is my personal mastery and this format really gives me the opportunity to share the lessons that are part of my continual growth towards this mastery.
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5791262070802c1891dc82f22f86efc9 | https://www.forbes.com/sites/forbestravelguide/2021/03/24/los-cabos-named-the-worlds-first-health-secure-destination/?sh=300dfc571b9b | Los Cabos Named The World’s First Health Secure Destination | Los Cabos Named The World’s First Health Secure Destination
Los Cabos becomes the first VERIFIED destination. Los Cabos Tourism Board
Los Cabos was named the world’s first VERIFIED travel destination after nearly all of its hotels earned an independent health validation from digital health company Sharecare. The title is the first for the health security of hotels.
Among the Mexican region’s 85 hotels, 84 of them have completed and maintained verification on more than 360 global health security standards, including health and hygiene protocols, cleaning products and procedures, ventilation and health safety communication for guests and employees. The remaining hotel is undergoing the verification process. (Full disclosure: Forbes Travel Guide helped to develop the VERIFIED platform.)
“It’s an acknowledgment and an encouragement to continue working towards having this goal, that is, offering the highest level of satisfaction to our visitors,” says Rodrigo Esponda, managing director of Los Cabos Tourism Board, about being VERIFIED. “Los Cabos has always been a destination that has excelled in exceeding the expectations of the visitors, even those that are repeat visitors.”
One&Only Palmilla is among the VERIFIED hotels. One&Only Palmilla, Los Cabos Resort
The certification is particularly meaningful for the hotels, given that tourism makes up 80 percent of the Los Cabos economy and the pandemic has made health safety measures a top priority among travelers. “Being VERIFIED not only means that the destination is operating with the highest degree of safety, but that resorts in the destination are consistently verifying their health protocols on an ongoing basis, ensuring compliance with the latest global health standards,” says Robert Logan, general manager of One&Only Palmilla, Los Cabos Resort. “It adds an extra layer of validation for our guests to come with a peace of mind, knowing that they and their families are safe not only at One&Only Palmilla but in Los Cabos as well.”
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Montage Los Cabos general manager Marco Ortlam agrees. “It demonstrates the commitment of the destination and all hoteliers in Los Cabos to the safety protocols and to the importance of tourism. We are grateful to be able to have the VERIFIED tool available that provides a peace of mind to everyone traveling to Cabo and also unified safety protocols.”
The area’s history of coming together to meet common goals at difficult times is the secret to achieving the first-time designation, according to Esponda. “We are a very united destination, and from many, many, many years back, that’s how we have overcome natural disasters, economic crises and other situations,” he says. “Our geography forces us to work together because we are separated in the peninsula. So that’s how we have been facing COVID-19. The Sharecare initiative is part of that, it’s part of the nature of collaboration that we have.”
Guests get a complimentary antigen test at Montage Los Cabos. Montage Los Cabos
That’s not to say it was easy, given the variety of accommodations in Los Cabos. “I think that’s the beauty of the Sharecare platform, that all types of hotels can participate, and all types of hotels must offer the same level of health safety to the visitors,” Esponda says. “It doesn’t matter if it’s a super-small family-owned hotel or a 500-room property part of an international hotel chain.”
Los Cabos has been taking many steps to protect travelers and to make its health security logistics easier to maintain. When the Centers for Disease Control and Prevention instituted a mandatory PCR or antigen test for travelers within 72 hours of a return flight to the U.S. (even for those who are vaccinated), the destination quickly came up with a plan.
“We decided that to offer personal service we need to do onsite testing not only in hotels, but vacation clubs, villa rental companies,” Esponda says. Montage Los Cabos, for example, provides free antigen testing with a same-day turnaround for all its guests.
The beach destination is working to make travelers feel secure. Credit: Los Cabos Tourism Board
Another hurdle was caring for guests who test positive but display no symptoms. To help these visitors undergo the required 14-day quarantine, some properties, such as Nobu Hotel Los Cabos, promise complimentary accommodations for the lockdown. The rest provide discounts. For example, One&Only Palmilla guarantees a minimum of 35 percent off the best available rate or the original booking rate, whichever is less.
Los Cabos is operating at half-capacity maximum throughout the destination, including hotels, restaurants, transportation and even the beaches, where police are on hand to take temperatures and regulate seaside access.
There’s also a midnight curfew. “I think that’s been very successful for us because as you’ve seen in other destinations in the world, the nightlife in itself has been a focal point of contagious outbreaks,” Esponda says. But this doesn’t just control the hours for bars and clubs; it includes hotels. “The authorities do inspections in town and inside the resorts so that everything is completely shut down,” he says. “It’s a way to refrain and contain the situation.”
Adhering to these and other health protocols has helped Los Cabos become an example for other areas looking to become more health secure. “As the first VERIFIED destination, Los Cabos and its tourism board are setting an important precedent for both the hospitality industry and other communities around the globe; through this initiative, they’ve put the health and safety of travelers, workers and residents at the forefront and at a regional scale,” says Hermann Elger, executive vice president and general manager of travel, entertainment and health security at Atlanta-based Sharecare. “For travelers, we’re thrilled that the Los Cabos Tourism Board has helped make health security the new standard, no matter where you chose to stay in Los Cabos.”
Los Cabos offers plentiful outdoor activities. Los Cabos Tourism Board
More than 570 hotels in 58 countries have received the VERIFIED badge, a third-party seal of approval that eliminates the need for travelers to wade through long, complicated lists of health measures to determine if a hotel is safe.
“We don’t tell hotels and resorts how to clean — we recognize there are many valid approaches,” Elger says. “Instead, we help them confirm their various measures align with the most up-to-date public health guidance and protocols, and in many cases, exceed them. This is accomplished by having the team on-property attest and confirm that they have the important elements of health security in place, which we’ve made easy to do in our VERIFIED platform. Additionally, in order to maintain their verification, each property that achieves this designation commits to ensuring all protocols and procedures are routinely re-verified through the platform.”
Los Cabos already has seen an increase in tourism as the vaccine rolls out across the globe. “The hotel guests that were regulars and have not been coming in a year, they are already coming back all vaccinated,” Esponda says. “We are hearing that a lot of people, as soon as they get the confirmation of the date that they are going to get the second vaccine, they immediately call their adviser or travel agent and book their trip.”
Yet, even after the number of those vaccinated increases dramatically, Esponda anticipates that these new procedures will remain. “All the protocols that we are discussing and the Sharecare certification is the way that tourism would take place in the next two or three years [at least],” he says. “The more that we are focused on offering that level of safety to the visitors, the better it will be for the sake of the destination.”
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ed9d0114d5411cb33f31f549e47e85cb | https://www.forbes.com/sites/forbestreptalks/2015/07/26/hints-founder-was-inspired-by-a-coke-executive-who-told-her-sweetie-americans-like-sweet/ | Hint's Founder Was Inspired By A Coke Executive Who Told Her, 'Sweetie, Americans Like Sweet!' | Hint's Founder Was Inspired By A Coke Executive Who Told Her, 'Sweetie, Americans Like Sweet!'
Back in 2004 Kara Goldin was a stay-at-home mom with three kids and another on the way when she decided she wanted to lose weight, clear up her acne and wean her family off sugary drinks. She purged her fridge of soda and juice and dropped some pomegranate seeds, raspberries, lime and blueberries into a pitcher. The flavored water was a hit with her family and friends, who encouraged her to bottle it. Eleven years later she’s running Hint Water, a San Francisco company with $20 million in investment capital and 36 employees that’s slated to gross more than $50 million this year. Twenty thousand stores in the U.S. and Canada carry no-calorie Hint, as do the corporate offices of Fidelity, Google and Facebook. And her one-year-old direct-to-consumer website already accounts for a fast-growing 15% of her business. In this edited and condensed interview Goldin, 48, talks about how she built a company she believes is worth at least $250 million.
Susan Adams: Did you know what you were doing when you started your business?
Kara Goldin: Before I stopped working in 2001, I was running AOL ’s ecommerce business so I knew how to set up a back-end operation and I knew about helping consumers understand the relevance of a product. Even though I left AOL as a vice president, I wanted to go back to the bottom and really learn something new. I found it incredibly exciting to go up against large companies. For us this is about a social mission to help people get healthier and to disrupt an industry.
Adams: But did you know anything about launching a bottled-water business?
Goldin: I started Googling around to find out about bottlers. It turns out that’s not even the right language. Bottlers are called co-packers and tops are called closures. Talking to these co-packers, they asked, did you work at Kraft or Coke and I’m like, no, I worked at AOL. I went in as a student and they wanted to teach me.
Adams: How did you make the flavoring?
Goldin: While I was pregnant I was looking at cookbooks and making flavors in my kitchen. I’m not a chef. I was just playing. I really had no idea what I was doing. We didn’t wind up using a flavor house. We have some consultants who do private cooking. It’s one of our proprietary secrets.
Adams: When you were building the company, you asked someone at Coke for advice and he called you “Sweetie.” How did that make you feel?
Goldin: A friend from AOL had connected me with someone from Coke. I was about to give up on my company, and about to give it to him if he’d said, we’ll take it over. I thought, I’ve got four babies, I’m a tech executive, I’m not a beverage executive, this is really hard, I don’t know how to get distribution, I don’t have capital to go build this thing right. I asked his advice and his response was, “You live in San Francisco and it’s a very liberal place but Sweetie, Americans like sweet.” After he called me that I don’t think I heard anything for the next five minutes but then I realized he didn’t get it and I had to do this because no one else would.
Adams: Did you have any staff at that point?
Goldin: It was just me and my husband delivering Hint in our Grand Cherokee for the first year.
Adams: Were you self-funded?
Goldin: We initially put in $50,000 of our own money. In the first six months we invested a few hundred thousand dollars and then a couple million dollars over the next three years. After that we took friends and family money. Over the years we’ve taken $20 million in funding, primarily from fans of the brand like John Legend, Omid Kordestani, one of the first employees at Google, and Matt Mullenweg, the founder of WordPress. We still personally own a little less than 50% of the company.
Adams: How much is the company worth?
Goldin: Sales are more than $50 million and multiples in the beverage industry range from five to 10 times sales. Vitamin Water was 11 times sales. Our margins, depending on the flavor, are 50% to 80% of what ends up getting sold at retail.
Adams: What’s the most expensive part of making your product?
Goldin: The flavoring. We boil down the fruits and skins. It gets to a gooey consistency and we add two or three drops per 16 ounces.
Adams: That really is just a hint. Do customers ever ask for more flavor?
Goldin: Rarely, about once a year, someone who usually drinks sweetened zero calorie soda beverages asks if it’s possible to have more flavor. Typically, after trying a Hint and realizing how much better they feel, they thank us for not being a high flavored and sweetened product.
Adams: How much do you charge for a bottle of flavored water?
Goldin: Our suggested retail price is $1.69.
Adams: Are you profitable?
Goldin: We’re on track to be profitable in the first quarter of next year and I’m very excited. We’re trying to decide what to do. Do we pay back our shareholders, do we take the company public?
Adams: How is it running a bottled water company in a state with a horrible drought?
Goldin: Most of our production is running outside California. It’s a good thing we have plants all over the place.
Adams: Do you start with tap water?
Goldin: It’s generally spring water but it could be tap water. We do massive purification because of the fruit. Our initial shelf life was three months but now we pasteurize and it’s 18 months.
Adams: How do you respond to those who say that bottled water is terrible for the planet, since more than 80% of the plastic winds up in landfills?
Goldin: Ninety-eight percent of plastic in places like San Francisco and New York is recycled. You can’t solve every single problem. What’s inside the bottle is just as important.
Adams: What’s your favorite flavor?
Goldin: I drink different flavors based on the time of day. I’m more likely to have the lime water in the morning. Sometimes I heat it up in the microwave and it’s almost like tea. Then I drink blackberry and watermelon and also peach. In the afternoon I’m more likely to drink the carbonated version like the Cherry Fizz I’m drinking right now. In the evening I often heat up the peach still version and sometimes pomegranate. If I have a stomach issue or I’m feeling more mellow, I have peppermint.
Adams: It sounds like you drink 10 bottles a day.
Goldin: At least!
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631eda601a545c1dcfcfaaee9f06d5f5 | https://www.forbes.com/sites/forbestreptalks/2015/07/27/when-her-daughter-was-diagnosed-with-a-rare-disease-this-accountant-started-a-biotech-company/ | When Her Daughter Was Diagnosed With A Rare Disease, This Accountant Started A Biotech Company | When Her Daughter Was Diagnosed With A Rare Disease, This Accountant Started A Biotech Company
Karen Aiach, 43, is the founder and CEO of Lysogene, a biotech company developing gene therapy treatments for rare central nervous system diseases.
Remarkably, the French native had no background in science or the pharmaceutical industry, let alone the advanced fields of gene therapy, before starting the business. Aiach was an audit specialist for Arthur Andersen who went on to found her own boutique consultancy in 2001. Then, in 2005 her baby daughter, Ornella, was diagnosed with Sanfilippo Syndrome A, a rare neurodegenerative disease that has no cure and can reduce life expectancy to less than 20 years.
That prompted Aiach to leave her career behind and dive into the world of biotech, connecting with scientists, funding research, and eventually starting her own company in 2009. This past May, Lysogene raised 16.5 million euros in its Series A, and is currently raising another larger round from North American investors (the company is based in a suburb of Paris). Aiach spoke recently about her experience as an entrepreneur and mother in a conversation that has been condensed and edited.
Brian Solomon: Take me back 10 years to when your daughter was diagnosed.
Karen Aiach: My husband and I were called to the hospital in Paris after a few months of anxiety. Our pediatrician had noticed our daughter, Ornella, had a few special features, including wide eyebrows and liver enlargement. These were very specific signs of alert for this kind of disease. She went through clinical examinations and blood testing, genotyping. After five, six weeks of this, we were told she was affected with a rare condition called Sanfilippo Syndrome A.
Solomon: What was the prognosis?
Aiach: We were told our six-month-old child would be mentally impaired, then physically handicapped, then die in her second decade. We went rapidly on the web and looked for information. We downloaded scientific articles related to the disease. Our first surprise was to realize that we were able to understand the contents of scientific publications and navigate into these papers and find the authors. We contacted them and started educating ourselves on science behind this syndrome and the symptoms.
Solomon: Did you eventually need help?
Aiach: I hired a neurobiologist who had been involved for years in gene therapy for neurodegenerative disorders. She was knowledgeable in how the science worked and the labs worked, had connections with biotech companies. Then in February 2006 we visited biotech companies like Shire to learn more. Most companies were developing enzyme replacement therapies or small molecule approaches. Neither is applicable to Sanfilippo Syndrome A – which made it one of the most neglected lysosomatic disorders. We came to the conclusion that the best pathway would be to explore gene therapy.
Solomon: Where did you begin?
Aiach: We began funding a research program out of a nonprofit I founded, raising funding from patient groups and putting our own savings into the program. We had to think about building vectors – the technology that transports the gene.
Solomon: When did it become a for-profit company?
Aiach: We were doing efficacy studies on mice, and a team had published preliminary data in Italy at the same time with very compelling data using the same vectors. It looked like more than a philanthropy program—I had a drug development program in my hands. So I started Lysogene in 2009.
Solomon: Was it more difficult to run a for-profit than a not-for-profit?
Aiach: No, it was the opposite. I’m a corporate person – and even though the company was tiny, it was easier. I’m more at ease in that type of environment than the not-for-profit world where the governance and rules are different.
Solomon: You didn’t have the scientific background, though. Did people in the industry take you seriously?
Aiach: The biggest challenge for me at the beginning was that I was not a scientist or a clinician or gene therapist. I was a mother taking responsibility to build a program and manage it. No one else would have done it so I wasn’t infringing on anyone else’s territory, but even so my being a mother of a patient was strange for some people.
There was skepticism and lack of support because they believed I wouldn’t make it. The investigator we worked with on our Phase 1 study was always quite difficult with me because he only considered me the bank. He couldn’t see why on Earth I would care about the clinical design. It was hard for him to listen to my voice. There were also patient groups who wouldn’t support this program because it was managed by non-scientist. They considered me arrogant. Some said, “If that idea was so good, Genzyme or Shire would do it.”
Solomon: How did you respond?
Aiach: Just because something has not been done doesn’t mean it is a bad idea. But I was afraid too. Not being originally from the biotech field, there were rules and practices I didn’t know about. I might not have been armed enough to face the challenges I was ignorant of.
Solomon: Were there times when you weren’t sure you would make it?
Aiach: In 2013 we were approaching a time when we didn’t have any more money. We had our first patients dosed -- including my daughter -- but we couldn’t leave them like that. We needed money to follow up. It was an emergency situation. So we went to friends, family members, showed that we had already done so much with clinical data and regulatory feedback. In a period of three weeks we raised 400,000 euros.
Solomon: You’ve run your own company before, but this must have been different.
Aiach: Since my daughter was involved, it was a question of life or death for me. I cannot pretend today that she will live longer than other patients with Sanfilippo Syndrome A, but she is living better than I could have expected. We didn’t know really what would come out of the trial treatment for her or the three other patients. But without doing anything, the consequences of the disease were dire—Ornella lost speech skills around age of 3 and become extremely hyperactive – she would run day and night everywhere in the house and break everything, putting herself and everyone in danger. We needed someone to take care of her 24 hours a day. That was our everyday life, without doing anything that’s what we’d have to face for years.
That’s a very strong motivation. I had to make this trial happen. We translated from animal to human trials within 5 years which is not unprecedented but is outstanding. Our teams could see me working night and day to have the program in the right direction. My daughter has been treated and benefited, and we’ll see how she progresses or regresses. But the pioneering spirit to transform this investigation treatment into something accessible for other patients has become a real passion for me. That’s something special and different from another company where you only want to make profit.
Solomon: Your daughter is now 10 years old. How is she doing?
Aiach: She is doing better. She remains a child with Sanfilippo Syndrome A, and was only dosed with treatment at the age of 6, which is pretty advanced in the disease. Since then she’s been much better for last three years from a behavioral standpoint -- not hyperactive, sleeps well. That’s changed her life, and the lives of her family around her. Now I have a smiling kid at home, which is the best outcome I could have dreamed of.
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389275f412576b61dc0339f5bb0c216a | https://www.forbes.com/sites/forbestreptalks/2015/07/30/how-mark-hatch-and-techshop-are-energizing-american-manufacturing/ | Here's How TechShop Is Manufacturing Startups And Entrepreneurs | Here's How TechShop Is Manufacturing Startups And Entrepreneurs
TechShop's CEO Mark Hatch (left) with founder Jim Newton: "It's Like Kinko's For Geeks."
You can make almost anything at a TechShop, a fast-growing chain of co-working spaces that stock industrial water-jet cutters and 3-D printers and every other high-tech tool imaginable. But what the shops really produce are entrepreneurs and economic impact. That, says CEO Mark Hatch, is because people come to the shops to build prototypes for products they want to sell. And in so doing, he says, they can save as much as 98% of their startup costs, which allows them to explore lots more ideas.
There are now eight TechShops across the U.S., with about 6,500 paying members and $15 million in annual revenue. The kinds of businesses that spring from TechShop, which is based in San Jose, Calif., run from a maker of cupcake toppers to a social enterprise called Embrace that makes incubation blankets it says have saved the lives of more than 150,000 babies born prematurely in developing countries to Square, the mobile-payment company started by Jack Dorsey and Jim McKelvey.
In an interview that originally aired on Wharton Business Radio’s The Digital Show and that has been edited and condensed, I spoke with Hatch, a former Green Beret, about TechShop’s growth and why he doesn’t want to take venture capital.
Loren Feldman: After being a Green Beret, being a tech CEO must be a walk in the park.
Mark Hatch: Let’s just say the training was helpful in dealing with the stress.
Feldman: Is it helpful in dealing with investors?
Hatch: Confidence goes a long way in being prepared, so yeah, it was a great training ground.
Feldman: Can you give us tour of a TechShop?
Hatch: It’s a membership-based, do-it-yourself fabrication studio. It’s like 24 Hour Fitness -- we charge $150 a month for access to the facility -- 20,000 square feet of every tool you need to make anything on the planet: machine tools, wood-working, plastic, electronics, textiles, 3-D printers, laser-cutters, a great big water jet that will cut through five inches thick of anything.
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Feldman: Who is your typical customer?
Hatch: We have all kinds of different folks: hobbyists, entrepreneurs, artists, tinkerers, and students. But the entrepreneurial community is the one the economic development folks are most interested in. We have three types of entrepreneurs: the hardcore who are going to raise lots of money and be a billion-dollar business that venture capitalists then fund. We have lifestyle businesses that will probably get to $30, $40, $50 million in sales but never be in a position to do an IPO. And then we have the occasional entrepreneurs who I like to say are kind of like my mom who would take a job in retail at the holidays to make a few extra thousand dollars for Christmas.
Feldman: And you’re open 24 hours?
Hatch: We’re open 24-7. We don’t believe that people stop being creative at midnight.
Feldman: What’s it like at 3 in the morning?
Hatch: Thankfully, there aren’t as many folks at 3 in the morning, so we can do maintenance and do some of our own projects but in San Francisco we’ll have at least a half dozen folks that are still bouncing around working on their projects.
Feldman: Does it feel like a co-working space?
Hatch: We are a co-working space -- just focused on manufacturing and making. On a Thursday, Friday, Saturday afternoon, we’ll have professors and students from Stanford and Berkeley and USF. We’ll have designers from Ideo, Method. We’ll have manufacturing engineers from Twitter, Square, Cisco, you name it. And then all kinds of startups, all kinds of artists, and they’re all there working on their own projects but also helping each other.
Feldman: Did you expect established companies to spend time at TechShop?
Hatch: Not initially. But we discovered that even well equipped shops won’t necessarily have a water jet, which is a big piece that alone takes like 45 amps -- most homes run on 38. So invariably we’ll have some subset of tools that they may not have access to -- and occasionally they like to get out of the office.
Feldman: How did you get involved?
Hatch: Jim Newton’s our founder. He started it in 2006. I joined him about a year later when he was getting lots of traction and interest from investors. I ran into him at a party in the Bay Area, and I overheard him say, “It’s kind of like Kinko’s for geeks.” And I had run the geeky part of Kinko’s at one point so I cornered him and said, “Who are you and what do you mean?”
Feldman: What was your first impression?
Hatch: You know it’s amazing, you walk into this 20,000-square-foot facility with all these tools and people bouncing around making things. I ran into three different groups of entrepreneurs there, and they each told me that they had saved 98% of their startup costs by launching out of TechShop. Each of these groups are multi-millionaires now. And so at the end of that first night, it was obvious to me that if you can save 98% of your startup costs, you can launch 20 more startups. Anybody in the middle class can now launch a hardware company.
Feldman: When is there going to be one in every state?
Hatch: Not soon enough. St. Louis is next. L.A. is on its way. We’re in discussions with folks in Baltimore. Internationally we’ve partnered with a large retail partner and we’re doing Grenoble, Milan and Sao Paolo. Fundamentally, we’re just cash-constrained on the investment side, so please hit Techshop.com and if you’re an accredited investor, come check it out.
Feldman: Can’t you raise money in Silicon Valley?
Hatch: Well, we’re not a software app
Feldman: Do you really have trouble convincing venture capitalists?
Hatch: We’ve used mostly strategic investors -- Autodesk, Lowe’s, and then the small folks who really understand what we’re doing. We’ve managed to avoid the venture capital class so far.
Feldman: By design?
Hatch: By design, yes, because they’re looking for 40% compounded annual interest. And they don’t understand hardware. They would want control, and they might drive this thing in a direction that we’re not ready to run it.
Feldman: How much money do you need?
Hatch: All in, we’ve raised like $25 million, $30 million. These things are fairly expensive. But we’ve recently done a pivot -- we’re now charging cities, universities and governments to open in their cities and the reason is because the value that our members have created in the Bay Area is absolutely stunning: $12 billion in incremental shareholder value, 2,000 jobs, $200 million in annual salaries. The state of California alone is pulling out more money on an annual basis than we invested in the three locations in the Bay Area. As a result, we’re getting interest from around the globe.
Feldman: Can you have that kind of impact away from Silicon Valley?
Hatch: Okay, so assume San Francisco is unique by a factor of 10. So you still end up with $1.2 billion of investor value created and $20 million in annual salaries. We’ve got people lining up. So we now target zero cost to open a location. The only expense we have is at the corporate level, which is still substantial because we expect to open a thousand of these over the next 15 years or so.
Feldman: Can your shops make money charging $150 a month?
Hatch: Oh, absolutely -- particularly when we don’t pay anything to open it.
Feldman: Tell us about someone who got started in a Tech Shop.
Hatch: Probably the most impactful startup was Square, Jack Dorsey and James McKelvey’s startup. James came up with the idea. A guy who had worked for him was Jack Dorsey of Twitter fame. James called him up and said, “Hey, I’ve got this idea about a dongle that goes on the phone and everybody will be able to take credit cards that has a checking account instead of just those the bank has approved. So they went to Silicon Valley and talked to ostensibly the smartest investors in the world -- and they turned them down. So James came to our Menlo Park location, learned how to use a mill, a lathe, learned the basic electronics, learned how to use an injection-molding machine and built the original three prototypes.
Feldman: Had he ever done anything like that before?
Hatch: He was a glassblower, so he did know how to make things. But no, he hadn’t worked in plastics or electronics. He was a computer programmer prior to that so he was a pretty bright guy but he’d never used any of those tools before. We taught him how to use the tools he needed to build a prototype that raised the $10 million in their Series A. And here’s the punchline that I like to give to large corporations, accelerators and so forth: If Jack Dorsey can’t raise money without a prototype, what are your chances?
Correction: A previous version reported, at one point, that TechShop charges $150 an hour; it charges $150 a month.
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f97ec872973a84fc63a07d53f9d33094 | https://www.forbes.com/sites/forbestreptalks/2015/11/01/noah-breslow-says-ondeck-is-trying-to-make-alternative-finance-more-mainstream-and-less-expensive/ | Talking With OnDeck's Noah Breslow About Small-Business Lending And Why His High Rates Are Falling | Talking With OnDeck's Noah Breslow About Small-Business Lending And Why His High Rates Are Falling
OnDeck CEO Noah Breslow says interest rates on the firm's small-business loans have come down for... [+] the past nine quarters, and will continue to drop. (Photo by Ian Londin)
On Deck Capital CEO Noah Breslow is the unlikely king of the short-term business loan. A 6-foot-3 software geek, Breslow joined OnDeck as a technology guy and became CEO in June 2012. Since then, he has expanded OnDeck dramatically, adding new products and taking the company public.
Alternative finance is booming, and OnDeck is at the center of that boom. It’s lent more than $3 billion to small business owners based on its proprietary algorithms since its 2007 founding. These aren’t bank loans, but short-term, high-rate financing, with payments automatically deducted daily (or sometimes weekly) from business owners’ bank accounts. It’s been under fire for its high annual percentage rates, which averaged 46.5% in the second quarter. But Breslow says that OnDeck’s rates have been falling steadily and that borrowers prefer the speed and convenience its technology allows. Still, its stock price has fallen significantly since the company went public last December.
Now, with competition increasing, OnDeck hopes to attract larger businesses that might qualify for bank financing. It recently doubled its maximum loan size to $500,000 from $250,000, and increased its maximum term to three years from two – dropping rates as low as 5.99% for the most creditworthy borrowers. It’s also doing its darnedest to keep borrowers in its financing system by offering a loyalty program for those who re-up with new loans.
I spoke with Breslow by phone, and then again over lunch in midtown Manhattan, in October. What follows is a condensed and edited version of those conversations.
Amy Feldman: OnDeck has made more than $3 billion in loans since the company was founded. How has the market evolved?
Noah Breslow: We started the business with a simple thesis that there was a part of this market, small business owners, that banks weren’t serving well. The next option was merchant cash advance. The idea was to use data technology to streamline the loan process, and $3 billion later, we have proven our thesis. Now that our scale has grown, and costs have come down, we are able to serve a larger part of the market. We see this as the way small-business owners will get loans over the next five years. It’s going from alternative to mainstream.
Feldman: In what ways is that playing out?
Breslow: Most banking execs now see that lending is moving online. Banks have a choice. They can build their own technology, or they can recognize that companies like OnDeck have already invested in it. We’ve announced several partnerships, including with BBVA Compass. We are sharing our technology, and they are sharing their data. We preapprove businesses for loans, and BBVA will reach out to them, and say, ‘OnDeck, our partner, has preapproved you for a $50,000 loan.’ Even though the loan comes from OnDeck, BBVA gets the halo effect because this is their customer.
Feldman: The alternative finance industry has gotten a lot of flack for rates being so high. Have those rates come down?
Breslow: Our rates have come down for the past nine consecutive quarters. I think that is a really good thing for small business owners. In the second quarter it was 46.5%. In the first quarter of 2013, it was 66%. So our rates today are a bit over two-thirds where they were just two years ago. On a cents on the dollar basis, it’s around two cents per dollar per month. If you borrow $50,000, you might pay $6,000 for six months. When I joined OnDeck, everyone was wired to think about rates of long-term loans, but many of our loans are shorter than one year. It’s like when you get a rental car. Let’s say you pay $100 a day or $50 a day for a car. If someone quoted you that rate in annual terms, it wouldn’t make sense. The APR overstates the actual cost of the loan to the borrower.
Feldman: It’s easy to compare the cost of renting cars because everyone quotes the price per day or week. Can you understand why business owners might think alternative finance companies are reluctant to divulge APRs because they don’t want borrowers to realize how much they’re really paying?
Breslow: Actually, the rental car analogy works very well for short-term loans because the leading lenders in the short-term SMB financing industry quote prices in the same way by focusing on total cost, and borrowers clearly understand how much they are paying for loans. It is straightforward to compare the costs of short-term loans because public companies, like American Express, PayPal and OnDeck, nearly-public, like Square, and dozens of private companies, including Kabbage and CAN Capital, quote their loans this way.
Feldman: How long does a typical loan last?
Breslow: Our average term is about 12 months. That’s a dollar-weighted number. The majority of our loans are less than one year. People who take longer terms get larger amounts because they have bigger and more established businesses.
Feldman: If the average term is 12 months, why not think about APR?
Breslow: That’s a very fair question. It’s not until 24 months that the APR and the cents on the dollar are equivalent. Customers don’t find cents on the dollar confusing. Invoice factoring and equipment financing also don’t quote APRs.
Feldman: You recently announced that you will be making longer-term, larger loans.
Breslow: Over the past five or six years we’ve been moving steadily upmarket. As we built more scale the OnDeck score has improved and that has allowed us to make better and better decisions and open up more product offerings to higher-quality borrowers. We expanded our maximum to three years and $500,000, and we opened up our pricing range as well, so we can now price as low as 6%. We think we now have the widest spectrum of offerings of any small business lender.
Feldman: What does it take for a business to qualify for a 6% loan from OnDeck?
Breslow: Seasoned businesses with strong credit histories, revenues and cash flow will qualify for our lowest rates, as well as businesses that have shown an excellent payment history on prior loan products with OnDeck.
Feldman: How will the rates on these longer-term loans compare with those of the banks?
Breslow: My hunch is that we’ll still be a little more expensive. You might pay a slight premium, but you are getting a turnaround time that’s dramatically faster. The same loan at a bank might take you four to six weeks, and a bank is going to ask you for collateral. As long as we’re within a range on the rate, we think we will win a fair share of the market.
Feldman: Do the payments still get automatically deducted?
Breslow: Yes, we do automatic deduction daily or weekly from the customer’s bank account.
Feldman: The New York Times reported that you continued to try to collect from a couple of businesses that had gone into bankruptcy.
Breslow: That was obviously distressing. It was a process failure. The outside law firm did not notify us in the proper way. We just did not know they had filed bankruptcy. That was not our standard operating practice. If it was, the Times would have found hundreds of cases like that.
Feldman: How common is it for companies that borrow from OnDeck to file for bankruptcy?
Breslow: It’s not that common, or we would not have a stable business.
Feldman: What is the default rate?
Breslow: For every dollar we lend, we expect to lose six or seven cents.
Feldman: That’s not as high as I would have expected.
Breslow: The cents on dollar is a dollar metric. So call it a 12% to 14% annualized default.
Feldman: Is your expectation that default rates should stay the same over time?
Breslow: We’ve been managing it to be very stable over the past couple of years. As we bring in upmarket populations of customers, we have a wider range of products and pricing available. We have risk-based pricing, and I think that’s important. Our two-year pricing is around 19% APR. We also offer loyalty benefits. For customers that build a track record with us, we reduce their fees and their pricing as well.
Feldman: How does your loyalty program work?
Breslow: For your first OnDeck loan, you might pay an origination fee of 2.5% plus the interest cost. Let’s say you come back a year later to buy inventory again. For that second loan, the 2.5% becomes 1.25%. And then on your third loan, the origination fee drops to zero. We can’t guarantee reduced prices for every customer, but the vast majority of customers whose business stays the same or improves from a credit risk point of view will see pricing benefits.
Feldman: So what percentage of customers re-up?
Breslow: It’s a geometric series. If 100 customers take a first loan, then 50 take a second. Half of customers ultimately come back for the next loan, and that is very natural we think.
Feldman: Would you at some point say, ‘hey, you might qualify for an SBA loan at this point’?
Breslow: We run a website called businessloans.com that educates borrowers on the different options out there. Introducing loyalty pricing is what customers were looking for from us. I think customers would rather work with someone like OnDeck because of our speed and convenience.
Feldman: How are you able to make the determination of who gets a loan or not so quickly?
Breslow: People think, ‘gosh, it happens so fast, you could not be looking at what a bank does.’ The OnDeck score is a view of your creditworthiness. We have integrated over 100 data sources, and we collect 2,000 data points in every application. If a drycleaner applies for a loan, we can compare it with thousands of other drycleaners we loaned to in the past. We are not looking at esoteric data – it’s really things like cash flow. We’ve just added more automation and scoring.
Feldman:What if the models don’t work out?
Breslow: I’m an engineer by training, so I think about it this way: Let’s assume the models don’t work, and let’s build a system that’s resilient. Sometimes people don’t understand why our loans are shorter term than traditional bank loans, or why we collect every day or every week from customers’ bank accounts, or why our pricing is higher than traditional banks. Those choices are very intentional. If a set of loans aren’t performing as well as they should, we know within three or four months after their origination. It would be very convenient to price every loan at 6%, but we know that’s not the right choice from a risk-adjusted point of view.
Feldman: One of the fastest ways to grow is through brokers bringing in loans, and in the past you have used a lot of brokers. What’s the situation with the brokers now?
Breslow: When we entered the market back in 2007, the predominant way customers bought these loans was through brokers. All these folks were calling on the OnDeck customer. Three or four years ago, we made a strategic shift. In the second quarter, 81% were from our direct and strategic partner channel. The strategic partners are the banks and big partners like Intuit. We also implemented a lot of compliance standards. Some businesses will want to work with a funding advisor or a broker, but we want to make sure that we are working with the right type of brokers.
Feldman: Bloomberg Businessweek last year spelled out some serious problems you had with brokers, including some brokers who had been convicted of stocks scams.
Breslow: That was obviously a tough piece. There were several issues we had with it. The people mentioned in that article accounted for an extremely tiny part of distribution, and most of them were no longer with us at the time the article ran. And we are very proud of the compliance program we put in place. We took a revenue hit to do it, but we think it was the right thing to do for the business and it enabled us to do these partnerships with banks that want to be sure we abide by the same standards they do.
Feldman: You’ve previously estimated that you expect to make full year gross revenues between $244 million and $248 million, with adjusted Ebitda between $7 million and $9 million. Is that still the case?
Breslow: I can’t comment. We have our next earnings call coming up.
Feldman: Since OnDeck went public, the stock has fallen roughly 65%. Does that concern you?
Breslow: The stock price is not something as a CEO you can manage on a day-to-day basis. There have been declines in other stocks. We can’t get hung up on that. Our core holders, our venture investors, have not sold shares at this point.
Feldman: Last summer, when a number of industry players rolled out the Small Business Borrowers Bill of Rights, you didn’t sign on to it. What was your thinking in not signing on?
Breslow: We weren’t actually asked to participate in the drafting of the document. If you read that Borrowers Bill of Rights carefully, it doesn’t show that shorter-term loan options are beneficial to borrowers. Very few lenders of any scale signed on to that. We are supportive of constructive regulations in the space.
Feldman: Someone told me today that there are over 100 alternative lenders out there. It’s starting to look like the setting for a shakeout.
Breslow: That’s a great point. There are a lot of alternative lending platforms out there, and a lot of dollars moving into the market that are chasing the success of some of the early platforms. You can be fashionably late to a party or you can just be too late. I think we’re a couple years away from the consolidation phase where people go by the wayside, but I think that will happen at some point. There will be a point where the venture capitalists stop pouring dollars into the space.
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72d5ef312eb573a35795982814240c81 | https://www.forbes.com/sites/forbestreptalks/2016/02/09/how-edible-arrangements-founder-tariq-farid-proved-his-skeptics-wrong-and-built-a-600-million-dollar-business/?utm_campaign=Forbes&utm_source=FBP | How Edible Arrangements Founder Tariq Farid Proved His Skeptics Wrong And Built A $600M Business | How Edible Arrangements Founder Tariq Farid Proved His Skeptics Wrong And Built A $600M Business
Americans will spend around $18 billion to show their love this Valentine’s Day and one founder is about to cash in . Tariq Farid, the head of Edible Arrangements, expects to deliver 1.9 million pounds of fruit-filled bouquets and chocolates to customers the week before Valentine’s Day. He’s been building his business since 1999, when he opened his first store on a modest 600 square feet of retail estate in East Haven, CT. Fast forward to today, the founder will ship 10.8 million orders in 2016, has more than 1,200 stores around the world and expects $600 million in sales this year-- all based on an idea that everyone told him wouldn’t work.
Natalie Sportelli: How did your entrepreneurial journey begin?
Tariq Farid: I bought a flower shop in East Haven, CT when I was 17 and we were making ends meet and it was something I enjoyed doing. Along the way we built a lot of knowledge and wisdom and learned about what the customer wanted. Being around flowers, I started thinking about the presentation of food in different displays and, at the time, no one was thinking about scaling or turning it into a big retail business. What we got right was everything except the presentation of our first shop, we were in a small location, but we poured our heart and soul into everything. It had to be perfect in execution, from the little tag to the presentation of the product.
Sportelli: How did people first react to your idea to create arrangements from fruit?
Farid: I’d pitch the idea and try to get people excited or to get funding and the majority of people told me it wasn’t going to work. They said that people aren’t going to pay for this and it hasn’t been done before. But we’d send an edible arrangement off to floral customers who were VIPs and the reaction was amazing. The customers asked, “when can I buy them?” I was inspired by the customers and when someone told me it’s not going to work. There may be challenges of price and logistics, but that's what really drives me.
Sportelli: What were some initial challenges you faced?
Farid: It was initially a lot of labor. Our first holiday was Easter and we got an order for 28 arrangements and they took 16-18 hours to make. We worked all day making those orders and knew that we had to automate and get efficient. After we sent them out the best thing happened. People started calling wanting to know where we’re located and how much we cost and were saying “wow, this is great.” This year we’ll send 10.8 million orders.
Sportelli: How did you begin to franchise your business?
Farid: One day, a customer walked into the store and asked if he could build one in Massachusetts. I said we were thinking of expanding, when in reality we were just trying to survive and get another delivery van, but I said I’d consult my attorney and send the paperwork. But I didn't have an attorney at the time so I put together the document and did research and when I spoke with franchisees I knew what every word meant and that was one reason we were very successful. When I got on the phone, I knew every aspect of the document we were signing and knew why it was there and the purpose of it. Franchisees were the same as me and knowing what they’re getting into and explaining it in layman’s terms went a long way.
Sportelli: Who are your competitors?
Farid: Anywhere where there’s a choice to buy a gift. Thank yous, birthdays, anniversaries, condolences any kind of occasion where a customer has a choice of where to buy a gift for those occasions. The direct competition is anywhere that sends food or something edible as a gift item.
Sportelli: What challenges have you faced growing your business over the past 17 years?
Farid: For anyone who’s done business in the last 16 to 17 years, everything has been a hurdle. Before, everything was a lot simpler, but now you have to build a web presence and a global presence. Along the way things have gotten very complicated and very expensive. There have been many challenges along the way, but I don’t consider them challenges. I think everything in business is difficult. Anything and everything can make you fail if you’re not willing to fight. Every difficulty has made me a better business person.
Sportelli: What traits have helped you and your company succeed?
Farid: Self-finance and self-reliance and living within your means. You can build a brand if you have the right product and the determination to go out and navigate rough waters. You can be very successful if you stay true to the product and focus on the customer experience.
Sportelli: How is Edible Arrangements planning to grow?
Farid: We’re working with big companies that want to use our product for marketing or as thank yous for clients. We have an innovation team, digital experience team and business gifting teams that are growing the business. We’re adding 75-100 stores a year. We’re online but we’re working on making our stores a destination and providing a great customer experience on every level.
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d2505c64181cb7f77f79cec871e69be0 | https://www.forbes.com/sites/forbestreptalks/2016/02/16/the-unlikely-entrepreneurs-behind-cubas-first-u-s-factory-since-the-revolution/ | The Unlikely Entrepreneurs Behind Cuba's First U.S. Factory Since The Revolution | The Unlikely Entrepreneurs Behind Cuba's First U.S. Factory Since The Revolution
Horace Clemmons and Saul Berenthal, both 72-year-old retired software engineers, are slated to become the first Americans since 1959 to set up a manufacturing plant in Cuba. Their plan: produce small, easily maintained tractors for use by family farmers. Under new regulations issued by the Obama administration, the U.S. Treasury Department’s Office of Foreign Assets Control gave the Paint Rock, AL-based partners the go-ahead last week. Once they get final approval from the Cubans, they anticipate that in early 2017, they’ll start building a factory in a special economic zone set up by the Cuban government in the port city of Mariel. In this condensed and edited interview, Berenthal describes his transition from software entrepreneur to Cuban manufacturing pioneer.
Susan Adams: Tell me about your personal connection to Cuba.
Saul Berenthal: I was born and raised in Cuba. I came to the U.S. in 1960 right after the revolution. First I came and then my parents. My family in Cuba is in the cemetery. But I have lots of friends there and I’ve been traveling back and forth since 2007.
Adams: How did you get the idea to build tractors?
Berenthal: I understood the needs of the Cuban economy. Cuba has to import more than 70% of what people eat. They’re still using oxen to farm the land. Our motivation really is to help the Cuban farmer be more productive.
Adams: But you and Mr. Clemmons are software engineers. How did you know the first thing about farm equipment?
Berenthal: Horace was born and raised on a farm in Alabama. He’s the farming expert and I’m the Cuba expert.
Adams: Just because he was raised on a farm wouldn’t mean he would know how to make tractors.
Berenthal: We hired an engineering company in Alabama that helped us pick up an existing design that was appropriate for what we wanted to do. We brought in state-of-the-art technology and produced the tractors. We have a tractor in Cuba already that’s going to be shown at an agricultural fair in March.
Adams: It sounds like you were motivated less by profit than by a desire to help the Cuban economy and Cuban-American relations.
Berenthal: Yes, our motivation is really to help Cuban farmers be more productive. Through commerce and trade, we can bring Cuban and American people closer together.
Adams: What about making money?
Berenthal: Our business model says we are investing in Cuba and reinvesting any profits we make. We’ll do what we did with our other businesses. We’ll create value and then sell the company.
Adams: What profit margins do you project for your tractors?
Berenthal: We’re aiming for 20%.
Adams: How many tractors do you need to sell before you’re profitable?
Berenthal: We believe we’ll sell 300 tractors in the first year and then we’ll ramp up to 5,000. That includes other light equipment we’ll sell for construction as well. The facility will have the capacity to produce up to 1,000 tractors a year. I think the profitability will come after the first or second year when we start to do production and not just assembly in Cuba.
Adams: But Cuba is plagued by shortages of the most basic products. How will you get tractor parts?
Berenthal: They’re all going to be sourced and shipped from the U.S. The current state of the embargo makes it so we can’t buy parts there. But we think that within the next three years the embargo will be lifted and we’ll be able to source from Cuba, if not sooner.
Adams: Your factory will be in a special economic zone?
Berenthal: It’s called ZED, for Zona Especial de Mariel. It’s built around one of Cuba’s biggest ports and it has a whole bunch of sections dedicated to foreign investment. They provide for a bunch of tax and investment incentives. We’re also taking advantage of Cuba’s commercial treaties with the rest of Latin America, where we’ll be able to ship and provide better pricing than for tractors built in the U.S.
Adams: What kind of tax incentive is Cuba offering?
Berenthal: For the first 10 years we don’t pay any taxes.
Adams: How many local people will you employ?
Berenthal: We’ll start with five and ramp up to 30 within the first year and then probably go up to 300.
Adams: You want to sell the tractors for $8,000-$10,000. How can a Cuban farmer with an ox possibly afford that?
Berenthal: There are a couple of ways. There is financing by the Cuban government and by third countries like Spain, France and the Netherlands. We also count on Cuban-Americans who live in the U.S. who have relatives and friends that run farms. We think they would be happy to contribute to Cubans owning a tractor. We’re also counting on NGOs that help Cuban farmers, like religious groups.
Adams: How much is your initial investment?
Berenthal: We project a $5 million investment and then it will go up to $10 million.
Adams: Where are you getting the money?
Berenthal: It’s private money. We have a couple of investors but we have also sold a couple of companies.
Adams: What was your first company?
Berenthal: We left IBM in 1982 and started our own company to compete with it. It was called PSI, for Post Software International, in Raleigh, NC, which developed software for cash registers. We had revenues of $30 million, offices in South America, Europe, Australia. The company was bought by Fujitsu in 1995. The purchase price wasn’t public. We had 300 employees in the states and 400 throughout the rest of the world. It was a significant enterprise.
Adams: Then you started a second company?
Berenthal: Csoft. It was a company that supported the credit card readers at gas pumps. We integrated those with the inside point-of-sale devices. In 2005 we sold that to the gas pump manufacturer we’d developed the software for. That company had $12 million in revenue and 60-some-odd employees.
Adams: What did you do after that sale?
Berenthal: We enjoyed life and then I started traveling to Cuba to find out what was going on there. We had other businesses that had to do with real estate and office buildings.
Adams: What did you find when you went to Cuba?
Berenthal: I started meeting with people and I had a lot of contacts in the economics department at the University of Havana. I learned what the Cuban government was proposing to do about readjusting the economy. In 2014, when the opportunity for trade arose, we decided to pursue farming and tractors.
Adams: How difficult was it to get U.S. government approval?
Berenthal: In all honesty it was tedious rather than difficult. We had to wait for the regulations to change so that the proposal we made was covered by the regulations implemented over the last nine months.
Adams: Were you competing with other U.S. companies?
Berenthal: We certainly believe we’re going to compete with the Chinese and Byelorussians, who are the current suppliers of tractors to the Cuban government.
Adams: Where did you get the names for your company, Cleber, and product, Oggun.
Berenthal: Cleber is from our names, Clemmons and Berenthal. It’s clever! Oggun is the name of the deity for iron in the Santeria religion. Santeria is the most popular religion in Cuba. It’s a mixture of Catholic and African religions.
Adams: Do you practice Santeria?
Berenthal: No ma’am. I’m Jewish. We’re called Jewbans.
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cb4327ea03527cd00de90595ce1dd864 | https://www.forbes.com/sites/forbestreptalks/2016/04/06/why-a-north-carolina-entrepreneur-took-a-stand-against-the-states-anti-lgbt-law/ | Why A North Carolina Entrepreneur Took A Stand Against The State's Anti-LGBT Law | Why A North Carolina Entrepreneur Took A Stand Against The State's Anti-LGBT Law
Bob Page (front right) with his husband and boys.
After North Carolina Governor Pat McCrory signed a sweeping law last month that requires transgender people to use public bathrooms that match their birth gender, Bob Page, CEO and founder of Replacements, a Greensboro, NC business that sells replacement china, silver and collectibles and produces $80 million in annual revenue, knew he had to do something. Openly gay with a husband and family of three boys, Page, 70, sent a deeply personal email to more than 3.5 million Replacements customers, objecting to the law, which also strips lesbians, gays, and bisexuals of anti-discrimination protections throughout the state. He described his marriage to his partner of 27 years, the couple’s adopted twin sons from Vietnam, the Nigerian teen they are sponsoring and how he wrestled with his identity: “My experience of feeling like an outcast opened my eyes and my heart to all who have been judged for being different.” In this edited and condensed interview, he talks about the tens of thousands of responses he’s received.
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Susan Adams: What was it like growing up gay in North Carolina?
Bob Page: I lived in a really conservative area up in Rockingham County. My father was a tobacco farmer. He had a ninth grade education. I did not know a single gay person growing up. But I knew way back then I was different. I was drafted and when I got out of the army in 1970, I seriously considered taking my own life.
Adams: How did you come to accept yourself?
Page: I gradually met a few gay people and my mindset began to change. But I didn’t come out to my parents until I was in my 40s. Both of them said they knew I was gay but they never discussed it with each other. I’ve only seen my sister once in the last 20 years and that was at my cousin’s funeral. She thinks I’m going to die and go to hell. It was only after I worked for myself for several years that I felt like I could be open with my employees. I have more than 80 people who have been here more than 20 years. They are my family now.
Adams: How have your customers reacted to your homosexuality?
Page: I had a picture of me in the office with kids and my spouse. One lady came in and said she’d never do business with us again. She wrote me a letter afterward saying she didn’t know why gay people needed to flaunt their lifestyles. Another time, someone spray-painted “fags” on the generators outside our building. Once someone went into the men’s room and wrote “fags and queers work here” all over the walls. We’re right on the Interstate, down a service road and one time a lady parked her car sideways and blocked traffic from coming into our building for 45 minutes. She was screaming about the coming of the lord and homosexuals.
Adams: That all sounds awful. How did you react?
Page: I don’t like it but I see the irony. These people claim to be people of god but they do such ungodly things.
Adams: Has the passage of the anti-discrimination ban affected your business?
Page: Last week there was a tour bus from Florida that was coming up to visit Replacements and they called and canceled because of the passage of the law. I had several letters from customers saying they would no longer do business in the state of North Carolina.
Adams: More than 120 businesses, including Apple , Facebook and Bank of America , signed a letter to the governor, objecting to the law. Did that motivate you to write your letter?
Page: I know I’m not alone, but I decided to do something up front. This is injustice and I had to fight it. I know people who can’t be out at their jobs. You can still be legally fired in North Carolina if you’re gay. You can be refused housing and you can be evicted from your home. The leadership in Raleigh has made our whole state appear like we’re cave dwellers.
Adams: How did you publicize your letter?
Page: We put it on our website and we emailed it to customers. It’s gotten more than 800,000 views on our website and 330,000 views on Facebook.
Adams: What kind of reaction have you gotten?
Page: At least 98% of the response has been positive. I’ve gotten 13,000 responses from customers and there have been thousands on Facebook too. I’ve spent many hours a day going through the emails and I’ve answered the personal ones that are directed at me. One lady said she was a Republican but she wanted to support me. There have been a few hundred negative responses. Most of them said, homosexuality is a sin and I don’t want to do business with you.
Adams: Have you been involved in political advocacy before?
Page: We were pretty vocal when they amended our state constitution to ban gay marriage. There was a big article about us that ran in the The New York Times , by James Stewart. He told me he got more emails for that piece than for any other article he’d written. I think that article gained us more business than we lost.
Adams: Do you expect the new law will stand?
Page: I’m convinced it will be overturned, probably through the courts. It’s also possible that if enough companies like PayPal [which has canceled a $3.6 million investment in the state] make announcements that they’re not doing business here, the legislature will act.
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7fd3ef917174412c6964b5768e508e3d | https://www.forbes.com/sites/forbestreptalks/2016/05/03/money-net-is-trying-to-kill-off-the-bloomberg-terminal/ | Money.Net Is Trying To Kill Off The Bloomberg Terminal | Money.Net Is Trying To Kill Off The Bloomberg Terminal
A former commodities trader who worked at Bloomberg for five years, Morgan Downey, 43, started Money.Net in 2014. His goal: Offer a superior product to the $25,000-a-year Bloomberg terminal at a fraction of the price. Money.Net sells an intuitive software platform that has all the functionality of a Bloomberg, according to Downey, for a subscription fee of just $1,800 a year. He won’t reveal 2015 revenue, except to say it was in the “millions.” Based in New York, Money.Net has 60 employees and is still operating in the red, but he says he’s signing up customers fast and expects to break even next year. His investors include ex-Citibank CEO Vikram Pandit. In this condensed and edited interview, Downey describes how he decided to take on an industry that has been dominated by Bloomberg and Thomson Reuters .
Susan Adams: Tell me about your background.
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Morgan Downey: I grew up in Ireland in a place called County Limerick on the West Coast. It’s a very rural area. At university in Ireland I studied computer science and finance. My first job, in 1993, was at Citibank in New York in a division called fixed income derivatives. Then I worked in commodities derivatives, doing things like helping airlines hedge their jet fuel and mining companies hedge the price of copper. For the next 15 years I was a commodities trader at Citibank and Bank of America in New York, Sydney, London and then Singapore.
Adams: How did those jobs lead you to Bloomberg?
Downey: Fast forward to 2008 when I moved back to New York. I was always the guy on the trading floors of Citi and Bank of America saying we should use technology. Rather than hire 50 traders or 500 salespeople, I’d ask, can I do that on a machine? I met this guy named Tom Secunda who [co-founded] Bloomberg in the 1980s. He asked me to join Bloomberg as global head of commodities. I was at Bloomberg for just under five years.
Adams: What made you want to start a competitor?
Downey: Two big things. There’s a need in the market for a product that is much more intuitive and more affordable than Bloomberg and Thomson Reuters. They have a reputation and they also have a reality. They’re very difficult-to-use products. They feel like they were designed in the 1980s and the reality is they were designed in the 1980s.
Adams: What’s wrong with the design?
Downey: People want machines that shouldn’t require any explanation or training. Commonly you hear people say, “I have a Bloomberg system but I don’t know how to use it.”
Adams: What’s the second reason you wanted to compete with Bloomberg?
Downey: Price. Bloomberg is $25,000 a year per user. You could hire someone for the price of two Bloomergs. J.P. Morgan pays over $400 million a year just for Bloombergs. Bank of America pays close to $500 million. The dollar amounts are huge.
Adams: What made you think you could do a better job?
Downey: The cost of the technology that goes into building the product has collapsed in the last five years because of the cloud. You can do five or ten times more of the technological development work for a tenth of the cost and almost ten times more quickly. Customers can see that they’re being vastly overcharged.
Adams: If that’s true, how can Bloomberg and Thomson Reuters continue to command such high prices?
Downey: The barriers to entry into their field are quite significant.
Adams: What are those barriers?
Downey: There are five or six big ones. One is you have to build a back-end system. Customers don’t see it but it costs at least $10 million to $20 million to build. We’re standing between our customers and the exchanges and other sources of data. You’ve got equity and futures exchanges. They’re sending all these data points into Money.Net. We’ve got to build a system to receive all that data. It’s called a ticker plant. Then you’ve got to turn around and deliver the data to your customer. This all has to happen in ultra-high-speed real time. Before we’d written one line of code for the front-end system that the user interacts with, we had to spend a huge amount of money building the back-end system. What kind of person in his right mind will build that without signing up a single customer?
Adams: What was another barrier?
Downey: You’ve got a long lead time for customer sales. The sales cycle is 12 months at one of these big banks. That’s just to get one customer. The reason is network security. Most people, if they start a new company, want revenue from day one with no back-end system.
Adams: What were the other challenges you faced building the system?
Downey: In order to build what a trader on a trading floor or a consumer of financial information needs, you need to sit in that trader’s chair. You have to have worked in the financial services industry for five or ten years to know in your gut what that person wants. You can’t learn that from a survey. Or if you’re a kid who just graduated from a high-flying university, you can’t build what that person wants or potentially needs. Very few people have worked on trading floors. That was Mike Bloomberg’s background. He had worked in finance at Salomon Brothers and in the technology division there. He didn’t need to ask anyone what to build.
Adams: Does your system have a terminal like a Bloomberg?
Downey: No. We’re building a platform. People want to boot up one piece of software that’s got everything.
Adams: What made you think you’d succeed?
Downey: We were able to raise the capital we needed to finance what we needed to build.
Adams: How much did you need?
Downey: It was in the tens of millions. We raised it from private, wealthy individuals, who put in a few million dollars each. Vikram Pandit, the ex-CEO of Citibank, was one of our investors, as was Michael Litt, who worked at FrontPoint, the hedge fund in the movie “The Big Short,” that bet on the sub-prime mortgage collapse.
Adams: How much of your own money did you put in?
Downey: A few million. I also put in sweat equity. My salary here is a dollar a year. It’s tough to live in New York on a dollar a year! Obviously I own equity. That is a real investment. We’re putting intellectual property into the firm.
Adams: How long did it take you to build the back end?
Downey: Six months for the first version of the product.
Adams: How involved were you in building the system?
Downey: Heavily. I like to do product design. It’s a passion. A lot of the developers we hired had worked in banks. One of the fortunate things about hiring in New York City is the banks have been downsizing their staffs. But you still have to pay up because you’re competing with Google and Facebook.
Adams: How did you figure out how to price your product?
Downey: Two ways. One is we looked at how much it cost us to build. We said let’s put a profit margin on top of that. The other way was asking, what will the market pay? The fact that Bloomberg is just under $2,500 a month and Thomson Reuters is $2,000 a month told us that there was a market at those price points. Bloomberg has got 325,000 customers paying that price and Thomson Reuters has 380,000 customers paying that price. But neither of them have been growing for the past five, six or seven years. The reason is that their price point is saturated. There are only so many people in the world who will pay that. At a lower price point there’s a huge unserved market. There’s no product out there for those users. We said, let’s price our product as low as possible, where we can still be profitable. We priced our product at $150 a month. People did a double take, it was so low.
Adams: How did you make your first sales?
Downey: From a power point. We were showing pictures of what the product would look like. We tried a few things, like a week free or a month free. We’ve found that our product is such a value play against Bloomberg and Thomson Reuters, people almost ignore the presentation and say yeah, I’ll just use it. They say, why not try it?
Adams: What does your product do that Bloomberg doesn’t?
Downey: The software is much more intuitive. All of the data and content you can get on Bloomberg, you can get on Money.Net.
Adams: People don’t need to be trained to use Money.Net?
Downey: Yes. You just start up the software. But if you want, we can train you.
Adams: What can a Bloomberg terminal do that Money.Net can’t?
Downey: Bloomberg has a proprietary chat system. It’s almost monopolistic. A lot of Wall Street uses it. In a lot of banks, you’ll have two people using Bloombergs and they don’t look at anything but the chat. They’re paying $25,000 a year to be on chat. It’s ridiculous.
Adams: How have sales been going thus far?
Downey: We started selling in 2014, but the first 18 months it was all through word of mouth and references. We’d get inbound inquiries. We only started building our sales force two months ago. Most of our customers have said not only, we’ll buy from you guys, but we’ll help you. There has been no competitor to Bloomberg and Thomson Reuters for 20, 25 years. We’re helping them solve a pain point of paying for these two ridiculously expensive systems.
Adams: What details can you share about your customers?
Downey: We have thousands of paying customers, at all the major banks in the US and internationally. We’ve got customers at hedge funds and we’ve got financial advisors. We’ve got non-standard customers like business schools like Wharton. We’ve got libraries including the New York Public Library and the Greenwich library in CT. North America counts for 65% of our customers but we’ve got paying customers in 57 countries. We’re likely to open an office in Europe this year.
Adams: What mistakes have you made?
Downey: We’ve spent money going to financial industry conferences, trying to raise awareness about the product. Some of them work but you don’t know that they’ll work until you get there. One thing that could derail the product is becoming too distracted by adjacent opportunities. We get constant inbound requests to do development for other people, to develop things that aren’t core to our product. There’s usually money involved. We’ve gotten good at saying no.
Adams: What’s the toughest thing about what you’re trying to do?
Downey: Recruiting the right people. We spend a huge amount of effort on recruitment.
Adams: Do you really think you can kill off the Bloomberg and Thomson Reuters terminals?
Downey: I can’t imagine those companies can exist in their current format five, ten years from now. Bloomberg and Reuters are like TWA and Pan Am. The fact that we exist and we’ve got paying customers is proof these big guys can’t survive without changing their products. They should be building the product that kills their product. We’re ten times less expensive and we’ve got a better product. Why the heck would someone buy a Bloomberg? It’s only a matter of time.
Adams: Did you try to raise these issues at Bloomberg before you left?
Downey: I’m under a confidentiality agreement about my time there.
Adams: Have you heard from Mike Bloomberg since you started Money.Net?
Downey: I have not spoken to him since I left
Adams: Do you have any plans to run for mayor?
Downey: Although I think I would do quite well in that role, I am not trying to follow in anyone’s footsteps. I am trying to blaze my own trail. Also my ambitions for Money.Net are like my sodas, big.
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de0646bc02d71072244e29aa5115998f | https://www.forbes.com/sites/forbestreptalks/2016/05/24/how-dinner-lab-blew-through-10-million-on-a-failed-restaurant-startup/ | How Dinner Lab Blew Through $10 Million On A Failed Restaurant Startup | How Dinner Lab Blew Through $10 Million On A Failed Restaurant Startup
In 2012, Brian Bordainick, 30, created Dinner Lab, a company that produced one-off dining events in 30 cities across the country. He hired chefs who were working in the No. 2 or 3 slots in top restaurants but wanted to prove they deserved their own places. He sought to create a fine-dining community, charging an annual membership fee plus between $60 and $90 for five-course meals with an open bar and requiring them to fill out detailed surveys rating the food. Venues included an Austin, TX motorcycle dealership and a New York City private school auditorium. Based in New Orleans, Dinner Lab ran through $10.5 million in venture funding and never turned a profit, shutting down last month and laying off 43 people. A former teacher, in 2012, Bordainick made Forbes’ 30 Under 30 list in the education category. In this edited and condensed interview, he describes the challenges of building Dinner Lab and what it was like to fail.
Susan Adams: What were you doing before you started Dinner Lab?
Brian Bordainick: For three years I was a teacher with Teach for America . Then I ran the Ninth Ward Field of Dreams, a $2.5 million capital project to build a sports stadium and track at the New Orleans high school where I was working. I raised the money myself. Then after Mayor Mitch Landrieu was elected, I was asked to come on board as a senior strategic advisor, to transition organizations that had been mired in bureaucracy, into public/private partnerships. After that I worked at 4.0 Schools, designing new ideas for charter schools in the Southeast.
Adams: How did you decide to leave education for the relatively decadent world of high-end dining?
Bordainick: In educational entrepreneurship, people take themselves very, very seriously. I was looking to get into a less serious space where entrepreneurs didn’t act like they were trying to cure cancer. I wanted to take this idea of growth and experimentation, which I loved about the education world but which was largely missing from the culinary world. Also I always enjoyed forming communities. As trivial as it may seem to form a community around food, one of the things I’m most proud of is the community at Dinner Lab, which formed across age and race. There aren’t many places where you have dinner with someone who’s 20 years your junior or senior who’s not your parent.
Adams: Where did the idea for Dinner Lab come from?
Bordainick: Initially we wanted to fill a void in New Orleans dining, offering high-end cuisine at midnight. It proved to be a terrible idea.
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Adams: Why was it such a bad idea?
Bordainick: At midnight people were typically pretty drunk. It made more sense to do the meals earlier in the evening.
Adams: What was your business plan?
Bordainick: To sell memberships, sell events and use the membership to generate a profit. The membership would subsidize the overhead on the corporate side and we thought we could make a profit on the meals as well.
Adams: Did you have any experience in the food business?
Bordainick: I had worked in the service industry throughout college. We had business partners and staff who had a ton of experience in that space, like Francisco Robert, a former chef at Alinea in Chicago.
Adams: How profitable were the events?
Bordainick: It wasn’t the unit economics of the events that were the most difficult part to manage. We were constantly creating new concepts and hosting in new venues and taking all the ticket risk for those new concepts. It was like going through a restaurant opening every single time.
Adams: Can you tell me about an event that ran into problems?
Bordainick: In New York City we hosted an event in a church where we used a propane burner. A neighbor thought the building was on fire. Twelve fire trucks showed up. We fed a lot of firefighters that night. In Denver, the health department threw out all of our food before one of our events. We had to get the state attorney general to write an opinion letter saying that what we were doing was safe.
Adams: Was any aspect of the business a financial success?
Bordainick: At a city level we were profitable. In most of the major markets like New York, New Orleans and Chicago, the volume of events, the ticket price and the math shook out a little better.
Adams: Were you hoping to make money on data you gathered at the events?
Bordainick: Each of the diners rated each of the courses. We gave that to the chefs so they could iterate their menus. We were using it internally, to find out what types of events we should be doing and where. It was really powerful information but we never monetized it in the market. We looked at selling the data to different people but the juice wasn’t worth the squeeze.
Adams: Can you give us some examples of what you learned from the data?
Bordainick: We had a chef who was doing an entire meal based on a Basque pepper called Piment d’Espelette. Originally he subtly integrated it into the food. It turned out people really liked it, so he made it more of a prominent feature.
Adams: Why do you think people weren’t willing to pay for what you were learning?
Bordainick: We operated under the assumption that the information we gathered was extremely valuable. But it turned out most restaurants have menus they’re already happy with.
Adams: How much did you pay your chefs?
Bordainick: It ranged depending on the market and their experience level, from a couple of hundred bucks to a thousand bucks per event. For the chefs that toured with us, we took care of their housing and their travel.
Adams: Did any of the chefs who left good jobs manage to get a restaurant of their own as a result?
Bordainick: One of our former guys, Kwame Onwuachi is starting a Nigerian-inspired restaurant called the Shaw Bijou in Washington, DC. He was one of our full-time guys for awhile. He cooked 15 events across the country.
Adams: At one point, you ran a national competition to pick a chef for a restaurant that Dinner Lab was going to open. What happened with that?
Bordainick: We were going to help one of our chefs do that but then a couple of our members swooped in to help Kwame. He was also on Top Chef this past season.
Adams: Why did you shut down the business?
Bordainick: The first quarter of 2016 was one of our best but we were still bleeding cash. We weren’t able to secure funding to continue operations.
Adams: What obstacles did you face with investors?
Bordainick: The food venture ecosystem was collapsing on itself as we were building our company. Kitchensurfing, which booked private chefs to cook in people’s homes, shut down in April. Also Storefront, which rented pop-up real estate, closed in March.
Adams: Why do you think those ventures failed?
Bordainick: It’s just a really challenging logistical marketplace. For us, producing unique events presented big challenges.
Adams: What mistakes did you make?
Bordainick: We were trying to scale a business that was very logistically complicated and we were always screwing up. It was also really challenging to get solid, consistent margins. We stacked the deck against ourselves.
Adams: What do you mean by that?
Bordainick: There were a lot of variables that were difficult to manage. We had an ever-changing landscape of staff, sourcing ingredients and everything else. That’s also what made the product very cool.
Adams: How did you know it was over?
Bordainick: We weren’t able to piece together the necessary funding. It was pretty clear.
Adams: How did the investors who lost $10 million respond?
Bordainick: They have been as supportive as humanly possible. But the loss of principal is never an easy situation to manage.
Adams: What did you do right?
Bordainick: Tons of friendships, business relationships and a few marriages came out of Dinner Lab. In an overwhelmingly digital world, people are striving for human connections. We did a terrific job of that.
Adams: How did your business affect your own personal life and relationships?
Bordainick: The business was my personal life. As a startup founder, it’s all you do. It’s how you associate and how you identify.
Adams: What are you doing now?
Bordainick: I look at this moment as binary. As a CEO, I pushed our staff to look at complicated situations that way. You’re always trying to get to an A or a B. You’re either going to start another company or you’re not. I don’t see a situation where I’m not going to start another company. The highs outweighed the lows and I learned thousands of lessons.
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bb02e3bb2fbc439a7be9c8af52dd7b2b | https://www.forbes.com/sites/forbestreptalks/2016/06/15/attorney-plans-revival-of-chicken-and-biscuits-brand-he-got-in-lieu-of-payment-for-legal-fees/?utm_source=newsletter&utm_medium=email&utm_content=Attorney%20Plans%20Revival%20Of%20Chicken-And-Biscuits%20Brand%20He%20Got%20In%20Lieu%20Of%20Payment%20For%20Legal%20Fees&utm_campaign=20160615entrepreneurs | Can A Lawyer-Turned-CEO Revive Mrs. Winner's, Four Years After The Chicken Chain Went Bankrupt? | Can A Lawyer-Turned-CEO Revive Mrs. Winner's, Four Years After The Chicken Chain Went Bankrupt?
Mrs. Winner's John Buttolph gained control of the brand after it went bankrupt and shuttered all its... [+] company-owned stores. Now he wants to rebuild the chain with a franchise model. (Photo courtesy of Mrs. Winner's)
For more coverage of the ins and outs of franchise ownership, click here.
John Buttolph never intended to be chief executive at a Southern chicken-and-biscuits chain. But the corporate attorney worked with Atlanta-based Mrs. Winner's as it dealt with financial troubles that pushed it into bankruptcy in 2010. The result: Mrs. Winner's, which once had 184 locations, shuttered all its company-owned stores and basically disappeared. Buttolph, 63, was owed around $200,000 in legal fees. To get paid, he took control of Mrs. Winner's trademarks, which weren't part of the bankruptcy, in 2012, and taught himself how to run a franchised restaurant business. Today, Mrs. Winner's has 13 outlets and systemwide revenues of $12 million. In an interview that has been edited and condensed, Buttolph spoke about Mrs. Winner's shutdown, ending up in a new career, and his current hopes for expansion.
Amy Feldman: What brought Mrs. Winner’s to bankruptcy?
Buttolph: My predecessors paid a reasonable price for Mrs. Winners when they acquired it 2006, but they had no operating funds, and then the recession hit, and it hit hard. This is a brand that caters to working-class people with marginal disposable income, and that income evaporated. Sales in the stores plummeted. From 2007 to 2009, they were down 40%. That decline combined with the physical structure of the stores and the inability to obtain working capital brought them to their knees. I became their attorney, and it ended up dominating my practice.
Feldman: It sounds like a headache. Why would you want to be their attorney?
Buttolph: It was a turnaround story, and it appeared to be a feasible challenge for a brief period of time. It was clear to me in a couple of weeks that they needed a Chapter 11, but the two gentlemen who owned the company were not prepared to file a bankruptcy.
Feldman: What happened?
Buttolph: I was negotiating forbearances with landlords, and there were continuing efforts to obtain financing. There was some effort to partner with a barbecue chain and bring some barbecue products to Mrs. Winner’s that never got past the planning stages. There was a belief the economy would recover, and sales would increase. Meanwhile, I was negotiating with 20 landlords every single day. Ultimately, litigation started to overwhelm the company. In the summer of 2010, the owners accepted the need for a Chapter 11 filing.
Gallery: Best Franchises 2016 36 images View gallery
Feldman: What shifted their thinking?
Buttolph: I think they just became weary of the fight. The economy wasn’t coming back. Credit was very, very tight. They finally talked to enough people and heard the same message: What you are asking us to do in terms of providing financing is just not doable. The bankruptcy was filed in November 2010 in the Northern District of Georgia. By then, the company had pared down to 15 operating stores. Winner’s Chapter 11 team along with the Chapter 11 trustee were attempting to locate a buyer for the remaining stores and for the intellectual property of Mrs. Winner’s brand. You and I are not from the south, but people love this brand down there. When I would go down to Georgia and North Carolina and tell people I was working with Mrs. Winner’s, they would sigh and say, ‘Oh, I love Mrs. Winner’s.’
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Feldman: And the trademarks for the brand?
Buttolph: The intellectual property was in a separate entity. Nobody thought it had value. The bankruptcy was converted to Chapter 7, and everything was liquidated. There was this intellectual property sitting out there, and the company was dead. The stores were all closed. The North Carolina stores were still operating. They were just using the name, operating as Mrs. Winner’s, with no support from the franchisor. So I spent a lot of time on the bankruptcy, and was never paid for it. The corporate owner of the brand owed me a couple hundred thousand dollars. The payment was going to come when the intellectual property was sold, and there were no takers. After about a year one of the principals of Winner’s came to me, and said, ‘you know John, we’re never going to be able to sell this, we’re never going to be able to pay you.’ I had taken a security interest in it to protect myself. So I did a friendly foreclosure on it.
Feldman: So you basically got it for the debts that they owed you?
Buttolph: Yes.
Feldman: Would you have bought it otherwise?
Buttolph: That’s hard to say. My wife and I were interested in moving out of California, and I was interested in doing something other than practicing law.
"When I would go down to Georgia and North Carolina and tell people I was working with Mrs.... [+] Winner's, they would sigh, and say, 'Oh, I love Mrs. Winner's,'" CEO John Buttolph says. (Photo courtesy of Mrs. Winner's)
Feldman: So the fact that you were owed this money set the course of your life in a different way?
Buttolph: It certainly had a role. I had a very strong sense that the brand had real value, and since I had been involved in the business for awhile it seemed like a natural next step. In 2012, I completed the foreclosure and transferred the intellectual property to my name.
Feldman: Then what?
Buttolph: These franchisees had been operating with the name, and to protect my rights as a trademark owner I had to come to some license agreement with them. I called them many times and got no response. I emailed, I called, I sent letters, I sent registered letters, and I got no response. In order to protect my legal ownership rights as a trademark owner, I ultimately filed trademark enforcement actions against all these people in Tennessee, Georgia and North Carolina. Three states, five actions. It was horrible to have to litigate with people who were on my team. Horrible. During the litigation they all got together and decided to rebrand.
Feldman: I read that they all became Umphy’s. What kind of name is that for a restaurant?
Buttolph: Umphy’s is a contraction of Umphenour, which is the last name of the franchisee who owns seven stores in North Carolina. All 12 stores changed their signage, and were still selling the Winner’s product. Their sales fell off the table. So within a short period of time, I entered into license agreements with them all. At that point I had not even drawn up a franchise disclosure document [the required filing to sell franchises]. I really wasn’t sure what I was going to do with this company.
Feldman: Are they still with you?
Buttolph: Oh yes. Then began a long process of building a franchising platform. It was in that period, 2013 to 2014, that I decided this brand has a lot of life and it’s a very franchisable concept and we’re going to go for it.
Feldman: So you did the FDD and started over basically?
Buttolph: That’s right. We gradually rebuilt the franchisor entity. We converted two of the former licensees to franchisees. I bought one of the licensed stores, near Chattanooga, and operate it as a company store because I knew I needed hands-on restaurant experience. We also opened our first real franchise location in April in metropolitan Atlanta. It’s near the airport in an economically disadvantaged area. Our franchisee is a trucker, and his wife is a schoolteacher who left her teaching job because the business just exploded.
Feldman: What are revenues of a typical Mrs. Winner’s?
Buttolph: It depends. The North Carolina stores bring our numbers down. There are seven of them clumped together in a small market. Those stores average about $900,000. For the new stores, we are concentrating on urban markets, Knoxville, Birmingham, Atlanta, Memphis, where the brand has proven to be very strong. The Atlanta stores are doing upwards of $2 million a year.
Feldman: So your view is that if you site these things right, you can do $2 million?
Buttolph: That’s our cautious expectation in urban locations. If we site these things properly, we should be in the top quartile of what our competition is doing. I consider our competition to be Popeyes, Bojangles’ and KFC.
Feldman: With so many chicken chains, how do you differentiate?
Buttolph: The market right now is celebrating hot chicken. We will add hot chicken, but it is never going to be primary. We have traditional Southern fried chicken. We also have biscuits, and do a very strong breakfast business with chicken biscuits, sausage biscuits, pork biscuits, bacon biscuits. Our second best seller in most stores is a yeasty cinnamon roll called Mrs. Winner’s super cinnamon swirl. It’s big with icing on it.
Feldman: You have all the Southern foods that are delicious and make you gain 10 pounds to look at them.
Buttolph: Yeah. I don’t think everybody is eating chicken and a biscuit every day. But when you want it Mrs. Winner’s is the place to go.
Feldman: How do you feel about having made this transition into something you didn’t expect?
Buttolph: I just have so much enthusiasm. We have an opportunity to build this brand through franchising and empower people in their communities. It’s a very affordable opportunity. The franchise fee is $30,000, the royalty is 4%, and the advertising fee is 2%. We are really strong in underserved communities so we are working with people to help them bring it to their own communities.
Feldman: How many more do you have in the works?
Buttolph: I have eight to 10 stores that we are negotiating on now. Our plan is to add 10 franchised stores a year, and for every 10 franchised store I want to add one company-owned store. We are doing fundraising now, which will fund a company store. It’s a pre-series A raise, friends and family. We’re too small for the big money. We’re just going out for $3 million in a convertible debenture.
Feldman: What is the company valued at?
Buttolph: We’ve got a valuation of $10 million to $12 million. It’s hard for me to believe that, but that’s what my people are telling me.
Feldman: So you’re out of the woods?
Buttolph: I’m not out of the woods. I don’t believe that at all. I will believe things are turning around when I have signed deals, stores open and investor money in the bank. Until then it is just a consistent effort to move this brand forward.
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049172f959d0280090770104a0620dfb | https://www.forbes.com/sites/forbestreptalks/2016/08/23/with-gigster-anyone-can-hire-a-great-developer-from-facebook-or-google/ | With Gigster, Anyone Can Hire A Great Developer From Facebook Or Google | With Gigster, Anyone Can Hire A Great Developer From Facebook Or Google
Roger Dickey.
Two years ago Roger Dickey, 33, started San Francisco-based Gigster, a platform where companies hire freelance software developers. Its selling point: a heavily screened pool of top developers eager to moonlight on a project basis for non-tech clients. To put together its bank of 800 freelancers, Gigster accepts only 1% of those who apply to be listed. Gigster takes 25% of the fee, but the projects can be lucrative, paying as much as $400,000 to a team of five developers. Large companies like IBM and MasterCard have used its services, and in 2015, the company’s revenue came to $10 million, up from less than $1 million its first year. The company has raised $12.5 million in venture capital funding. In this interview, which has been condensed and edited, Dickey explains how he got the idea for Gigster and why he considers Google “a retirement home for smart people.”
Susan Adams: Tell me about your background.
Roger Dickey: I’ve been coding since I was seven years old. I studied engineering at the University of Illinois at Urbana-Champaign. I founded a company when I was 23 and created a video game called Dope Wars, which I sold to Zynga. The game [whose name was changed to Mafia Wars] did $1 billion in revenue after I sold it.
Adams: Why did you sell it while it was still growing?
Dickey: I wanted to live in Silicon Valley and I was running the company out of Austin, TX. Zynga was the lowest bidder but I sold it for all stock because I thought Zynga was the most promising company that bid for it. At that point it had 30 employees. By the next year it had 300 and the following year, 3,000.
Adams: Zynga has hit hard times. How did your stock perform?
Dickey: I was able to sell the stock after Zynga’s IPO. I made enough money that I didn’t have to work again.
Adams: What did you do next?
Gallery: Spotlight: Next Billion Dollar Startups 2016 10 images View gallery
Dickey: The first step was figuring out what other industry I wanted to invest in. I became an angel investor. Over the last several years I invested in 70 companies in the Bay Area. It gave me the chance to learn about a lot of different marketplaces. It got me interested in the future of work, the marketplace for the gig economy, and artificial intelligence.
Adams: Seventy companies is a huge number. How did you make your investment decisions?
Dickey: There were about 10 industries I came to understand incredibly well. I poured over census data, I read Tech Crunch every day and when a company in one of those industries sold for $100 million or $1 billion, I would network my way either to the founders or the investors, and form a model for revenue numbers for each of those companies.
FORBES' Next Billion-Dollar Startups
Adams: Can you explain how you would form those models?
Dickey: I would figure out how much the company sold for. Then I would put together a set of factors that described the company. For example, how many years it was in existence, was it a second-time or first-time founder, what market it was in, what was the business model, what were the approximate margins, what was the approximate revenue. And I would use that information as well as other factors to understand and predict what the exit of future similar companies would be. That was, as an investor, I could understand what a company would sell for and I could understand whether to invest.
Adams: What else did you do with that information?
Dickey: I used it to decide which industries were the most viable. I have a 100-step checklist of what to look at in a company.
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Adams: What’s on the checklist?
Dickey: It’s divided into six categories. I look at the team, the traction, the product, the market. Under market, there are six or seven checklist items.
Adams: Such as?
Dickey: How big is the market? Is it young or growing; ideally it’s not mature. Is there a dearth of entrenched competition? What are the possibilities for maneuverability?
Adams: How did you do as an investor?
Dickey: On paper I’m up eight times my investment on a large portfolio.
Adams: Do you only invest your own money?
Dickey: Two weeks ago I got some firms in China to start backing me.
Adams: Why did you want to start your own company?
Dickey: I’ve always loved building things. I went from Legos as a kid to building software.
Adams: Where did you get the idea for Gigster?
Dickey: Software is an essential tool in every business in the world. Very few companies have access to software that’s either high quality or low cost or both. If we can give everyone access to great software, human evolution will happen faster.
Adams: That’s a grandiose claim.
Dickey: Technology has always enabled progress. Look at the industrial revolution and cars and planes. The next step is artificial intelligence. The world will change even faster.
Adams: If software is so important, don’t companies want to have developers on staff?
Dickey: There aren’t that many great engineers in the world. Facebook and Google are fighting over top talent. Even if you’re Facebook, you probably can’t keep your top talent. A bank in Ohio is at a severe disadvantage. Big companies like MasterCard, Square, Airbus and the World Bank, all clients of ours, are non-technical firms. They may have engineers in house but they rarely have engineers who know new technology like artificial intelligence.
Adams: Given the shortage of talented engineers, don’t those people already have great jobs?
Dickey: If you’re a software engineer and you want an easy way to earn side income, there’s no easy way to just plug in and start earning money as an engineer. You can go to [global freelancing platform] Upwork, but then you’re competing with foreign development shops who are going to undercut you and not offer quality software. You lose 49 of the 50 bids you make. We’ve built a website where a developer can push a button and start earning money. Every project on Gigster comes with a product manager.
Adams: How does that work?
Dickey: With other systems you might hire 10 Ruby developers. On Gigster you get a couple of developers, one or two designers and a project manager who manages the whole team. That way you just provide the vision and the specs and your project manager will run with it, managing all the details for you. This is distinct from other models where you just get a developer and you have to manage everything yourself. Also we guarantee the cost of the project and we’re responsible for managing the budget. If we tell you it’s going to cost $20,000 and it goes over, we eat the difference.
Adams: How do you screen your freelancers?
Dickey: We ask people what they’ve done that’s exceptional. Did you go to an exceptional school, work at an exceptional company? Did you win a math Olympiad? Then we do a written screen and sometimes two phone screens. Once you’ve done a few projects you earn points. We have an acceptance rate of less than 1%.
Adams: Aren’t the best developers already earning well at companies like Google?
Dickey: They’re incredibly well paid but I would call Google a retirement home for smart people. A lot of people there don’t work that hard and they get cushy benefits. It’s easy to hide behind the bureaucracy. There are a lot of people who want to buy a Mercedes or a new house. If you make $200,000 a year, what about $250,000? These people are always doing side projects anyway. They come home and tinker with virtual reality. Why not get paid to tinker with cool new technology?
Adams: How much do your developers earn?
Dickey: We have people who have earned more than $10,000 for a single weekend of work.
Adams: What are some things Gigster developers have built?
Dickey: A remote control for a flying car. We’ve done 3-D credit card visualizations and software for Microsoft. We’ve made control software for a robotic restaurant.
Adams: A robotic restaurant?
Dickey: It’s backed by Google Ventures and it’s called Momentum Machines. It will be here in San Francisco and it will have a machine the size of a van that makes 100 burgers an hour, gourmet burgers where you can choose ingredients like the buns and the patties.
Adams: What mistakes did you make as you built the company?
Dickey: A big one was we had a very expensive marketing team of four people. I shut it down three months ago and we’ve continued to grow.
Adams: What did the marketing team do that didn’t work?
Dickey: Paid advertising, a combination of Google and Facebook ads. We saw early success but it ended up being a money pit. Using advertising to target people who hadn’t been clients before or seen our brand was not ROI-positive.
Adams: What else didn’t work?
Dickey: We spent a lot of money, up to $80,000 at a time, sponsoring conferences. That was a waste.
Adams: Anything else?
Dickey: Content marketing. We hired 10 freelance journalists who started writing a lot of content for the Gigster blog. Our marketing team was excited about it but it wasn’t ROI-positive.
Adams: Content marketing is all the rage. Why do you think it didn’t work for you?
Dickey: There are a lot of people doing business-to-business content marketing, writing articles that say, here are the top five ways to build a better sales team. Even if we write a good article, who’s going to see it? The content has to be extremely good for anyone to share it. There’s a supply/demand problem. The demand for content and articles hasn’t really changed but there’s a lot more content out there, a lot more supply
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bba990bc2ed7b978b1002a145caa0fb6 | https://www.forbes.com/sites/forbestreptalks/2016/10/19/costco-for-millennials-how-chieh-huang-built-boxed-a-mobile-juggernaut-with-100m-in-revenue/ | Costco For Millennials: How Chieh Huang Built Boxed, A Mobile Juggernaut With $100M+ In Revenue | Costco For Millennials: How Chieh Huang Built Boxed, A Mobile Juggernaut With $100M+ In Revenue
When Chieh Huang was growing up in suburban New Jersey, he used to go with his parents to the Price Club every other weekend and buy paper towels and other consumer products in bulk. So when Huang founded Boxed with a few friends in 2013, he wanted to offer the same bulk-sized deals as suburbanites get at Costco, but with the convenience that Millennials demand: mobile ordering and delivery to your doorstep. Since then, Huang, 35 – who sold his first startup, Astro Ape, to gaming giant Zynga – has overseen the New York-based company’s nationwide expansion and astronomical growth. With $133 million in funding from DST Global, GGV Capital and others, Boxed expects revenues to surpass $100 million this year, up from $8 million just two years ago. Those numbers explain why FORBES named Boxed one of the 25 Next Billion-Dollar Startups. I spoke with Huang by phone, and then in late-September he dropped by FORBES’ office, wearing jeans and a checked gray shirt, to talk about what it’s like to sell millions of rolls of toilet paper, why mobile is key, and why he’s setting aside nearly half his stake in the company to fund employees’ college education. What follows is an edited and condensed version of those conversations.
Amy Feldman: Take me back to the beginning.
Chieh Huang: When we left Zynga, we moved into my garage in New Jersey. That was late-2013, and the company started as a national service in 2014, and it took off from there. By the time we moved out of the garage, there was a 40-foot pod in front of my house, and industrial pallets on the driveway, and all the neighbors were like, ‘What the hell is going on?’
Feldman: What was the initial concept?
Huang: I was basically trying to solve a problem that I myself have. I grew up in the burbs, and every other weekend would go to the Price Club, and then I went to the city and didn’t have a car anymore. Am I just supposed to get ripped off?
Feldman: So when you started, you were in the suburbs with a 40-foot pod in front of your house?
Huang: Yeah. [Laughs.] There was a clip of Hoda and Kathie Lee talking about it, and we were like, ‘Okay, we really need to get out of here when the orders come in.’
Feldman: What was the first item you sold?
Huang: Tide pods. The little plastic things, where they premeasure for you. It was shipped to Queens, New York.
Feldman: Were you standing around cheering?
Huang: We’re like ‘Omigosh, someone ordered something.’ From there we had a few days where we were trying to figure things out. It’s been a pretty crazy ride in less than three years. Now we ship anywhere in the lower 48 from four fulfillment centers.
"A big investor told me, ‘If you guys aren’t doing a few billion by the time 2020 rolls around, you... [+] really messed this up.’ Wow, that fires me up," says Boxed CEO Chieh Huang. (Photo courtesy of Boxed.)
FORBES' Next Billion-Dollar Startups
Feldman: Did you expect that?
Huang: In some ways, because entrepreneurs are dreamers. Now I look back on those 36 months, and I’m like, ‘Wow, that really happened.’ [Huang pulls out his laptop to a series of maps showing the spread of Boxed orders starting in the first quarter of 2014.] In the beginning, we’re high-fiving each other, this is a thing. Then Q2 came along, and we started spreading across the Midwest. In Q3 we tracked the dispersion of the U.S. population. We’re not taking customers away from Costco, and it’s not that people don’t have a car to go to Sam’s Club in Texas. And while consumers know Boxed as a retailer, a large portion of our business, and the fastest-growing portion of our business, is B2B. The FORBES office is probably not ordering all the coffee and snacks from Amazon.
Feldman: Didn’t Costco and Sam’s Club have websites?
Huang: Yes, they did, but there's only a tiny overlap with what's available in-store. It's virtually impossible to replicate your in-store shop online.
Feldman: How did you fund the business?
Huang: We raised $1.1 million in August 2013. In general, folks were like, ‘Okay, crazy idea, not what we would do, but here’s a small check and go figure it out.’ We were able to figure it out because our first company had a good outcome. We’ve raised a little under $150 million since then.
Boxed has become a mobile juggernaut selling vast quantities of toilet paper and paper towels.... [+] (Photo courtesy of Boxed.)
Feldman: At what point did you realize what you’d created?
Huang: Mid-2014. By that time, it was spreading and we were barely keeping up, just making sure everyone was getting their packages on time. There’s a vestige of our past we’ve never lost. Everyone starts in the fulfillment center. As we were treading water, sometimes we would sound these all-hands alarms and everyone from the office would go to the fulfillment center.
Feldman: You would go yourself?
Huang: Everyone. We would sound the alarm, and rent a van. Every person who starts at Boxed does shifts at the fulfillment center. It doesn’t matter if you are the general counsel or the COO. You line up for your morning shift. It allows us to maintain the culture that we are one big team whether you are in an office in New York or Silicon Valley or a warehouse in Vegas.
Feldman: How often do you go to the warehouse?
Huang: Once a week. I’m not on the line much anymore, but I can still pack a box pretty quickly.
Gallery: Spotlight: Next Billion Dollar Startups 2016 10 images View gallery
Feldman: What makes that difficult?
Huang: Our average order has 10 items. Most online orders have one or two so you can just visually look at it and grab the right box. For us, it’s a huge problem. How do you Tetris those 10 items into a box? We buy flat cardboard and cut and score it. It is literally the smallest box that can be used to fulfill that order.
Feldman: And you’re opening a new fulfillment center in New Jersey?
Huang: We’ve got a flagship one opening in New Jersey, with full robotics. I just got the keys to it. There’s a roundabout where the Garden State Parkway meets I-78 that used to be a dairy plant. It’s right under 150,000 square feet.
Feldman: How much did it cost, and what will it allow you to do?
Huang: It will be one of the most efficient and advanced, consumer products goods-focused facilities in the world. It is all custom-built. We aren't able to disclose cost, but it cost a lot more than my garage.
Feldman: What’s the potential for Boxed?
Huang: With all this money raised, the expectations are even higher. Retailers are one by one taking notice that this online thing is not going to go away. Consumer packaged good is one of the biggest drivers of the economy, and it is only 1.5% online. How crazy is that? The three warehouse clubs will generate $200 billion combined, 2% of it online and zero percent on mobile. I cannot find a larger consumer-facing industry with zero mobile.
Feldman: What do you think of Walmart’s acquisition of Jet?
Huang: I think it’s actually great for us. It showed that the industry is real and it’s here to stay, with the elephant in the room, which is Walmart, making a huge, gigantic move.
Feldman: Do you think it will work?
Huang: I don’t know. I’m on the edge of my seat to see if it will.
Feldman: Does Walgreens shutting down Drugstore.com have any impact?
Huang: That would be a tailwind for us. That one is mindboggling to me. No one thought of it five years ago when they bought it? I feel like someone must have won internally.
Feldman: What’s your background?
Huang: We were really poor growing up. I spent time in Columbus and later in Baltimore. It was tough times in Ohio when we lived there. My dad was between unemployed and just selling random knickknacks at a flea market. My mom was a cashier at a Chinese food restaurant. They both had awesome careers back in Taiwan, and they came here for my sister and I.
Feldman: Wow, that’s tough.
Huang: It was. We bounced around, and ended up in New Jersey, and have been in central Jersey since then. [When we lived in Baltimore] my mom worked at this Chinese restaurant near Johns Hopkins University, and she would always say, ‘We have to do what we can as a family to get your kids to go to Hopkins.’ She thought there was no way we would be able to go. I was able to go to Hopkins, and graduated in 2003. I ended up in a government-sponsored program to teach English in the Japanese countryside. I felt like I was wasting my life. I came back to law school and ended up becoming a corporate attorney.
Feldman: How did you go from corporate attorney to entrepreneur?
Huang: I got this call from folks I knew who said, ‘Hey you know this thing called the iPhone that came out? We want to make games for it. We’re going to quit our jobs and do it. Do you want to quit yours?’ I thought, ‘I’m not cut out to be a corporate attorney, so why not?’
Feldman: How much did you sell Astro Ape to Zynga for?
Huang: Eight figures. It was a very good result.
Feldman: How much did you make?
Huang: Enough not to worry about money anymore and pursue my passion, which was something else.
Feldman: So this was your impetus for paying for your employees' kids to go to college?
Huang: Going into our fulfillment centers brought back memories of how my parents struggled. I go to a fulfillment center, like the one we opened in Atlanta, and most people can’t afford a car. Some CEOs would say, ‘Oh, that’s capitalism.’ That’s not the kind of person I am and not the kind of team I want to build. I realized that education has been so transformative in my family’s life. I just thought, let’s do something. If we have a liquidity event, a large portion of my stake in the company is set aside of that. It’s a little under half the way we have been calculating it. I’m just a regular dude from New Jersey. If Boxed is successful, and you take 90% of my money away, I’ll still be all right.
Feldman: So you told the whole company that nearly 50% of your net worth will go to that?
Huang: [Nodding] There were a few tears. I gathered everyone in a room and just told them, ‘We’re in this together. Let’s make this thing successful so we can all be successful.’
Feldman: How does it work? Who gets the money, and how much?
Huang: The children of all full-time employees are eligible. We cover full undergraduate tuition, not housing, for either private or public college education, and there is no limit on that tuition cost.
Feldman: How many people work at Boxed now?
Huang: About 400. We just crossed 150 for fulltime employees, including non-hourly pick-and-pack.
Feldman: So is it turning out to be Millennials who are using Boxed?
Huang: We’re 81% between the ages of 25 and 44. When you look at the mainstream warehouse clubs they are boomers and seniors. It’s a new audience.
Feldman: What’s the biggest seller?
Huang: Paper products, toilet paper and paper towels.
Feldman: What’s the company’s valuation now?
Huang: It’s still sub-$1 billion. We don’t chase the private round valuations. No one benefits from that other than the founder’s ego.
Feldman: Would you want to go public?
Huang: I would love to. A big investor told me, ‘If you guys aren’t doing a few billion by the time 2020 rolls around, you really messed this up.’ Wow, that fires me up. But talk about setting the bar high. It’s a lot of pressure.
Feldman: How has it been for your parents to see you succeed?
Huang: Parents will be parents. Even now my mom asks me sometimes, ‘When are you going to go back and get a real job?’
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be29ba21bf8fadc72c194142a9ee476d | https://www.forbes.com/sites/forbestreptalks/2016/11/17/a-first-time-entrepreneur-at-56-sequoia-cheney-sold-a-stake-in-her-raw-food-snack-line-for-2m/ | How A Raw Food Diet Inspired This 56-Year-Old To Launch A $5 Million Snack Company | How A Raw Food Diet Inspired This 56-Year-Old To Launch A $5 Million Snack Company
Six years ago, after curing her diabetes with a raw food diet devoid of grains and sugar, Sequoia Cheney, 62, started selling some of her raw food concoctions to a local grocery chain near her home in Watsonville, CA. At 56 years old, she’d had a career running an art therapy program at a mental hospital and an art program at a maximum security men’s prison. Later she and her husband Jack worked as sound and energy healers, charging $125 an hour to private clients Though at first Cheney resisted starting a business, her macaroons caught on and in 2011, she founded Wonderfully Raw Gourmet Delights, which now produces three lines of ultra-healthy snack foods, including Brussel Bites, made of dehydrated, organic brussels sprouts, and Snip Chips, made from parsnips and coconut. They sell in 2,000 stores across the country including Whole Foods and Target. In 2015, revenue hit $5 million and Cheney decided she needed a partner to help expand the business. In October 2015, she sold a majority interest in the company to Fresca Foods, a producer of natural and organic food products in Louisville, CO. She’s remained on contract with Wonderfully Raw, which is changing its name to Sejoyia Foods in January. In this interview, which has been edited and condensed, she describes the breaks she got and the mistakes she made as a first-time entrepreneur.
Susan Adams: How did you decide to start your first business at age 56?
Sequoia Cheney: About 10 years prior to that, I was diagnosed with diabetes. My doctor put me on drugs and told me there was nothing I could do, that I would end up on insulin. It was the catalyst for me to look into anything I could do to reverse my diabetes. I ended up at the Living Light Culinary Institute in Mendocino, a raw foods chef school. I reversed my diabetes with fruits and vegetables and whole, raw foods that had no grains or sugar.
Adams: What were you doing for a living at the time?
Cheney: We had a healing center. My husband Jack is a sound healer and I do energy work. We charged $125 an hour.
Adams: How did your change in diet lead to starting a business?
Cheney: I started teaching cooking classes for $150 a class. People were buying hundreds of dollars of my food at each class. They would say, you’ve got to get this stuff on the market. I said, “I’m 56 years old, I don’t want to start a business.” But then an online farmers’ market heard about me and said, “Would you like to create 25 food items for our customers?” I did crackers and hummus and macaroons and almond milk.
Adams: Where did you produce your products?
Cheney: On Craigslist there was an ad that said, “Young kale chip manufacturer looking to share kitchen space in Watsonville.” We went down there and signed the lease.
Adams: How did that lead to you starting your business?
Cheney: The kale chip man tasted my macaroons and said, “You’ve got to put those on the market.” I said, “I’m 56 years old. I don’t want to start a business.” But he said, “go see Bonnie at New Leaf Market.” They had seven stores. So I put my little red chef’s coat on and took my basket of macaroons. She loved the macaroons and said, “How quickly can I get them?” That was January of 2011. I didn’t have a bag or a label.
Adams: How did you meet that order?
Cheney: The first day my husband and I and five hippie friends who helped out for free, scooped 1,295 macaroons with an ice cream scooper. I started to cry and said, “I’m so sorry, I’ve ruined your life and mine.” It was so much work. I didn’t realize there was so much labor involved in making this product. But we kept going.
Adams: How did you price your product?
Cheney: I called my son who was a chef in New York City. He had three restaurants. We used our cost of goods, and margins and we figured that out. We talked on the phone a lot. After six months I said to him, “Do you want to move back to California and become a partner in my company?” He set up our systems and everything we needed to make a quality product.
Adams: How did you expand into more stores?
Cheney: I hired a sales rep and through a distributor, we got into Whole Foods throughout northern California. At the time we were scooping 90,000 macaroons a day. We had 20 people scooping. We knew it was time to automate.
Adams: How did you finance your startup costs?
Cheney: My husband and I financed it in stages. We grew organically.
Adams: When did you become profitable?
Cheney: In the first year. We grossed $500,000 and 30%-40% of that was profit. The next year we did $1.1 million, then $3.3 million.
Adams: How did you expand across the country?
Cheney: I hired a master broker who has offices in every state. They call the buyers at retailers like Costco, Safeway and all the natural foods stores. When they go into meet with the buyers they may have 20 different lines they’re selling. They earn a 5% commission.
Adams: What was your biggest challenge as you grew?
Cheney: Keeping up with production, making sure the quality was consistent and making sure we could fulfill our orders on time.
Adams: What mistakes did you make?
Cheney: One big mistake was we were asked to do an infomercial. We were sold a bill of goods. It cost $26,000 and I think it was fraud. We thought we would get publicity, that it would be a commercial that would run as a three-minute story. It was during our first year and someone approached us. We were so excited that someone wanted to do something about us that we didn’t investigate thoroughly. I still get calls from TV shows on cable. They say, “our producer really wants you and we think your product would be an amazing fit into their show.” I say,” Is there a cost?” and they say, “We’re going to talk to you about that later?”.
Adams: What happened to your $26,000?
Cheney: They made the tape but nothing happened with it. It was a big lesson.
Adams: Were there any other big mistakes?
Cheney: I bought my first UPC codes, the codes that go on your packaging that get scanned, online. I put them on all the bags. But it turns out the UPC codes you purchase online are not the codes you’re supposed to buy for retail. There’s a national bank of UPC codes. We probably lost a couple of hundred thousand dollars because we had to change all the codes on our bags. It was a big mess but we survived.
Adams: After your hippie friends stopped working for free, how did you hire?
Cheney: We used an organization called Smart Hire. It helps people go from welfare to work. If you hired the people and trained them, you would get a subsidy for six months of their salary. We built a beautiful family of employees. Minimum wage was $8 and we were paying a couple of dollars above that.
Adams: How did the deal with Fresca Foods come about?
Cheney: The very first year we had a booth at Natural Products Expo West, the health food industry show. Liz Myslik from Fresca really liked our product and at the end of the show she said out of the 80,000 products, she wanted to watch Wonderfully Raw. Liz and I developed a relationship. A year ago when it was time for us to expand, she was the first person I called.
Adams: What was happening in the business that made you think you needed a partner?
Cheney: We were growing so fast, our expertise as a family couldn’t take us to the next level. Our revenue was $5 million at that point but we needed more cash for expansion. We knew we needed help and partners. We wanted the company to grow in a good way and eventually be a household name.
Adams: What can you tell me about the deal?
Cheney: We sold 69% of the company and they’re paying $2 million over a period of time.
Adams: Did you have any reservations about doing the deal?
Cheney: Not at this point. We interviewed other companies and I didn’t feel comfortable with some of them.
Adams: Did all of your employees lose their jobs?
Cheney: Yes. Fresca moved the production to Louisville, CO. But our people were grateful that they had skills and could take them somewhere else.
Adams: What’s your role in the company now?
Cheney: Last year, I was calling on our big sales accounts like Costco and Target. This year we’re going to be pushing a big media campaign and I’ll work on that. I’m on contract. My son is on contract and he’s developing new products.
Adams: Financially, how has the deal worked out for you?
Cheney: It’s been a financial boon, it’s given us security and it’s allowed us to do the work we want to do.
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416e7c20ead1204d1041c3dba5f900c9 | https://www.forbes.com/sites/forbestreptalks/2017/02/15/inventor-of-the-cut-buddy-paid-youtubers-to-spark-sales-he-wasnt-ready-for-a-video-to-go-viral/ | Inventor Of The Cut Buddy Paid YouTubers To Spark Sales. He Wasn't Ready For A Video To Go Viral. | Inventor Of The Cut Buddy Paid YouTubers To Spark Sales. He Wasn't Ready For A Video To Go Viral.
Cut Buddy founder Joshua Esnard paid grooming YouTubers to spark sales of his product. He's now... [+] racked up $700,000 in sales. (Photo courtesy of the Cut Buddy.)
Some businesses are planned out methodically, others take on a life of their own. For Joshua Esnard, the inventor of the Cut Buddy, a plastic hair template that sells for $14.99 on Amazon, it was the latter. He’d invented the simple device, which allows a user to keep sharp lines in a haircut, as a teen. A year ago, Esnard, 30, was working at Broward College, and running a side business selling the patented Cut Buddy out of his Fort Lauderdale garage. Then he commissioned a YouTuber called 360WaveProcess to make a video, the video went viral, and orders started pouring in. Esnard quit his job, and today sells the Cut Buddy on Amazon, Ebay and elsewhere, with sales of around $700,000, and, he says, significant profits. In an interview that has been edited and condensed, Esnard spoke about scrambling to fulfill orders after the video went viral and fighting back against knockoffs.
Amy Feldman: What’s your background?
Joshua Esnard: I was born in St. Lucia. I was an only child, and I knew how to mess with electronics and fix them. I spent a lot of my time drawing, and building gadgets.
Feldman: Why the Cut Buddy?
Esnard: My dad used to cut my hair. I was sick of the same hairstyle. It was the flat cut. I was going into middle school, and people were starting to wear the clothes and the sneakers, and I wanted a nice haircut. I started cutting my own hair at the age of 12. I messed up my hair many times. There were bald spots. I pushed my hairline back.
Feldman: How did that lead to the hair template?
Esnard: I realized most of the problems I had cutting my hair were at the precise hairlines at the side of my head and on the forehead, on the curves. I would mess up the curve. So at 13, I cut a little plastic template from folders that my mom or dad had for their teaching and I pressed it against my head and I ran a razor the first time and then a clipper. That thing came out sharp. It was nice and crispy. I was like, “wow.” I looked better than my friends who were going to the barber.
Feldman: How did you decide years later to turn that invention into a business?
Esnard: One day I was moving my treadmill into the house with my girlfriend, and we had to take the door down to fit it in, and she told me, “Put the door back on the hinges,” and I’m like, “I’m tired, I’ll do this some other time.” She said, “You never finish what you start.” That hit me in the heart. I opened this book of drawings, and there was the tool I had been using for years. I went on the Patent and Trademark Office website to see if anybody had invented something like this, and nobody had. I went to a patent lawyer the next week. I now have two design patents for the Cut Buddy.
Feldman: Why two patents?
Esnard: The Cut Buddy 2.0 hasn’t even come out yet. It is getting ready to release. The first one is great but the second one is amazing. My fiance’s dad is a CAD engineer who does drawings for NASA and the military. I sent him the design of the Cut Buddy, and that was child’s play for him.
Feldman: What happened after you designed the first one?
Esnard: We got it manufactured. I ordered a few hundred boxes and it came to my house. The garage was filled with boxes. I had videos on YouTube of me cutting my hair. At 28 years old, my hairline started receding. So I was running out of time to be a model for my own product. The comments were like, “this is stupid,” and “this guy shouldn’t even be on the video.” But for every 20 negative comments, there was an order. It plateaued at about 20 products a day. There were many boxes in the garage, and Pima [Mbwana, a childhood friend who is his partner in the business] was like, “I don’t like seeing these boxes, we’ve got to do something.” We scouted the Internet for more handsome, better-looking guys who had better hairlines. I reached out to them, and said, “I’ve got something brewing, and I don’t have much money, but if you make a video, you can be an affiliate and I’ll give you a coupon code and a commission.” There were four guys willing to do it. One was 360WaveProcess. Another was Nick Wavy. Another was Brdgng, a YouTuber for beards. And there was a guy in Australia called Wezstyles. These guys did videos for me. Things just changed. It went from 20 sales a day to 300, 400 sales per day, and that grew until March. Then on March 5th, we were going to see Cirque de Soleil for my girlfriend’s mother’s birthday, and my phone started glitching. I’m talking, ding, ding, ding, ding. Then my Facebook started glitching. I looked at what’s glitching, and it’s my merchant system saying you have an order. And it keeps going for hundreds of pages. I found out that 360 Wave Process went viral and hit 5 million views in minutes. Then he hit 8 million views in hours.
Feldman: How did that happen?
Esnard: You know these blog sites. There’s one called Wetal that does DIY. They went on YouTube, found the video, and sped it up from 10 minutes to about 15 seconds. They put it on Facebook, and it blew up. We went to Cirque de Soleil, and my phone was still glitching. I’m like, “Omigod, I just sold 4,000 products in a few hours.” You want to hear the big problem? I only had 200 products left in my garage.
Feldman: What did you do?
Esnard: I had a heart attack, not a real heart attack, but I had a heart attack. I consider myself an inventor/artist before a business owner. I set up a merchant system that took orders. They took their cut and sent me the money. I never looked into inventory control or anything like that.
Feldman: How did you get the inventory?
Esnard: I called my manufacturer and pleaded with them. I sent them all their money upfront. The main problem was damage control. PayPal froze my accounts. The bank was looking to freeze my accounts. People were threatening to sue me. We sent every customer an email. We said, “We’ll give you a full refund, or wait one more month and we’ll double your order.”
Feldman: You gave all of your customers a two-for-one deal?
Esnard: Correct. I was willing to take that hit to make good on those orders.
Feldman: Were you still working at this point?
Esnard: I was. I was at Broward College, mixing eight or nine hours a day at my job with another eight to 10 hours with the Cut Buddy. It was brutal. We were up all night stuffing packages.
Feldman: Where do you manufacture?
Esnard: We’re in China now. When I first started the business, I went to manufacturers in southern Florida. I didn’t get a response, or they wouldn’t touch it. So I went on a manufacturer sourcing site, and matched up with a plant in China.
Feldman: Did you try to get investors?
Esnard: We did pitch competitions.
Feldman: Were you on “Shark Tank?”
Esnard: No, I wasn’t. There were smaller ones. Black Enterprise had a pitch competition. And there’s a business tank competition in south Florida. Everybody asks me about “Shark Tank.” The Sharks bite at deals that have nowhere near the sales and margins we have.
Feldman: What are sales?
Esnard: We have sold 55,000 units. We’re looking at $700,000.
Feldman: Are you profitable?
Esnard: Oh yeah. We were profitable after the second month. The MSRP of the product is $14.99, and that is eight times what it costs to produce.
Feldman: How much do you pay in commissions?
Esnard: The customer saves 10% with the coupon, and he gets 10%. The rest is ours. It still leaves beautiful margins for us.
Feldman: How much have you spent in total commissions?
Esnard: It’s in the range of $15,000. After 360 Waves blew up, we went from being sold on my website to Amazon, Overstock, Jet.com and now the Daily Grommet. Amazon is just killing it. My product is number three in haircutting kits, and was number one when it first came out. It’s crazy, right?
Feldman: How did the Amazon deal come about?
Esnard: They have reps who scout for new products. I honestly didn’t even know how to set up on Amazon until they reached out to me. We started on Amazon last February when I was still selling from my garage on my website. Now the fulfillment center is in Lee, Mass.
Feldman: That was before the videos went viral?
Esnard: Yes. After I went viral, Amazon ran out. It went into a deficit of like 200 products. Your seller account goes into jeopardy on Amazon if you don’t fill an order quickly, so those guys who rep my product were like, “Dude, you need to get it together.” My manufacturer was nice enough to send me 200 products when they started manufacturing so I could save my Amazon account.
Feldman: So then what happened?
Esnard: After Amazon blew up – oh, this is good – and we went viral, we started getting some wholesale clients. Then I started seeing products similar to mine. Chinese companies on Alibaba, and Ebay, were putting my product on there with my actual picture of my ugly face. I have been knocked off more than 700 times. My guy Alex [Kresovich, his third partner] hunts for knockoffs. If you have a product that is booming, you need to do that. Every week, he looks on all the merchant systems to see who is copying my product. Now it is down a lot.
Feldman: What do you do when you see those knockoffs?
Esnard: Every one of these merchants has the opportunity to complain about knockoffs.
Feldman: So you spend a lot of time fighting against patent infringement?
Esnard: Alex spends hours and hours on that every week. The more he takes down, the more we sell. If I didn’t do that, I would have just bled out.
Feldman: How many people do you have now?
Esnard: It’s me, Pima and Alex. I gave Alex and Pima a little ownership in the company.
Feldman: How much do you own?
Esnard: I own 79%.
Feldman: You still have no investors?
Esnard: Nope. I started this business with about $5,000 of my own money, and maybe $5,000 for the patents. My parents and grandparents helped with nearly $1,500. The rest was just credit cards. I was down to pennies with my credit cards. I went to the pitch competitions hoping someone would bite and we would get an investment. But my product was too weird and low tech and every time I went someone with an app won. After those pitch competitions, I cursed a lot. But if we had won, maybe I would have gotten lazy.
Feldman: What’s the plan from here?
Esnard: We want to get a handful of retail stores, like CVS and Walgreens. The purchase of beauty and grooming supplies is greatest at those stores. I also want to get an endorsement, to put a face to our product. It doesn’t have to be a mainstream celebrity, but someone who is growing. Leveraging someone else’s popularity by giving them a piece is the future of marketing.
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6fe666c2b12310c819fab2d938d6eaab | https://www.forbes.com/sites/forbestreptalks/2017/03/28/once-a-struggling-single-mom-amy-nelson-takes-over-venture-for-america-a-teach-for-america-for-entrepreneurs/ | Once A Struggling Single Mom, Amy Nelson Takes Over Venture for America, A Teach For America For Entrepreneurs | Once A Struggling Single Mom, Amy Nelson Takes Over Venture for America, A Teach For America For Entrepreneurs
Amy Nelson. Courtesy: Venture for America
The first in her family to go to college, Amy Nelson, 33, was six months pregnant when she graduated from college. Instead of seeking out a well-paying corporate job, she scraped by on meager salaries at two international relief organizations. Attracted by the emerging field of impact investing—investing in companies with social missions--she earned a business degree from NYU’s Stern School and in 2013, she took a job as a fundraiser at a two-year-old non-profit, Venture for America. Modeled on Teach for America, which recruits college graduates from top schools to work as teachers, Venture for America draws from the same population. It finds jobs for each class of 200 fellows in startups located in 18 U.S. cities like Detroit and Birmingham, ALA, that lack the allure of Silicon Valley or New York. Before they start their jobs, fellows go to a five-week boot camp hosted on the Brown University campus where they take crash courses in business, sales, marketing and product development. Venture for America does not subsidize salaries, which start at $38,000. The organization was founded in 2011 by Andrew Yang, 42, a graduate of Brown and Columbia Law School who ran a test prep company acquired by Washington Post/Kaplan in 2009. Yang is stepping down March 28 to write a book, and Nelson is moving up from managing director to the top job. In this interview, which has been edited and condensed, she explains how VFA tries to help rebuild cities and encourage entrepreneurship.
Susan Adams: Were you always interested in entrepreneurship?
Amy Nelson: No. I was raised by a single mother in a small town outside St. Louis. It was a low-expectation environment where going to college was not the norm. Still, I was involved in Model U.N., and I wanted to be an ambassador.
Adams: How did you pay for college?
Nelson: I was my high school’s valedictorian and I had teachers who believed in me. I wound up going to Claremont-McKenna College, where they were very generous with financial aid.
Adams: Claremont-McKenna graduates a lot of people who go into well-paying corporate jobs. As a single parent, why didn’t you choose that kind of career?
Nelson: I always knew the corporate lifestyle was not for me. I was also naïve. My mother had raised three children by herself on a limited income. I had faith I’d figure it out. My calling was to create opportunities for others.
Adams: How did you balance your first job with your parenting responsibilities?
Nelson: By not sleeping for the first two years. I was a program officer for Relief International, a medium-scale international development agency. I’d be on email until three in the morning. My daughter’s crib was in a walk-in closet.
Adams: Why did you go to business school?
Nelson: My next job was at the Cambodia Children’s Fund, where we were doing direct charity. Increasingly I felt called to use business solutions, and I wanted to explore the new space of impact investing and social entrepreneurship.
Adams: What brought you to Venture for America?
Nelson: I was at NYU Stern business school and I read about VFA in The New York Times. They needed someone to do fundraising, which I told myself I wasn’t going to do after business school, but I knew they were on the precipice of doing big things.
Adams: Why should a non-profit help for-profit businesses hire people?
Nelson: Our mission is to revitalize cities and communities through entrepreneurship. Our startups are in places like Cleveland, Pittsburgh, St. Louis and Detroit, cities that struggle to retain and attract talent. If you’re a startup in Cleveland, you don’t have the bandwidth to recruit from Yale. We also know that tech jobs have a downstream effect in terms of creating other jobs.
Adams: How do you find and screen the companies where you place your fellows?
Nelson: We’re kind of like venture capitalists. We rely on word-of-mouth and we talk to local incubators and accelerators. We’re looking for companies willing to spend time mentoring young talent.
Adams: How many failures are there among the companies where you’ve placed people?
Nelson: Less than 10% of the 200 companies we’ve partnered with. Also 95% of our fellows complete two years of our program. Our alumni have gone on to start 26 companies and they’ve cumulatively created 150 jobs.
Adams: Tell me about a company that failed and what it did wrong.
Nelson: Dinner Lab in New Orleans [which produced one-off dining events]. They raised a bunch of money and they were under a lot of pressure from investors to expand very quickly. They were in 30 markets in a short amount of time and the cash ran out. In New York, you couldn’t get a ticket to their dinners but they had a hard time replicating that in Milwaukee. The lesson was, don’t expand too rapidly.
Adams: What’s a success story where Venture for America made a difference?
Nelson: A company called Upserve in Providence. One of our first fellows, Sean Lane, went there from Boston College in 2012. They do back-end technology for restaurants like reservation systems and credit card processing. When he started, there were 30 people on the team. Now they have 80. He was a key person on their sales team and he’s now leading revenue and operations.
Adams: What kind of follow-up do you do with fellows after they finish your program?
Nelson: We have our own accelerator and we make seed grants of between $10,000 and $35,000. We spend less than 10% of our $6.5 million budget on it, but last year we helped seven new companies and six companies the year before.
Adams: Why is your founder Andrew Yang leaving the organization?
Nelson: He’s in the process of writing his next book, about the future of the labor market, but he’s going to remain a board member. He’ll talk about his next endeavor in due course.
Adams: What’s the toughest thing about running your organization?
Nelson: We have to hustle every year to keep up our funding and to identify private philanthropies aligned with our work. The other challenge is finding the right partners in the cities where we work.
Adams: Do you ever think about changing gears and becoming an entrepreneur?
Nelson: I like being on this side of the equation. I like facilitating and connecting people and supporting others’ work. For now.
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4280959a078881f820a2de9b70d1f20d | https://www.forbes.com/sites/forbestreptalks/2017/12/05/john-lippman-reinvents-book-of-the-month-as-a-subscription-box-business-for-millennial-women/?sh=2c017d0f6dcf | Book Of The Month Reinvents As A Subscription Box Business For Millennial Women | Book Of The Month Reinvents As A Subscription Box Business For Millennial Women
Book of the Month's John Lippman Courtesy of Book of the Month
Book of the Month Club, founded in 1926, was once one of the most influential players in the book industry. But as Amazon has reshaped book selling the club’s membership has shrunk and the company has changed ownership several times. As part of Bookspan, a collection of book clubs, it was run as a joint venture between Time Inc. and Bertelsmann, until Bertelsmann bought out Time Inc. and then Bookspan was acquired by an entity controlled by media investor Jahm Najafi. In 2012, John Lippman, 43, previously an executive at music-rights firm Evergreen Copyrights, bought a majority stake in Bookspan from Najafi for an undisclosed sum with the idea of relaunching Book of the Month online. His idea: Millennial women, used to buying subscription boxes from Stitch Fix and Birchbox, would breathe new life into the outdated book club if he made the business digital and offered a handful of great books from emerging fiction writers. To do that, he shut the club down, moving its existing members members to Bookspan's other clubs, then relaunched Book of the Month in late-2015. Today, subscribers pay $14.99 a month and get to choose among five hardcover books, with extra books available to subscribers only at $9.99. Revenue hit $2 million in 2016, and Lippman expects it to surpass $10 million this year. In an interview that has been edited and condensed, he spoke about the struggles and opportunities of reinventing a faded brand.
Amy Feldman: What brought you to buy the parent company of Book of the Month?
John Lippman: We had sold Evergreen to BMG Rights Management [a division of Bertelsmann], and then I was doing some other entrepreneurial and deal-oriented work. An investor who owned the business and had bought it from Bertelsmann called and asked if I was interested in taking it over. The timing worked out.
Feldman: Why did you want a struggling book club?
Lippman: I have always loved books and authors. I was interested in taking some of the things I had learned in the music business and applying it to books. With Amazon’s dominance, the project was clearly going to be challenging. But what I thought was interesting was that there was not a lot of innovation in the space because nobody was trying. Amazon is not a very good place to discover what you will like. I saw the opportunity to redo Book of the Month in a way that would make it relevant again.
Feldman: How much did you pay for the acquisition?
Lippman: I don’t want to disclose that. It was a lot of sweat equity, a lot of work. The thing was troubled in a variety of ways.
Feldman: So if you didn’t buy it, it wouldn’t have survived?
Lippman: I think if I didn’t do it, it probably wouldn’t exist today. That would be pretty sad. It’s 92 years old, and it was just getting crushed alongside other bookstores.
Feldman: Bookspan had a lot of different clubs. Did you buy all of them?
Lippman: It is all the different ones. The one we’re focused on is Book of the Month. We shut it down completely and relaunched from scratch in late-2015. It had a great legacy and very high name recognition. We thought there was a great opportunity to bring the brand into the modern era. The thing we relaunched is very different than the old club. It has the same mission but a different business model. We couldn’t do it halfway. We had to take a risk.
Feldman: How did you come up with what you launched?
Lippman: We started with what was missing from the consumers’ perspective. We wanted to have a very focused, limited selection of books we believed in each month, and we wanted to shine a spotlight on books that otherwise wouldn’t get attention. Most of the attention goes to the most famous authors and it has become very difficult for up-and-coming authors. We had some debates about how few books we could pick each month and still have a business. Can you only have one book? Probably not. We figured five was focused enough. It gives us enough breadth of choice each month that each person can find something they like.
Feldman: You use judges to help pick the books. How did you come up with that idea?
Lippman: Book of the Month Club always had done that. In 1926, they were more authoritative, they were people who were arbiters of culture. We interpreted it a little differently. We don’t come from an authoritative perspective, but with the idea of getting a lot of voices.
Feldman: Are you doing similar relaunches of the other book clubs?
Lippman: The other clubs serve our members. We haven’t done a deep dive. There is one we are deep into preparing for a relaunch. That is children’s Book of the Month. We may do it under a new brand identity. It’s the one property that you could be at a dinner or a cocktail party, and people will say, ‘Please do children’s.’ We’ve also been in discussions with various media companies about launching book clubs for them.
Feldman: How many different book clubs are there?
Lippman: 15.
Feldman: Does it still make sense to have 15 of them?
Lippman: The ones we have make sense. There were some we combined or shut down. There’s a consumer base at the other clubs and we continue to serve our members there. We don’t want to dilute our focus on Book of the Month to the extent we do other relaunches.
Feldman: What happened to the previous members of Book of the Month when you shut down?
Lippman: We moved those members to some other clubs. Most of those customers were in their 60s and 70s. Now it’s 95% women, and most are in their 20s and 30s.
Feldman: Why did you target women in their 20s and 30s?
Lippman: We wanted to do fiction, and we wanted to focus on up-and-coming authors. Older readers tend to have favorite authors who have written many books, but younger readers are looking to find their favorite authors. And generally speaking it is younger women who sign up for subscription services like Birchbox and Stitch Fix. That is an audience that shops online and has enthusiasm for subscription lifestyle services.
Feldman: How many members does Book of the Month have?
Lippman: We have about 100,000 active members. We are also a marketing platform for new books. We have 330,000 Instagram followers and we’re doing millions of impressions on Pinterest and we have celebrity tie-ins. We’re running TV ads and subway ads. We are in the New York City subways promoting Book of the Month and the books.
Feldman: What are revenues?
Lippman: In 2016, the first year we launched, we had roughly $2 million. This year, we’ll finish between $10 million and $15 million.
Feldman: Are you profitable?
Lippman: We’re investing in growth at this point so we are not profitable.
Feldman: How long will it take to become profitable?
Lippman: It depends how fast we grow. We have the ability to be profitable at a scale that is not that much bigger than we are now.
Feldman: Explain to me more how the business model works.
Lippman: We work with all the major publishers and many independent publishers and identify the books that will be best for our members. We negotiate a license agreement where we pay in advance for the rights to produce the book ourselves. We take the risk that we may print a dud or have extras. Throughout the month we reprint titles, and our most popular titles may be reprinted several times.
Feldman: How did you convince consumers that this was a brand they want?
Lippman: We have tried and continue to try every approach to get our message out.
Feldman: What has worked and what hasn’t?
Lippman: Facebook, Instagram and Pinterest work very well. We’ve experimented with other marketing channels. With messages, it’s a mix of focusing on the specific books we’re featuring and explaining the brand. It’s a little tricky to balance those two. Sometimes people will see the Tom Hanks’ book [Hanks’ “Uncommon Type: Some Stories,” was a November pick] and say, “I want to get that.” In other instances, for the club to scale we have to tell what our mission is.
Feldman: What have been the biggest challenges of bringing back the brand?
Lippman: Ooff. What has not been a challenge? Everything has been hard-earned. Building momentum from zero is very, very hard. I have always meant to look up who that very first person was to get a membership who wasn’t friends or family. There are also lots of product things. Figuring out what kinds of books members love is a challenge that never ends. And figuring out what kinds of features are important. There are many things we can do for that audience.
Feldman: Like what?
Lippman: Social. We have a discussion forum. Ebooks we can easily do, but our members haven’t clamored for it. Even the shopping experience, and how narrow or wide to make it for our members.
Feldman: What kind of extras do you offer now?
Lippman: We often have one or two extras, which could be a backlist book or a book we didn’t think was exactly right for the whole club. We did a promotion with Josh Gad who is starring in “Murder on the Orient Express.” I don’t think you should watch the movie and read the book, so we said, “Let’s pick our other favorite Agatha Christie and promote it.” We picked “And Then There Were None,” and did a joint promotion with Josh on Instagram. Sometimes we do celebrity guest judges. We had Gabby Sidibe in October, and also sold her book because we were working with her. Our main focus is the five selections on the site, but there are a couple hundred books total.
Feldman: Why was it so hard for the previous owners to bring it back?
Lippman: The business was declining and Amazon was rising. It’s hard for large organizations to embrace the amount of change that is fundamentally needed to transition a property instead of saying, “What if we tweak this?” I made no compromises. People ask, “What about the old members?” You have to set aside the heritage and mission and all that stuff from the past and look into the future five or 10 years. It was almost a startup.
Feldman: What’s the long-term potential?
Lippman: There’s no logical reason it can’t be 500,000 people. Even at that size it would be a very small fraction of the book business. In order for the club to be successful, it doesn’t have to be huge. We’re a very small portion of the industry, but a very large portion of the books we sell. Between 75% and 80% of the books we feature are by relatively unknown authors, and about 80% of the authors are female. We sometimes sell 15,000 or 20,000 copies, and you can see that everyone else sold 5,000 copies. We are shining a spotlight on a limited number of great books.
Feldman: Tell me more about how you do that.
Lippman: Because we are focused on this audience, we have opportunities to market a book that you cannot do by yourself. We featured Ruth Emmie Lang’s “Beasts of Extraordinary Circumstance.” We’re running subway ads, and one of the frames features that book. Nobody was going to run New York City subway ads for that one book, but we found it and believed in it. Last year’s most popular book was Bryn Greenwood’s “All the Ugly and Wonderful Things.” At the end of the year, it won our book of the year award. We reprinted a special edition with a special book cover. Not only did a surge of our members buy it, but it hit the New York Times bestseller list just after we announced it won. That was very rewarding. We are helping launch a career.
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64f3b05271bfc6a0f07c65576135852f | https://www.forbes.com/sites/forbeswomanfiles/2011/08/18/todays-job-candidates-fail-to-make-the-grade/ | Today's Job Candidates Fail to Make the Grade | Today's Job Candidates Fail to Make the Grade
By Abby Tracy
Unemployment numbers in the United States continue to rise, leaving a large pool of talented and eager professionals ready to work. Yet, according to members of The Commonwealth Institute (TCI), many job seekers are failing to make the grade in the interview process when a potential opportunity is presented to them.
Meet Janet Santa Anna, president of The Resource Connection in Middleton, Mass. As a recruiter for the past 24 years, she has observed improper etiquette in the interview process.
“I’m appalled when candidates come to interviews or attend job fairs with their phones on,” said Anna. “More shocking is when they answer a call or respond to a text and don’t acknowledge that this is not acceptable or appropriate behavior.”
Anna surmises that technology could be partly to blame for some of the lack of “real communications skills”, since many people, young and old, now rely on texting and social networking as their primary forms of communication. At a recent association meeting with 1,800 professionals, she couldn’t help but notice a majority of attendees emailing and texting on their phones after each session.
“We used to talk to each other!” she exclaims.
Catherine Friend White, president of Fin Arc LLC Investment Management in Needham, Mass., was struck by the large number of spelling and grammatical errors found on applications received for a recent job opening at her firm.
“If they’re sloppy with their resume and cover letter, what will their customer interactions be like?” asks White.
Kathy McDonough of Community Health Network in Holliston, Mass., cites examples of candidates arriving late to interviews without explanations or apologies.
“When we interview candidates, we take all of this behavior into consideration. It’s part of an ongoing checklist that paints a picture of the candidate,” McDonough explains.
Similarly, divulging too much personal information, whether during the interview or on social media sites (yes, potential employers look for and can find that information), can also be detrimental.
Sue Romanos of CAREERXCHANGE in Miami, Fla. – a temporary placement agency, describes a candidate who discussed that the same day of the interview was the anniversary of her divorce. She was disqualified for “too much personal information.”
Romanos also added that candidates tend to overlook the obvious with regards to their general appearance. She’s had people walk in to interviews with cropped pants and inappropriate hair ornaments. The strangest one of all was a candidate who wore odd-looking contact lenses thereby giving the appearance of having alien eyes. As to be expected, the employer could not get past this, so the candidate was immediately turned down.
These stories certainly elicit cringes from business owners looking to hire as well as from the many job seekers who maintain high standards of etiquette and professionalism. The good news is that there are small changes potential candidates can make to curtail negative behavior and move to the top of the list.
Women CEOs who comprise membership in The Commonwealth Institute offer the following strategies for success:
Carefully review your resume for mistakes. Grammar and spelling speak volumes about your capabilities as a future employee. Spell check exists for a reason – use it on all materials that you distribute. Honesty is the best policy. Don’t pump up your resume with lies about your background and skills. If you are hired, any fabrications can easily be discovered by your new colleagues and supervisor. Perform due diligence and research the companies to which you are applying and prepare a list of relevant questions to ask during the interview. Weave professional attire choices into your overall job search strategy. How you present yourself not only helps your self-confidence, it ensures a positive first impression. Set boundaries on what you share about your life – both on the web and in person with potential employers, and don’t ask personal questions of your potential employer and/or interviewer.
Mary Lou Andre of Dressing Well, a full-service wardrobe management and consulting firm in Needham, Mass., tells her clients that viewing their professional images as visual resumes is a key to success. She wisely suggests putting yourself in the shoes of the interviewer.
Would you be impressed if you received a resume with typos or met with a job candidate who looked at texts or shared too many personal details during an interview? Competition is fierce in today’s job market and making a positive first impression can provide an edge. Don’t be left in the dust because of these easily amendable behaviors.
Abby Tracy is the program director of The Commonwealth Institute, one of Boston’s leading women’s organizations whose mission is to help CEOs, entrepreneurs and corporate executives build successful businesses. www.commonwealthinstitute.org
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f37d189e17a81c3e30c4d3830e58943d | https://www.forbes.com/sites/forbeswomanfiles/2011/12/21/where-are-the-women-in-tech-on-30-under-30/ | Where Are The Women In Tech On 30 Under 30? | Where Are The Women In Tech On 30 Under 30?
If FORBES' editors cannot find them, then clearly the computer science deans, VC firms and angel investors are also, still, missing half the story.
By Janet Vertesi
In 2011, even Barbie can be a Computer Engineer. Just don’t expect her to make it to FORBES’ Top 30 under 30.
In row after row of the “Technology” section of this influential list of business leaders, young faces beam at us, the brightness of their smiles matched only by the certain glow of their computer screens. Their credentials are impeccable; their demeanors range from quirky to stoic, from Jobs to Gates. But with only three exceptions, these top 30 are young men. And those few women who are featured are posed alongside their male colleagues.
Where are the next Sheryl Sandbergs (Facebook)? The Genevieve Bells (Intel)? The Meg Whitmans (eBay & HP)? Where, to put it plainly, are the women?
Perhaps FORBES is not entirely to blame. They may be simply representing the field as they find it. And in this field of high-tech entrepreneurship, women are apparently a rare breed.
Research on women’s careers in Science, Technology, Engineering and Medicine (STEM) demonstrates that female contributions tend to be consistently undervalued. Women face a range of structural inequalities from graduate education to grant funding to tenure cases. Like men in computing, women frequently work as part of a team; unlike men, they tend to credit this teamwork for the larger part of their success. Young women in computing are often given the more routine tasks of coding instead of the visionary work. Small wonder that few of them stick around to see the rewards of their labor.
Sociological research, too, shows that women face uphill battles in entrepreneurial roles. One experiment run by Sarah Thébaud of Princeton University placed exactly the same resume and “pitch” in the hands of participants, varying only gendered names on the header. When asked to rate expertise and likeliness of return on investment, projects with female names were consistently rated less viable. Not only structural inequalities such as childcare are to blame for women’s underrepresentation in entrepreneurship.
So visionary female technologists may be harder to find. But perhaps it is just a question of knowing where to look, and what to recognize when you see it.
My own work in Human-Computer Interaction takes place alongside hundreds of innovative young women under 30. Their research and design is on game-changing topics from how people in sub-Saharan Africa and India use computers and cell phones, to the use of Twitter and social media during crisis, to how digital gaming contributes to business relationships in China, to how American families control internet use at home. Two of these young women founded Frestyl, the first location-based online music finding service. Apparently this does not count as “technology.”
In my work at NASA I am also surrounded by brilliant young women engineers. They are busy flying the Cassini spacecraft around Saturn and building the next generation of Mars Rovers. In Forbes’ own magazine, a young woman is profiled whose Silicon Valley startup focuses on an innovative energy storage system. Apparently this does not count as “technology” either.
This is not to say that the young men selected for this prestigious showcase are not deserving. I know one of them personally: he is extremely talented, thoughtful, innovative, ambitious and hard-working. We all know that he, and the others featured here, will go far.
But in a world where the hoodie is the new powersuit, Computer Engineer Barbie doesn’t own a single one. Our mental image of the high-tech entrepreneur is still that of a young man, in jeans, t-shirt (or signature turtleneck), and hoodie, tinkering in his garage to build the first Apple computer, or putting his college social networks online. There are no women in this picture, no alternatives to explore. This mental image may be the most exclusionary factor of all.
The top 30 young women in technology are here, under our noses. If FORBES' editors cannot find them, then clearly they, computer science deans, VC firms and angel investors alike, are all, still, missing half the story.
Janet Vertesi
Janet Vertesi teaches Sociology of Technology at Princeton University, where she is a member of the Society of Fellows. She holds a PhD in Science and Technology Studies from Cornell University.
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61fde0afd5d9c98fb2ec96f4a6f52b7e | https://www.forbes.com/sites/forbeswomanfiles/2012/06/20/top-100-websites-for-women-2012/ | Top 100 Websites For Women 2012 | Top 100 Websites For Women 2012
By Meghan Casserly and Jenna Goudreau, staff reporters.
We're thrilled to present the third annual ForbesWoman Top 100 Websites for Women.
As the official method to our madness, this list is the sum of a year's worth of Internetting, asking around and getting lost down the rabbit hole of the best (and sometimes weirdest) of the Web. We're forever indebted to our friends in the ForbesWoman community: from the ongoing conversations in our Twitter, LinkedIn and Facebook groups to the brilliant contributors and commenters on our site, you continually inspire us, enlighten us and not-so-gently nudge us to look past our own personal tastes online.
So what do we look for? Informative and compelling content, smart navigable design, engaged communities and, of course, a voice that speaks to and for the female reader that’s kept fresh, timely and in-the-know by savvy staffers and impassioned writers. Inspire us to save money, change the world (or just ourselves), climb the ladder or strike out on our own and we’re getting on board. Of course, there are extra fun points for the sites that suck us in and help to pass the often-painful three-oh-clock hour. But here's the real challenge: Does it have that amorphous and often indefinable quality that inspires us to share--with our social networks and in e-mails and conversations with our moms, sisters, friends and colleagues.
This year you’ll find some familiar favorites—no one can dispute the “best of” status of bloggers Dooce and Penelope Trunk, who don’t just chime in on the mommy wars—they often start them. We’ve also kept up with some of the giants: 85 Broads, LearnVest and Catalyst have become old friends—and contributors to ForbesWoman--and you can rest assured they’re bookmarked.
But you’ll also notice a slew of new names on this year’s list. It’s no surprise, really. When we posted a call for candidates, we received more than 1,100 suggestions (and counting) from commenters, contributors and staffers.
One of our nominations was Hello Giggles, the new content site founded by actress Zooey Deschanel and two L.A. friends, Molly McAleer and Sofia Rossi. Content is girly if not saccharine-sweet--how-tos on nail art and something called a BunnyCam (yes, really) get top-billing—but Deschanel describes the mission as broader. “If we can be the place where 13-year-old-bloggers are engaging with 30somethings, finding out how much all women really have in common, then I think we’re on to something,” she says.
Commenter Tamara Simon nominated The Full Plate blog to help “Busy parents nourish their families and themselves with fabulous meals. [Blogger] Eila Johnson does a great job vetting recipes and placing them in the context of our busy lives. She is a creative dynamic force who is mindful of balance and her blog reflects these values.”
One thing you’ll notice from last year are two new areas of focus, one highlighting the rising tide of female entrepreneurs and another that takes note of the cultural shift of the millennial workforce.
Check out the list, and let us know what you think. Are we missing something major that’s important to your life? Give us your picks in the comments!
85 Broads: A members-only international network of 20,000 inspired, empowered and connected women started by female staffers at Goldman Sachs. Nice offering of blogs from members on work-life issues.
Alexandra Levit: A career blog by author and journalist Levit that regularly dispenses wisdom on all things work.
Babble: A community for new parents with advice, recipes, news and resources, plus a witty blog called Strollerderby.
Birds On the Blog: This London blog features career advice and breaking women's-interest news from 11 resident bloggers (known as "the birds.") All ad revenue from the site is used to fund the education of 5-year-old Ugandan twin girls, Princess and Perfect.
BlogHer: The premier women's blog platform is celebrating its sixth year this year--and it's still going and growing.
TheBloggess: Jenny Lawson blogs about sex, love and motherhood, and whatever else comes to mind.
The Boss Network: A community of entrepreneurial women who support each other through conversation, online and event-based networking.
The Bump: The Bump, from TheKnot, is a community website for expecting and trying-to-conceive couples that offers support, advice and features to women and their partners.
Brazen Careerist: Serial entrepreneur Penelope Trunk writes about work and life for over 40,000 subscribers. Her top piece of advice? Control your professional identity to stay employable.
CafeMom: An online community for moms that hosts parenting forums, games and blogs.
Catalyst: This website by nonprofit group Catalyst hosts research about women in business and an insightful blog, Catalyzing.
Change The Ratio: The tumblr presence of the Change The Ratio campaign, which aims to tip the scales on women on the corporate and entrepreneurial level, features updates from women’s events and inspirational content. Take Sheryl Sandberg’s Harvard grad address: “If you’re offered a seat on a rocket ship, don’t ask what seat. Just get on.”
Chic CEO: A slick site for women with the entrepreneur bug. Advice covers everything from patents and copyrights to the pros and cons of buying a franchise, but a particular emphasis on downloadable tools (think business plan outlines and contracts) makes this a must-visit.
Colored Girl Confidential: This online community for women unpacks race and gender issues, providing thoughtful “career and life advice that is as fierce as you are.”
Cool Mom: TV host and pop culture writer Daphne Brogdon blogs and posts videos to fuel the "momversation."
Corporette: A fashion and lifestyle blog for corporate women: lawyers, bankers, MBAs, consultants and "otherwise overachieving chicks."
A Cup Of Jo: Magazine writer Joanna Goddard has a great eye for art, food and all-that's-good on the Internet. Her posts are honest, insightful and, most notably, always share-worthy.
Daily Worth: A personal finance and business site for women updated daily with money tips and blog posts. Their motto is: "We believe all women should be in charge of their financial health."
Daily Mom Report: Think Drudge Report, only more organized, and curated with moms in mind. One-stop-shopping for every headline you might otherwise have missed.
Daily Muse: A career advice hub for the Gen-Y careerist, the newly relaunched site features accessible (and entertaining) advice for recent grads and working gals and a bang-up portal for job hunting.
Danielle Laporte: A contrarian self-help guru, Danielle Laporte is the author of The Firestarter Sessiona and doles out unconventional wisdom for creative and professional types. From “how to maximize procrastination” to “how to look hot in a professional photo,” her take is refreshing and inspirational.
Deal Seeking Mom: With five kids, Tara Kuczykowski lives on a budget. She blogs about money-saving tricks, alerting readers to freebies, coupons and sales. Extreme couponers, beware: this girl's good.
DivineCaroline: A curated blog platform for women, DivineCaroline hosts entertaining and thoughtful content about work, travel, style and relationships. Recent noteworthy post: “The Elevated Perspective on Dating: Tips for Tall Women.”
Dooce: With stunning pictures and crisp wit, mom and former Web designer Heather Armstrong chronicles her life and the world around her.
Dr. Mommy Online: Chiropractor and mom of five kids, Dr. Daisy Sutherland (a.k.a. Dr. Mommy) runs this useful and well-organized site dedicated to helping busy parents better manage their families, work, health and lives.
ED2010: What began as a project for aspiring young writers who hoped to attain editor status “by 2010” is still going strong two years past deadline. The hybrid networking hub, educational resource and font of media industry advice is a must-see for those aspiring to join the death rattle of the publishing biz.
Entrepreneurial Moms: A networking community for mompreneurs and work-at-home moms in North America, Australia and the United Kingdom.
The Everygirl: An everything-you-need-know site, The Everygirl inspires career-driven, creative young women to create the stylish, successful lives they’ve always dreamed of through finance, fashion and travel tips.
The Everywhereist: Geraldine DeRuiter got laid off and became a full-time traveling companion to her frequent-flyer husband. The result? From the mundanity of our cubicles we get an on-the-ground view of their journeys.
Feministe: A feminist blog that tackles gender issues with both humor and gravity.
Feministing: An online community and blog with a feminist perspective that analyzes how pop culture and mainstream media reflect modern women.
The Football Girl: Melissa Jacobs blogs about football, "because women love football too." Her site features game analysis, exclusive interviews with players and fantasy football tips for women.
The Full Plate Blog: Mother-of-two Eila Debard Johnson honed her cooking skills by night while working at an investment bank by day, and now runs this cooking blog for busy parents. She regularly posts recipes that are healthy, quick and easy-to-follow.
Generation Meh: By ForbesWoman contributor J. Maureen Henderson, Generation Meh focuses on “providing practical personal development tips, tricks, and guidance for twenty and thirtysomethings who shun (or would like to shun) the 9-5 corporate grind.”
GetRaised: A seriously simple step-by-step guide to getting a pay bump that was created with women in mind. According to the site, 65% of women that have used it have, in fact, earned a raise. Average amount? About $6,700.
The Glass Hammer: An award-winning blog and online community created for women executives in finance, law, technology and big business.
The Hairpin: This blog, edited by freelance writer Edith Zimmerman strives to be like "a low-key cocktail party among select female friends." Beauty, food, cocktails, general quirkiness.
Healthy Women: A go-to information source for women on all things health, with hard medical data and breezy lifestyle articles. Check out “12 Simple Ways To Fight Prediabetes.”
Hello Giggles: Cofounded by three Los Angeleans including “New Girl” Zooey Deschanel, this site was first envisioned as a comedy site for women—think Funny Or Die without the fart jokes. Instead it’s grown into an exchange where women of all ages share their writing on life, love and all things adorable.
Hello Ladies: Calls itself "the intersection of feminism and life," and features breaking news stories, feminist essays and work-life advice.
Home-Based Working Moms: An online community and association for work-at-home moms with useful resources to help with the juggle.
HuffingtonPost Women: The best part of Arianna Huffington taking over AOL? Her shrewd application of HuffPo vaudeville to the women's space.
Intern Sushi: A portal for connecting college students and young professionals with internships in creative professions. Slick, smart and well-designed, Intern Sushi encourages users to ditch the resume for creative video introductions.
iVillage: One of the Web's largest communities for women, featuring lifestyle stories and tips and a ton of active message boards.
Jezebel: Owned by Gawker Media, a must-visit blog about celebrity, sex and fashion that bites into the media's representation of women and critiques gender in pop culture.
The Juggle: WSJ.com's The Juggle blog provides news and views on work, caregiving and time management for working parents.
Ladies Who Launch: An active and engaging site for female entrepreneurs that provides a resources for starting, building and running a business.
LearnVest: Easy-to-understand financial advice, information and tools for women hoping to take control of their financial lives.
Lindsey Pollak: LinkedIn spokesperson and Gen Y expert Lindsey Pollak blogs about social media and work for the next generation of leaders.
Loren's World: Pet project of marketing exec Loren Ridinger, this site is buzzing with beauty tips, current events and A-list celebrity spotting. Business advice has start-up sensibility but focuses on glamour, entertainment and media types.
Maggie Jackson: Author and journalist Maggie Jackson posts about the balancing acts of working parents and how technology is changing the way we live and work.
Make Mine A Million: Just what it seems--an entrepreneurial initiative to help turn your business dream into a million dollars through events, coaching and online community support.
Mint.com: A free tool for setting a budget--and sticking to it--by synching bank accounts and sending email reminders to stop spending and start saving. Easy to set up, easier to stick with.
Mommy Tracked: This "multi-tasking" website for modern moms provides a fresh take on motherhood with sharp columns and commentary.
Moms Rising: Members of this "motherhood movement" take to the site to rally behind family-friendly policies like paid sick days and parental leave, flexible work options and quality health care.
Motherlode: This New York Times' blog by KJ Dell’Antonia tackles studies, news and first-hand insight of modern motherhood.
Ms. Magazine: The Web presence of feminist frontrunner Ms. magazine, the website boasts the most extensive coverage of U.S. and international women's issues.
Ms. Money: A personal finance resource for women that covers everything from investing and budgeting to debt reduction, all to give financial peace of mind to its users.
On The Ground: Here, New York Times' columnist Nicholas Kristof expands on his award-winning human rights coverage.
The Nie Nie Dialogues: The world has been watching Stephanie Nielson as she's raised her family of four and miraculously recovered from a plane crash that burned 83% of her body. We can't stop watching.
On The Job: A workplace blog from columnist and author Anita Bruzzese, On The Job tackles outsourcing, unemployment issues and procrastination with just the right quantities of journalism and snark.
Pinterest: Everyone’s favorite online scrapbook/bulletin board hybrid has grown to more than 20 million users this year (more than 2/3 of us are women), and even politicians are getting in on the action. Mitt Romney and Barack and Michelle Obama have all created Pinterest boards to reach the coveted female demographic in Election 2012.
Pioneer Woman: Ree Drummond juggles homeschool, career and life on a ranch, and blogs her recipes, photography and family stories. Inspiring and delicious.
Plum District: Known as the “Groupon for moms,” this deal site provides daily offers specifically designed for savvy moms. Staffed by other mothers across the nation, it’s tapped into what women want and now counts over one million users.
PopSugar: The parent site for all of the PopSugar Network blogs that cover all manner of life, from work and fashion to kids to celebrities. PopSugar is one-stop shopping for hip female-friendly content.
Salon: While the Broadsheet--Salon’s original ladyblog--has bit the dust, former Jezebel writer (and FORBES 30 under 30 member) Irin Carmon has joined the site and shouts on behalf of women everywhere.
Savvy Auntie: A kid-friendly site for those of us who love other peoples' kids. Because it's always more fun when you can give them back!
Secret Society of Women: TV journalists Lisa Ling wants women to share their deepest secrets online and created SSOW as an anonymous portal to make that happen. On the site, read and share with other women on topics ranging from addiction to parenting issues and infidelity—without the fear of judgment.
Sharp Skirts: "No pink. No platitudes. Just success for smart women." This Austin-based site is a network of resources for entrepreneurs looking to break out of the mommy mold.
SheKnows: She knows everything--entertainment, beauty, parenting, shopping, health and more. The entire busy woman's lifestyle hub wrapped up into a slick, searchable website.
She Takes On The World: One of our picks for the 20 best marketing and social media blogs by women this year, She Takes On The World is an award-winning business and lifestyle blog for women.
The Silver Pen: Nurse and child development specialist Hollye Jacobs started The Silver Pen to document her physical and emotional journey battling breast cancer. The blog is full of silver linings and stunning photography and offers up humor, support and helpful resources.
Small Hands, Big Ideas: Grace Boyle has written from the minority perspective of a 20-something women who works for a tech startup since 2008, and chronicles her travels, relationships, career hiccups and “big ideas” on a daily basis.
Smitten Kitchen: New Yorker Deb brings us mouthwatering recipes and just-as-delicious photographs. Want to make your own ricotta? It's possible--this site has turned many a ForbesWoman into a foodie.
Sous Style: Australian transplant to Brooklyn, NY, and current photo director of Elle magazine, Pippa Lord launched Sous Style for a “new generation of homemakers.” The lifestyle blog offers beautiful photos, quirky interviews and smart fashion and design ideas.
Start Up Princess: A resource for female entrepreneurs by female entrepreneurs through education, encouragement and networking opportunities.
Style.com: Vogue's online home for fashion news, runway shows, trends, designers and insider industry tidbits. A great resource for women looking to update their working wardrobe, or to keep on top of trends each season.
Tech Mamas: A tech blog for mamas, a mom blog for techies, this California-based site offers advice on software, hardware and marketing for the working-from-home set as well as marketers in the tech sector.
TrustLaw Women: The newest channel from TrustLaw, the international legal news and assistance hub sponsored by the Thomson Reuters Foundation.
UN Women: The online presence of UN Women, the recently created United Nations arm led by former Chilean President Michelle Bachelet.
WAHM: An online magazine and resource for work-at-home mothers that includes features and advice on finding work, self-marketing and keeping the kids busy while you freelance.
WFN: The blog of Boston College's Alfred P. Sloan Work and Family Research Network is a destination for information on work and family balance, and features articles on public policy and evidence-based information on workforce issues, talent management and the impact of work and family issues on business.
What The Flicka: This sassy self-help blog was created by Desperate Housewives actress Felicity Huffman to give moms, women and anyone else who needs it a daily pick me up. Huffman and a host of regular celeb contributors share everything from workouts and recipes to tips for the “survival of the mommy-est.”
WebGrrls: Webgrrls International is a networking organization of women focused on propelling their careers and businesses forward through technology. Info on joining one of more than 60 local chapters is the first step.
WiserWomen: The nonprofit Women's Institute for a Secure Retirement offers the best steps for your financial future.
Women 2.0: With daily content on women in technology, Women 2.0, which is underwritten by the Kauffman Foundation, has made its mission to increase the number of female founders of tech startups with inspiration, information and education.
Women Entrepreneur: The female arm of Entrepreneur.com, this site is a resource for current and aspiring women business owners, featuring in-depth profiles of success stories as well as up-to-date advice on funding.
Women For Hire: A hub of recruitment services for women, this site offers career expos, blogs and feature articles as well as an online job board that connects leading employers with professional women.
Women On Business: The goal of Women on Business is to expand the international network of businesswomen online by promoting conversation on common issues. It was founded by writer and consultant Susan Gunelius.
Women Success Coaching: A blog from success coach Bonnie Marcus, Women's Success Coaching weighs in on the many building blocks of empowering women in business, from assertive communication to self-promotion to sensitivity training.
Womenetics: A networking platform for professional women that features daily content on business and personal relationships.
Women Fitness: Aims to improve women's nutrition and activity levels. "Wanting to look and feel good may feel shallow," they say, "but if it means reducing body fat and building toned muscles, it's a truly wonderful thing."
WomensForum: As one of the first online women's communities, it still boasts 8 million pageviews a month as a destination for working women.
Women’s eNews: An award-winning nonprofit news service covering issues concerning women and providing women's perspectives on public policy around the globe. A particular emphasis on the women’s-focused news stories that often get very little play in mainstream media.
World Moms Blog: For a truly global perspective on motherhood, World Moms brings together writers from the US and Canada to Australia, China, India and Japan to discuss parenting across cultures.
Work It Mom: A community and blog for working mothers. Their philosophy is that if mothers share their experiences with each other, working women can successfully juggle career and family.
Work Life Fit: Resource for work life fit and flex scheduling for organizations and individuals.
Works by Nicole Williams: Author Nicole Williams curates WORKS, a resource for young professional women with a sophisticated voice.
Women & Hollywood: Women are more than 50% of the population, film ticket buyers and TV watchers, yet are not represented in equal numbers on screen or behind the scenes. Melissa Silverstein's W&H is a call to arms.
xoJane: Former Sassy Editor-in-Chief Jane Pratt resurfaced this year with a women's site as irreverent and informative as her previous lady mag. A smart stable of bloggers and Pratt's celebrity friends keep the content fresh.
The XX Factor: A female-focused look at "politics, culture, and anything else that strikes our fancy" from the XX writers and editors of Slate.com.
Yahoo Shine: A women-only curated blog platform that serves up career advice, style tips, whatever's-in-your-fridge recipes and pithy takes on current events.
Young House Love: DIYers beware, following the lives of this young TK couple as they renovate their ranch home by hand is addictive—and for many of us, jealousy-inducing. But after you pick your jaw up off the floor at what this pair can do with a can of paint, you’ll be inspired to hit the Home Depot and get to work.
Top 10 Parenting And Homemaking Websites For Women 2012
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a8ffb6027082bc6098e08e88bc67ad97 | https://www.forbes.com/sites/forbeswomanfiles/2013/01/23/what-do-comic-books-teach-us-about-gender-attitudes/ | What Do Comic Books Teach Us About Gender Attitudes? | What Do Comic Books Teach Us About Gender Attitudes?
By Christina Blanch
The Pew Global Attitudes Project recently released the results of a survey suggesting that the career-oriented woman is globally accepted nowadays. But while most countries appear to be comfortable with women pursuing professions, the study also uncovered a lingering perception that men have an upper hand on landing high-paying jobs and are more entitled to employment in times when jobs are scarce.
This study is one more benchmark in measuring global attitudes toward gender. As an academic specializing in the study of culture over time, I have spent my career looking for ways to teach rising generations about how our perceptions of gender roles influence everything from glass ceilings in the workplace to the way we treat our friends and neighbors.
Admittedly, this is a sensitive topic for most people, so I have turned to an unlikely resource — namely, comic books — to aid in teaching about complex and evolving gender issues. Pop culture provides an excellent lens on society, and comic books, in particular, tend to incorporate rich, complex storylines that reflect the times.
I made my first foray into teaching gender through comics last semester at Ball State University, and it was met with tremendous success. The entire class was engaged, and I saw social cliques break down as students from various walks of life resonated to lessons learned from superheroes.
One benefit of analyzing gender through comics is the ability to track attitudes over time. The seminal example is the original comic icon, Superman. He’s the Man of Steel — impervious to harm, unparalleled in masculinity and the polar opposite of his bumbling alter ego, Clark Kent. His love interest, Lois Lane, is a study in how Americans viewed women around World War II.
When Superman launched in the 1930s, Lois was depicted as independent, strong and respected in her profession. This view of Lois came from a time when men were off fighting Hitler and women picked up the slack in factories and offices back home. When a new editor came in toward the end of the war, however, the character took on a new demeanor — deferential to her male counterparts and seemingly helpless against a constant onslaught of villains bent on abducting her. The boys were coming home to a new nation and a new version of Lois Lane.
Even after Superman, the cultural narratives in comics have paralleled what’s happening in society. In 1961, a woman cracked the starting lineup for a superhero team — vaunted status in the world of comics — when Sue Storm made the cut in the Fantastic Four. Her superpower, however, was the ultimate irony: the ability to turn invisible. While she was a reflection of social norms in the early 60s, the Invisible Girl (later Invisible Woman)also foreshadowed a decade in which the roles of men and women were redefined in radical ways, especially with regard to workplace dynamics such as pay, advancement opportunities and sexual harassment.
In the 1990s, comics saw a spike in how muscular the characters became. Batman, for example, morphed from the diminutive figure portrayed by Adam West into a hulking warrior donning chiseled body armor. When I ask my students which superhero is the most masculine, Batman’s name comes up more often than Superman. Perhaps this is because he is a mortal man yet manages to survive perilous falls and brutal beatings without suffering lasting effects. Contrast this with Batgirl, who was paralyzed after being shot through the spine by Batman’s arch nemesis, the Joker.
The juxtaposition of Batman’s invincibility and Batgirl’s frailty is consistent with an obsession with overt male strength that dominated the 90s. This preoccupation with physical stature, which was punctuated so perfectly by steroid scandals in pro sports,is thought by many to have been a reaction to hird-wave feminism, one of the most influential gender movements in history.
More recently, the X-Men title tackled the preeminent gender issue of our day: gay marriage. Last spring, Marvel’s first openly gay character, Northstar, tied the knot with his boyfriend in the first homosexual wedding to occur in the pages of the Marvel universe. Once again, this was art imitating life. In 2012, Maine and Maryland became the first states to legalize gay marriage by popular vote — a proposition that had previously failed 32 times — and Wisconsin voters elected Tammy Baldwin as the first openly gay senator in U.S. history. My hope is that future comic book narratives reflect a society that continues to make strides in understanding gender.
Christina Blanch is an instructor and doctoral assistant at Ball State University in Muncie, Ind. Her courses include Cultural Anthropology, Global Cultural Diversity and Gender through Comic Books, which she is teaching this spring as a massive open online course (MOOC) via Canvas.net.
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57c00edecb33308411c5d8b0e81452cc | https://www.forbes.com/sites/forbeswomanfiles/2014/04/07/the-awful-truth-of-the-gender-pay-gap-it-gets-worse-as-women-age/ | The Awful Truth Behind The Gender Pay Gap | The Awful Truth Behind The Gender Pay Gap
By Lisa M. Maatz
Another year, another several million dollars lost to the gender pay gap .
On April 8 we once again recognize Equal Pay Day, the symbolic date when women’s wages catch up to men’s from the previous year.I know my calendar says 2014, but I’m having trouble believing it. The Mad Men era isn’t just on TV. It’s real life for women and their families who are struggling to make ends meet.
The gender pay gap is hopelessly static right now. For the last decade, median earnings for women working full time, year-round have been just 77% of men’s earnings. This oft-cited percentage stems from U.S. Census Bureau data and is not, despite critiques, something made up by feminists to (heaven forbid) give women raises. However, that stat is just a snapshot of the pay gap in the U.S., so it’s important to drill down deeper. The American Association of University Women's research report, Graduating to a Pay Gap, does just that.
The report controls for occupation, major, hours worked, parenthood, and many other factors to reveal that college-educated women working full time were paid an unexplained 7% less than their male counterparts were paid one year after graduation. To clarify, this analysis looks at men and women who have made the same educational and occupational choices and still finds a gap.
Unbelievably, some folks respond to this research by saying that 7% is too small to worry about. If it’s so small, I suppose these folks would happily give up 7% of their own salaries? Didn’t think so.
Plus, for the women on the short end of this salary stick, the gap is not “just” 7%. That gap has immediate consequences, like causing women to have greater difficulty repaying student loans. Women and men pay the same tuition and graduate with comparable student debt. But Graduating to a Pay Gap found that among full-time workers repaying loans one year after college graduation, more than half of women (53%) compared with 39% of men were paying more than what they could reasonably afford toward their debt.
Plus, women fall further and further behind the eight ball over time. AAUW’s research report The Simple Truth about the Gender Pay Gap found that women are paid about 90 percent of what men are paid until age 35, when women’s median earnings typically drop to 75–80% of men’s. So, not only does the pay gap make us feel like we’ve traveled back in time, but it’s also only going to get worse over time — and women cannot ever truly recover. Salaries dictate how much women will have for retirement and function as the starting point for all future raises.
In many cases, women aren’t even privy to the knowledge that they started out behind. That was true for Kerri Sleeman of Michigan, who testified April 1 at a Senate committee hearing on equal pay.
When Sleeman’s employer of five years—a Michigan mechanical engineering firm—went under in 2003, she learned through bankruptcy court that almost all the men she had supervised earned more than she did. Sleeman had tried to negotiate her salary when she was hired but was told salaries were nonnegotiable. After she found out about the discrepancy, she spoke to her former supervisor, who unapologetically informed her that the young men were likely paid more because they were sole breadwinners for wives and children—never mind Sleeman’s glowing performance reviews and supervisory role. To her employer, she just wasn’t the right gender to make a salary that would have helped her refinance her home, pay for her husband’s heart surgery, and help her parents and in-laws in retirement.
At the end of the day, those who claim that the gender pay gap does not exist simply choose to ignore, often for politically motivated reasons, both empirical analysis and the voices of American women. Too bad for the deniers, because American women are also motivated—to secure the wages they deserve.
The Paycheck Fairness Act is a commonsense fix to bring the 50-year-old Equal Pay Act into the 21st century. The bill, with 207 House co-sponsors and 55 Senate co-sponsors, would strengthen incentives in line with other civil rights laws to encourage employers to pay fairly, empower women to negotiate for the wages they deserve, and prohibit retaliation against employees who share salary information.
On Equal Pay Day, President Obama will sign two executive orders to help close the pay gap. He will direct the Department of Labor to move forward on a data compensation tool that will help us see if federal contractors and subcontractors are discriminating against women with our taxpayer dollars. The president will also put part of the Paycheck Fairness Act in place now through an executive order that will prevent federal contractors from retaliating against workers who discuss salaries. This protection will cover 22% of the nation’s workforce, but the rest is up to Congress. We need Congress to pass the Paycheck Fairness Act to cover all workers.
Kerri Sleeman had no idea she was being paid unfairly.In fact, she had never discussed wages with her co-workers, because she thought she could be fired if she did. Women—and all workers—need to be protected when they discuss what they’re paid. I’m not asking for salaries to be posted in the break room, but I am asking for all employees to be able to talk about salaries in the break room.
The Senate is expected to vote on the Paycheck Fairness Act on or around Equal Pay Day. As Sleeman said, “I know that women alone cannot close the gender pay gap. We need policymakers to do their part.” And as their constituents, it’s our job to demand that they do so. Now is the time for our paychecks and our national policies to catch up to the 21st century. We’ll leave the Mad Men era to television.
Lisa M. Maatz is the vice president of government relations at the American Association of University Women. Follow on Twitter @LisaMaatz
Gallery: The United States Of Paycheck Inequality 51 images View gallery
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88d5d27d07b4a1f009a48896f13a45d9 | https://www.forbes.com/sites/forbeswomanfiles/2014/06/03/women-in-the-spotlight-if-google-and-sxsw-can-do-it-so-can-you/ | Women In The Spotlight: If Google And SXSW Can Do It, So Can You | Women In The Spotlight: If Google And SXSW Can Do It, So Can You
By Shifra Bronznick and Anne Weisberg
Google lived up to its mission to make information “universally accessible” by releasing data last week that documents the gender (and other) diversity gaps in its workforce and leadership. Earlier this year, the company reached out to the technology community with a survey soliciting ideas for increasing women’s representation at conferences.
These promising efforts by a global powerhouse to redress imbalances in the tech sector connect to a critical issue for working women in every sector: visibility.
No one disputes that the more senior you get in any organization, the more your success depends on both what you know and who knows what you know. But for a complex set of reasons, women are less likely to be acknowledged as experts and given the stage – regardless of the quality of their work.
How can women become more visible? Sheryl Sandberg's Lean In tells women to raise their hands. But that’s only half of the solution. We believe systemic change will happen when men raise their hands as well - not for themselves, but rather to point out their talented women colleagues.
An early leader in recognizing the critical value of engaging male allies, Advancing Women Professional and the Jewish Community (AWP), launched the Men as Allies campaign eight years ago to promote gender equity in the Jewish nonprofit sector. AWP’s experience – its setbacks and successes – makes a strong case for positioning men as a key part of the solution.
The campaign’s “ask” was simple: take a pledge not to participate on all-male public panels, and not to organize conferences where only men are featured in major roles. Male allies were asked to respond to such invitations by persuading the organizers to also invite talented women who may be less visible, but who are equally qualified, to join the panel, conference or decision making body.
The pledge campaign had its challenges. Initially, male allies would ask AWP for “the list” of women they could pass on to event conveners. But a “binder full of women” wasn’t a solution because the problem wasn’t the missing list. The problem was that men needed to think in new ways about their women colleagues so that they could help conveners recognize and value their contribution. To catalyze this deeper, adaptive shift in thinking, AWP tasked male allies to be talent scouts on behalf of their female colleagues.
Resistance on the part of conference organizers and others was a common response. Organizers reacted as if a request for diversity was an attempt to "dumb down" the discourse by forcing them to choose a less qualified speaker or thinker. AWP’s male allies learned to hold steady in the face of negativity. Sometimes, this required them to relinquish their place to make room for a woman; at other times, both the man and the female colleague that he had recommended were invited to speak.
Over time, the men in the program became more comfortable and confident in their role – and more effective at their efforts. They began convincing conference organizers that going beyond the usual suspects enhances the dialogue, brings vitality to the public square, and yields new thinking on complex issues.
In turn, organizational conveners and decision makers in the Jewish community became more educated and began to pro-actively change the composition of their conferences. Today, women are increasingly seen in public venues as thought leaders, visionaries, and innovators.
AWP’s cadre of male allies, now 70 strong and growing, is helping to create a cultural shift in the Jewish nonprofit sector toward more accountability and gender inclusivity. It has shown that change can happen when men put real skin in the game.
The movement toward gender inclusivity is taking root - although more gradually than we would like. When The Atlantic published an article that invited readers to adopt AWP’s pledge to help phase out all-male panels at tech conferences, some respondents cried “tokenism” and “affirmative action.” Some reactions were so negative, vitriolic even, that the publisher had to take the list of signatories and comments down.
On the progress side of the ledger, in addition to Google’s initiative, SXSW, which now produces a full calendar of gatherings in music, film, interactive, education and more, now requires all panel organizers to include at least one woman in any session with three speakers or more.
As these kinds of efforts become the norm rather than the exception, men will discover the depth of expertise of their female colleagues, and women will step forward into the spotlight. Taking a public pledge not to appear on an all male panel, and taking action to promote accomplished women, is not just good for the women – it’s good for everyone who values excellence and equity. If you count yourself in this group, are you ready to take the pledge?
Shifra Bronznick is a senior fellow at NYU Wagner’s Research Center for Leadership in Action, president of Advancing Women Professionals and the Jewish Community, and a co-author of Leveling the Playing Field. Anne Weisberg is a SVP at the Families and Work Institute and coauthor of Mass Career Customization: Aligning the Workplace with Today’s Nontraditional Workforce.
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197527329129c2d6db3cc2fe71d0c64f | https://www.forbes.com/sites/forrester/2011/08/22/the-emergence-of-cxm-solutions/ | The Emergence of CXM Solutions | The Emergence of CXM Solutions
By Stephen Powers and Brian K .Walker
There has been a great deal of talk over the past few years about what acronym will replace WCM (web content management). Web experience management? Web site management? Web engagement management? Web experience optimization? The list goes on and on.
Certainly, the evolution of the WCM term makes sense on paper, since traditional content management functionality now only makes up a portion of the products that WCM vendors now offer. WCM vendors are also in the content delivery/engagement business, and are even dipping their toes into web intelligence. However, Forrester clients still overwhelmingly ask about “WCM” and that term isn’t going away any time soon.
But even without changing the acronym, it is time to start thinking about WCM beyond just managing content or silo-ed web sites or experiences. Instead, we need to think of how WCM will interact and integrate with other solutions – like search, recommendations, eCommerce, and analytics – in the customer experience management (CXM) ecosystem in order to enable businesses to manage experiences across customer touchpoints.
Forrester recently teamed up to outline what our vision of CXM looks like, including process-based tools, delivery platforms, and customer intelligence, for IT and Marketing & Strategy professionals. eBusiness & channel strategy professionals, in particular, can benefit from these solutions, which are quickly evolving to support:
Leveraging cross-channel data for targeted offers. New CXM technologies bring the merchant, site manager, and marketer together with business rules to provide targeted and personalized offers to the customer across touchpoints including the call center. Leveraging web and offline advertising, traffic, sales, and CRM data to enable improved targeting of the customer. Personalized experiences across touchpoints. As customer touchpoints proliferate, screen size shrinks, and consumers are increasingly distracted, CXM solutions will incorporate personalization tools to drive product recommendations, offers, and content to drive conversion across channels in a personalized, automated, and scalable fashion. Dynamic sites built for unique customer experiences. Highly dynamic, personalized, and targeted digital experiences will require both automation and business management tools. These tools will fundamentally change how sites and digital experiences are managed, evolving from “page building” to pages built on the fly. On dynamic sites, CXM solutions will extend component-driven functionality to deliver tagged and attributed pools of content assets -- leveraging search and personalization to drive the most relevant experience for users.
It is very early in the evolution of these CXM tools. Customers won’t go out and buy CXM suites. They may source multiple CXM components from one vendor, and then augment with best-of-breed solutions.
No one vendor offers all the components, though some – like Adobe, IBM, and Oracle – are working on acquisitions. Today, many of the vendors packaging CXM solutions are adapting or extending the tools they already have to drive more of the overall experience, and for some the label CXM will be a re-packaging of their existing solution and strategy. For other solution categories -- such as eCommerce platforms and CMS tools -- CXM will be an aspect of how those solutions continue to adapt to meet their customers’ business needs. For eBusiness leaders, understanding these tools and the direction they are headed will be important to understanding their utility in helping them drive the business and in ensuring they have the tools they need to optimize an ever more complex digital business.
Stephen Powers is a principal analyst at Forrester Research, serving content & collaboration professionals.
Brian K. Walker is a vice president, principal analyst at Forrester Research, serving eBusiness & channel strategy professionals. Follow him on twitter @bkwalker.
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12a1304533e9feff5199e9e4b55451c3 | https://www.forbes.com/sites/forrester/2011/11/07/with-barnes-nobles-nook-tablet-david-takes-on-two-goliaths/?feed=rss_home | With Barnes & Noble's Nook Tablet, David Takes On Two Goliaths | With Barnes & Noble's Nook Tablet, David Takes On Two Goliaths
By Sarah Rotman Epps
Today Barnes & Noble (B&N) announced the Nook Tablet, a beefed-up version of the Nook Color that, in our view, gets everything right. My colleagues J.P. Gownder, James McQuivey, and I spoke with several product strategists from B&N about the Nook Tablet, including CEO William Lynch, President of Digital Jamie Iannone, and GM of Digital Newsstand Jonathan Shar. Our conversations and hands-on time with the device led us to conclude that the Nook Tablet:
Is a “wow” product. No, it’s not an iPad lookalike, and it doesn’t need to be. The Nook Tablet improves upon the Nook Color in key areas that matter for tablets, including a dual-core processor and a screen that’s fully laminated with no air gap—two technical details that add up to a better Web and video experience. Compared with Amazon’s Kindle Fire, the Nook Tablet has longer battery life (9 hours vs. 7), 2x the memory, and nearly twice the RAM—feeds and speeds that will make the device more convenient to use and snappier for media consumption and app multitasking. In addition, the Nook’s software update includes innovative experience improvements, such as the integration of recommendations into the navigation UI—think of it as a “Netflix-ization” of navigation. At a decent price. We are not going to pretend that consumers won’t notice the $50 price difference between the Kindle Fire ($199) and the Nook Tablet ($249): The higher price point will give B&N a smaller addressable market for the Nook Tablet than Amazon can reach with the Kindle Fire. But we don’t see it as a major barrier to success, for three reasons: 1) Consumers’ price perception for tablets is actually higher than the price of either the Nook Tablet or the Kindle Fire—a Van Westendorp price sensitivity study that Forrester conducted in September revealed an optimal price point for tablets of $308, which means that both B&N’s and Amazon’s tablet will look like a very good deal to consumers; 2) B&N is keeping the original Nook Color in its lineup and dropping the price to $199, which gives consumers an entry price point to compare with the Kindle Fire so they don’t dismiss B&N out of hand for being more expensive; and 3) the value of the Nook Tablet is enhanced by the free in-store service at Barnes & Noble stores, a strategy that makes good use of B&N’s best asset and takes a page right from Apple’s book. With perfect timing. The Nook Tablet will ship in mid-November, which puts it on shelves in time to compete with the Kindle Fire for the holidays and before Apple releases an iPad 3. If B&N had dragged its heels to launch the Nook Tablet in Q2 of next year, it would be a non-event. Kudos to B&N for moving quickly and launching at the perfect time.
Barnes & Noble’s story has implications for product strategists beyond the tablet space. Product strategists should look at B&N as a case study in “fast following” done right. Barnes & Noble wasn’t first to launch an E Ink eReader, but when they did, they improved upon the experience not just with better features (a touchscreen), but also with better services (e.g., the lending and social features of the original Nook). Similarly, with their tablet launch, they didn’t just improve upon feeds and speeds (although they did, with battery life, memory, and RAM that bests the Kindle Fire), they also improved the overall experience with the innovative “recommendations” feature integrated throughout the navigation. They are using their brick-and-mortar stores to their best advantage as well, offering free service, exclusive content, and full browsing over the free Wi-Fi network in Barnes & Noble stores—benefits Amazon can’t match.
Still, Barnes & Noble is David taking on not one but two Goliaths: B&N’s market cap is just $700 million, compared with $100 billion for Amazon and $370 billion for Apple. We think the Nook Tablet will be successful in its own right, selling 1.5-2 million units this holiday season on top of the estimated 5-7 million units sold to date for the original Nook Color. But Amazon, as we’ve said, will sell twice as many Kindle Fires, and Apple could sell as many as 20 million iPads globally in Q4 with 8 million sold to US consumers. In our September survey, we asked consumers considering buying a tablet what brands they would consider if they were available. Apple was No. 1 with 61%, Amazon was No. 2 with 24%, and B&N was farther behind with 6% of tablet shoppers willing to consider its brand of tablet (before they knew anything about what the product or price would be). This means that B&N is starting from a much smaller base of consideration, but with a solid product, a huge commitment to marketing (they’re tripling their TV ad spend this holiday), and a vast expansion of channel presence (2,000 sq-ft Nook stores-within-stores now under construction, plus 12,000 other retail channels), we think they will expand their appeal beyond initial considerers to take some tablet market share from both Amazon and Apple.
Sarah Rotman Epps is a Senior Analyst at Forrester Research serving Consumer Product Strategy professionals. Follow her on Twitter at @srepps
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405fea12fd8a684e03e3b63ebdb33b43 | https://www.forbes.com/sites/forrester/2012/04/25/apple-sony/ | Apple=Sony: Brace For The Coming Post-Steve Jobs Decline | Apple=Sony: Brace For The Coming Post-Steve Jobs Decline
By George F. Colony
George F. Colony is Chairman and CEO of Forrester Research. Follow him on Twitter at @gcolony.
George Colony
Apple will decline in the post Steve Jobs era.
Here's why.
Sociologist Max Weber created a typology of organizations in his 1947 book The Theory of Social and Economic Organization. He described three categories: 1) legal/bureaucratic (think IBM or the U.S. government), 2) Traditional (e.g., the Catholic church) and 3) Charismatic (run by special, magical individuals).
Charismatic organizations are headed by people with the "gift of grace" (charisma from the Greek). "He is set apart from ordinary men and treated as endowed with supernatural, superhuman, or at least specifically exceptional powers or qualities." Followers and disciples have absolute trust in the leader, fed by that leader's access to nearly magical powers. "Charismatic authority repudiates the past, and is in this sense a specifically revolutionary force."
Sound familiar? Quoting from Adam Lashinsky's book Inside Apple: "...Jobs made all the decisions." "He was the final arbiter on matters of taste." Lashinsky points out that Apple was an entrepreneurial company, "...but its people generally are not entrepreneurs -- and they are not encouraged to be." In other words, there was one charismatic entrepreneur at the center (note Lashinsky's org chart from Fortune Magazine, at left) with followers connected via "...an emotional form of communal relationship" in the words of Weber, with the leader.
One of the primary challenges with charismatic organizations is succession. In bureaucratic organizations codified processes like elections yield new leaders. In traditional organizations, long-held rituals (smoke emitting from the Sistine Chapel) elevate the new head. In charismatic organizations, the magical leader must be succeeded by another charismatic -- the emotional connection of employees and (in the case of Apple) customers demands it. Apple has chosen a proven and competent executive to succeed Jobs. But his legal/bureaucratic approach will prove to be a mismatch for an organization that feeds off the gift of grace. What about Apple University, Jobs' attempt to prepare the company for when he was gone? Back to Weber: "Charisma can only be awakened and tested, it cannot be learned or taught."
Without knowing them personally, I would look to Apple executives Jon Ive or Scott Forstall to be CEO. From on far they appear to have some of the charisma and outspoken design sense to legitimately lead the company.
When Steve Jobs departed, he took three things with him: 1) singular charismatic leadership that bound the company together and elicited extraordinary performance from its people; 2) the ability to take big risks, and 3) an unparalleled ability to envision and design products. Apple's momentum will carry it for 24-48 months. But without the arrival of a new charismatic leader it will move from being a great company to being a good company, with a commensurate step down in revenue growth and product innovation. Like Sony (post Morita), Polaroid (post Land), Apple circa 1985 (post Jobs), and Disney (in the 20 years post Walt Disney), Apple will coast, and then decelerate.
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92305b82fcf9f7247aa84a1d19e6db62 | https://www.forbes.com/sites/forrester/2012/05/15/sap-gets-serious-about-the-large-enterprise-application-cloud/?utm_source=dlvr.it&utm_medium=feed | SAP Gets Serious About The Large Enterprise Application Cloud | SAP Gets Serious About The Large Enterprise Application Cloud
By Stefan Ried
Stefan Ried is a Principal Analyst at Forrester Research, serving CIOs. Follow him on Twitter @StefanRied.
Stefan Ried
Until now, it looked like SAP was still trying to balance its existing on-premises licensed business with the cloud alternative. But following its acquisition of Success Factors and the arrival of that company’s outstanding CEO, Lars Dalgaard, SAP has become really serious about applications in the cloud, placing Mr. Dalgaard at the head of a 5,000-person development team.
SAP’s new cloud strategy is all about business applications in large enterprises. SAP today announced its People, Money, Customers, Suppliers strategy — a significant move to offer business applications for large enterprises, rather than just SMBs and a few niche cases. It’s really targeting its core business users. Today’s announcements show SAP combining its core strength of large enterprise applications with a ready-to-use cloud strategy for the first time.
What is really mission-critical in this transformation of SAP and its global customer base?
1. Cloud-generation business applications.
Software-as-a-service (SaaS) applications are not just rehosted traditional applications. SAP is still on a learning curve, and the infusion of Success Factors will definitely help. The upcoming generations of enterprise users expect their applications to be simple, collaborative, mobile, and very different from what they (and their moms and dads) have used in the past. SAP key’s challenge is to keep their existing, conservative customer base happy while meeting the requirements of (and signing deals with) this new generation.
2. Best-of-breed application landscapes - not total replacements.
The overlap with the existing on-premises SAP Business Suite is more visible than ever. The good news is that the typical Success Factors user hasn’t replaced the traditional SAP HR solution, if they had one — one example is Siemens, which runs Success Factors for 300,000 employees. Larger enterprises run hybrid environments; they keep the legacy systems that they have tailored most to their individual needs and complement these with the highly standardized cloud application logic. This is very different to the SMB space, where customers expect to fully replace their on-premises legacy environment; enterprise customers move slowly and pick out hybrid scenarios of cloud and on-premises applications that make sense for their individual use cases.
3. Cloud-based integration.
SAP seems to understand this issue in the SAP2SAP world, but it is also highlighting its work with partners such as Dell Boomi, IBM Cast Iron, and MuleSoft. This is crucial for orchestrating the wide variety of SaaS applications that enterprises currently use (typically up to 12). We’re not talking about lengthy, complex integration projects but about taking just a few days to configure the links between packaged SaaS applications and the SAP Business Suite, if it’s still close to the packaged standard.
4. Applications need a platform.
SAP’s DNA involves partnerships and leveraging its extensive ecosystem. SAP’s customers, systems integrators, and ISVs extend its applications to make them more relevant to specific industries, geographies, or customer segments. This can also work in the cloud: salesforce.com has shown the industry how to do this with its application-centric platform-as-a-service (PaaS) offering, Force.com. SAP has a major opportunity in this space right now, given that major competitors like Microsoft and Oracle are still struggling to adapt their core business applications to the PaaS model. Once Oracle’s Fusion applications gain market share and Microsoft focuses more seriously on Azure as a default application platform for Dynamics and Office365, SAP’s window of opportunity will shrink rapidly.
5. Reinventing the platform for the next generation.
SAP’s ability to reinvent itself is the most critical part of this journey. Many customers still remember how SAP tried to complement the ABAP-based application logic with Java-based X-Apps a decade ago. The approach (and Shai Agassi) failed — SAP focused too much on meeting the demands of its largest customers rather than balancing customer demands with a technology that could capture a new generation of customers. The “cloud challenge” is very similar to the “Java challenge” that SAP faced 10 years ago. To succeed this time, SAP needs to embrace the new cloud-focused architectures and keep investing in both an application (ABAP)-centric PaaS option and a new, lightweight cloud PaaS offering. Nobody would think about using an SAP PaaS offering to develop a Facebook application today: SAP needs to deliver a long-term vision of business networks to secure the next generation of application developers. Let’s see if SAP NetWeaver Cloud delivers this balance. The in-memory Hana technology is just an enabler, not a strategy in this platform play.
My point of view:
SAP’s long-term cloud strategy needs to be a triple play: SaaS applications, an application-centric platform to extend them, and a new platform for the next generation of social business networks.
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26ab1571c7fbda8030aec6f189244b64 | https://www.forbes.com/sites/forrester/2012/10/16/microsoft-surface-rt-499-on-a-slippery-slope/ | Microsoft Surface RT: $499, On A Slippery Slope | Microsoft Surface RT: $499, On A Slippery Slope
Sarah Rotman Epps
Today Microsoft announced pricing and availability for the Windows RT version of the Microsoft Surface ($499 for 32GB, not including the “Touch Cover,” available for preorder today, shipping 10/26). This product is intended to be a pure consumer play; Microsoftalso plans to launch a Windows 8 version of the Surface, aimed at enterprises, for which it has not yet announced pricing. Yesterday I spent the day with the Surface team led by Steven Sinofsky and Panos Panay and I learned many things: Sinofsky is from Florida, for example, and when he stands on a Surface that’s attached to skateboard wheels, it doesn’t break. I learned about the importance of optically bonded displays, saw nifty 3D printers making plastic models, and heard about the many trips to China required to perfect the Surface manufacturing process. I was told many examples of the Surface team’s attention to detail, down to the sound design of the kickstand closure.
I did not hear, however, the answers to the most pertinent questions asked by our clients, many of whom are product strategists in Microsoft’s partner ecosystem (OEMs, ISVs, and potential app developers like media companies, banks, and retailers). Will Surface expand distribution beyond Microsoft’s stores and website? If Microsoft believes it’s making the “best hardware for Windows,” as Sinofsky told us, how does it expect its OEM partners to respond? No comment on both fronts.
My colleague Tony Costa made the call correctly: Microsoft can’t have it both ways. If Microsoft aggressively expands distribution for Surface, Microsoft will alienate OEMs, who are already scaling back Q4 sales forecasts. But if Microsoft keeps Surface distribution small, the product won’t have much impact.
Surface is a solid product, with a sleek and considered design, a bit heavier than the iPad but certainly lighter than the 5-pound Dell laptop I’m using to write this blog post. Its display is competitive with the Retina iPad. It won’t replace your PC if you use legacy Windows software other than Office, but it will serve as a fine device for Web, email, entertainment, and light productivity, which is what most consumers use their PCs for anyway. But it is a transitional product, just as Windows 8 and Windows RT are transitional products: They meet consumers where they are today, in the gap between the PC and Post-PC Era, between keyboards and mice and touch and voice. But how long will this transition last, and will consumers look to Microsoft to carry them forward to the future? Consumer interest in Windows tablets has been waning: In a Forrester Consumer Technographics® survey conducted in January 2011, Windows was the most-desired operating system among consumers intending to buy a tablet, with 45% of US tablet shoppers saying they’d prefer a Windows tablet if it were available. By September 2011, that percentage had fallen to 25%, and by August 2012 it was 18%, as Apple and Android grew in mindshare. The idea of Surface was born in 2009, but in the three years it took to get to market, Windows’ relevance to consumers has declined significantly.
“Surface is not a tablet, but it’s the best tablet I’ve ever used. It’s not a laptop, but it’s the best laptop I’ve ever used,” said Sinofsky. Surface may defy categorization, but it can’t defy market realities. To succeed as a product, it needs to expand its distribution footprint: To be in as many retail channels as the iPad by Black Friday would be game-changing but seems unlikely at this point. And if it takes that expansive path, it will do so at the expense of PCs. According to Forrester’s data, 13% of tablet owners said they bought their tablet instead of a laptop; 18% say they’ll wait longer to buy their next laptop and 14% say they won’t buy a new laptop ever. It’s not hard to imagine a world where Microsoft takes an increasing share of the shrinking consumer PC market, while HP and Dell focus on enterprise or exit PCs entirely. Lenovo and Samsung stay in the PC game but put their real focus on mobility. Asus, Acer, Toshiba, and Sony fight over crumbs. Oh, and Apple’s expected smaller, cheaper iPad takes more share from everyone.
I’m not saying Microsoft is wrong to pursue this strategy. I’m saying, though, that it’s high risk and self-cannibalizing, and reaping the rewards requires pushing its partners out of the way. Sinofsky may not want to discuss his strategy today because this uncomfortable truth doesn’t make for great marketing. Cannibals survive, but they don’t make polite dinner conversation.
Sarah Rotman Epps is a senior analyst at Forrester Research, serving Consumer Product Strategy professionals. Follow her on Twitter @srepps.
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a99e9f22b934b6612fa41a27929a6d04 | https://www.forbes.com/sites/forrester/2012/11/15/by-the-numbers-is-windows-8-dead-on-arrival-in-the-enterprise/ | By The Numbers: Is Windows 8 Dead On Arrival In The Enterprise? | By The Numbers: Is Windows 8 Dead On Arrival In The Enterprise?
David K. Johnson
With the release of Windows 8, Microsoft is in the midst of its largest marketing effort ever, hoping to reach 2.1 billion people over the next several months. With its lukewarm initial sales but with new tablets and convertibles on the way, Forrester clients are understandably asking how much attention should they give it. Here's my take:
The data tell us two important things. The first is that Windows 8 is seeing roughly half of the interest from IT hardware decision-makers that Windows 7 saw at the same point in its release cycle. Only 24% of firms expect to migrate to Windows 8 but have no specific plans to do so, versus 49% for Windows 7 back in 2009. Only 5% of firms have specific plans to migrate to Windows 8 in the next 12 months, versus 10% for Windows 7 in 2009:
The second important thing that the data tell us is that Windows 8 has higher interest than we expected amongst employees, with a full 20% already saying that they would prefer Windows 8 on their next touchscreen tablet versus 26% for iOS. That bodes well for Windows 8's prospects for bring-your-own-device (BYOD) demand:
What It Means: Forrester does not expect enterprises to adopt Windows 8 as their primary IT standard. More on why in a future blog. But we do expect employees will force IT to have a formal support policy for Windows 8 for employee-owned devices. Windows 8 will accelerate BYOD demand. Look for more from Benjamin Gray and yours truly in a report due out shortly.
David K. Johnson is a Senior Analyst at Forrester Research, serving Infrastructure & Operations professionals. Follow him on Twitter @david_kjohnson.
Related on Forbes:
Gallery: Microsoft Introduces the Surface Tablet 19 images View gallery
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138972cd81588e850eae290afa2d1ea2 | https://www.forbes.com/sites/forrester/2013/08/22/google-steps-it-up-with-data-driven-attribution/ | Google Steps It Up With Data Driven Attribution | Google Steps It Up With Data Driven Attribution
By Tina Moffett
More news from Mountain View on Tuesday, where Internet powerhouse Google released the much-anticipated Data Driven Attribution (DDA) feature for its Premium users. The release of Google’s DDA approach comes as no surprise to the analytics and measurement community. The world of attribution measurement is constantly evolving and new attribution approaches, new players, and new tools regularly enter the market, enabling marketers to select the right attribution tool for their business needs. It was only a matter of time before Google released a persuasive, more advanced measurement offering.
Tina Moffett
First, the Data Driven Attribution feature is only available for Google Analytics Premium users. It has several notable features worth highlighting:
Google DDA’s approach is statistically driven methodology. Google’s DDA approach is a huge improvement over its rules-based Attribution Modeling tool (which is available for FREE for Google Analytics users). The DDA approach uses probability modeling to best estimate the values of each interaction. The approach itself is transparent, understandable, and Google is extremely open about how it calculates the value parameters. Google’s DDA feature can include non-Google data. Yes, you read correctly. The DDAfeature leverages the Google Universal Analytics capabilities. Universal analytics capabilities allow marketers to upload a richer set of data, including offline data, mobile app data, and richer data through more accurate tracking. This enables marketers to track converters and non-converters, from online to offline —this is huge. Google’s DDA feature integrates seamlessly with existing Google products. If you’re a Google shop, it’s easy for you to integrate your existing data sources into the DDA feature. Google does a great job with creating usable interfaces, and the ease in which they can transfer data from one Google product to another makes this feature extremely appealing to Premium users who do not want to invest in another measurement tool. Google’s DDA’s feature is now a serious option for marketers wanting a more advanced attribution measurement approach. Google’s advanced approach demonstrates that it is serious about measuring more effectively. It’s a serious option for marketers seeking a more advanced attribution approach. To be clear, I certainly think there is room for a wide breadth of attribution offerings, but it’s going to force the attribution measurement experts to be more innovative with their approach, and their insights, which for users, is a good thing.
But it’s not all puppies and rainbows for Google; it’s going to face some major obstacles. It needs to:
Convince organizations to send it non-Google data for a more accurate attribution measurement. This is the biggest challenge for Google. I anticipate that the DDA feature within GA Premium will expand its capabilities and depth. In order to do so, Google needs to convince organizations to send it CRM data, offline data, and data from other sources into Google DDA to gain a more robust view of the customer and conversion paths. This will be a huge hurdle for Google to overcome, as consumers are increasingly concerned about their privacy and businesses don’t want to be perceived as Big Brother-ish. Develop more robust services and support for the Data Drive Attribution approach andfeature. I’ve been shouting that attribution is simply not a plug-and-play feature within a tool (or a standalone technology for that matter). Attribution is complicated; it has major implications on change management within an orgnizaiton, how firms measure marketing effectiveness, how consumers are valued, and how marketers purchase media and build marketing strategies. Premium users need support to fully benefit from the DDA features and insights. They need help to understand results and provide actionable recommendations. I’m not saying that attribution is a full-service offering, but I’m not saying it’s a complete solution either. Any type of measurement insights and optimization engine needs to have some support services and analytics expertise. And while GA Premium has a service and support team, we have yet to understand the extent of that service and support in the context of attribution and consumer analysis and optimization. Assure DDA users that Google can be trusted to sell media and provide rich, unbiased analysis. Ahh…yes, the elephant in the room. Google sells media to marketers. So, this begs the question: how can Google also provide an analysis of media performance and complete, trueROAS without being biased and win the trust of their Premium users? I think this will be another great hurdle for Google to overcome.
Further, I don't see Google's development of DDA as a threat to the existing attribution competitive base. On the contrary, we are seeing more and more service and technology providers developing advanced attribution solutions and offerings. Google is a bit late to this advanced attribution party, but it is making a splash with its approach and ability to intake different types of data (and we need to wait and see on its capability to do that). I do think there is room for everyone, because every marketer has different needs. But Google's in a great position to be a powerhouse in this very competitive market.
It’s an interesting, but expected move for Google to come to market with an advanced attribution approach. But who wins and who loses?
Winner: The Google Premium user. Premium users will reap the immediate benefits of the Data Driven Attribution feature. It’s available to all Premium users NOW, so I expect many expert users to test this new measurement approach. And if you’re a Premium user who’s using this feature, please share your experience with me!
Loser: The Google Analytics user. While GA users can still leverage the Attribution Modeling Tool through the free, GA base product, marketers seeking an attribution approach with a little more power may want to invest in Google Premium for the DDA functionality . . .or go elsewhere. Not having access to the Premium version may turn off non-Premium users, leading them to turn to the competition for a robust competitive attribution offering. And the attribution vendor market is a fierce group of analytics and marketing experts that understand consumer purchase behavior, marketing performance, and the complex data and media buying ecosystem.
Google made the right move in developing a more robust advanced attribution approach. It’s positioning the DDA approach as a way to better understand customer purchase behavior andtouchpoints, which is a uniquely different value proposition than the go-to-market attribution message of generating efficiency by making better marketing and media budget allocations. However, it faces many challenges in a world where consumer data and privacy awareness is at the forefront of everyone's mind.
It’s a very exciting time for us measurement and analytics geeks. I hope to see more measurement and insights innovation coming from the market in the next year.
Tina Moffett is an Analyst at Forrester Research, serving Customer Insights professionals. Follow her on Twitter @vmoffett.
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fd111d7a04d87941c96566574a3c186f | https://www.forbes.com/sites/forrester/2014/01/29/artificial-intelligence-what-you-really-need-to-know/ | Artificial Intelligence - What You Really Need to Know | Artificial Intelligence - What You Really Need to Know
By Michele Goetz
It looks like the beginning of a new technology hype for artificial intelligence (AI). The media has started flooding the news with product announcements, acquisitions, and investments. The story is how AI is capturing the attention of tech firm and investor giants such as Google, Microsoft, IBM. Add to that the release of the movie ‘Her’, about a man falling for his virtual assistant modeled after Apple’s Siri (think they got the idea from Big Bang Theory when Raj falls in love with Siri), and you know we have begun the journey of geek-dom going mainstream and cool. The buzz words are great too: cognitive computing, deep learning, AI2.
For those who started their careers in AI and left in disillusionment (Andrew Ng confessed to this, yet jumped back in) or data scientists today, the consensus is often that artificial intelligence is just a new fancy marketing term for good old predictive analytics. They point to the reality of Apple’s Siri to listen and respond to requests as adequate but more often frustrating. Or, IBM Watson’s win on Jeopardy as data loading and brute force programming. Their perspective, real value is the pragmatic logic of the predictive analytics we have.
But, is this fair? No.
First, let’s set aside what you heard about financial puts and takes. Don’t try to decipher the geek speak of what new AI is compared to old AI. Let’s talk about what is on the horizon that will impact your business.
New AI breaks the current rule that machines must be better than humans: they must be smarter, faster analysts, or they manufacturing things better and cheaper.
New AI says:
The question is sometimes more important than the answer. Imagine if the machine could help you refine or augment the way you approach and think about new situations and solve challenges? Suggestions don’t always need to be answers on what to buy, change the process, or determine a strategy. Suggestions can questions. Eric Horvitz of Microsoft told MIT Technology Review, “… Another possibility is to build systems that understand the value of information, meaning they can automatically compute what the next best question to ask is....” Improvisation is the true meaning of adaptation. Search on ‘artificial intelligence’ and ‘improvisation’ and you get a lot of examples of AI being linked to music. The head of Facebook’s AI lab and musician, Yan Lecun, says,“I have always been interested in Jazz because I have always been intrigued by the intellectual challenge of improvising music in real time,” he wrote. Linking the two, he wrote a program that automatically composed two-voice counterpoint for a college artificial intelligence project. Collaboration produces better results. Guy Hoffman at the Media Innovation Lab, School of Communication, IDC Herzliya introduced a robot that could not only compose music independently, but also collaborate with another musician (Guy himself) to create a new piece of music. The robot provided visual cues, reacting and communicating the effect of the music and creative process for lifelike interaction between robot and composer.
This is game changing, both in how organizations operate and strategize as well as the impact on customer experience. These three principles are the foundation for customer and organizational engagement. Today AI is like a super smart magic eight ball. Tomorrow AI supports and creates a dialog between companies and customers, managers and employees, and business to business.
Dialog is the essence of intelligence and at the heart of learning, evolution, and innovation. Even as we leverage big data, analytics, and machine learning today to tell us what markets to go after, how to optimize manufacturing and logistics, or influence purchases on ecommerce, there is still a significant amount of dialog that occurs to ask the right questions and put into place the answers machines provide.
So, when you read about the next AI acquisition, investment, or product release, consider how machines can participate in a strategic dialog and collaborate in the process to position and engage in unchartered territories.
Michele Goetz is a Senior Analyst at Forrester Research.
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9f1cc739cb542db3e859ed021a87704d | https://www.forbes.com/sites/forrester/2015/04/16/great-digital-customer-experience-must-be-more-than-skin-deep/ | Great Digital Customer Experience Must Be More Than Skin Deep | Great Digital Customer Experience Must Be More Than Skin Deep
By Ken Calhoon
It’s impossible to have great customer experience without digital transformation in the age of the customer. Most of us think first about the front-end experience when challenged with improving digital customer experience. We naturally gravitate toward the direct human interface: web features and functionality, design, native mobile apps vs mobile web and more. This is the glitz of digital customer experience and there is no relaxing here—your competitors and peers continue to raise the bar.
Look at online retailers for example. Companies like Amazon and Etsy scored high on our Customer Experience Index, and both have done so being customer obsessed--not only in their behaviors but in the digital experience they deliver.
But that’s Amazon and Etsy, both digital-only brands you’d expect are creating great digital customer experiences. How about a company you wouldn’t necessarily expect? Take Grainger, a B2B seller of construction and maintenance products, that is driving significant company growth through digital success.In 2014, ecommerce made up 36% of the its revenue and accounted for nearly all of its sales growth. Over the past couple of years, it has invested in the front- and back-end: it launched a new website and mobile app while expanding its products online over 1.2 million and constructing a one-million square foot distribution center in Illinois. Grainger’s revenue and profit growth are the direct result of new, preferable digitally-based customer experiences rooted in operational excellence.
So how can your organization understand where it stands today and how it should invest in the future? One way we often start is to have clients take our Digital Business Readiness Assessment, a simple but powerful tool that focuses on two dimensions: digital customer experience and digital operational excellence. In six questions for each dimension, a client can quickly ascertain its current readiness.
To add relevance, Forrester surveyed 61 companies to find out how they stacked up. As you can see in the following chart, most are still in the lower-left, Digital Dinosaur, quadrant. In fact, only three are in the upper-right section as Digital Masters.
A firm that has pursued both customer experience and operations dimension is the Kuveyt Türk Participation Bank. It has embedded customer experience disciplines at the same time it has built a service-oriented banking platform serving multiple digital touchpoints.
Given the importance of digital in driving customer experience, and the impact it can have on company growth, pursuing a path to digital mastery is critical. In our work with clients, it is clear that there is no perfect path or “one-size-fits-all solution.” Each business has its own set of customer needs, competitive dynamics and internal capabilities.
It is also clear that companies cannot pursue just digital customer experience or digital operational excellence. Both are critical in driving improved customer experience.
Ken Calhoon is a Vice President and Consulting Director at Forrester Research. Follow him @KenCalhoon.
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dfee5662b819566b406821d8e57b8e88 | https://www.forbes.com/sites/forrester/2015/08/24/robots-wont-steal-all-the-jobs-but-theyll-transform-the-way-we-work/ | Robots Won't Steal All The Jobs -- But They'll Transform The Way We Work | Robots Won't Steal All The Jobs -- But They'll Transform The Way We Work
By J.P. Gownder
This morning, WIRED published an article about my new Forrester Big Idea report, The Future of Jobs, 2025: Working Side-By-Side With Robots. You're probably familiar by now with the panic-stricken books (like Martin Ford's Rise of the Robots: Technology and the Threat of a Jobless Future) and headlines (HBR's What Happens When Robots Replace Workers?) proclaiming that the future of employment is bleak because of the rise of automation technologies. In other words, the meme goes, robots are taking all the jobs.
By "robots," we mean all forms of automation technologies, including those that conductphysical tasks, intellectual tasks, or customer service tasks (which mix elements of both physical and intellectual activities, but which constitute a distinct category in the age of the customer). Indeed, some impressive new technologies are becoming incredibly useful in a variety of organizational settings. Take, for example, Rethink Robotics' Baxter robot, seen in the video below. Unlike traditional industrial robots, it's safe for workers to be around Baxter -- and it's imperative, too. Because software engineers don't program Baxter; human colleagues simply move the robot's arm to teach it new actions, and it learns in real time.
According to the job-killer thesis, robots will displace jobs at an alarming rate; in a widely-quoted 2013 study, Oxford academics Frey and Osborne found that 47% of U.S. jobs were "at risk" of computerization.
But there are some flaws associated with the now-common job-killer meme. Cultural anxieties about robots (as seen in the novel Robopocalypse, or the Battlestar Galatica reboot) create an atmosphere in which people readily believe the worst case scenario. But the scariest numbers have the least specific timeframes and outcomes associated with them; even Frey and Osborne write of their estimate that at-risk jobs are merely “potentially automatable" (emphasis mine) and that their timeframe is "over some unspecified number of years, perhaps a decade or two.” And aggregate economic productivity numbers don't suggest that automation is moving the needle toward human redundancy.
Instead, Forrester lays out a specific, nuanced viewpoint rooted in a huge research initiative:We forecast that 16% of jobs will disspear due to automation technologies between now and 2025, but that jobs equivalent to 9% of today's jobs will be created. Physical robots require repair and maintenance professionals -- one of several job categories that will grow up around a more automated world. That's a net loss of 7%: far fewer than most forecasts, though still a significant job loss number.
Finally, we look at job transformation: At what point in the future will any given job category be changed by the presence of automation technologies? Our analysis suggests that, by 2019, 25% of all job tasks will be offloaded to software robots, physical robots, or customer self-service automation. For most workers, robotic colleagues will change the way we approach our daily jobs, requiring new methods of job training, management, financial reporting systems, and the like.
It's a major piece of research, and one that I'd invite all clients to read. Please read and download The Future of Jobs, 2025: Working Side-By-Side With Robots.
Receive an alert when I publish a new report!
J. P. Gownder is a vice president and principal analyst at Forrester Research. Onalytica named him one of the five most important people in the world in the area of wearable computing for 2015. Follow him at @jgownder.
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27c8b9cb5cec93f494becffa2a68ecfe | https://www.forbes.com/sites/forrester/2019/04/10/apple-itp-2-1-what-it-is-what-it-means-and-why-it-matters/?sh=3ec303647cb8 | Apple ITP 2.1: What It Is, What It Means, And Why It Matters | Apple ITP 2.1: What It Is, What It Means, And Why It Matters
Tim Cook, chief executive officer of Apple Inc., speaks during the Apple Worldwide Developers... [+] Conference (WWDC) in San Jose, California, U.S., on Monday, June 4, 2018. Apple Inc. highlighted improvements to its augmented-reality software, a key foundation for iPhones, iPads and future devices. Photographer: David Paul Morris/Bloomberg © 2018 Bloomberg Finance LP
By Tina Moffett, Senior Analyst, and Steph Liu, Researcher
Apple first introduced Intelligent Tracking Protection (ITP) in 2017, but the latest update (2.1) creates a new set of challenges for advertisers, publishers, and tech vendors that make money from online behavioral advertising (OBA), attribution, web analytics, testing, and personalization. With new reports that Google may be following suit, we decided it was time to answer some common questions about tracker blocking.
What Is ITP 2.1?
Apple announced ITP 2.1 in February 2019; it applies to iOS 12.2 and Safari 12.1. It is the latest release of ITP, which Apple first introduced in 2017 to limit cross-screen tracking by degrading third-party cookies after 30 days. After a few iterations, ITP 2.1 introduces a new set of measures: Safari purges most first-party cookies after seven days and blocks all third-party cookies by default, rendering device fingerprinting and long-tail measurement nearly impossible.
If ITP 2.1 sounds harsh, it’s meant to be. Apple explains in its blog post that one of the reasons for the update is that vendors were using redirects to masquerade as first-party cookies. And ITP aligns with Apple’s positioning as a protector of consumer privacy (see its latest privacy-centric ad campaign). Apple isn’t alone, either: Brave Browser and Firefox also block third-party trackers by default.
What Does ITP Mean For Marketers?
ITP 2.1 will likely disrupt marketers’ core efforts to track, analyze, measure, target, and personalize for Safari users. Let’s unpack this:
Web analytics will lose accuracy because a site visitor will be forgotten after seven days, thus inflating the number of unique visitors that a marketer sees on her website. This inflation could impact how marketers develop content and promotions. A/B testing will suffer as marketers will have a small opportunity to obtain insights. A/B tests will only have a seven-day window to test content and track results. Customers that visit sites less than weekly will be considered new visitors and could be pooled into a different testing group, resulting in inaccurate A/B tests. Data management platforms (DMPs) may see an inflated number of mobile devices because the episodic cookie purges will create new identifiers for mobile devices that aren’t new. This will exaggerate audience sizes and may impact how audiences are created. Marketers risk building audience segments based on outdated or incomplete data. Personalization will also suffer. Non-authenticated sites that leverage personalization tools based on past behaviors and preferences to create consistent customer experiences will not have historical data to personalize content. Because of this, customers will have inconsistent web experiences. Attribution will be harder to execute. With a shortened lookback window, marketers can’t attribute conversions that occur more than seven days after the user’s last site visit. Marketers will misattribute credit to campaigns and credit the last marketing touch too highly, running the risk of overspending on ineffective channels.
What Does ITP Mean For Publishers?
Publishers stand to benefit from ITP — if they can get their visitors to create accounts. Because authentication cookies are secure, they are immune to these changes, so publishers will be able to track their logged-in readers past the seven-day window. This will make publishers’ first-party data even more valuable, as long as they offer a clear benefit to readers, such as access to exclusive content or additional free articles, in exchange for registering.
How Did We Get Here?
Apple, Brave, and Firefox build their tracker-blocking capabilities to protect consumers’ privacy. Data breaches and privacy incidents, such as the Equifax data breach and Cambridge Analytica privacy scandal, have taught consumers that companies (many of whom they’d never heard of) are collecting, storing, and sharing data about them. As privacy regulations continue to roll out — the California Consumer Privacy Act goes into effect next year, and many other states have introduced their own privacy bills — tech companies are beginning to differentiate on their privacy posture. Apple is turning to privacy as a means of separating itself from the Facebook/Google/Amazon data oligopoly.
What Should Advertisers Do In Response?
Estimate the potential impact of tracking protection features by: 1) reviewing how much of your site traffic comes from Safari or Firefox and 2) measuring the average time between user visits to your site. Advertisers with significant numbers of Safari visitors need to work with their vendors and analytics experts to determine tracker blocking’s impact on all marketing efforts, specifically looking for overinflation of return on ad spend (ROAS).
Advertisers should be wary of vendors that claim to have workarounds. As ITP’s multiple iterations have shown, adtech vendors are in a game of cat and mouse with browsers, and updates to ITP have already rendered previous workarounds ineffective. It’s also worth noting that ITP 2.1 removes support for a Do Not Track (DNT) setting because, previously, websites ignored that setting entirely if consumers turned DNT on. Browsers tried to give consumers a privacy-friendly option and sites didn’t comply, so Apple, Brave, and Firefox created a mechanism where compliance isn’t optional.
This post originally appeared here.
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1f60feedae3e0ddf816b2fc1015a3794 | https://www.forbes.com/sites/forrester/2019/07/05/stop-chasing-after-all-things-smart-home-build-connected-health-experiences/ | Stop Chasing After All Things Smart Home -- Build Connected Health Experiences | Stop Chasing After All Things Smart Home -- Build Connected Health Experiences
Close up of modern medical diagnostics concept Getty
It’s not just about the smart home . . . it’s about something much bigger. Healthcare organizations (HCOs) need to learn and understand how to navigate the smart home space and use internet-of-things (IoT) technology to improve wellness or chronic condition management — to improve overall health outcomes — on the backdrop of creating an end-to-end connected health experience for consumers.
But tread carefully. HCOs must not get distracted by shiny objects like smart stoves and ambient lighting just for the sake of doing all things smart home. The smart home ecosystem is vast and complex, with a wide range of device types, distribution channels, and revenue models — for example, smart speakers such as Amazon Echo and Google Home, which accounted for more than 50% of the installed base of smart home devices in 2018.
Successful deployment can lead to improved health outcomes, lower costs, and enhanced patient and physician experiences by:
Reducing readmission rates. Remote monitoring devices allow physicians to monitor patients from the comfort of their home after discharge. Access to vitals and health during post-acute will allow physicians to intervene as necessary, resulting in fewer complications and reduced costs. Empowering patients to self-triage. New symptoms appear in the blink of an eye, leaving patients unaware of what is wrong and how to fix it. Connected devices can offer actionable insights on a patient’s health as it changes, whether it is helping understand their condition or knowing when it is appropriate to act on new symptoms. Building a 360-degree customer view of the patient. Physicians often rely on a snapshot of health data to diagnose and treat patients. Smart devices, such as wearables, can track patient health 24x7x365. When coupled with personal health records, physicians gain a holistic view of patients, understand their health, and provide proactive, preventative care.
Forrester mapped out the connected health ecosystem, documented stories of success, and outlined key questions HCOs must ask to stay on the right path. This will help ensure HCOs build cohesive connected health experiences that customers need and want.
Download Forrester’s complimentary guide on the seven ways to deliver exceptional healthcare CX to learn more about each of these initiatives.
This post was written by Senior Analyst Arielle Trzcinski, and originally appeared here.
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6c39984c0a0a16c460310262c5d90d8e | https://www.forbes.com/sites/forrester/2019/10/04/virtual-banks-in-hong-kong-are-set-to-rekindle-the-retail-banking-experience/ | Virtual Banks In Hong Kong Are Set To Rekindle The Retail Banking Experience | Virtual Banks In Hong Kong Are Set To Rekindle The Retail Banking Experience
Online banking businessman using Laptop with credit card Shopping online Fintech and Blockchain... [+] concept Getty
Also, for a deeper analysis of the financial services customer in Asia Pacific, download Forrester’s complimentary guide.
The Hong Kong Monetary Authority (HKMA) recently announced eight new virtual banking licenses in the market, and their operators will all launch new digital-only banks there before or in early 2020. Here’s what we think is happening:
HKMA’s objective is clear: disrupting traditional banking and improving digital CX for Hong Kongers. Traditional banks were quick to dismiss the March 2019 announcement of the first four virtual banking licenses as a nonevent. In the days and weeks that followed, their executives commented that such teams coming from local startups and existing banks would not succeed in disrupting the market — even though Zhong An was in the first batch. But then HKMA issued a new batch of licenses in May, and the four new names — Ant Financial, Ping An, Tencent, and Xiaomi, four of the largest and most successful digital platform players in China — sent shivers down the spines of those same executives. Customers are willing to switch. Of the 1,000 online Hong Kong adults we researched earlier this year, 18% said they would consider switching to digital-only banks within the next two years; about 38% said they would likely not switch. This was before any of the virtual banks launched their digital-only value propositions and leaves about 44% of Hong Kong customers sitting on the fence. Also interesting is what keeps customers from switching: It’s not for security reasons or because they love their banks — it’s because they expect switching to be a painful process. Suffice it to say that this does not seem to be a strong reason for customers to remain loyal to their banks. Incumbents’ mobile apps are not ready. Early this year, we benchmarked the usability and functionality of the mobile banking apps of five banks in Hong Kong: Bank of China, Bank of East Asia, DBS Bank, HSBC, and Standard Chartered Bank. The results weren’t pretty: None can compete on equal footing with the mobile banking apps of Chinese banks such as ICBC, China Merchants Bank, and Ping An Bank. In particular, Forrester identified some clear areas of weakness in incumbents’ self-service and money management functions. In terms of usability, three of the five HK banks we reviewed have not met customers’ demand for better navigation and search experiences on their mobile apps. We expect virtual banks — and not only the ones linked to Chinese digital giants — to dramatically outperform banking incumbents’ mobile apps. Hong Kong banks have less than two years to up their digital CX game. Forrester Research tracks digital-only banks across the world, and we have noticed that it usually takes a few years for these banks to attain critical mass (see the Disrupting Finance: Digital Banks report). Amazing success stories like KakaoBank are unique. We expect that virtual banks in HK will start launching digital-only propositions in early 2020, if not before. Of course, not all of them will succeed, but the operators linked to and empowered by mainland China-based digital giants will certainly have an advantage with strong, modern technology stacks and unfettered customer obsession for customers, as well as insights-driven operating models. We expect to see strong results appear sometime in 2021.
The good news is that most banks have started to react. The other good news is that Forrester can help with data and insights, frameworks, and best practices, as well as consulting and CX training and certification plans. These assets and services will help you prepare your troops and equip them to successfully compete and defend your market share against digital disruptors.
This post was written by Analyst Meng Liu and Vice President, Research Director Frederic Giron. It originally appeared here.
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e4d60b719c52dcef53e5f77cb3f9704e | https://www.forbes.com/sites/forrester/2019/11/25/predictions-2020-iot-expansion-brings-even-more-change/?sh=71a5ebb62e32 | Predictions 2020: IoT Expansion Brings Even More Change | Predictions 2020: IoT Expansion Brings Even More Change
Using the internet to connect physical products and operations to business digital systems has evolved far from its roots as simple RFID tags. The internet of things (IoT) is proliferating across consumer products, industrial operations, and supply chains. And, as we predicted for 2019, the variety of IoT software platforms has continued to grow and evolve to complement the cloud giants’ foundation IoT capabilities rather than compete with them.
In 2020, business use of IoT will keep expanding as it’s added to more products and business operations. Just as the market has come to expect updated digital experiences, it will begin to expect the same from experiences in the physical world. Customers increasingly expect that OEMs know what their experience is with the product and that you can give them up-to-date status on how well the business process is working toward their needs.
Here’s three of our 2020 IoT predictions:
Smart speaker displays will proliferate. 41 million US households have smart speakers in 2019, and they are proliferating in other markets as suppliers do the necessary language and cultural localizations for various markets. Lower prices of $50 and under are also a major factor in global expansion. In 2020, Amazon, Baidu, and Google will drive major adoption of smart displays — smart speakers that have a phone, camera, or tablet-sized screen to enable visual responses and interactions. These devices will also play a growing role in the workplace. A product OEM will be targeted by a ransomware attack. Cyberattackers have so far targeted companies with ransomware by hacking their internal computer systems. But in 2020, we expect to see attackers instead go after the company’s products in the hands of customers. They will block connection or operation of connected products such as home lighting or manufacturing machinery until the product maker pays a large ransom. A major product-as-a-service ecosystem will launch. Connected products create a constant communication flow between customer and product maker. They also create ongoing costs for product makers, who need to monitor experiences and send software updates. OEMs are seeking new revenue sources for their connected products to offset those costs. In 2020, we predict a major consumer or B2B provider will convert from product sales to an IoT services offering, backed by partners in an ecosystem.
The IoT market will continue to see dramatic and rapid change. To learn more about what we’re predicting for 2020, read our full report.
Download Forrester’s Predictions 2020 guide to understand the major dynamics that will impact firms next year.
This post was written by VP, Principal Analyst Frank Gillett, and originally appeared here.
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693b8c1491b3d24503c4f7c16d1174d8 | https://www.forbes.com/sites/forrester/2019/12/26/nike-is-setting-the-standard-for-omnichannel-loyalty-in-every-industry/ | Nike Is Setting The Standard For Omnichannel Loyalty In Every Industry | Nike Is Setting The Standard For Omnichannel Loyalty In Every Industry
Most marketers understand that earning loyalty is bigger than rewards programs and incentives. That it’s important to treat different customers differently. And they agree that a loyalty program should deliver the best content, offers, and experience that a brand has to offer.
But, making the shift from loyalty as a standalone marketing practice to something that is tightly integrated with the customer experience is hard. And companies struggle with many of the fundamentals that make it possible — such as understanding customer interactions across channels, delivering a consistent experience, and collaborating with internal groups like eCommerce and customer service.
Enter Nike.
Membership in NikePlus, which it bills as “the very best of Nike”, is at the center of Nike’s direct to customer growth strategy. The 170M members of the program get benefits for both shopping and using its family of apps. There are three things that set Nike’s approach apart:
Loyalty has a higher calling than a promotional firehose. Nike prioritizes loyalty and membership as part of the company’s corporate strategy for growth. In his FY2019 letter to shareholders, Mark Parker referenced members and membership six times and attributed 35% growth in digital revenue to the expansion of the program. Exclusivity, access, and innovation are front and center. NikePlus members get access to shopping perks like free shipping but the emphasis and focus is on access and exclusives rather than percent off. It consistently tests new kinds of partnerships and benefits to keep the program fresh and exciting. For example, in November it introduced “Member Days,” where program members could get unlock a new benefit – such as free gift with purchase, rewards for doing a working in Nike’s training apps, or first access to the new Kyrie 6 shoe — each day for six days. Member insights impact omnichannel experiences. The member experience and exclusive offers aren’t just limited to mobile, web, and email. Nike brings membership to life in its stores as well with express checkout, special store hours for members, and a members-only floor at its flagship store in NYC. It’s also using member data to enhance the value it delivers for members through hyper-localized store formats: at the end of October, Nike expanded its Nike Live concept with two new stores in Long Beach, CA and Tokyo, Japan.
Nike may be setting a new standard for loyalty, but the uptick in retail loyalty program revamps I’ve seen in the past 18 months tells me that other retailers are paying attention and investing in program evolution too. Stay tuned, you’ll be hearing more from us about retail loyalty in 2020.
This post was written by Principal Analyst Emily Collins, and originally appeared here.
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452dca8f2bc3d660bc30e03b4790cfe5 | https://www.forbes.com/sites/forrester/2020/08/24/its-time-to-ready-your-brand-for-social-justice/?sh=7383971da06f | It’s Time To Ready Your Brand For Social Justice | It’s Time To Ready Your Brand For Social Justice
The pressure on brands to speak up is being exerted not only by protestors on the streets but also by a broader shift in attitudes that encompass customers and employees. Neutrality is no longer an option.
In the summer of 2020, brands did something they had never done before. They spoke up about race. For some, like Ben & Jerry’s and Microsoft, this came naturally; they had long-standing programs to advance social justice. In June, when the spotlight turned on racial justice, these brands communicated at length their commitments and actions to promote greater equity. But for most brands, schooled in the traditional public relations practice of avoiding issues with even a whiff of politics, the discomfort was palpable. But they had little choice; the tide had turned.
The pressure on brands to speak up is being exerted not only by protestors on the streets but also by a broader shift in attitudes that encompass customers and employees. Sixty percent of the US population, and 78% of those aged 18 to 34, expect brands to take a stand on racial justice. Consumers vote with their wallets, employees with their feet: 50% of LGBTQ+, 45% of racial and ethnic minorities and 39% overall have chosen not to pursue a job because of a perceived lack of inclusion.
Learn From Your Peers
As the neutrality option evaporates, brands big and small, across categories, find themselves put on the spot by customers, employees, partners, and other stakeholders. Brands are responding in three ways:
They signal intent through channels internal (like Satya Nadella’s email to employees) and external (like Nike’s “Don’t Do It” video). TV ad spend on racial justice messaging in one summer month was well over five times what it was in 2018 and 2019 combined!
They flex their muscles. They write big checks to organizations (Netflix’s Reed Hastings wrote one for $120 million of his own money to historically black colleges!). P&G used its immense marketing buying power to demand that its supply chain gets behind equity.
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They changed something integral about the way they operated. Advertising agency Weiden+Kennedy announced that it didn’t want staff or clients who don’t support Black Lives Matter, and Sephora committed to reserving 15% of its shelf space for black-owned brands.
Build From Within
This is not about marketing. It is about expressing who you are, what that means for your stakeholders and the implications for your actions. This is the stuff that brand equity is made of.
The best responses are honest, even if that can sometimes be uncomfortable. Coca-Cola’s James Quincey didn’t shy away from acknowledging its role in the most significant employment discrimination case in US history. He then used the clean slate to layout a program for the future. Taking a stand on social justice, whatever stand you may choose to take, should be informed by a careful assessment of your values. Unless you are a brand like Patagonia or Salesforce, you’ve probably got a fair bit of figuring out to do.
Start with the exercise of articulating what values your brand should consider sacrosanct. If you’ve done work on purpose or core values, this is an excellent time to dig that out. If you haven’t, there is no time like the present. Think of this as defining the character of the brand and letting the actions flow from there. Relationships, for brands and people, are built on character. Who do you want to be to your customers and your employees?
Practice, Practice, Practice. Make Perfect.
Once you iron out your values and your strategy, put on your tactical hat. The more complex and distributed your operations, the higher the likelihood of things going wrong when you have to respond. Simulate scenarios that are playing out in real-time all around you. For example, what would you do if your employees wore Black Lives Matter masks (a Taco Bell employee was fired, then reinstated)? Or what if, like at Goodyear, a brouhaha erupts about whether employees can wear “Make America Great Again” hats?
You don’t need to be a futurist to know that you’ll be grappling with social justice issues for quite some time. They will permeate what kind of brand you build for your customers and what kind of workplace environment you will foster for your employees. Tackle these issues of justice and equity with the same rigor you would solve a business-critical problem like product development, pricing optimization, or channel strategies. Because if you don’t, none of those other things may matter.
This post was written by Vice President and Principal Analyst Dipanjan Chatterjee, and it originally appeared here.
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6ae4e0407272c77921eeb35bc8ea687d | https://www.forbes.com/sites/forrester/2020/10/29/the-fdas-digital-health-center-of-excellence-why-it-matters-and-what-it-means-to-you/?sh=769893195685 | The FDA’s Digital Health Center Of Excellence: Why It Matters And What It Means To You | The FDA’s Digital Health Center Of Excellence: Why It Matters And What It Means To You
Last month, the US Food and Drug Administration (FDA) launched the Digital Health Center of Excellence (DHCoE), bolstering the shift toward digital that the healthcare industry has already been embracing. Investment in digital health is at an all-time high. The market cap created from nine IPOs in 2019 from companies in the digital health space sits at $43 billion. There was a record of $4.2B in venture funding for digital health in H1 2020 in addition to continued investments in wearable technology from tech titans like Apple, Google, Samsung and, most recently, Amazon.
While overtures in this market are strong, digital health still faces significant hurdles, including data quality, measuring effectiveness on care outcomes, and integration issues between innovating parties.
The DHCoE Is A Much-Needed Catalyst In Digital Health Experimentation
The DHCoE aims to meet these challenges by mitigating risk and connecting the dots for innovation within the digital health space that spans consumer health and wellness wearables, digital health technology, mobile health technology, software as a medical device, and technologies used to study medical products.
If successful, the DHCoE will help the healthcare industry:
Overcome barriers to rapid innovation. The lack of regulatory guidance and credible third-party organizations limit the ability for healthcare organizations to do timely and thorough reviews. The DHCoE looks to eliminate that. FDA Commissioner Stephen M. Hahn, M.D., stated that the DHCoE holds a goal to “ensure that the most cutting-edge digital health technologies are rapidly developed and reviewed in the US.” The DHCoE has outlined its three-step approach to innovating regulatory approaches as “enabling efficient, transparent and predictable product review with consistent evaluation quality; providing clarity on regulation by developing cross-cutting digital health guidance; and developing novel, efficient medical device regulatory approaches that are least burdensome while meeting FDA standards.” Accelerate the shift toward value-based care models. Digital health is a tool that will drive efficiency, reduce wasteful medical spend and help shift the US healthcare system toward a continuous proactive model. While these shifts are not yet explicitly stated as part of the DHCoE’s mission, it is an anticipated outcome given the increased pressure to move to value-based care. In 2019, 36% of total US healthcare payments were tied to alternative payment models (APMs), and 91% of health insurers surveyed by Health Care Payment Learning and Action Network expected APM activity to increase going forward. As this number continues to grow, digital health is key to future success in these models. Coordinate across parties to advance and regulate digital health. Digital health requires coordination across multiple parties with varying expertise. Device manufacturers, medical researchers, physicians, health systems, health insurers, software developers, consumer product sellers and more must keep integration and security in mind as they design new solutions while also designing for a great user experience. Issues like cybersecurity are early strategic priorities for the DHCoE. Create trust and awareness across all parties. Digital health success will require near simultaneous buy-in from multiple parties, including health insurers, providers and consumers, to be successful. Lack of trust from any of these parties will slow adoption across the board. The DHCoE’s transparent provision of scientific support, policy advice, best practices and oversight capacity will move to generate trust across all parties interacting with digital health. Protect population interests. As more tech titans such as Apple, Amazon, and Google continue to enter the digital health space, regulations need to evolve with their innovation. If there is one thing we have learned from numerous congressional hearings, it’s that regulation needs to be proactively thought out as these companies continue to disrupt new industries. The DHCoE must be able to expand beyond traditional healthcare regulation to support the growing role that software, analytics, and new methods of digital diagnosis will play in the new normal for healthcare.
You can download Forrester’s complimentary 2021 Predictions eBook here.
This post was written by Senior Analyst Arielle Trzcinski, and it originally appeared here.
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dac841a31c1007493af807e72ed8cc7f | https://www.forbes.com/sites/forrester/2021/02/24/why-citis-500m-mistake-is-really-a-design-debt-interest-payment/ | Why Citi’s $500M Mistake Is Really A Design Debt Interest Payment | Why Citi’s $500M Mistake Is Really A Design Debt Interest Payment
Bad user interface design just cost Citi $500M. Three employees using poorly designed software accidentally sent $900 million to one of its client’s creditors instead of $7.8 million — then when creditors refused to return most of the money, a judge ruled in favor of the creditors.
The judge blamed “human error” in his decision, pointing out that:
The instruction manual for the banking software, Flexcube, explained how to perform this kind of transaction. Citi uses a “six eyes process” — meaning that three Citi employees reviewed Flexcube’s transfer screen, to approve the transaction. Flexcube warned that funds would be sent out of the bank, but not the amount.
However, that explanation misses the bigger picture: If three experienced employees agree on what they expect the software will do, but it does something else, that indicates an interaction design defect that caused the human error.
Avoiding mistakes is one of the six ways better employee user experience (UX) drives better business results. It’s rarely as dramatic as a single $500 million incident — at most companies, it’s a steady drumbeat of avoidable mistakes that cost time and money and could have been prevented through better UX design. This is a design debt interest payment that almost every business is paying day after day, year after year.
The Design For Work Opportunity
Businesses are waking up to the upside opportunity in improving UX design for employees. Already, about half of design teams work on employee-facing software. And based on Forrester’s analysis of the $150 billion-plus design industry, that number is going to grow.
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Citi has many dedicated professionals working on UX for its consumer app and site, both of which are much better designed than that screen in Flexcube, based on Forrester’s UX reviews of apps and sites for banking customers. Citi probably even has a team dedicated to employee-facing software as most large firms do. However, that team is probably overstretched and wishes they’d had the chance to improve this interaction in Flexcube. If you were Citi, wouldn’t you invest in fixing that defect right now? How many other UX issues lurk inside of businesses waiting to cause major or minor mistakes? And how many other companies are in the same boat? Again, this is interest paid on Citi’s design debt — and it’s likely to come due again.
It’s not just internal teams either — software vendors are being forced to improve UX or face dire consequences. How would you like to be Flexcube right now, knowing that your product caused a customer to lose $500M, and that your competitors are telling all your prospects about it? And consider just how much frustrating software employees interact with every day. Every single one of the vendors of those tools is at risk of being abandoned in favor of a better designed replacement. Just look at commerce suites, for one example among many.
There have been plenty of major mistakes caused by bad UX before, of course: The tragic accident of the USS John McCain in 2017 that was caused by confusing controls; the Hawaii nuclear missile test warning gone awry in 2018; Three Mile Island’s 1979 meltdown exacerbated by a convoluted control room. And there are minor ones every day that affect us. These issues are everywhere and at every scale.
Making It Better Requires Effort And Expertise — And Pays Off
So what’s the first step to improving this situation? Recognizing there’s a problem: Our research has found that most organizations assume employees will use whatever tool they’re asked to, so most companies put minimal effort into design as long as the functionality exists, even if it’s unnecessarily convoluted and obscure. They may have been able to get away with that in the past — but less and less so, now.
More important, though, is recognizing that UX quality directly affects business results. When UX quality is higher: Employees try harder and feel invested in their jobs; they’re easier to hire and train quickly; better UX tends to increase market share; digital transformations are more successful because employees adopt required tools and processes; organizations avoid tragic and costly mistakes; and they do better at regulatory compliance.
To understand the business and technology trends critical to 2021, download Forrester's complimentary 2021 Predictions Guide here.
This post was written by Principal Analyst Andrew Hogan, and it originally appeared here.
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c1e78f21732127ffdb970a7a425f4354 | https://www.forbes.com/sites/forrester/2021/02/26/how-b2b-cmos-can-respond-to-their-ceos-need-for-certainty/ | How B2B CMOs Can Respond To Their CEOs’ Need For Certainty | How B2B CMOs Can Respond To Their CEOs’ Need For Certainty
Over the last year, we have all experienced an unprecedented amount of change, and scenarios we used to see only in movies became reality affecting all aspects of our professional and personal lives. In business terms, markets that used to be attractive may have disappeared, organizations that used to be fierce competitors may have decided to join forces and the ways we work and how we interact have — for many — dramatically changed.
As uncertainty is still high, many B2B marketing leaders are shrinking their planning horizons to ensure that marketing plans are examined and adjusted as needed so that their teams can continue to demonstrate agility and resilience. As these principles of agility and adaptability have risen in importance boards, CEOs and executive teams are all keen to move forward and make decisions that shape their organization’s future and drive a step change in performance and value creation.
Therefore, marketing leaders must avoid the trap of focusing only on near-term efforts; more than ever before, it is critical to create the bandwidth needed to look ahead and drive the longer-term growth agenda of their organizations. To do this, B2B marketing leaders need to not only manage external realities and uncertainties, but also navigate through their own organizational constructs and internal complexities so that they can deliver a concise yet actionable marketing strategy.
Creating a clear vision forward is not always easy — and given the ongoing uncertainty, such an endeavor may seem even more complex and daunting. Where do you start? How do you ensure that you align with your peers in the sales and product functions across all levels of the organization? How do you make sure that decisions made at the highest level of strategy cascade and drive operational efforts across all marketing sub-teams to avoid inefficiencies and waste?
We have broken down that complexity and distilled marketing strategy formulation into three sequential levels. Specifically:
Level 1: This is what we call the shared destination, and it captures decisions that sales, marketing and product leaders must take together to provide clarity on where and how future revenue will be generated. As revenue engine leaders agree on the future shared destination, they must also examine the strategic fit of all revenue engine functions, identify areas where change is required and commit to driving that change for the future market advantage to be attainable. Level 2: At this level, B2B marketing leaders must take decisions that define how marketing will orient to — and maximize the effectiveness of — its approach in supporting the shared destination. The first decisions made at this level are external — related to brand, audiences, go-to-market routes and value creation. Here, CMOs have a unique opportunity to bring their deep understanding of buyers’ and customers’ evolving behavior and expectations so that revenue engine leaders together make decisions that maximize business results in existing and new or untapped market areas. CMOs then turn their attention to internal decisions that provide clarity on the operating model, marketing capabilities and milestones that marketing needs to achieve to support the shared destination. Level 3: The decisions made at the previous levels cascade down to the individual marketing subfunctions (e.g., marketing operations, portfolio marketing, demand marketing), providing the strategic clarity that these leaders often times lack. Having this clarity enables them to define what they need to deliver within their own sub-functions to support the long-term marketing strategy.
Taken together, these three levels form the Marketing Strategy Compass — a best-practice model Forrester uses with B2B CMOs to help them navigate through uncertainty and noise and deliver a clear strategic vision that advances their business’s growth agenda. Developing that future outlook is key to ensuring that B2B marketing leaders continue to act as assertive agents of change — especially at times when their business needs clarity the most.
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To learn more about how CMOs can use this approach in their own organizations based on their business context, join Forrester at B2B Summit North America.
To understand the business and technology trends critical to 2021, download Forrester's complimentary 2021 Predictions Guide here.
This post was written by VP and Research Director Meta Karagianni, and it originally appeared here.
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6ec32d77083206b555a42c0383ca49cb | https://www.forbes.com/sites/forrester/2021/03/04/intelligent-creativity-overhauls-the-creative-process/ | Intelligent Creativity Overhauls The Creative Process | Intelligent Creativity Overhauls The Creative Process
Despite an ever-expanding universe of marketing channels and complexity, the creative process utilized by most marketers and agencies has remained unchanged for nearly a century. Creativity in today’s marketing and agency setting is reliant upon instincts. Yet an intuition approach alone to creativity produces outputs that interrupt, confuse or discourage consumers. Creativity — the force multiplier that ignites consumers’ desires, aspirations, concerns and envy — struggles to deliver culture-shaping ideas and power-punch executions in today’s culture.
Why? Consumers consider advertising irrelevant. Advertising no longer engages elusive consumers who actively avoid it. About a quarter use ad-blocking technology. Only a third agree that advertising is a useful way to find new product information. And nearly two-thirds think that there are too many ads. Customer experiences are commoditized. Companies are swimming in a sea of sameness, with digital experience and customer experience initiatives that lack emotional connection and brand relevance, or they leverage the same technology to solve the same customer problem.
Creativity itself is not broken or irrelevant. But the creative process has not kept pace. Companies should modernize the process surrounding creativity.
Invigorate Creativity With Machine Intelligence
There’s always been tension between creativity and technology. On one side is the belief that technology can in no way replicate human tastes, sensibilities or sociological understanding. And the opposing point of view is that humans cannot keep up with the scale, accuracy or speed of technology. Neither of these absolute points of view are correct on their own.
The answer lies in combining the accuracy of technology with the artistry of human creativity. The combination breathes new life into the creative process, its practitioners, and its outcomes. Agencies are becoming smaller and smarter. Our research shows that agencies will automate 11% of jobs by 2023 as a result of accelerated adoption of artificial intelligence, machine learning, and robotic process automation.
CMOs and agency executives who infuse the potent combination of technology and creativity into marketing reap rewards. They can differentiate brands with hyper relevance, better meet the emotional needs of their customers and empower their employees by automating the boring work and elevating the fun work,.They can also generate significant intangible value such as branding, corporate reputation, intellectual property and innovation.
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Introducing Intelligent Creativity — A Human + Machine Creative Process
We call this solution intelligent creativity, a process of creative problem-solving in which teams of creators and strategists conceive, design, produce and activate business solutions with the assistance of AI, intelligent automation and data. Intelligent creativity follows the same creative process but with the assistance of platforms and machines. Intelligent creativity helps businesses:
Define the problem to solve with algorithms and insight. Develop creative solutions to these problems with the assistance of intelligent software. Verify and then scale creative solutions with machine precision and accuracy.
To take advantage of an intelligent creativity process, CMOs and agency executives should ask the following questions:
How can you forge the right connections between marketing and IT to ensure that the right technology is deployed? Creativity and the use of technology should not start or stop at one department or another. The IT and marketing communities need tighter collaborations to spur growth. Who should own which portion of the martech stack? The answer likely varies depending on your internal resources and agency relationships. Agencies take different approaches to their internal tech strategy and external partnership. How can your technology and partnerships better connect/integrate your marketing mix? Siloed, disconnected marketing is part of the problem. Uniting upper-funnel persuasion with lower-funnel precision for full-impact marketing requires connecting technology, creativity, content and media. What talent is required to enact intelligent creativity? Digital marketing and storytelling talent can be oppositional. They must be interwoven throughout the process so that brand and technology conversance are equally valuable and used.
To understand the business and technology trends critical to 2021, download Forrester's complimentary 2021 Predictions Guide here.
This post was written by Principal Analyst Jay Pattisall, and it originally appeared here.
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21174f5c6330c6dfd4bd072df2bec00b | https://www.forbes.com/sites/forrester/2021/03/05/sales-leaders-what-happens-when-we-all-get-to-travel-again/ | Sales Leaders: What Happens When We All Get To Travel Again? | Sales Leaders: What Happens When We All Get To Travel Again?
One day, later this year, it’s going to happen: herd immunity, un-quarantining, social proximity, and the return of safer long-distance travel. It’s not hard to predict that for B2B sales professionals, the long-awaited opportunity for face time with buyers and customers will likely explode with activity, after so much pent-up demand, not to mention the resurgence of team off-sites, user conferences, marketing events, and annual kickoff meetings.
Here’s the challenge for sales leadership: After well over a year of somehow making do with predominantly virtual selling, how much of the return to business travel is necessary? Is there a downside to resurrecting the B2B road warrior persona? What will our customers want?
It’s a perfectly natural instinct to plan to quickly return to in-person customer engagements —particularly for sellers whose performance has suffered during the pandemic — as it’s a straightforward justification for having missed quota the last few quarters. Additionally, there are plenty of industries and selling environments that, until March 2020, still relied on traditional interactions — lunches, golf outings, customer conferences — to build relationships and seal deals. And, let’s face it, many folks need relief from the pressures of social isolation and monitoring their kids’ algebra classes; letting people out of seclusion may help them to rebalance emotionally, and thus perform better professionally.
Hence, when limitations are lifted, we should all expect — depending on the region and other variables — a temporary, extreme pendulum shift of travel volume — from virtually none to “everyone’s out-of-office email message is turned on,” which itself might provide short-term relief, but is certainly not a sustainable new normal. What sales leaders, enablement and operations teams will need to determine, after we’ve collectively scratched the road travel itch, is this: How much travel is the right amount? Where should the pendulum come to rest in a post-pandemic sales world?
Sales leaders can start solving the riddle by answering the following three questions:
What Do Buyers And Customers Prefer?
As much as high-velocity sales reps have capitalized on the fact that their target audience has been stuck at home and as a result, more susceptible to cold outreach, a natural corollary is that customers have streamlined their buying interactions, limiting sellers to virtual meetings that dispense with the formalities of live meetings. In other words, some of the good that has come out of the pandemic entails a better understanding of how B2B interactions might be improved. For example, win/loss analysis may uncover an organization’s improved ability to win deals involving buying group members spread across multiple time zones who learned to collaborate more efficiently via videoconferencing.
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Ask your customers which 2020-influenced interaction adaptations should remain in place, and which should return to the “Before Times.” Customers’ preferences should always guide your sales motions, and you’ll stand out from the competition by simply asking them this question.
How Have We Made Things Work Remotely?
Virtual selling is more than lights-camera-action video tactics. It’s a new muscle that must not only adapt to buyer personas and industries, but also be influenced by how we’ve internally managed our sellers in a quarantine-driven world (i.e., repurposing presentation formats and prospecting competencies). Sales leaders must determine what adaptations have supported more productive sales motions, rep productivity, adoption of top-down initiatives and desired changes in seller behavior. For example, eliminating commuting time can help business development reps increase their outreach volume, as well as to connect with prospects in the morning and late afternoon.
Ask your sellers the same question as your customers, but then segment their responses by performance, and let the data inform your decisions. Have high-performing reps leveraged virtual selling into Winner’s Circle attendance? Are the entreaties to return to old ways predominantly voiced by underperformers?
What Does The Data Say?
Most sales leaders, supported by operations and enablement teams, should already understand pandemic-driven findings, such as which buyer personas were more or less accessible in a work from home world. Which stages of the pipeline were slowed down or more seamless? Which SKUs sold better or worse without in-person pitches? Your competitors are already doing this.
Be sure your integrated sales tech stack components (e.g., CRM/sales force automation system, engagement tool, content platform and readiness solution) can easily provide the discoveries mentioned above. You can’t manage change if you don’t measure its impact.
Many organizations are mid-stream in rethinking their employment cultures in terms of who can, or should, work partially or completely remotely. The same scrutiny should be applied to seller/buyer interactions, by sales leaders interested in creating something positive out of such a difficult shared experience.
Finally, here’s some bonus Forrester data from B2B sellers about their pandemic experience:
40% agree that it’s easier to conduct meetings with customers 41% agree that WFH has made some collaboration easier 58% report they are working more hours each week in a virtual environment 78% feel the pandemic has negatively impacted customer spending
To understand the business and technology trends critical to 2021, download Forrester's complimentary 2021 Predictions Guide here.
This post was written by VP and Principal Analyst Peter Ostrow, and it originally appeared here.
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dd366f0e50c3742df7fb27132603a532 | https://www.forbes.com/sites/forrester/2021/03/05/the-future-of-work-is-all-about-changing-your-management-culture/ | The Future Of Work Is All About Changing Your Management Culture | The Future Of Work Is All About Changing Your Management Culture
Value propositions are increasingly shifting from traditional product sales to providing relevant services and great experiences. Of course, employees will continue to play a central role in this business transformation — but alongside technology. Hence, the need for greater employee engagement becomes critical. Why? Because higher employee engagement drives better customer experiences. At the same time, in a post-pandemic world, we will see the emergence of a hybrid workforce. This shift will undermine traditional top-down management and the presence-based office culture.
The degree of employee engagement, meanwhile, is affected by the quality and type of corporate culture. Better employee experiences translate into higher employee engagement. And culture is a determining factor for employee experiences. Moreover, corporate culture matters for business success because it defines how your organization thinks about itself and how it tackles the challenges of permanent change.
Management Culture Sets The Tone For Corporate Culture
Management defines the framework for how corporate culture affects employees, customers and how an organization deals with ethical questions. Therefore, an innovative management culture provides a strong purpose, creates diverse and cross-functional teams, focuses on the customer as the center of business activity and embraces transparent communication with the organization.
Culture affects the struggle for talent, as well. Businesses usually can find employees who are diligent, obedient and trained in their respective areas. Traditional management techniques address these requirements. Encouraging self-initiative, creativity and passion for one’s work requires a corporate culture that values these characteristics. In other words, management culture is critical for fresh thinking and breaking with conventional dogmas, driving diversity of thought, the integration of different opinions, and strengthening of cultural intelligence.
Nothing Less Than The Redefinition Of Leadership Is At Stake
Managers will continue to be responsible for planning, organizing, staffing, leading and controlling. But managers will also need to communicate clearly why and how transformation is affecting the future of work inside their organization. Moreover, management needs to broaden its hiring and skill-selection horizon beyond traditional grades and digital skills.
A cross-functional organization and team-building capabilities are critical aspects of the cultural transformation process. Managers need to deal with different levels of education, expertise, goals, viewpoints and mindsets — all sources of potential culture clashes. Managers also must learn to give employees more leeway and to empower them. In leading organizations, the role of the manager is therefore gradually transforming from a classic top-down, instruction-based command-and-control management style to a coaching style.
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Management culture is an important stake that will define the future of work. There are several other factors, however. Join our webinar, The Return to Work: Top Considerations for Technology Leaders in Europe, on April 14, 2021 at 10 a.m. CEST to participate in the panel discussion of Forrester analysts regarding the expected changes to the physical office, the emergence of the hybrid workforce, the evolving work-space regulation in Europe, and the efforts to boost employee experiences in a European context.
To understand the business and technology trends critical to 2021, download Forrester's complimentary 2021 Predictions Guide here.
This post was written by Principal Analyst Dan Bieler, and it originally appeared here.
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93672f3eddf7cfecb7e155da7639638d | https://www.forbes.com/sites/forrester/2021/03/08/covid-19-accelerated-your-digital-momentum---dont-slow-down-now/ | COVID-19 Accelerated Your Digital Momentum — Don’t Slow Down Now | COVID-19 Accelerated Your Digital Momentum — Don’t Slow Down Now
Your digital transformation initiatives may have been floundering pre-Covid, but that’s ancient history now.
Like many other firms, the global pandemic likely forced you to shift almost overnight to only engaging your customers virtually, thrusting the digital teams to the forefront of your firm’s business strategy. The impact on digital strategy, priorities and approaches has been massive.
But what now? Digital is well and truly the beating heart of your organization. How do you maintain that momentum?
To answer that question, Forrester interviewed over 20 heads of digital strategy from a cross-section of organizations across industries and geographies.
The bottom line is clear: digital leaders will never have a better chance to enable lasting business transformation and instill a digital-first culture. As Paul Siemers from Melbourne Water told Forrester, “There’s a fresh impetus at senior levels for both automation where feasible and remote working, now that both have been forced on the organization and the sky hasn’t fallen.”
To take full advantage of this opportunity:
Become product managers. Forrester has long pushed for digital leaders to build a core competency that views customer needs and technology opportunities through a commercial lens. With digital teams now front and center, this need has never been greater. Early in its Covid-19 response, a Singapore-based private bank found that staff were no longer content to be passive recipients of digital capabilities but were proactively reaching out to the digital team requesting more features, capabilities and services. As the bank’s chief digital officer noted, “When digital responds quickly and delivers value, that leads to even more requests and higher expectations.” The key to successfully embracing your inner product manager? Excel at matching business needs to technology capabilities.
Embrace and extend agile. Firms that responded to Covid-19 by embracing digital-only customer engagement, even if only for a limited time, have seen a corresponding acceleration in business change. Why? As Peter Caddy at Medibank observed, “Front-line employees have become more connected to our digital teams, and we are working hand in hand to bring customer insights directly into our teams to deliver improvements iteratively, which is empowering for everyone.” Transform how you work with executive leadership to scale agile practices to the strategic level.
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Increase transparency. At many less digitally mature firms, the shift to virtual engagement has meant that internal staff in key functions have, as Bupa’s Nick Park noted, “shifted from viewing digital as a ‘black box’ pre-pandemic to seeking to understand the details of how the team operates.” Like all insurance carriers, Sun Life was forced to respond to COVID-19 restrictions on face-to-face client engagement. The firm treated this as an opportunity to accelerate changes in how it works, better collaborate across functions and become more agile, with the goal to minimize risk while embracing uncertainty and being the quickest and most productive in trying new things. Evolve your approach to account for new revenue models, a shift from capital expenditures to operating expenditures and fluid planning centered on customer journeys or cross-functional teams delivering new propositions.
Most importantly of all: Don’t over-pivot to digital. Don’t let the massive uptake in digital engagement make you lose sight of key objectives — delivering positive experiences and being relevant to customers’ needs and wants.
The future is hybrid experiences. Stores and branches will be back, and there is still a role for sales staff and financial advisors. The first wave of pure-play digital engagement will give way to hybrid combinations of physical and digital. Forward-thinking firms are already planning ahead, leveraging what they’ve learned to rethink their engagement models, both physical and virtual, for the entire customer lifecycle.
To understand the business and technology trends critical to 2021, download Forrester's complimentary 2021 Predictions Guide here.
This post was written by VP and Research Director Michael Barnes, and it originally appeared here.
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9bd3191923abb3919175214d8e732d82 | https://www.forbes.com/sites/forrester/2021/04/01/four-building-blocks-to-help-campaign-leaders-balance-economies-of-scale-and-localization-requirements/ | Four Building Blocks To Help Campaign Leaders Balance Economies Of Scale And Localization Requirements | Four Building Blocks To Help Campaign Leaders Balance Economies Of Scale And Localization Requirements
Campaign owners want economies of scale — however, countries often waste time and resources localizing campaigns. Building a planning process that brings global, regional, and country marketing teams together will help drive campaign adoption.
Lego® pieces come in many shapes and sizes, from the packs of freeform bricks that let us build something unique, to the defined kits with detailed instructions that lead to a standard model. In many ways, these two scenarios reflect the dichotomy campaign leaders face when deploying global campaigns.
Ideally, leaders want regions and countries to use the same defined campaign “kit” with the same mix of programs and tactics to drive consistency and economies of scale. However, research shows that these sorts of campaigns have notoriously low adoption rates in the field. In a recent survey of regional marketing leaders, three quarters of them told Forrester that the global campaigns they were asked to deploy required significant local adaptation.
In contrast, country-based and regional marketing teams would like their own freeform “bag of marketing bricks” from which they can build localized campaigns tailored to their local market requirements.
How can global, regional and country teams collaborate to balance the two approaches? We recommend focusing on four key building blocks:
Gather country input. Don’t make assumptions about where to deploy campaigns or the needs of in-scope countries. Instead, focus on gathering data to identify prioritized countries and their needs in terms of language, program emphasis and tactic preferences. Analyze the input. Analyze the country input and use the insight to focus resources and budget on meeting the needs of the majority. Be clear about any country-level requests you cannot to meet so they can focus their efforts on filling gaps (rather than wholesale localization). Clearly define roles and responsibilities. Ensure that global, regional and local teams have clear roles and responsibilities in the campaign planning process. Having these three groups work together in a coordinated and systematic fashion is the foundation to driving campaign adoption. Socialize the campaign execution plan. Once you’ve built the campaign plan, share it with stakeholders for feedback and sign-off before moving to campaign execution.
To learn more about the four building blocks, please register for Forrester’s B2B Summit North America here.
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This post was written by Principal Analysts Mavis Liew and Conrad Mills, and it originally appeared here.
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476b5030a4079c6717d7ebb536423581 | https://www.forbes.com/sites/fotschcase/2017/01/10/simple-tools-to-make-more-money-in-2017/ | Simple Tools To Make More Money In 2017 | Simple Tools To Make More Money In 2017
Here’s a New Year’s resolution for you. Run a better, more profitable business this year.
We’re not just being rah-rah cheerleaders, because in this article we’ll show you how. The key is a set of simple techniques that any company can use, and that are virtually guaranteed to boost your bottom line.
Let’s begin with an obvious truth. Some products and services are more profitable than others. Some customers are more profitable than others. Every entrepreneur knows this, but many lose sight of it as their companies grow. The day-in, day-out drive to make sales—any sales—overwhelms other priorities.
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So the first step is an analysis. Depending on your business, you may want to break your sales down by product or service. Or you may want to break them down by customer. One client, a supplier of HVAC equipment, created a spreadsheet that, in simplified form, looked like this (“GM” refers to gross margin and “Inv” refers to inventory):
It often helps to divide up products or services by revenue, so that you don’t inadvertently axe big sellers that deliver low gross margin percentage but a lot of gross margin dollars. A catering company, for instance, produced a chart that looks like this:
With the data in hand, you can proceed to the second—and critical—step. Ask yourself why you make more money with some products or services than others. Or why you make more with some kinds of customers than others.
You can slice and dice the data in any way that will help answer these questions. For example, you can identify the common characteristics of your most profitable businesses or clients. But the answers aren’t always obvious. Some customers drive harder bargains than others. Some product markets are more competitive than others. You’ll need to involve your team in uncovering the truth. Examine your constraints on pricing, product by product. Scrutinize the opportunities and challenges involved with selling to different kinds of customers. Where do you have a competitive advantage—and where do you lack one?
One company, a foundry, discovered that it earned much higher margins on large, low-volume castings. These were difficult jobs that managers and employees generally disliked; they preferred jobs with long production runs. But they realized that the reason they were making so much money on the low-volume jobs was that they could do in-cycle mold changes, a unique capability that enabled them to run different castings without having to shut down the line. To focus on these jobs, the company had to change the sales compensation formula, from percent of sales to percent of gross margin dollars, to get the sales reps on board. But the new focus increased profits by $3 million in one year.
As the example shows, the “why” analysis will reveal your business’s potential for the coming year. What if you could raise the overall level of profitability to the level that you’re already realizing with your best customers or products? How much more money would you be making? What would you have to do to reach that point?
Those questions point to the final step: the development of action plans to realize that potential. Here’s where the whole company gets involved—operations, sales and marketing, customer service, and so on. Specific individuals take responsibility for each action plan. The plans carry clear milestones, and should be incorporated into the company’s ongoing forecasts. As the year progresses, you can refine both the forecasts and the action plans, helping everyone learn more about how to drive profitable growth. For example, as the foundry focused more on the large, low-volume castings, it began to run out of capacity. So the company began increasing prices, which led either to higher margins or to cancelled orders. Either way, it was better off.
If you follow this approach, we’re pretty sure that you and your company will have a happy new year. And next year at this time, you’ll be planning how to increase your profitability even more in 2018.
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30de2ccba9fc301f0d9ea9ea115f61c5 | https://www.forbes.com/sites/fotschcase/2017/05/30/remembering-a-man-who-made-a-difference/ | Remembering A Man Who Made A Difference | Remembering A Man Who Made A Difference
Some people just have a positive effect on others—and on the world. Take a guy named Terry Millard, known to all as Moose.
One of Moose’s Air Force squadron mates, Jim Hubbard, met him in Korea in 1980, not long after Moose had completed a tour in Vietnam. Hubbard noticed that the name tag on Millard’s flight suit read “Moose,” not “Terry.” Evidently the Wing Commander found out about this and called Moose on the carpet. Name tags should reflect your real name, said the commander, the name your mother would call you.
“My mother calls me Moose,” said Millard. The commander was not amused. He said, in effect, change it or else.
So Moose finally showed up one day with a name tag reading “Terry Millard.” That night, all of Moose’s squadron mates showed up at the bar with new name tags of their own. There was Moose Hubbard, Moose Simmons, Moose Johnson, and so on.
“The Wing Commander,” writes Hubbard, “gave up.”
Moose had that kind of effect. He didn’t accept conventional rules. He inspired people to work together to change those rules. Yet he wasn’t purely a maverick—he knew how to get things done within the system.
In his 20-year career with the Air Force, for instance, he flew two combat tours, served as an evaluator of management and leadership, and commanded a combat-ready F-16 Fighting Falcon squadron. When he left the service, he signed on as pilot with Southwest Airlines (SWA). “In addition to performing duties as an airline captain, check airman, and assistant chief pilot supervising over 600 pilots,” says his biography, “he was deeply immersed in company culture initiatives like pilot hiring, human factors team training, and intra-departmental employee relationship building.”
Moose Millard The Actuarial Review
When he could no longer fly, he reinvented himself as an SWA spokesperson and motivational speaker, which is how we met him. He loved the idea of getting employees to think and act like owners, and he brought us to Southwest to help move the airline’s pilots in this direction. (Only at Southwest: the head of the pilots and the head of the pilots union both loved the proposed initiative and actually argued over who would fund it. We ended up splitting the invoice.)
With Moose driving the process, we got broad input from pilots, finance, and others as to the key issues they were facing. We established metrics to focus on: pilot productivity and fuel economy. We developed a platform called Plane Smart Business that would provide information and serve as an avenue for suggested improvements. Moose, though he had developed a severe case of cancer, was there each step of the way, despite the pain from chemo. As he grew skinnier, he would joke, “My doc seems to want to get me back to my birth weight.”
The program was successful, and Southwest went on to launch similar initiatives elsewhere in the organization. Moose wasn’t so lucky. His cancer got worse, and he died in 2009.
But this is Memorial Day season, and Moose is a man worth remembering.
In his speeches, Moose was known for firing up an audience, often with catch phrases of his own. He would periodically remind people, “United we stand—but at Southwest we FLY!” And he liked to help people gain new perspective on their sometimes-difficult coworkers: “Mean people suck” was a phrase that a lot of folks remember. “We always knew that,” writes his friend Dr. Jim Mullins, “but putting it into words released a flood of emotional baggage that had weighed us down. The freedom to be real about painful people at work drew us to Moose. Moose [also] said, ‘Everyone has a contribution to make.’ And he generally found it. He reminded us to look for the good in even the weakest member of the group. And when he included them we knew that we were included as well.”
Our friend Tom Schramski has yet another story about Moose—one that illustrates his continuing influence.
“Last week, as I was in line at the airport to escape a Minnesota snowstorm, the person in front of me accosted a Southwest Airlines agent when it became clear to him that he was going to miss his connecting flight. He was loud, vulgar and demeaning to the agent who seemed to gauge the situation well, letting him talk and giving him little to fight with in her responses. When I stepped up for my new boarding pass I asked her if she had ever heard of Moose. She looked at me, began to smile and said “mean people suck.”
“Moose had to be smiling at that moment,” says Schramski.
We agree. We hope he still is.
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17f39009dba3f4d44e491c2d66b8f8aa | https://www.forbes.com/sites/fotschcase/2018/01/09/how-to-keep-your-best-people-from-walking-out-the-door/ | How To Keep Your Best People From Walking Out The Door | How To Keep Your Best People From Walking Out The Door
Right now, the US unemployment rate is hovering around 4%. In some areas it’s even lower. That’s very close to what economists call full employment.
For business owners, the statistic has a simple and powerful implication. Labor is scarce, and your best employees are likely to have a lot of other opportunities.
Will some of them consider—or even take—those opportunities? You bet they will. Often the only way a front-line worker can get higher pay is to change jobs. And if one employee leaves for greener pastures, others are likely to wonder why they’re sticking around.
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Most companies’ business is booming at the moment, and the last thing you need are empty slots on the payroll. Nor do you need the lost time, expense, and uncertainty involved in hiring new people.
But there’s one powerful insurance policy against a lot of people walking out the door: provide good jobs, 2018-style.
Good jobs are a topic we address in detail in the current issue of Harvard Business Review. In an article titled “More Than a Paycheck”—written with Prof. Dennis Campbell of Harvard Business School—we make what we think is a simple but important argument: where front-line employees are concerned, the good jobs of today don’t look like the good jobs of the past.
Time was, plenty of blue-collar workers could find jobs in factories. Maybe they belonged to a union. Even if they didn’t, they typically earned a good wage and enjoyed generous benefits. They might be laid off in a downturn, but they’d be hired back when the economy picked up.
Those jobs have mostly gone away, and they aren’t coming back. Anyway, most companies in today’s economy can’t afford to offer old-style union-scale compensation or job security to their hourly workers.
So what constitutes a good job in today’s tumultuous economy? What would it take to be the employer that the best people seek out—and never want to leave?
Some of the basics are obvious. At good-job companies, employees are trusted and respected. They’re given the tools and training they need to do their jobs well.
They’re also paid better than their peers at other companies. Maybe the wages are no different—many employers don’t have much flexibility on that score—but the company offers stock, phantom equity, and/or profit sharing on top of base pay. Chobani, the fast-growing yogurt company, gave its workers shares worth up to 10% of the company’s valuation in 2016. Southwest Airlines paid $586 million in profit-sharing bonuses that year, increasing every employee’s annual compensation by 13.2%.
But there’s more to a good job than generous compensation. Today, employees can no longer count on working for the same company or even in the same industry for their entire careers. So they need an opportunity to learn new skills.
To us, the most important skill a company can provide is the ability to think and act like a business owner. Understanding the big picture helps employees make good decisions. It’s a skill that makes them more valuable wherever they might end up working—starting with where they are right now, your company. It helps the business as well as the individual.
How to build that skill? That’s where open-book management comes in. Open-book companies identify one or two key numbers that reflect the business’s economics. They track and forecast those numbers week in and week out. Employees come to understand why the numbers are important and what they can do to move them in the right direction. Over time, they start thinking like owners.
Open-book companies also typically pay a short-term bonus based on hitting targets related to the key number. These bonuses don’t cost the company anything, because they pay for themselves through improved financial results. But they put more cash in employees’ pockets, and they focus people’s attention on the economics of the business. As we put it in an earlier article, employees get engaged—in making money.
In our experience, very few people voluntarily leave open-book companies. They’re making great money. They’re having fun. They’re learning new skills. They know they have job security, since they know the business’s economics. They know they are trusted in ways that most companies never trust their employees—with the numbers.
Most important, they feel like the company is theirs, not someone else’s. And why would you want to leave your own business?
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7b72a529fcf870502927cfcd49a14e26 | https://www.forbes.com/sites/francesbooth/2015/01/23/stop-checking-email-so-often-and-reduce-your-stress/ | Stop Checking Email So Often And Reduce Your Stress | Stop Checking Email So Often And Reduce Your Stress
New research has found that checking email less reduces stress.
It provides further evidence that stepping away from your inbox is a good idea not just for the sake of productivity, but also for the sake of your health.
In an experiment done by Kostadin Kushlev and Elizabeth Dunn, participants were told to change how they dealt with email in two separate weeks.
In one week, a limit was put on the amount they could check email – they were only allowed to check email three times a day.
The other week, they could check their email as much as they liked.
The researchers - from the University of British Columbia, Vancouver - found that in the week when email use was restricted, participants experienced significantly lower daily stress than when they checked email more often.
Many of us can feel this showing up in our own daily lives. Email stresses us out.
We know that an overflowing inbox is overwhelming. We groan as we open our emails. We find it hard to keep our email under control.
Yet despite all of this stress email causes us, we keep checking and checking. Many of us - and many companies - haven’t yet looked for a way to improve how we manage email.
As a starting point in doing this, the rule of checking email just three times a day is a great suggestion to try.
In my book, The Distraction Trap: How to Focus in a Digital World, I also outline other practical ways to deal more healthily and productively with your email.
Why not try checking email three times a day, and see how it makes you feel?
Here are some of my tips to help you do this. Firstly, decide whether it would be best to set yourself three fixed times or whether you would prefer to keep the timings flexible (having a fixed time can sometimes help you avoid the temptation to check all the time).
If you’re setting fixed times, you might choose to check, for example, at 10am, 1pm and 5pm.
Or, set yourself time brackets, for example: check email once at some point between 9am and 10am, once between 12 o'clock and 1pm, once between 4pm and 5pm.
If you think you’ve got the willpower to be completely flexible, just check three times whenever it feels appropriate.
To start with, expect that you'll be tempted to check all the time. This is normal. As time goes on, checking less will become easier.
Get up and walk away from your desk for two minutes if you feel really tempted to check.
Start whatever else you are meant to be doing. Commit to doing it for 20 minutes and let yourself get absorbed in the task.
Keep a running list of any emails you need to send as you think of them and do them all in a chunk, rather than logging in for each one. Start to notice how long you are actually spending on email. Start to notice how much else you are getting done when you check email less often.
At the end of the day, think for a moment about how checking just three times a day made you feel. Did you feel more, or less stressed?
If this new behaviour worked well for you, why not do it again the next day, and the next, until it becomes a healthy habit?
You might even want to cut your email use down further, to checking twice a day, just once, or on certain days, not at all.
Frances Booth is author of The Distraction Trap: How to Focus in a Digital World. To get your free first chapter of The Distraction Trap, and for more productivity tips, join her mailing list here
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b36c8ea610b258bee3a9799185cbb47d | https://www.forbes.com/sites/francesbridges/2016/12/07/serena-williams-writes-open-letter-about-gender-equality-empowerment-and-resilience/ | Serena Williams Writes Open Letter About Gender Equality, Empowerment And Resilience | Serena Williams Writes Open Letter About Gender Equality, Empowerment And Resilience
AP Photo/Darron Cummings, File
The number two tennis player in the world, Serena Williams, wrote an open letter in Porter's Magazine Incredible Women Of 2016 issue. She addresses the obstacles women need to overcame for equality, and Williams is an apt author for this issue. She was the number one ranked tennis player in the world for over three years, and only slid to number two this September after dominating women's tennis for most of her career. Critics often bemoan the state of American tennis, when Williams has reigned for about a decade. She was consistently underestimated and overlooked, but Williams has defied everyone to become arguably the one of the greatest in her sport.
She opens her letter by writing, "When I was growing up, I had a dream. I’m sure you did, too. My dream wasn’t like that of an average kid, my dream was to be the best tennis player in the world. Not the best “female” tennis player in the world." It's a defiant dream. When introducing male tennis champions, they are simply introduced as the best tennis player in the world. Female tennis players are always introduced with their gender distinction, stating bluntly they are not world champions, just champions of their gender. The distinction reeks of misogyny and disrespect, and openly states women are not equal to men. Williams rejects that notion.
She proceeds to write that her success is due to the tremendous support of her family, which not everyone has. With that encouragement she learned not to have fear. "But as we know, too often women are not supported enough or are discouraged from choosing their path. I hope together we can change that. For me, it was a question of resilience. What others marked as flaws or disadvantages about myself – my race, my gender – I embraced as fuel for my success. I never let anything or anyone define me or my potential. I controlled my future."
She then delves into equal pay, which she says frustrates her, because she has made the same sacrifices and put in the same work as her male counterparts. Yet critics, including number two player Novak Djokovic, question whether women should have equal pay in tennis. She's ranked 40th on the Forbes World's Highest-Paid Athletes list, and is without a doubt the best tennis player of her generation. The best male athletes are rewarded the most endorsements: Cristiano Ronaldo, Lionel Messi, Lebron James, Roger Federer, Novak Djokovic, Kobe Bryant and Tom Brady are considered some of the very best to play their respective sports. Williams is significantly farther down the list than any of her male counterparts. She ranked 55th overall in 2014 on Forbes World's Highest-Paid Athletes list; today she is 40th. Federer and Djokovic out earn Williams by three to one, and are ranked fourth and sixth, respectively.
Williams credits her resiliency for overcoming her obstacles. She concludes the letter by writing,"It is my hope that my story, and yours, will inspire all young women out there to push for greatness and follow their dreams with steadfast resilience. We must continue to dream big, and in doing so, we empower the next generation of women to be just as bold in their pursuits."
The truth is, if Williams was male she'd be a top five highest-paid athlete. The gender pay gap in her case amounts to tens of millions of dollars. Some day, endorsement deals will be more equal, and there will not be a gender distinction when women are presented as champions because Williams paved the way. Female athletes owe it to Williams and the champions who came before her to take up the mantle and continue this crusade, because the progress Williams made came with a big price tag.
Read my Forbes blog. Follow me on twitter.
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ab426495eb1761b2da1ffd298f72d94d | https://www.forbes.com/sites/francesbridges/2017/06/30/the-3-steps-to-assessing-your-goals-halfway-through-the-year/?sh=6b62af85741b | The 3 Steps To Assessing Your Goals Halfway Through The Year | The 3 Steps To Assessing Your Goals Halfway Through The Year
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Whether your New Year's goal was to get a job or a promotion, pay off $10,000 of your student loans, or lose 20 pounds, July marks six months into 2017, and this is an ideal time to take stock of your goals for the year: Measure your progress, evaluate your approach and adjust your timeline. Here are the three steps to understanding how you achieve your goals and how you can refine your habits and tactics for the second half of the year:
Assess Progress
Which goals have you made progress on? Which goals are you struggling with? Only by measuring your progress will know how much farther you have to go, and what adjustments you need to make to reach your goal. Measuring your progress involves looking at the numbers. If your goal is to pay down your student loan, how much have you paid down thus far? How much do you have left? Which months were you able to pay more and why? Look at bank statements and calendars to see if there were events you had to spend extra money on, like weddings, birthday celebrations or if you took a vacation, etc. Take into account if it's recurring expenses preventing you from paying the loan down, or occasional events like a wedding or a birthday. If getting a job is your goal, how many interviews have you been called back for? How many jobs are you applying for every day and every week? Keeping track of what you're accomplishing, it will inform your progress, therefore help you achieve your goal.
Evaluate Techniques
Now that you know where you're succeeding and where you're struggling, think about why. If you're succeeding at your goal of packing lunch every week day, how have you met your goal? Likely because you've planned time to grocery shop, prepare and pack your lunches. You're able to anticipate exactly what you need to do to meal prep, and you're setting yourself up for success by allotting time for it. Now, how can you apply this to goals you're struggling with? If you're behind on your goal to pay off $10,000 of your students loans, and have only paid $4,000 thus far this year, examine the months you've met your student loan payment goal and the months you haven't. What is preventing you from meeting the goal? If it's recurring expenses, determine what you should cut back. If it's one time expenses, then think of ways you can anticipate those expenses, make a budget for it, and save in advance so you can attend the event and meet your student loan payment goal. Planning ahead and anticipating obstacles will leave you less blindsided by unanticipated expenses, and help you meet your goals more consistently. They key is evaluating what works, and why, and how you can apply it to other areas of your life.
What doesn't work is easy, you push it to the side, but there's value in asking why it failed. If your goal is to lose 15 pounds this year and so far you've only lost five, why do you think that is? Are you not going to the gym enough? Are you not eating as well as you'd like to? Are you eating out too often? Look at your bank statements, your diet, your workout routine and get to the bottom of it. If you're not going to the gym enough, what ensures you go to the gym? Is it a time of day? Or scheduling it? Not packing gym clothes? Or if your diet isn't as healthy as you'd like, when you do eat well what do you do? Is it grocery shopping? Is it planning ahead? Evaluate when you succeed and when you fail, and try to create circumstances when you usually succeed: schedule your gym session, pack your gym clothes the night before, schedule time to grocery shop and make that healthy meal you're always happy to make. Taking the time to evaluate your approaches to your individual goals and understand what works, will help you understand how you meet your goals, therefore help you meet all of them.
Adjust Your Timeline
Evaluating your goals incrementally, and adjusting your timeline accordingly (every quarter or bi-annually) is the most effective way to educate yourself about how you accomplish your goals, and to motivate you to to stay on track. By taking the time to assess your progress and your goals, you take what you learn from the first half of the year and apply it going forward. It can also make your goal less daunting. If you have paid $4,000 of your student loan and your goal is to pay $10,000 by the end of the year, your goal evolves to paying $6,000 in six months. Your goals are now subject to a six month timeline and not a year, a sense of urgency often provides clarity. A good assessment helps refine habits, which increases the odds of achieving your goals the second half of the year.
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d4882cefeb6712d65b35aad51c5a7389 | https://www.forbes.com/sites/francesbridges/2017/11/29/4-ways-to-advance-your-career-over-the-holidays/ | 4 Ways To Advance Your Career Over The Holidays | 4 Ways To Advance Your Career Over The Holidays
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The holidays are the time of year to spend with your friends and family, to reconnect and catch up. It is also the time of year everyone takes stock, and begins making goals for the new year. Instead of waiting until January to set goals and take action, start thinking about them now, while you're in a natural time of year to socialize with friends old and new often, and seek their advice and connections while celebrating the season. If you utilize this time, you can organically make more connections and reconnections than you could in the new year, and it's also a time of year people are looking to give back, and ways to be generous, whether it's with their time, guidance or resources. So capitalize on all of the opportunities to connect with people over the holidays, and do not wait until January to start working towards your goals, start now!
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Here are a few things you can do to jumpstart your career over the holidays:
Ask Your Parents To Help You
Your parents have second or third cousins you've never met, but may work in your industry. Your parents have friends, their friends have friends, their colleague's kids has friends, etc. Asking your parents for help opens up a whole other network for you to tap, it is a waste not to use it. The holiday season is a major time people reconnect, and see each other socially at everyone's holiday parties. Ask them to open up their Rolodex, and when they see people who can help you, they'll ask. It's a waste to wait until January, take advantage of your parents seeing their friends, family and colleagues socially.
Reconnect With High School And Childhood Friends
Black Wednesday (the Wednesday before Thanksgiving) is a popular time for young people, home to see their families, to go out around their childhood home and see their high school and elementary school friends. If there is someone who perhaps can help you professionally that you grew up with, whether they work for a company you want to work for, or their parents may work for, or their parents friends may work for, etc. It is an organic time to reconnect, and people are more often than not eager to help, so muster the courage to ask for their help.
Buy People Coffee
When connections are made, ask if you can treat them to a cup of coffee for 15 minutes of their time. Chances are, they will give you more than that, you will learn some thing about the company they work for or your profession that you didn't know 15 minutes earlier and you will have made a solid connection that you can follow up on. Make room in your budget for buying people coffee, because it could be one of those cups of coffee that connects you to the right opportunity.
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Help When You Can
Sometimes, your friends or family whom you've asked for assistance,may ask you to reciprocate with an introduction- do not hesitate to do this. Building good will only helps you down the line, and building your reputation as someone helpful and generous will come back to you and enrich your life personally and professionally.
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4cd5f048c462e149840a596a6b905792 | https://www.forbes.com/sites/francesbridges/2018/02/07/10-ways-to-make-people-like-you-from-how-to-make-friends-and-influence-people/?sh=664d89fc4bb4 | 10 Ways To Make People Like You, From 'How To Make Friends And Influence People' | 10 Ways To Make People Like You, From 'How To Make Friends And Influence People'
APR 15 1976, APR 16 1976; EMPLOYES AT DEPARTMENT OF LABOR PRACTICE COMMUNICATION; Shauna Edgeman and... [+] George Dayton, foreground; Joe Bray and Ella Bryan, attended a Dale Carnegie class conducted during Federal Women's Week.; (Photo By Bill Peters/The Denver Post via Getty Images)
After you graduate college it becomes harder to make friends and connections with people who are not your colleagues. But much of success is about building a network and making friends in your industry, and that involves making people like you. But how do you make friends as an adult? How do you make people like you? It seems like a subjective process, but there are universal techniques you can use to help you make small talk a bit more easily. Leaders like Warren Buffet swear by How To Win Friends And Influence People by Dale Carnegie, and the lessons of Carnegie have stood the test of time. They are classic principles in the best sense, and the fundamentals of this book are still applicable generations later. These principles do not revolve around trends or fads, they are just the building blocks of social intelligence, and how practicing good social skills can improve your life. Here are the 10 best, classic lessons we learn from Carnegie's How To Win Friends And Influence People:
1. Do Not Criticize, Condemn or Complain
Carnegie writes, "Any fool can criticize, condemn or complain- and most fools do." He continues on to say that it takes character and self-control to be forgiving, this discipline will pay major dividends in your relationships with people.
2. Be Generous With Praise
Carnegie uses Schwab as an example throughout the book, as someone who exemplifies all of the tenets Carnegie preaches. Schwab used praise as the foundation of all of his relationships, "In my wide association in life, meeting with many and great people in various parts of the world," Schwab declared, "I have yet to find the person, however great or exalted in their station who did not do better work and put forth greater effort under a spirit of approval than they would ever do under a spirit of criticism."
3. Remember Their Name
Remembering people's names when you meet them is difficult. You casually meet a lot of people so it's challenging, but if you can train yourself to remember people's names, it makes them feel special and important. Carnegie writes, "Remember that a person's name is to that person the sweetest and most important sound in any language."
4. Be Genuinely Interested In Other People
Remembering a person's name, asking them questions that encourage them to talk about themselves so you discover their interests and passions are what make people believe you like them, so they in turn like you. Carnegie writes, "You make more friends in two months by becoming genuinely interested in other people than you can in two years by trying to get other people interested in you." If you break it down, you should listen 75% and only speak 25% of the time.
5. Know The Value Of Charm
One things people do not discuss much in the job search industry is that so much of getting an opportunity is not about talent, where you went to college or who you know, it is people liking you. A good resume may get you in the door, but charm, social skills and talent keep you there, and people will normally pick someone they enjoy being around over a candidate they don't enjoy being around as much but is more talented. Become someone people want to talk to, be genuinely interested in other people, because it will enrich your life and open so many more doors than you ever thought possible.
6. Be Quick To Acknowledge Your Own Mistakes
Nothing will make people less defensive and more agreeable than you being humble and reasonable enough to admit your own mistakes. Having strong and stable personal and professional relationships relies on you taking responsibility for your actions, especially your mistakes. Nothing will help end tension or a disagreement more than a swift acknowledgment and apology on your part.
7. Don't Attempt To "Win" An Argument
The best way to win any argument, Carnegie writes, is to avoid it.Even if you completely dismantle someone's argument with objective facts, you won't be any closer to reaching an agreement than if you made personal arguments. Carnegie cited an old saying: "A man convinced against his will/Is of the same opinion still."
8. Begin On Common Ground
If you are having a disagreement with someone, you start on common ground and ease your way into the difficult subjects. If you begin on polarizing ground, you'll never be able to recover, and may lose ground with subjects on which you agree.
9. Have Others Believe Your Conclusion Is Their Own
People can not be forced to believe anything, and persuasive people understand the power of suggestion over demand. Learn to plant the seed, and instead of telling people they're wrong, find the common ground and persuade them that what they really want is your desired outcome (obviously without telling them that is the case).
10. Make People Feel Important
Smiling, knowing people's names, praising people, making an effort to know their interests and chat about them make people feel important. That is the underlying point of all of the above principles. If you make people feel important, how you walk through the world will be an exponentially more pleasant and incredible experience.
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731bc9fc0279bbff553033614b7bdae4 | https://www.forbes.com/sites/francesbridges/2018/07/28/4-ways-to-conquer-catastrophe-from-chasing-perfection-by-business-coach-sue-hawkes/?sh=5368ebe111f2 | 4 Ways To Conquer Catastrophe, From 'Chasing Perfection' By Business Coach Sue Hawkes | 4 Ways To Conquer Catastrophe, From 'Chasing Perfection' By Business Coach Sue Hawkes
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If there are two things that are absolutes in life, it is that change is certain and how you handle that change that impacts your recovery and quality of life. The future is not always predictable: loved ones get sick, we get sick, jobs are won and lost, relationships come and go, and sometimes it feels like the ground has shifted beneath us and we're never going to find our footing again. In Chasing Perfection: Shatter The Illusion; Minimize Self-Doubt & Maximize Success by Sue Hawkes with Alexandra Stieglbauer, the bestselling author and certified business coach addresses how to confront catastrophe, and to move forward during life's most trying moments. Here are a few ways the coach recommends coping with life's catastrophes, whether they be personal or professional:
Focus On What Matters
In times of crisis or tragedy, focusing on your priorities: your family, friends, your own self care and your work is what matters. "Most of us have the luxury of making up problems and worrying about what might happen, or about what other people think, or how it should be, or how we compare to others- but honestly? It's bulls***," writes Hawkes. "We're missing life while it's happening. When the bottom falls out, all we have is right now." So soak up time with people you love and have your best interest at heart. Examine any regrets and try to address them, because life is shorter than we think.
Take Life One Step And One Day At A Time
Hawkes recommends writing down your wins for the day, big or small, then they're easy to build on. When you're grieving or recovering from a traumatic event, you're not going to operate at full capacity. Take life one step, one day at a time, and when you fail, forgive yourself. "Maybe our goal is to take a walk twice a week; maybe it's to cook a healthy meal once a week," writes Hawkes. "When we can see we've actually achieved a goal, we can pursue and celebrate for a moment."
Accept Help, Ask For Help
Don't try and go this alone, reach out to people and delegate responsibilities. Think of things people can do to help, because those who care about you will want to help, and you need to let them. "Don't be shy about asking for help, because people want to reach out but often don't know how to help; make a list and share it when asked," writes Hawkes.
Patience
Grief and recovery do not follow a structured timeline, you will recuperate in your own time. "Let your process take as long as it needs to take. Don't let anyone put you on a timetable- not even yourself. Know that while grief never leaves you completely, it gets better in time. It really does."
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4dd6f7e783e203de510f76f4b1034aa9 | https://www.forbes.com/sites/francesbridges/2018/10/30/the-4-best-ways-to-manage-anger/?sh=724b3b61395c | The 4 Best Ways To Manage Anger | The 4 Best Ways To Manage Anger
Have you been feeling angry? Perhaps about the news and what is going on in the world, or your job or personal life? Have you been unsure how to manage it? There are productive and less productive ways to address anger issues, and it is important to address them as soon as possible. Letting anger fester, and mismanaging it with substance abuse or over-eating is not conducive to improving the problem or your life. Here are four ways you can manage your anger efficiently and productively.
Identify The Cause
Maybe you're consuming too much negative media, surrounding yourself with the wrong people, or having financial issues, don't like your job, having a family issue or issues with a partner, maybe you're unhappy with who you've become, but the only way to meaningfully start managing anger is to identify it's cause. You may already know the answer, or you may not understand yet, but put the time to think about it so you can begin addressing it.
Exercise
One productive way to work off additional, anxious energy and anger is exercise. You will feel a lot better after, and it is the healthiest way you can manage anger and stress. If you do not particularly enjoy exercise try taking a walk or dancing, just something that will burn off energy and help calm you down. Consistent exercise is an important part of managing anger and dark emotions, so make a point to make time for it every day. Treat it like a doctor's appointment when you're going through a dark and frustrating period. You will thank yourself.
Therapy
If you can afford it, it is an incredibly helpful way to examine the issues you need to address personally and professionally. It will also help alleviate the burden from family and friends, so you do not always have to vent negatively about what you're going through with them. It really expedites the process if you have someone committed to getting you to reframe how you think about your issues, what might be at the root of it
Spend Time With Friends
Make it a point to spend time with people who are positive, who make you feel good about yourself and want what is best for you. Go get coffee or a drink with your most fun friend. Have a proper night out or a cozy night in with your favorite people. Schedule things that you can look forward to and enjoy the company of people who love you and who you love in return.
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efbd29a4625acd7e518edf1e5daf8ffd | https://www.forbes.com/sites/francesbridges/2019/01/26/food-makes-you-happy-a-healthy-diet-improves-mental-health/ | Healthy Food Makes You Happy: Research Shows A Healthy Diet Improves Your Mental Health | Healthy Food Makes You Happy: Research Shows A Healthy Diet Improves Your Mental Health
Photocredit: Getty Getty
Depression has many origins: it is genetic, triggered by a specific event, certain circumstances or lifestyle choices. But it is a disease of the brain, and researchers find that ensuring it receives the proper nutrients is a way to prevent and treat depression. In the future patients experiencing depression may not only be referenced to a therapist, but a nutritionist as well. It has long been understood that fruits, vegetables, whole grains and lean, unprocessed proteins are the best foods for our daily diet, but only over the last 10 years or so have studies begun to show that healthy eating impacts not only our physical health, but our mental health as well. And an unhealthy diet—high in trans fats, sugar and processed and refined foods—increases risk for depression, especially in children and teens because it deprives the brain of the nutrients it needs, and breeds bad bacteria in the gut, which impacts our mental and physical health.
A trial conducted by epidemiologist Felice Jacka of Deakin University in Australia, set out to measure the therapeutic impact of a healthy diet. The study consisted of 67 subjects with depression, some of whom were receiving psychotherapy, some of whom were taking antidepressants and some with both. Half were given nutritional counseling, the other half were given one-on-one social support, someone to keep them company and engage in social activities with- known to help people with depression. After 12 weeks, the group that changed their diet felt significantly happier than the group that received additional companionship. The study was published in January 2017 in BMC Medicine. Prof. Jacka explains,
Whole (unprocessed) diets higher in plant foods, healthy forms of protein and fats are consistently associated with better mental health outcomes. These diets are also high in fiber, which is essential for gut microbiota. We’re increasingly understanding that the gut is really the driver of health, including mental health, so keeping fiber intake high through the consumption of plant foods is very important.”
A second study from the University of Konstanz in Germany drew similar conclusions, finding that consuming vegetables led to a higher level of happiness over time than sugar or unhealthy food induces in the moment. In a study with 14 different food categories, eating vegetables “contributed the largest share to eating happiness" measured over eight days. And on average, sweets only provided “induced eating happiness” in comparison to an overall healthy diet. “Thus, the findings support the notion that fruit and vegetable consumption has beneficial effects on different indicators of well-being, such as happiness or general life satisfaction, across a broad range of time spans,” writes the Department of Psychology from the University of Konstanz.
So what should we eat? Research suggests a Mediterranean-style diet made up of fruits, vegetables, extra-virgin olive oil, yogurt and cheese, nuts, whole grains, seafood and lean red meat, and eliminate fried and processed foods. The diet provides the nutrition our brain needs and supports good bacteria in the gut.
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3f13105f7a29179bd3161b78a2f9a6e8 | https://www.forbes.com/sites/francesbridges/2019/07/30/how-to-focus-when-the-weather-is-nice/ | How To Focus When The Weather Is Nice | How To Focus When The Weather Is Nice
After long winter and spring months indoors, it is difficult to focus during the summer when the sun is out and the weather is warm and inviting. Here are a few tips on how to stay focused at the office when the weather is beautiful and the last thing you want to do is work:
Know Your Work Habits
If you know you focus best in the morning, then make you wake-up early and use your peak energy in the most productive way possible so you can get out of the office and enjoy the day. If you know you can focus outside at a picnic table or on a lounge chair, then work outside and enjoy the weather—just make sure you are honest with yourself about your ability to work in certain environments and if they will be too distracting for you to work productively.
Break Up Your Workday
Instead of thinking “I have to work eight hours today,” set a timer for an hour, and work for that solid hour. When the timer goes off, take a five-minute break: get-up, stretch, use the restroom, get some water, etc. Then sit back down, set a timer for another hour, repeat. Set a work goal for each hour. Breaking your day up into hour-long increments will help keep you focused and productive.
Reward Yourself
If you complete your to-do list for the day early, reward yourself by leaving the office early to enjoy the weather. If you have to stay at your desk until 5 p.m., reward yourself with breaks and meals outside, and set a goal: if you compete your to-do list, you can get yourself a treat after work. Your treat can be anything,: leaving work early, a drink with a friend or simply taking time for yourself to enjoy the weather. Incentivize yourself to remain focused at work when it’s difficult with a reward for good behavior.
Check The Weather For The Week And Plan Your Work Accordingly
Plan to be productive when the weather is bad, i.e. brutally hot, humid or rainy. Work late and try to stay focused and productive when you know you will not want to socialize or be outside. Then on beautiful days leave the office early, see friends, enjoy the day, and reap the rewards of your time management and planning by enjoying the sunshine.
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b7a17e6929e6e10ad24b1838d4d255aa | https://www.forbes.com/sites/francesbridges/2019/09/28/5-life-lessons-from-jonathan-van-nesss-new-book-over-the-top/ | 5 Life Lessons From Jonathan Van Ness’s New Book ‘Over The Top’ | 5 Life Lessons From Jonathan Van Ness’s New Book ‘Over The Top’
TODAY -- Pictured: Jonathan Van Ness on Tuesday, September 24, 2019 -- (Photo by: Nathan ... [+] Congleton/NBC/NBCU Photo Bank via Getty Images) NBCU Photo Bank via Getty Images
This past Tuesday Jonathan Van Ness, the ebullient hair and grooming expert on Netflix’s Queer Eye released his memoir, Over The Top: A Raw Journey to Self-Love. Van Ness, a tour de force of warmth and positivity, takes his readers back to his hometown, Quincy, Illinois, and his twenties where he grappled with his self-esteem, accepting his body, depression and his sexuality. The book jacket states, “The truth is, life hasn’t always been gorgeous for this beacon of positivity and joy,” which understates the heartbreaking experiences Van Ness details growing up as a queer kid in a small, midwestern town. He shares his most difficult struggles and his deepest insecurities, in hopes that his story will give hope to other young people, especially other LGBTQ+ young people who are navigating dark, lonely moments in their life. Van Ness also discusses everything he has learned from his experiences, and what he hopes readers take away from them. Here are five things Van Ness hopes you learn from his life experiences:
At Some Point You Have To Go For It
A young Van Ness took an early shine gymnastics and figure skating, and started taking gymnastics lessons after school. He mastered several forward moves, but was afraid to try anything backward. His stepfather, Steve, a former triathlete who Van Ness describes as “a man of action” informed him one day while they were at the country club that Van Ness was going to do a back flip off the diving board. Van Ness patently refused to do it. His stepdad reassured him he could, and coaxed him onto the diving board, standing behind him. He told Van Ness to put his hands up, Van Ness said he wasn’t ready. So his stepdad put his hand under his lower back, forced him into a back bend, and pushed him. It was Van Ness’ first back dive. He writes,
It wasn’t even that high. It was a one-meter, normal a** diving board. It wasn’t far to fall at all. But I was like, Oh my God, I didn’t die. When I went back up onto the diving board, I did a back flip into the pool on my first try. And this, knowing that I could go backward, was the first step toward learning how to tumble. Realizing it wasn’t impossible for me.”
Know When To Say “This Isn’t Worth It”
Van Ness landed a high profile assistant job at a salon in Los Angeles. In typical just-starting-out in a competitive field fashion, he worked long hours for little pay on the salon floor, assisting two in-demand stylists at the salon, and taking every education course he could. After working around the clock for nearly two years, “with the goalposts for what I needed to become a stylist constantly moving” he wrote, he digested that he would only pocket 20% from a clientele he would have to build himself. For example, he would only pocket $40 from a $200 haircut plus the tip. Van Ness realized the hours, the pay and the toxic work environment of the salon was not for him, and it was time to move on. “For that time of learning and exposure to a different level of excellence, I was grateful,” he wrote. “But now I was armed with the knowledge of the kind of boss I wanted to be, and I had more importantly learned the worth of saying, ‘This isn’t worth it.’”
Learn To Love Yourself & Forgive Yourself
Before the release of his book, Van Ness spoke to several media outlets about his HIV diagnosis, and he writes about the circumstances surrounding it and all of the demons he was battling at the time in “Over The Top.” In Van Ness’ journey through depression, insecurity and addiction, his diagnosis was rock bottom. He moved back to LA to rebuild his life and his sense of self. Van Ness writes,
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I had to work so much harder to fall in love with and accept where I’d come to in my life, and forgive myself for all the decisions I’d made to get there. That wasn’t an overnight process. It was a daily one…Life is so much a daily exercise in learning to love yourself and forgive yourself, over and over.”
Base Your Worth On How You Treat Yourself
Towards the end of his book, when Van Ness discusses his relatively newfound fame, he writes that the thing he wants to say to anyone who asks for photos is he is just as lost as they are, but he is grateful. He is, “a perfectly imperfect mess,” he writes, but he has a different criterion for critiquing himself now. “Basing my worth in how I treat myself despite how others treat me has been the key to my success—and I want that for you too,” he writes.
You Are Never Too Broken To Heal
Van Ness concludes his raw, deeply personal book with hope, for everyone who is experiencing dark and difficult times, but especially young LQBTQ+ people. He writes,
I wanted to share my journey because we have all done things we never thought we could and been places we never thought we would go. Good and bad. As scary as this can be I want you to know no matter how broken you feel, and how seemingly unlikely it is, we are never too broken to heal.”
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cdc3e34889478bc1c1bea8f9cfd74060 | https://www.forbes.com/sites/francesbridges/2020/07/31/how-to-stay-optimistic-in-difficult-times/?sh=30633e727dd3 | How To Stay Optimistic In Difficult Times | How To Stay Optimistic In Difficult Times
Tired businessman getty
So many of our lives have shifted dramatically as a result of the coronavirus, it is hard to maintain a positive outlook when it seems like there is little to feel optimistic about. So how do we stay optimistic about our lives, our country and the world when there is an overwhelming amount of evidence that supports the contrary?
Practice Self-Compassion
Stephanie Marston, a psychotherapist and a co-author with daughter Ama Marston of the book “Type R: Transformative Resilience for Thriving in a Turbulent World,” told the New York Times, “Especially during a crisis,” Stephanie Marston said, “we just have to be even more attentive to our emotional state. When we do that, we’re able to more quickly move beyond our stress, discomfort or pain.”
Stick To A Routine
According to Salynn Boyles on WebMD.com, "Researchers from the University of Pittsburgh School of Medicine report that bipolar patients fared better when their treatment stressed the importance of establishing daily routines for things like sleeping and eating. Social rhythm therapy, as it has been dubbed by the researchers, is based on the idea that irregular sleeping habits and those associated with other daily activities can trigger manic episodes by disturbing the body's sleep-wake (circadian system) clock." When we’re feeling out of control and unsure of the future, establishing a routine helps us take back control, helps us regain self-confidence through our productivity and decreases stress and anxiety.
Stay In Touch With Friends And Family
It’s important not to isolate yourself when you’re feeling depressed. Isolation only breeds depression, stress and anxiety. Reaching out to a trusted friend or family member to air your difficulties and concerns is not only psychologically therapeutic, but they can potentially help quell your anxieties or solve whatever issue you’re confronting. If you are feeling particularly isolated and depressed and are not comfortable reaching out to friends or family, seek professional help. You don’t have to go through this alone, we’re not meant to.
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8c99159340bf06b7a87620d7e38a4fdc | https://www.forbes.com/sites/francescadonner/2010/08/10/take-yourself-seriously-in-the-job-interview/ | People Only Take You As Seriously As You Take Yourself | People Only Take You As Seriously As You Take Yourself
Image by apes_abroad via Flickr
The other day, I was having breakfast with a young woman who, although marvelously talented, was (and is) struggling to land a job.
Yes, yes, yes, you’ve heard it all before. We’re all desperate to find jobs these days. Right?
Wrong.
This woman has been looking for a job for two years -- ever since she’d graduated from a top U.S. university. She was talented, eager, interested, passionate, had impeccable credentials, was willing to do just about anything. Plus, she wasn’t expecting a sky-high salary.
She also had a compelling blog, she had completed internships at companies you’ve actually heard of and she had real-life experience talking with CEOs and other major leaders in her industry.
On paper, she was grand. And she’d had plenty of first-round, second-round, even third-round interviews. But for some reason, the sign-on-the-dotted-line part of her job search escaped her.
Which raised the question … what exactly was going on in the interview?
To find out, I suggested we try a bit of role playing. I’d be the interviewer and she’d be herself.
I began with a basic question: “Tell me about your blog.”
As she opened her mouth to respond, do you know what she did?
She giggled. I was horrified. Giggling is for babies NOT job-seeking adults!
“Why are you giggling?” I asked, alarmed. “What’s so funny?”
Well, it turns out nothing was funny. But she couldn’t help telling me about her achievements without giggling. And that was just the beginning -- as she began to describe her background, her tone changed, her demeanor diminished, she even tried to shrink her not insignificant stature.
“Are you NUTS?” I asked her. "Do you think a man would ever, ever, EVER giggle about his work or tell me that something he’d done was "small"? Would he ever forget to tell me that he'd hired and managed a team of writers? Would he ever give me that look that suggested he wouldn't mind disappearing through a hole in the floor?
Well, I think you can guess the answer.
Moral of the day: If you can’t take yourself seriously, trust me, nobody else will.
What other job interview crimes have you witnessed? What job interview crimes are you yourself guilty of? Please share them in the comments below.
See also: Don't Get Stumped In The Interview -- The New, NEW Interview Questions
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847a0f712db02d0cd76d7e007a2457be | https://www.forbes.com/sites/francescadonner/2010/08/18/happiness-is-hard-work/ | Happiness Is Hard Work | Happiness Is Hard Work
Image by marklarson via Flickr
Perhaps it’s just me taking stock of my life (I am about to become a first-time mum, so the present seems as good a time as any for reflection) or perhaps it’s the slew of happiness pieces I’ve been reading in the media recently -- either way, the question of happiness keeps crossing my path.
Let’s take the case of my soon-to-be-born son. My husband and I have a ton of hopes and dreams for our child, but in the end it all just boils down to one thing: We want him to be happy.
I’m not entirely sure happiness is a goal everyone is striving for -- after all you do meet people on life’s journey who seem to relish their misery -- however, let’s say, for the sake of argument that most people want to be happy.
Which raises the question: Can happiness be cultivated?
I did as I often do when faced with a conundrum: I posed the question to the ForbesWoman community of Twitter followers. Here’s a sampling of what they had to say:
@nath_sagt → Yes, it can! :) @Persan19 → Yes it can, but I think that way it won't last for long @kimarketing → I believe yes @JaimieField → Yes. Yes it can @jkhoey → Hmmmm. It sure can be thwarted by a bad start to the day. @radhesen → Yes. you can make happiness an attitude @yanina_s → very possible, it is all about attitude @Mommyality → To a certain degree, we all cultivate our happiness. However, it's best when felt innately.
I think you’ll agree – a very positive take on happiness.
Which brings me to my second question: If happiness can indeed be cultivated, how, specifically, can we achieve it?
Can we achieve it, as suggested in a recent New York Times story, through a cultivation of experiences over the acquisition of things?
Is it about raising children or, ironically, the decision not to have children. (Per New York Magazine: “Most people assume that having children will make them happier. Yet a wide variety of academic research shows that parents are not happier than their childless peers, and in many cases are less so.”)
Is happiness to be found through a rewarding career? After all, happy employees are more productive employees.
Or is it some combination of, oh, everything?
This question was addressed in a large-scale project by Gretchen Rubin who tried to increase her happiness over the course of a year by setting herself specific goals that covered, among other areas, marriage, work, leisure, parenthood, friendship, money and so on.
Rubin approached the problem with the method, research and precision of an artful academic and in the end, she argues she really did make herself happier.
Of course, Rubin's approach is hardly everyone’s cup of tea.
Whatever your means of achieving happiness, I do think unhappiness in all its various forms lurks around every corner, hiding out, waiting for us to fall into its ever-open jaws. In short, unhappiness doesn't take much effort at all.
Happiness, meanwhile, is hard work. Any happy person could tell you that.
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674000fde63216eb7f08fca42e1acae7 | https://www.forbes.com/sites/francescahogi/2021/02/01/people-are-already-falling-in-love-on-clubhouse-a-popular-new-audio-social-media-app/ | People Are Already Falling In Love On Clubhouse, A Popular New Audio Social Media App | People Are Already Falling In Love On Clubhouse, A Popular New Audio Social Media App
A user of the social media app Clubhouse shows her smartphone with the logo of the audio ... [+] application. Photo: Christoph Dernbach/dpa (Photo by Christoph Dernbach/picture alliance via Getty Images) dpa/picture alliance via Getty Images
Clubhouse is nine months old and is the hottest social media platform to emerge from 2020. Media attention surrounding celebrities and controversies on the app, as well as its new $1 billion valuation are plentiful.
A less publicized Clubhouse phenomenon: its dating culture and the couples who are meeting in its chat rooms. Personal discussions of every type are a constant on Clubhouse, therefore it comes as no surprise that users are capitalizing on the chance to connect romantically. Behavioral scientist and Clubhouse user Clarissa Silva observes “[a]ll social media platforms eventually become dating platforms. Clubhouse is no exception. It's solving for our desire to find love when other options have failed.”
(Full disclosure—I’ve been on Clubhouse since September and run several clubs on the platform.)
All of the conversations on Clubhouse happen live without being recorded, so you’re either in the room where it happens or not. On her very first day on the app, Carolyn Penner, 35, popped into a room where she met her now-boyfriend. “He was asking thoughtful questions and seemed to be friends with everyone in the room,” she says of Ryan Dawidjan, 28. Penner never anticipated dating on Clubhouse, but within three days they were talking on the phone, and now they’re in a relationship. “On Clubhouse, you can get a sense of someone’s vibe and character much faster than via written communication,” she says. Dawidjan even bought the domain clubhousecouple.com to commemorate their pairing.
As more people flock to the app, unofficial figures put the user base at more than three million. On any given day on Clubhouse, it’s easy to encounter multiple discussions focused on dating, relationships, and sex. Speed dating and dating games are common as well (I myself have hosted a public matchmaking game), with couples pairing off for 1-on-1 conversations in private rooms. (Side note: you can’t send messages on Clubhouse; conversations happen inside of public or private rooms, though many use Twitter and Instagram DMs as a backchannel.)
Pauleanna Reid, 33, met her partner on Clubhouse, and told their love story via Twitter thread. Reid doesn’t believe they would have met on any other platform. “My partner is very low-key and has never used a dating site/app. Clubhouse connects like-minded individuals. We were in a shared space because we are energetic, curious, outgoing and outspoken. This wouldn't have happened any other way.”
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29-year-old Tevi Brown has given some of the dating rooms a try, including acting as a contestant for “Clubhouse Bachelor” a regular dating game on the app. While an audience of over 200 people listened in, Brown was playfully direct about her interest in Bomani X, 27, the current face of the Clubhouse icon. A number of audience members changed their profile photos to Brown’s to show their support. Bomani X described his experience as the Clubhouse Bachelor as “more parody than love search” but adds “while rooted in humor, I do believe this format can work.” As for Brown, she says her participation was mostly for fun, but also that she was open to Bomani X “sliding into her [Instagram] DMs.”
Brown says “I’m typically social media-averse, but Clubhouse has changed that.” While she’s enjoyed her attempts at making a match on Clubhouse, she’s also borne witness to the flipside. “I know quite a few people who have started ‘situationships' and have been [flown] out already by people they’ve met on Clubhouse. I’ve also nursed a couple of friends through serious Clubhouse heartbreaks.”
So far, Clubhouse dating has been positive for 22-year-old Flossy Brand, who hosts several rooms on the topic. “My experience with dating through Clubhouse has been amazing.” Not limited to dating themed rooms, she enjoys connecting in various ways on the platform. “From meeting people in rooms that interest me and us having that commonality established right away, to being able to have conversations surrounding what we are both looking for, it’s all been a great time and I’m happy to be able to add this new way of dating to my roster.”
While some users are actively looking for love on Clubhouse, others are focused on talking about it. Suezette Yasmin Robotham, co-founder of the Clubhouse club Black Love, isn’t currently dating on the platform, although she’s open to the idea. She regularly shares her personal dating experiences and facilitates supportive rooms where others can do the same. “Clubhouse still allows for enough anonymity to be who you are. There's a freedom that makes it feel like a relatively judgment-free space. We're all coming as we are—deeply human and deeply connected.”
Clubhouse co-founder Paul Davison has a theory about why the platform is conducive to personal connections in ways that text and image-based platforms are not. “Voice adds texture and fidelity to conversations that can be lacking in other venues. The intonation, inflection, and emotion that are conveyed through voice allow people to pick up on nuance and empathize with each other. This helps people on Clubhouse quickly develop meaningful connections—whether they’re networking, catching up with friends, joining a club, or discussing personal topics like life, dating and relationships.”
Ketan Anjaria, a 43-year-old Clubhouse user based in San Francisco agrees that voice is a key component to connecting on the app. “Audio requires you to listen. On Clubhouse if you aren't a good listener, you won't get far. Listening is key for connection, so dating on Clubhouse is almost a given because people feel heard.” Anjaria is currently single but has tried his hand at dating on the app. “I had a relationship this summer where I traveled from San Francisco to NYC for someone I met on Clubhouse. We met in a room one night and just started talking the next day on the phone. Clubhouse helped us both be more open and talk naturally, as other people were in the room.”
Relationship coach Casandra Henriquez, a Clubhouse user since October, also sees the inherent power of the all-audio medium. “Normal social media is showing you flashes of the highlight reel. But on Clubhouse, people are sharing what they really think about certain topics, and even their fears and struggles. People come to the speaker stage with questions about things they’re struggling with, things they wouldn’t necessarily say somewhere else. You get to hear the heart of each person that tells their story.”
The effects on the body of close listening are both emotional and physical. In a 2015 article published in The Atlantic, Paul Zak, the director of the Center for Neuroeconomics Studies at Claremont Graduate University, described the effect of experiencing audio storytelling on our brains as a “neuro ballet.” This causes the brain to release oxytocin in response to empathy with the speaker—an arousal response to the feeling of being “inside” the story.
Some of Clubhouse’s appeal may be more practical, particularly in light of the Covid-19 pandemic during which it was created. “The mere fact that you don’t have the pressure to always have the perfect hair, the perfect outfit, really allows people who might have looked past each other to invest in a relationship. The price of admission into the dating space is just lower,” says Denise Hamilton, a Clubhouse user from Houston.
“I’ve been married for a few years now, and as an observer of the dating scene, I worried that people weren’t having deep, authentic conversations. I worried that people were looking for a checklist instead of a partner. I think the intimacy of voices on Clubhouse allows people to really get to know the true heart and spirit of a person. It’s incredibly powerful.”
A viral tweet about another Clubhouse love story involves the Nigerian based Ephraim Osehon, 28, and Victoria Owanate Amachree, 24. Amachree joined the app on the 9th of January and found herself chatting with Osehon in a casual room. The pair connected quickly and the next day Osehon made the drive from Benin City to Port Harcourt to visit Amachree. It was an immediate match, and one Osehon can’t imagine happening on another platform. “You can meet someone anywhere, but I believe we were destined to meet on Clubhouse.” Amachree, who didn’t have dating in mind when she joined the app, is surprised and delighted by her new relationship. “Love happens when we least expect. Sometimes it’s not how long you’ve known a person that matters. He makes me so happy. I’m glad I met him and I’m excited to see what the future holds for us.” Osehon has some ideas. “She’s the best thing that’s ever happened to me. Maybe we’ll get married soon! She’s the love of my life. Distance isn’t a barrier for us. We hope to make everything work and to be together forever.”
Though growing rapidly, Clubhouse is still in beta and thus far has retained a feeling of exclusivity. It’s also a “real identity” platform, as per its terms of service. The ability to know the person you’re speaking to is who they say they are and that you can click on their profile to see who invited them is likely a factor in the speed, if not also the frequency of some of the relationships forming on the app. There is a level of social proof that Clubhouse provides that can’t be found on a dating app. It’s too soon to know how Clubhouse will continue to evolve as it grows, and how that evolution will impact its dating culture. However, for now it’s proven itself as a place to connect and to explore romantic possibility. With the right mix of boldness and openness, Clubhouse is an ideal dating venue for those comfortable with expressing themselves through extemporaneous conversation.
As Ketan Anjaria puts it, “Clubhouse forces you to connect by words, by intelligence. By who you really are versus your picture-perfect profile pics or witty taglines on dating apps. By making you listen and then helping you meet people who aren't in your normal social circles, your chances for connection multiply. It's then up to you to be your best authentic self.”
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70a161e0b1aadf87b14ce316b228d89a | https://www.forbes.com/sites/francescalevy/2010/09/30/duarte-and-bradbury-a-tale-of-two-one-cities/ | Duarte and Bradbury - a Tale of Two (One?) Cities | Duarte and Bradbury - a Tale of Two (One?) Cities
Image via Wikipedia
Our annual list of the country's most expensive ZIP codes invites a lot of attention --and a fair amount of skepticism.
Usually, residents of pricey ZIPs that were left off the list wonder why. Conversely, some urban ZIPs on the list where newly-listed million-dollar condominiums stand alongside working-class houses seem out of place to some. The strongest ire tends to come from people who don’t think their neighborhood is getting its due.
This year, we’ve heard some objections to our classification of the most expensive ZIP on the list: 91008. The code covers a tiny and exclusive California city called Bradbury, bordered to the south and east by the larger city of Duarte. But officially, the United States Post Office identifies 91008 as Duarte –and since we listed each ZIP alongside its USPS designation, “Duarte, Calif.” appeared prominently in the story and on the ZIP code’s profile page.
That's when the angry reader mail started pouring in.
Some residents of Bradbury argued that we were confusing the two cities. They said that the 91008 ZIP was created exclusively for the municipality, and said it is full of multi-acre lots and gated mansions, quite separate from the smaller suburban homes that make up larger Duarte. But according to the USPS, the authority on ZIP codes, the actual city for 91008 is “Duarte.”
Residents aren’t happy with that.
“Nothing about 91008 has much to do with Duarte, which the LA Times more accurately described as a ‘gritty working-class suburb.’ Duarte's main ZIP Code is 91010, not 91008. Bradbury may have pretty much exclusively million dollar homes, but Duarte certainly does not. And unlike some other high-housing-value areas that have their own high-performing school districts, Bradbury is stuck with Duarte's mediocre public schools,” wrote JohnS43 in the comments section.
“91008 isn't Duarte. It's the gated city of Bradbury. Duarte is mostly modest suburban tract houses. Bradbury is almost entirely large mansions for the wealthy,” said LaMapNerd.
There's conflicting opinions about what to call Bradbury. Duarte Post Office supervisor Laura Cardenas says it is a “town within a city,” but Jeremiah Pestas, a management analyst at the City of Bradbury, notes that it was incorporated as a city in 1957. It has a city hall, but no post office, and successfully fought for its own ZIP in 2007. But the ZIP includes a handful of homes in Duarte, outside of Bradbury proper.
Residents of Bradbury have battled to differentiate themselves from Duarte.
“They were fighting for their own ZIP code for years, and the Post Office finally decided to give it to them,” says Cardenas, who confirms that Bradbury and larger Duarte are distinct. “In Bradbury there are big houses, rich people, it’s a really nice area. It looks more rural, there are huge mansions that are separated from each other –in [Duarte], houses are attached– some areas are even gated, with guards.”
According to Pestas, the need for a separate ZIP code, and public distinction from Duarte, is all about cementing Bradbury’s identity, and comes from a desire to protect itself from suburbanization, born when the enclave was formed in 1957.
“Duarte was subdividing their lots, and the residents of Bradbury were afraid that would happen to their property. Bradbury has one, two, and five-acre lots,” he says. “[The ZIP code] is basically a recognition that we aren’t Duarte. It sounds kind of petty, but we want to be unique and preserve our rural characteristics.”
Bradbury is a pocket of wealth within a larger middle-class neighborhood; exactly the type of local market nuance our index of 500 luxury ZIPs is great at sniffing out. Its desire for exclusivity manifested not only in gates and guards, but a fight for its own postal code. Still, the USPS insists on calling 91008 Duarte.
“There’s a lot of conflict between us and the Post Office,” says Pestas.
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5c66821c72047e2d8651eee5a07d29cb | https://www.forbes.com/sites/francescalevy/2010/10/12/real-estate-lifestyle-danger-housing-cities/ | The Country's Most Dangerous Cities | The Country's Most Dangerous Cities
Image by MrB-MMX via Flickr
Last night, hail that was by various accounts peanut-sized, macadamia nut-sized, or quarter-sized pounded the windows of my Brooklyn apartment for several minutes. The downpour was deafening and frankly terrifying, mostly because it was so unusual - it has only hailed in Brooklyn five times in the past 25 years, the New York Times reports.
Just last month, tornadoes hit Brooklyn, downing trees and destroying cars and backyards. It's tempting to conclude that the natural world is rising up against Brooklyn in revenge for its sins, and that continuing to live there makes me easy prey for the next biblical assault. Tempting, but not rational. Freak occurrences, no matter how unlikely, are scary because we have no control over them. But as with many other things we're afraid of - terrorist attacks, plane crashes, identity theft - our level of concern doesn't match the real probability of falling victim to them.
We've put together a measure of safety in cities we think will be a little more useful. By combining data on violent crime with data on the rate of fatal car crashes, we determined the country's safest cities. Here we present the other side of the coin.
The cities on this list are the riskiest places to live in the country, but only by certain measures. The Federal Bureau of Investigation provides detailed crime statistics every year, but warns against creating rankings solely based on their data, since they are individually reported by agencies and reflect vastly different socioeconomic circumstances. By combining the data with traffic fatalities we feel our list offers a proxy for safety. But determining how safe you'll really be in a city requires a more nuanced look than any ranking can provide.
"There are zones in safe cities that are way off the chart for crime rates, but when you average it across all of the city, it doesn't look so bad," says Bruce McIndoe, president of Maryland-Based iJet Intelligent Risk Systems, a risk-assessment firm. "When people move into cities, they should be finding out the lay of local land. A homeowner would want to do due diligence and look at it neighborhood by neighborhood - not just by city."
Caveats aside, the top ten cities on our "most dangerous" list have, at the very least, some problems to sort out. We used FBI data on the number of violent crimes per 100,000 residents in 2009, and Department of Transportation data on the number of traffic fatalities per 100,000 residents in 2008 (the most recent available). We ranked all cities with a population above 250,000 for which we had complete data. A lack of data prevented us from including Chicago, Las Vegas and Virginia Beach, Va. in the rankings.
Memphis, Tenn., where gang crime has ramped up in recent years, takes the dubious honor of first place. The city also has one of the worst driving fatality records of any city we ranked, with fifteen traffic fatalities for every 100,000 people in 2008. Missouri is a comparatively dangerous state - two of its cities, St. Louis and Kansas City, come in at numbers two and three, respectively. This list will also do little to dispel the stereotypes of fourth-ranked Detroit, Mi. as an altogether scary place.
While it's easy to fixate on fear, the country is getting safer on several counts - crime continues to drop nationally, and more and more states each year are putting laws on the books to combat distracted driving, which will make the roads a slightly less scary place. But to satisfy your morbid curiosity, the ten most dangerous cities are below.
The Country's Most Dangerous Cities
1. Memphis, Tenn.
2. St. Louis, Mo.
3. Kansas City, Mo.
4. Detroit, Mi.
5. Miami, Fla.
6. Tulsa, Okla.
7. Nashville-Davidson, Tenn.
8. Indianapolis, Ind.
9. Oklahoma City, Okla.
10. Stockton, Calif.
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0d73d9078b9940e9c7e37ecdb968b3ca | https://www.forbes.com/sites/francescalevy/2010/10/14/mukesh-ambani-skyscraper-mansion-carlos-slim-billionaires/ | Mukesh Ambani's Skyscraper-Mansion is the World's Most Expensive Home | Mukesh Ambani's Skyscraper-Mansion is the World's Most Expensive Home
Mukesh Ambani
India's richest man, and the fourth-richest man in the world, has eschewed understatement and built a 27-story Mumbai skyscraper, as Forbes reported this morning. Reliance Industries chairman Mukesh Ambani plans to move into 570-foot building, called Antila, this month. But in addition to being an imposing postmodern edifice, it likely sets a record as the world's most expensive residential home. The Telegraph reports the home is worth £630 million, or $1 billion. Yes, you read that right.
The last time Forbes ranked the world's most expensive homes was November 2009, when The Manor, Candy Spelling's Beverly Hills mansion, won out- it was priced at $150 million. That home is still for sale, and its price hasn't budged, qualifying it for the number one spot on our recent list of America's most expensive homes. Our global list limits itself to homes currently on the market, and Ambani's behemoth isn't for sale. Plus, that ranking is a year old - new mansions may have come on the market since. But even given those facts, at $1 billion the Antila outprices any home on the market, anywhere in the world, by an order of magnitude.
But the story goes back further than that. As we reported way back in 2008, the billionaire has planned to break records with this home for years. When he was worth $43 billion (his net worth is down by nearly a third), he commissioned architecture firms Perkins + Will and Hirsch Bedner Associates, the minds behind the Mandarin Oriental, to design the home. We have a full slide show of their original plans on the site.
Now fully constructed, it's the most ever spent on a home that we know of. In June the world's richest man, telecommunications billionaire Carlos Slim Helu paid $44 million for an Upper East Side Beaux Arts town house. One could interpret the two tycoons' recent moves as a billionaire version of keeping-up-with-the-Joneses. If that's the case, Ambani won by a long shot.
Given the enormous gap between the Antila's sale price and the known closing cost of any home sold in recent years, there's an awfully good chance that this is the most paid for a home, ever. Consider the highest price paid for a home in 2010: somewhere between $47 million and $72 million for Le Belvedere, in Bel Air.
What do you get for $1 billion besides an awfully strange-looking tower? According to reports, a health club, gym, dance studio, a ballroom, guestrooms, numerous lounges, a 50-seat screening room, an elevated garden, three helipads, and underground parking for 160 vehicles.
The Indian building is a skyscraper, which is bound to fetch more than a single-family home - even a stately 19,500-square-foot building across the street from the Metropolitan Museum of Art such as Helu's. But Ambani is moving in with his wife, three children and a modest 600-person staff. That makes it a residence, and by my count, the world's most expensive.
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a2de296d94dafb1f264e18a63e046f25 | https://www.forbes.com/sites/francescoppola/2013/12/30/bubbles-banks-and-bitcoin/ | Bubbles, Banks And Bitcoin | Bubbles, Banks And Bitcoin
We are used to money being created by the state. Or rather, we are used to money being created by banks on behalf of the state. The state has no direct control over the quantity of money created by the private sector on its behalf, though it does influence that quantity through monetary policy and, in these days of near-zero interest rates, fiscal policy. But it does guarantee it. Or rather, it used to.
Money created by the private sector on behalf of the state always ends up in a bank, and once it is there it is indistinguishable from money actually created by the state (bank reserves and physical currency). Private sector money and state money are "fungible", or as Izabella Kaminska puts it, "entangled". Trying to disentangle them is like unscrambling an omelet. So we don't try to. We simply accept that all of it is equally valuable. Anything called a "dollar" and sporting the symbol $ is fully backed by the US government, however it was created - even actual counterfeits if they escape detection.
But the implied cost to the state of guaranteeing the value of all the money created by private sector lending activity is enormous,as we discovered when Lehman fell. So governments have been attempting to limit that guarantee - for example by capping the amount of private sector money that can be converted to safe government money (that's what the depositor haircuts in Cyprus did), or limiting the types of institution whose money-creating they will guarantee. The trouble is that far from making the system stronger and safer, it's actually making it riskier. Since private-sector-created money is indistinguishable from state-created money once it gets into a bank, limiting the state guarantee makes state-created money less safe. Saying "I'll guarantee this but I won't guarantee that" when "this" and "that" can't be clearly distinguished means that "this" can't be trusted because it might actually be "that". It's not unlike the UK's ridiculous legislation banning "dangerous dogs", which relies on identifying certain breeds of dog by means of their physical characteristics. This has resulted in the rescue centres being full of Staffordshire bull terriers, which are not classified as "dangerous" but look very much like the banned American pit bull terriers. Trust in safe dogs has been diminished because they look like dangerous ones. So it is when the state removes the guarantee from some forms of money: trust is diminished in other forms that are still guaranteed.
This is where Bitcoin comes in. As state-guaranteed money becomes less safe, the private sector is trying to create alternatives. Bitcoin is gaining credibility as a future currency because the state is perceived as reneging on its implied pledge to guarantee the safety of money. Zero interest rate policy and QE, particularly, are seen as "theft": people blame the state, not the banks, for negative returns because they believe the state sets the price of money. If the state can't be trusted to honor its pledges, it is no surprise that people look for alternatives outside the state currency system.
Currencies have three functions: store of value, medium of exchange and accounting unit. At the moment, Bitcoin is principally a store of value. I disagree with those who think that Bitcoin cannot be a store of value because it has nothing physical backing it. Anything that is intrinsically scarce and doesn't decay can be a store of value. Bitcoin, consisting as it does of digital information with a hard limit on the number of units that can be created, certainly meets these criteria. The deliberate scarcity of Bitcoin makes it good for people who want to invest in it as a store of value, because (bubbles aside) it will appreciate over time, so they will get richer simply by hanging on to it. But it makes it much less satisfactory as a medium of exchange. When money is deliberately kept scarce in order to preserve the value of money savings over time, the general price level in the economy tends to fall, which is deflation. As Haruhiko Kuroda, governor of the central bank of Japan, explains, deflationary economies tend to stagnate, because people defer spending decisions in the expectation that prices will continue to fall. For the economy to grow, people have to spend, which is more likely if they expect prices to rise in the future - obviously we don't want them rising too much, but a little bit of inflation does keep the economy moving. A safe asset which gradually appreciates, so makes a good long-term investment, is not a good medium of exchange. The design of Bitcoin therefore makes it more suitable as an investment rather than a medium of exchange.
However, the problem with non-monetary stores of value is liquidity. If you can't sell investments when you want to, they aren't much use - after all, the very fact that they don't decay means you can't eat them. And since Bitcoin's popularity is at least in part due to people's suspicion of state-guaranteed money, forcing people to realize their investments in state-guaranteed money rather defeats the object. So it is necessary for Bitcoin also to be a medium of exchange. If Bitcoin can readily be used to make purchases, bypassing state money, then its liquidity is assured. This is why it is promoted as a currency rather than as an investment.
But it is really not a viable alternative to state-guaranteed money. It is only accepted in payment for goods and services because it can be converted to state-guaranteed money - and in that respect it is exactly like all other forms of private sector money. Furthermore, because it is not denominated in dollars, its value in relation to the dollar fluctuates. At the moment it is doing rather well, but like all investments its value can fall as well as rise. Volatility in a medium of exchange is a threat to economic and financial stability, which is why central banks intervene if exchange rates become too volatile. But Bitcoin doesn't have a central bank smoothing out exchange rate variations. Yes, it has a great payments network, far better than its rival Paypal (which really needs to get its act together). But having a great payments network doesn't make it a good currency.
But crypto-currencies like Bitcoin and its rivals are also addressing a different - and much more interesting - need than "we don't trust government". There really is a shortage of state-guaranteed money as a medium of exchange. This is partly because of the sheer quantity of goods & services now being produced, many of them in digital form, and partly because the banks/state combination isn't meeting the need. If the banks/state money-creating machine can't or won't increase the supply of money enough to meet demand, then other parts of the private sector will create alternatives.
The shortage of state-guaranteed money may itself be sufficient to explain the proliferation of -coins. But I think there is something else going on. This looks to me very like the dot-com bubble. When the dot-com bubble burst, lots of dot-coms died and people lost money. But as Forbes contributor Tim Worstall reminded me recently, from the ashes of the dot-coms, Google arose.
I don't think that the -coins we are seeing now are the last word in digital currency. They are experiments. And I do think there is a bubble in the making, which will burst noisily at some point. But unlike others, I don't regard this as a bad thing. Just as the dot-com bubble and bust was an essential part of the evolution of the Internet, so the bursting of the -coin bubble, when it comes, will enable a new digitized financial architecture to emerge.
So bring on the -coin bubble and bust. I want to see what grows in its place.
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0806af301bf2c43a87497fc0aed420cf | https://www.forbes.com/sites/francescoppola/2014/02/25/an-attempt-to-explain-europe/ | An Attempt To Explain Europe | An Attempt To Explain Europe
I frequently encounter confusion between “Europe”, the EU and the Euro area, particularly from the other side of the Atlantic. This is understandable, because "Europe" as popularly imagined appears to resemble a nascent United States. But it's actually nothing like it. So I thought I would attempt to explain how "Europe", the EU and the Euro area differ from each other.
To Europeans the distinction no doubt seems clear – although recent events in the Ukraine cast doubt on this, as this piece by a former British ambassador to Sarajevo explains. “What is Europe”? asks Charles Crawford. Indeed, that is a good question.
It is very difficult to define “Europe”. Geographically, where does “Europe” end and “Asia” begin? It is far too simplistic to draw an arbitrary boundary line at the Urals and define everything to the west of that as Europe and everything to the east as Asia. That would split Russia in two. Russia extends all the way to the Pacific and is the largest country on earth in land area. Prior to World War 1 it would have been considered part of Europe. But then it was run by the Romanovs, who were related to the (joint) royal family of Britain and Germany, and had close ties to France as well. I wonder how many people realize that World War 1 was a family feud?
Really, Europe is a geopolitical construct rather than a geographic one. In my lifetime, the definition of “Europe” has changed. When I was a child, “Europe” meant the continent of Europe up to but not including the Iron Curtain states – the supposedly self-governing satellites of Soviet Russia that in reality were firmly under the bear’s paw. This was questionable, of course: refugee Poles in Britain regarded themselves as European, and there was the problem of divided Germany – was East Germany part of Europe? Most people regarded Poland, East Germany, Hungary, what was then Czechoslovakia, Bulgaria and Romania as essentially "European", but states with closer ties to Russia, such as the Baltics, as "Russian" - if they had heard of them at all.
That all changed in 1989 with the fall of the Berlin Wall and the disintegration of the Soviet Union. Yet in many people’s minds, “Europe” still ended more-or-less where the Iron Curtain used to run. Reunification of Germany extended “Europe” eastwards, of course, and few people had difficulty recognizing Poland and Hungary as part of "Europe". But other former Iron Curtain states were left in no-man’s-land – no longer Soviet, but somehow not quite European either.
At the Eastern border of the EU, “Europe” is being defined. Former Iron Curtain countries that join the EU become firmly “European”. Those that have not joined the EU still have uncertain identity. Is Ukraine “European”? Indeed, is Russia itself?
And what are we to make of Turkey’s quest for EU membership? Historically, Asia Minor has not been considered part of Europe. But geopolitics is more important than geography: Turkey will be allowed in if it suits the EU. So far it has not, but that could change.
But whatever the definition of “Europe”, it is larger than the EU. Norway and Switzerland are European countries under any definition, but they are not part of the EU. And the definition of the EU is set by international treaty, whereas the definition of "Europe" is a matter of opinion.
So I suppose non-Europeans can be forgiven for being confused about what “Europe” is. After all, Europeans themselves don’t seem to know any more. But when I see charts that compare the US with “Europe”, I see something that is pretty meaningless. The comparison should be with the EU.
But then I sometimes see charts that compare the US with the EU, when it clearly isn’t the EU they mean. For example, consider a chart showing the relative economic performance of the US, the UK, the EU and Japan (I see a lot of these!). This is meaningless. The UK is part of the EU. It can’t be “compared” with it. What is usually meant in this case is a comparison with the Euro area – which is not the same as the EU. The EU is currently made up of twenty-eight states. Of those, eighteen are Euro members. The rest – including the UK – have their own currencies which may or may not be pegged to the Euro.
“Europe” is like a Russian doll. Within Europe is the EU, and within the EU is the Euro area. And all three are subject to change. Will Ukraine join the EU? Will the UK leave it? Will Scotland remain a member if it leaves the UK? Will Turkey be allowed in? And - heaven help us - will the Euro fall apart? Who knows.
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4ab5324bcd1e7af1239a40d2555a2122 | https://www.forbes.com/sites/francescoppola/2014/02/26/deflation-is-not-benign/ | Deflation Is Not Benign | Deflation Is Not Benign
There has been much discussion recently about the possibility of deflation in the global economy. Many Western economies are experiencing what we call “disinflation”, where the rate of increase of prices falls over time. If the rate of increase falls enough, it becomes a decrease – and then we are into deflation. This sort of “boiling frog” deflation is very different from the acute deflation of the financial crisis, when prices went into freefall with catastrophic effects on jobs and incomes. Many people regard it as beneficial. After all, if prices are falling, money goes further, doesn’t it? You can buy more stuff both now and, if you save, in the future. What’s not to like?
Those who think that this kind of slow deflation can be benign usually point to the latter part of the 19th century as a time when economies were growing even though the general price level was falling. There were casualties, of course: this period is sometimes known as the “Long Depression”, mainly because of the economic decline of the agricultural sector in Europe at that time. But other industries, such as railroads, were booming.
But comparing such a period with now is comparing apples and pears. Inflation and deflation are primarily monetary phenomena: the inflation rate is the change in the purchasing power of money. During the Long Depression, the whole Western world was using gold as its currency, though sometimes with silver too. It was the period of the classical gold standard, which ended in 1914 with the financial crisis that preceded the outbreak of World War 1.
Using a commodity such as gold as money means that the quantity of money in circulation remains fixed unless more gold coinage is produced. A falling general price level is therefore a sign that the economy is GROWING. More – or better - goods and services are being produced relative to the amount of money in circulation: the value of money rises and the price of goods and services falls. This is “benign” deflation.
But this is very different from the way in which the quantity of money changes in a modern fiat money economy. In our fiat money economy, the quantity of money in circulation is determined principally by bank lending. When banks lend, they create an amount of fiat money equal to the amount of the loan. What we call “broad money” – which is the money actually used for transactions in the real economy - therefore expands. When the loan is paid off, the money the bank has created is destroyed, and the broad money supply therefore contracts.
When broad money contracts, the value of money rises relative to goods and services, causing a fall in the general price level. So you can buy more stuff both now and in the future. Consumers rejoice, because their shopping bills shrink. Savers rejoice, because their savings increase in value.
At this point most of you are probably scratching your heads and thinking “I don’t get it. Why is this not benign?”
It’s all because of how money is created. For broad money to be created under our fiat system, someone has to borrow. So for our monetary system to work at all, there must be debt. When the value of money increases because some are paying off their debts (or defaulting on them), the value of debt for the remaining borrowers increases. That includes households, governments and businesses. All of them become MORE INDEBTED relative to their incomes when the value of money rises. This is because although incomes tend to flex with the value of money, the stock of debt does not. Debt is nominal.
If this isn’t clear, let me give you an example. If you have a debt of $1000, and the value of money increases by 5% (outright deflation), you still have to pay $1000. You don’t get a reduction in your nominal debt because the value of money has risen. So your lender benefits from the increased value of money. But you don’t get a pay rise. In fact you may even get a pay cut. After all, from your employer’s point of view, your pay is costing him an extra 5%. The fact that you will have to pass that straight on to your lender doesn’t concern him.
There are a lot of highly indebted people out there, and highly indebted companies and governments, too. Outright deflation would increase their debt burdens, forcing them to cut spending and defer investment decisions. It may even force some of them to default: if defaults are sufficiently widespread, the money supply falls abruptly. When people, businesses and banks are highly indebted, slow deflation can all too easily change to virulent debt deflationary collapse.
But increased debt burdens are not the only problem. Our economy depends on lending. When there is deflation, people don’t want to borrow, because any money they borrow increases in value during the period of the loan. And they don’t want to spend, because prices tomorrow will be lower, so they will get a better deal. Therefore businesses don’t invest, households don’t spend, and banks don’t lend. Of course, this would happen under a gold standard too. But in our fiat money system, reduction in lending causes the money supply to drop, making money even more scarce and accelerating the rate at which prices fall. This is very different from a gold standard where bank lending and the money supply are not connected, so falling prices do not affect the quantity of money in circulation. In a fiat (credit) money system, even if the level of indebtedness is relatively low, falling prices mean a falling money supply – and a falling money supply generates further price falls. It is easy to see how this can become an out-of-control deflationary spiral. No wonder central banks fear deflation.
Of course, this is not to say that technological advances that drive down production costs, enabling people to buy better widgets for the same amount of money, aren’t a good thing. But in my view it is incorrect to call this deflation. If you buy a new improved widget for the same amount of money as the old widget, the amount of money you pay hasn’t fallen. And you may at the same time be paying more for some products without realising it: companies create “hidden” inflation by all manner of dodges such as cutting product sizes, adding inexpensive fillers to make products larger or heavier, or improving packaging to make products look as if they are better quality. We don’t usually count these effects in measures of inflation: it is therefore perverse to argue that technological changes that improve the quality of products without increasing their price are deflationary.
Furthermore, productivity improvements enabling companies to make money while lowering prices do not necessarily follow through into higher real wages, and may result in higher levels of unemployment. This is actually what happened in the Long Depression: yes, there was economic growth, and prosperity for many of those in work, but there was also high unemployment and poverty. The “technological changes cause benign deflation” argument is in my view seriously flawed.
I am unconvinced that the benefits of falling prices ever outweigh the problems they create, even when the money supply is fixed. But of one thing I am certain. In an economy in which the production of money depends on the production of debt, there is no such thing as benign deflation.
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bb4d685f718e8887c0b03fa22b944446 | https://www.forbes.com/sites/francescoppola/2014/04/24/austerity-and-suicide-the-case-of-greece/ | Austerity And Suicide: The Case Of Greece | Austerity And Suicide: The Case Of Greece
A paper claiming that austerity in Greece had caused male suicide rates to rise significantly created something of a stir this week. Some people used it to support their argument that the structural reforms imposed by the “Troika” ( IMF , European Commission and ECB) as a condition of Greece’s bailout were economically destructive and should be abandoned. Others disputed the findings, claiming that there never was any austerity and the suicides were simply a response to difficult economic conditions.
There is no doubt that six years of deep recession in Greece have taken their toll on the population. The paper shows a statistically significant positive correlation between unemployment and male suicide, and an even more significant negative correlation between economic growth and male suicide. Economic depression, it seems, does cause some men to end it all.
However, that wasn’t what the authors set out to show. There is already substantial evidence that suicide rates rise in recessions. For example, this paper published in the British Medical Journal shows positive correlation between the 2008 economic recession and higher suicide rates across a wide range of countries.
No, the authors set out to show that “austerity” itself is a cause of suicide in general, and particularly for older people affected by cuts to their fixed incomes. And I’m afraid they failed. They simply did not adequately demonstrate correlation between government spending cuts and suicide rates, let alone a causative relationship. The best they could do was show statistical significance at the 5% confidence level between government spending cuts and male suicide rates only (not age dependent) for data from 1968-2011. With weak statistical significance on a reduced data set, these findings are insufficiently robust. They do not show that Greek government spending cuts increased suicide rates. There was a slightly stronger relationship between deficit reduction and suicide rates – but deficit reduction itself is not necessarily due to what we normally call “austerity”, namely government spending cuts and tax rises.
Failing to prove their primary hypothesis to a sufficiently robust level was bad enough. But they completely failed to prove their secondary hypothesis, namely that older people were more likely to commit suicide under austerity. And that is because of a serious problem with the data. Their age cohort data ends in 2009. The Greek debt crisis blew up in 2010 and austerity measures were imposed after that. Government spending reductions in the 1988-2009 data either did not exist or were so tiny they were practically irrelevant. In short, there was no austerity during that period. It is therefore not possible with this data set to prove that government spending cuts cause increased suicides among older people. The regression does show that there MIGHT be some relationship between government spending cuts and suicides among older men. But it is pretty weak: the best they can show is occasional significance at the 5% or 10% level. It does not constitute “proof”.
Media reports such as this one in the NY Post saying "Draconian austerity measures instituted as a result of the Greek debt crisis have taken a dramatic toll on male suicides" are just wrong. The paper does not demonstrate any direct connection between austerity measures imposed due to the debt crisis and suicide rates in Greece. Indeed it cannot: available data for suicides ends in 2011, before the bulk of the austerity measures came into force. Suicides in 2009 and 2010 really can't be attributed to Troika austerity measures - but they could be attributed to the 2008 financial crisis.
But it is possible that austerity measures in Greece and elsewhere could have indirectly caused suicide rates to rise. There is plenty of evidence that recession and unemployment are associated with higher suicide rates, especially among men, and it is entirely possible that austerity measures delayed economic recovery after the financial crisis and, in the case of Greece, turned the post-crisis recession into a prolonged and severe depression.
I am disappointed therefore that the authors chose to try to prove a direct link between austerity and suicide rates, particularly among older people. This was never going to be possible: it is notoriously hard to prove that general fiscal changes have specific welfare effects (everyone tends to resort to anecdote), and in this case the data is not good enough anyway. What is really needed is proof that severe government spending cuts cause persistently negative economic growth and high unemployment. If such a relationship could be shown beyond reasonable doubt, then we could reasonably conclude that austerity does indeed cause suicide rates to rise. Until then, the case remains unproven.
Paragraphs 4, 5 and 6 above have been amended in the light of comments from Alan Collins, co-author of the paper.
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fcd00f05e3ae6ae5b2d9265ae7085860 | https://www.forbes.com/sites/francescoppola/2014/04/27/an-economics-lesson-for-professor-sinn/ | An Economics Lesson For Professor Sinn | An Economics Lesson For Professor Sinn
Writing in Project Syndicate, Hans Werner Sinn, Professor of Economics and Public Finance at the University of Munich, bewails the continuing growth of sovereign debt in the Eurozone. He claims that because the European fiscal compact has not been properly enforced, southern countries are flouting the rules and allowing their debt/gdp ratios to rise to unsustainable levels:
Had the compact been enforced, Italy would have had to reduce its debt/GDP ratio from 121% in 2011 to 112% in 2014. Instead, Italy’s debt ratio has skyrocketed, with a forecast by the European Commission projecting it to reach 134% at the end of this year. Likewise, Spain’s debt ratio should have fallen from 71% to 69%, but will probably increase to 99%. Greece’s debt ratio will rise from 170% to 177% (despite a 58-percentage-point debt-relief scheme in 2012), Portugal’s will surge from 108% to 127%, and France’s will rise from 86% to 96%. But, instead of ruefully admitting their failures, the governments in question are now going on the offensive by rejecting austerity categorically.
And he complains that, in seeking to improve growth in the Eurozone, politicians are missing the point:
Supposedly, everyone just wants more growth; unfortunately, when politicians talk about growth, what they usually mean is that they should be permitted to incur more public debt….. However, new debt is nothing but a form of dope, reducing pressure to take painful measures that would improve competitiveness and capacity growth.
The economics underlying this statement is woefully inadequate. The fiscal contraction required to reduce debt/gdp as required under strict interpretation of the Maastricht rules might be possible if there were robust growth. But the Eurozone periphery does not have robust growth. It has been in a slump for most of the last six years:
(please note the nominal gdp measurements in this graph differ by country due to limited data availability. It gives a general impression of Eurozone periphery growth since 2008, rather than an accurate picture.)
Fiscal contraction of the order required to bring public debt down to those levels would raise unemployment to the skies and force brutal cuts to essential services such as healthcare and pensions. How would reducing the populations of these countries to the standards of income, nutrition and health last seen in Western Europe before World War 2 improve competitiveness and capacity growth? It is far more likely that it would force the young and skilled to leave, leaving behind the old, the sick and the unemployable. Quite apart from the social costs and questionable morality of such an action, it would hardly make these countries an attractive place for businesses.
Nor would such a severe fiscal contraction necessarily have the desired effect anyway. In this paper, IMF researchers warn that in the aftermath of a severe economic shock such as a financial crisis, fiscal contraction designed to put public finances on a sustainable path over the medium term is likely to cause debt to rise in the short term. This is because fiscal contraction is, er, contractionary. If growth is strong, it causes it to slow: if growth is poor, it causes recession. If growth is already negative, as it is in Greece, for example…..well, I’m sure you can work out where that leads.
When growth slows, tax revenues fall and benefits bills rise due to higher unemployment, so the government tends to borrow more. Of course, it can respond by raising taxes and cutting benefits, but as the IMF researchers note, that tends to make tax revenues fall and unemployment rise even more. They warn that further fiscal tightening to counteract rising debt/gdp due to fiscal consolidation can result in a damaging deflationary spiral, and they advise fiscal authorities not to set short-term debt/gdp targets in a fiscal consolidation.
But even if government manages to balance its budget despite economic slowdown, debt/gdp will still rise. This is simple arithmetic. Debt is an existing stock, whereas gdp is a measure of current income (a flow). When countries go into recession, gdp falls – but debt doesn’t. Therefore debt/gdp rises simply because the denominator has fallen. I am frankly astonished that Professor Sinn makes no mention of this in his analysis.
Greece is now in its sixth year of deep recession. Its debt/gdp was bound to rise, simply because there has been no return to growth. Why on earth does Professor Sinn think that further fiscal contraction in Greece would reduce its debt/gdp? It hasn’t worked so far. All it has done is drive the country deeper into recession, hurting its population and damaging its productive capacity, possibly permanently. Albert Einstein defined insanity as doing the same thing over and over again while expecting a different result.
The periphery politicians are going for growth because that is the only way they can make their sovereign debt/gdp sustainable over the medium term – and the only way they can contain the social unrest that unrelenting austerity and recession causes. It is of course possible that their actions won’t bring debt/gdp down: the absence of inflation and Germany’s persistent trade surplus don’t exactly help matters, and there are powerful vested interests resisting useful reforms. But what is certain is that without stronger growth, fiscal contraction is likely to increase sovereign debt/gdp levels still further.
However, I’m not so sure that Professor Sinn is really interested in the future health of Eurozone periphery countries anyway. His main worry appears to be the prospect of future bailouts. He would do well to remember that much of the bailout money so far provided by German taxpayers has gone to their own banks. Who exactly is it who is being bailed out?
No-one wants to see the Eurozone periphery going any deeper into debt. And most people agree that structural reforms such as labor market liberalization are needed. But harsh austerity measures imposed on deficit countries without corresponding easing from surplus countries, especially Germany, will only bring about the outcome Professor Sinn fears. If he really wishes to avoid further bailouts, he should support periphery countries’ drive for growth and encourage more liberal fiscal policies in his own country.
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adc35dd0fda3c0572298e266ce8cc527 | https://www.forbes.com/sites/francescoppola/2014/07/01/bnp-paribass-sanctions-penalty-is-not-enough/ | BNP Paribas's Sanctions Penalty Is Not Enough | BNP Paribas's Sanctions Penalty Is Not Enough
As expected, US regulators have imposed a “shock and awe” penalty on the French bank BNP Paribas for breaking US sanctions against Sudan, Iran and Cuba, to which the bank has already pleaded guilty in a New York State court and will additionally plead guilty in a Federal court on July 9. The total fine is $8.97bn and BNP Paribas will additionally suffer a temporary suspension of interbank and oil & gas dollar clearing facilities.
Thirteen employees have lost their jobs, including the co-Chief Operating Officer Georges Chodron de Courcel (who has already announced his intention to retire), and a further 45 face disciplinary action and pay cuts. The Federal Reserve says it intends to pursue civil enforcement action against a number of employees and former employees.
The total penalty is by far the most severe ever imposed on a major bank. But does it fit the crime?
Frankly, no it does not. From 2004 to 2012, BNP Paribas routinely evaded US sanctions imposed on Sudan, Iran and Cuba. The Statement of Fact issued by the regulators tells of widespread and deliberate deception, not only of US regulators and other financial institutions, but even of BNP Paribas's own US subsidiary.
Sudan was a key part of BNP Paribas's business strategy. Management and Compliance comments quoted in the Statement of Fact indicate that BNP Paribas was anxious to avoid damaging relationships with Sudanese customers – which included organisations owned or controlled by the Sudanese government, whose questionable legitimacy and awful human rights record were the reason for US sanctions. Support for Sudanese sanctions-breaking appears to have come from the highest levels in the bank. Admittedly there does seem to have been some lack of clarity over the “reach” of US law – a legal opinion given in 2004 wrongly suggested that US sanctions did not apply under certain circumstances. But even when this opinion was overturned, BNP Paribas still continued to break US dollar sanctions in order to develop their Sudanese business.
Even after it ended its relationship with Sudan, BNP Paribas continued to clear US dollar transactions for Cuba and Iran in direct contravention of US Sanctions. In the case of Cuba, communications quoted in the Statement of Fact suggest that the bank knew perfectly well it was breaking US law.
The Statement of Fact details the means BNP Paribas used to evade sanctions:
a. BNPP intentionally used a non-transparent method of payment messages, known as cover payments, to conceal the involvement of Sanctioned Entities in US dollar transactions processed through BNPP New York and other financial institutions in the United States; b. BNPP worked with other financial institutions to structure payments in highly complicated ways, with no legitimate business purpose, to conceal the involvement of Sanctioned Entities in order to prevent the illicit transactions from being blocked when transmitted through the United States; c. BNPP instructed other co-conspirator financial institutions not to mention the names of Sanctioned Entities in US dollar payment messages sent to BNPP New York and other financial institutions in the United States; d. BNPP followed instructions from co-conspirator Sanctioned Entities not to mention their names in US dollar payment messages sent to BNPP New York and other financial institutions in the United States; e. BNPP removed information identifying Sanctioned Entities from US dollar payment messages in order to conceal the involvement of Sanctioned Entities from BNPP New York and other financial institutions in the United States.
The last of these is particularly damning. Deliberate falsification of payment messages is wire fraud.
The fact is that for years on end, BNP Paribas flouted US law for commercial gain. The profits they generated from doing this far exceed the penalty now imposed. Despite the apparent severity of the penalty, they have actually got off lightly.
And that is what the share price shows. BNP Paribas's share price rose after the penalty was announced, and it is now trading well above its previous value: analysts commented that the bank should be able to absorb the fine without restricting shareholder dividend payout, and they saw the ending of legal uncertainty as a positive for the bank.
So what hope does this penalty give that BNP Paribas – and other banks – will be discouraged from overt criminal behavior in the future?
None whatsoever.
English: BNP-Paribas headquarters on boulevard des Italiens, Paris Français : Le siège de... [+] BNP-Paribas sur le boulevard des Italiens à Paris (Photo credit: Wikipedia)
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b635999bdd08350f5fdd2fe8d144a7a9 | https://www.forbes.com/sites/francescoppola/2014/08/18/the-bulgarian-banking-disaster/ | The Bulgarian Banking Disaster | The Bulgarian Banking Disaster
Two months after it was taken into conservatorship by the Bulgarian National Bank (BNB) after a catastrophic bank run, Bulgaria's CorpBank is still closed.
Well, nearly closed. It is now open for loan repayments. Depositors can't get their money out of CorpBank, but borrowers can pay their debts.
There are good reasons for this. Closing a bank's operations completely leaves it unable to service its obligations, not just to depositors but to bondholders too. CorpBank recently defaulted on a bond payment because of its lack of cash flow. Personally I am at a loss to understand how a bank in central bank conservatorship can be allowed to default on a bond payment: until the bank is either recapitalized or wound up, it is the central bank's job to ensure that it has the liquidity to meet obligations. Claims that CorpBank doesn't have sufficient assets to support provision of central bank liquidity are frankly unbelievable. Allowing CorpBank to default on a bond payment is central bank negligence, pure and simple.
Not that this is the first example of BNB incompetence. One of the interesting features of the Bulgarian bank runs story is the difference between the treatment of CorpBank and First Investment Bank. Both banks were subject to runs driven by media reports and social media messages. The BNB allowed the run on CorpBank to continue until it had torn a huge hole in its balance sheet, then closed it down. In contrast, First Investment Bank was provided with emergency liquidity by both the BNB and eventually the EU: the President issued reassuring messages about the safety of deposits, and the BNB called for prosecution of people guilty of “spreading rumors” about bank instability. Why were the two banks treated so differently?
Not only that, but the BNB's treatment of CorpBank prior to its collapse does not give the impression of a regulator that knows what it is doing. CorpBank was paying very high interest rates to attract deposits – in my view always an indication of liquidity problems: it had an unusual concentration of state assets and breached regulatory limits on lending to limited companies. But the BNB lauded CorpBank to the skies, naming it in “Bank of the Year” awards and turning a blind eye to its growing risks.
The BNB also ignored evidence of corruption. We now know that CorpBank is embedded in a complex and opaque edifice of financial and non-financial companies owned by Tsvetan Vassilev, who is now in hiding. As I've observed before, complex and opaque structures exist for one purpose only – to conceal what is really going on. Bulgarian oligarchs understandably like to conceal their business interests from predators, so a complex and opaque structure in a Bulgarian enterprise is not necessarily an indicator of fraud. But the Bulgarian Chief Prosecutor says that there was fraud in this case. In addition to the earlier claim that large amounts of cash were withdrawn from the bank on Vassilev's orders immediately prior to its failure, allegations have now been made that Vassilev systematically drained the bank to support his other business interests over the course of about 4 years. Investigators into CorpBank's failure claim to have found documents that were deliberately concealed from auditors and evidence that documents were shredded on the order of senior bank executives immediately prior to CorpBank's closure. Along with the bank's Chief Cashier, Vassilev stands accused of embezzlement, and an international arrest warrant for him has now been issued. Interpol were looking for him in Vienna, apparently, but he had long gone.
Tsvetan Vassilev. Photo credit: Novinite
But corruption in Bulgarian banks is endemic. CorpBank is no more corrupt than FI Bank: both banks were named by Wikileaks as being among several “bad apples” in the Bulgarian banking system. Why was CorpBank closed but FI Bank kept open? Indeed, why is there no investigation into the other banks named by Wikileaks?
Nikolay Staykov of the Bulgarian Protest Network says that the BNB had completely different objectives with regard to the two banks. CorpBank was to be brought down in order to remove the current majority owner, Tsvetan Vassilev. But FI bank – the bank to which Delyan Peevski moved his money, sparking the CorpBank run – was to be protected. Ostensibly this was to keep the banking system stable: but as this whole affair is really a fight to the death between Vassilev and Peevski, it is hard not to conclude that Bulgarian institutions are partisan. The judiciary is known to be corrupt and the Chief Prosecutor''s office seems to be politically captive: it is hardly surprising therefore that the Protest Network's call for the entire banking sector to be investigated for corruption appears to have fallen on deaf ears. One “bad apple” has been removed, but the rest have been protected for unknown reasons. As ever in Bulgaria, it is all as clear as mud – except for one thing. The removal of Vassilev from the scene leaves Peevski in effective control not only of Bulgarian media and secret services, but of its banking sector too. Such concentration of power is a cause for concern in a supposedly democratic country.
Delyan Peevski. Photo credit: Novinite
And as always in Bulgaria, when big fish fight, little fish get hurt. According to Zheni Stefanova from KTB ALive, a Facebook group of CorpBank depositors which is organizing street protests against its continuing closure (the next one is today, Monday August 18th):
We can’t use our savings and money at all. The employees of the bank are not sure about their jobs in the future . As an addition, the companies can’t use their frozen accounts, which creates so much difficulties for them with their cash flows, their financial planing, investments and blocked wages for their employees. There are many health institutions that can’t function normally because of that problem. There were 6000 retired people with blocked accounts that can’t use their money and they really need it because of their health problems as old people.
Admittedly, since no-one in Bulgaria trusts banks, most of them have other resources. But the longer CorpBank remains closed, the more likely it becomes that there will be tales of real hardship. Indeed according to Stefanova there are already a few:
There is a man who needs a cancer treatment and his life depends on a quick solution, there is a little boy who had the misfortune to use an account at Corpbank for charitable needs , another man who's wife is dying , she needs an urgent treatment and now he needs his money as soon as possible.
But at present there seem to be no plans to re-open CorpBank before the elections in October, or indeed before the completion of the audit into its books, currently scheduled for October 20th. By that time depositors will have been denied access to their money for four months.
Stefanova says that depositors have tried to persuade the Bulgarian authorities to re-open – or resolve – CorpBank, to no avail:
So far nothing has been undertaken by neither the Government, nor the Central Bank. We send letters to the Central bank with a hope of a support. They just answer that the law doesn't allow them to help us and release our own money. They just suggest that we should find different ways to solve our problems. Here arises the question what kind of law is that? Nobody is doing anything about this problem.
And she also criticizes the EU authorities:
Listening to the news I hear different opinions about the problem and everybody says that the bank should open soon, however nothing is happening. We are not less Europeans than the other European countries. We have waited two months for this problem to be solved and we can’t wait anymore.
She is right. The inaction of Bulgarian and EU authorities over the plight of CorpBank's depositors is disgraceful. No other bank in the EU has been allowed to remain in limbo for two months with no decision regarding its future and no payout to depositors. Even in Cyprus, bank closure was only for two weeks: admittedly, large deposits remained frozen after that, but at least insured deposits were covered.
But the problem is that insured deposits are NOT covered. As Shaun Richards explains, Bulgaria's deposit insurance fund is insufficient to meet claims from insured depositors. No wonder the Bulgarian authorities are keeping the bank closed. If they re-open it, there will immediately be a massive bank run, which will force it into bankruptcy and could break the Bulgarian currency board due to the need for leva and possibly Euro liquidity to support such a massive run: while if they wind it up, they will have to pay insured depositors within 20 days under EU rules, which they don't have the money to do.
This of course explains why the bank has been opened for repayments, and why the BNB has been holding talks with representatives of Oman's sovereign wealth fund – an existing shareholder of CorpBank – about recapitalizing the bank. And it also explains a report that the Bulgarian authorities are considering a Brady-style refinancing deal for the bank devised by a special consultative committee organised by corporate depositors, trades unions and people from the finance industry. It all smacks of desperation to me. Somehow, they have to get more money into CorpBank, and it isn't going to come from the Bulgarian government.
But there is a wider issue here. Allowing CorpBank to default on a bond payment raises questions about the trustworthiness of the Bulgarian authorities. Shabby treatment of depositors raises questions about the commitment of the Bulgarian authorities to the responsibilities of EU membership. And growing evidence that the BNB is both incompetent and politically captive casts doubt on the stability of the Bulgarian financial system. My source close to Vassilev warned that the ultimate objective of those behind the failure of CorpBank was to destabilize the Bulgarian banking system, break the currency board and cause a repeat of the 1996 financial collapse and hyperinflation. Professor Steve Hanke of the Cato Institute, who designed Bulgaria's currency board system, has expressed concern that confidence in the central bank might be at risk unless CorpBank is resolved quickly through bankruptcy and losses for bondholders and large depositors. A financial collapse in Bulgaria would be disastrous for the entire Balkan region. Despite Professor Hanke's reservations about involving the EU or the IMF, in my view external authorities must now intervene.
The final paragraph of this post has been amended at Professor Hanke' s request to reflect more accurately the views expressed in his interview with Bulgarian National Radio.
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76acb8f79a06355ab22be560a7bd0757 | https://www.forbes.com/sites/francescoppola/2015/01/17/oh-switzerland-what-have-you-done/ | Oh Switzerland, What Have You Done? | Oh Switzerland, What Have You Done?
On Thursday January 15th, the Swiss National Bank abruptly made a radical policy shift. For the last two years it has capped the value of the franc at 1.20 EUR by doing what was until recently the world’s largest QE programme – buying euros without limit in return for newly created francs. As a consequence, its balance sheet has ballooned to 86% of Swiss GDP. But according to the SNB, times have changed and the cap is no longer needed:
Recently, divergences between the monetary policies of the major currency areas have increased significantly – a trend that is likely to become even more pronounced. The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.
So with immediate effect, the cap was lifted. The franc now floats freely versus the euro. And in a radical move, the SNB slashed interest rates on central bank deposits to an unprecedented minus 0.75%. Immediately after the announcement, the franc rose by over 40% against the euro and more than 15% against other currencies, though it later fell back, closing up 19% against the euro.
Such a massive surge had appalling effects on financial intermediaries and their customers who were exposed to Swiss francs through derivative trades. Brokers were particularly badly hit. The FX trading platform FXCM found itself $225m short of regulatory capital because of customer losses: it has now obtained emergency funding of $300m from Leucadia. Alpari UK is officially insolvent, Global Brokers NZ Ltd. was forced to shut down and IG Group said it could face losses of up to £30m ($45.3m). Banks suffered too: Bloomberg reports that Citigroup appears to be down $150m, while Barclays and Deutsche Bank also admitted to heavy losses.
Nor are the losses limited to financial markets. Households in Hungary and Poland who had taken out mortgages in Swiss francs will experience distress since the forint and the zloty have fallen versus the franc. And Switzerland’s own export sector is severely impacted, since the Eurozone is by far its largest trading partner. The SNB, too, has taken substantial losses on the mark-to-market value of its holdings of euros.
This action has without question been very costly. So why did the SNB do it?
Frankly, I don’t buy the SNB’s “cap is no longer needed” story. If the currency peg was really redundant, market reaction would have been far less extreme. Nor do I agree with Markus Brunnermeier and Harold James that this was due to domestic political worries about SNB solvency. In my view this is all about ECB QE – and about the power dynamics between central banks.
Swiss National Bank
The ECB has been dropping heavy hints that QE would be initiated soon, though the exact form that it would take was not clear. The main obstacle, apart from German opposition, was the German legal challenge to the ECB’s OMT program, which is similar to QE (though has never been implemented). It is now clear that the ECB was waiting for the opinion of the Advocate General of the European Court of Justice (ECJ). This opinion is not binding – it must be followed up by the formal decision of the ECJ – but it is unheard-of for the court to differ from the opinion of the Advocate General.
The Advocate General gave his opinion on Wednesday January 14th. As expected, he confirmed the legality of OMT. He said, in effect, that the ECB had the right to conduct monetary policy by any means it saw fit, and courts could not interfere with that since they did not have appropriate technical knowledge:
In his Opinion today, Advocate General Pedro Cruz Villalón observes that the framing and implementation of monetary policy are the exclusive competence of the ECB. In order to carry out its task, the ECB has at its disposal technical expertise and valuable information, which, together with its reputation and communications strategy, enable it to manage expectations in such a way that its monetary policy “impulses” actually reach the economy. Therefore, the ECB must have a broad discretion when framing and implementing the EU’s monetary policy, and the courts must exercise a considerable degree of caution when reviewing the ECB’s activity, since they lack the expertise and experience which the ECB has in this area.
This judgement makes the ECB the most powerful central bank in the world: it is now not only democratically but also legally unaccountable. It can do whatever it pleases.
The Advocate General’s opinion, although it concerns OMT, clears the way for ECB QE. Despite many people’s misgivings, QE is now sure to go ahead, if only because no-one has a better idea.
But there was another obstacle to QE. As John Authers points out in the FT, the SNB’s purchases of euros have not only prevented the appreciation of the franc, they have also supported the Euro. The ECB has openly admitted that what it calls the “exchange rate channel” – i.e. weakening the currency – is a means by which QE could achieve its effects in the Eurozone. But it would be pointless for the ECB to flood the market with euros only to see the SNB hoover them all up again. Somehow, the ECB had to persuade the SNB to stop supporting its currency.
Central banks cannot be broken by markets when defending a rising currency (though they can when defending a falling one). But they can be broken by a central bank with more firepower. The ECJ Advocate General’s opinion was a game changer. No way is the most powerful central bank in the world going to allow the minnow on its border to derail its hard-won QE program. The SNB, considerably smaller than the ECB and subject to both democratic and legal constraints, had no choice but to end its Euro purchases or face destruction of its balance sheet to no purpose.
But why did the SNB act so precipitously? After all, at the time of the SNB’s action the ECB had not announced QE. Surely the SNB could wait until it did so?
No, it could not. It had to act when it did. On Friday January 16th, the German newspaper Der Spiegel reported that on the same day as the ECJ Advocate General published his opinion, the ECB President, Mario Draghi, had presented his proposed QE programme to German Chancellor Angela Merkel. The presentation gave details of the size of the programme, the approach (NCBs to buy their own government bonds) and limitations (Greek bonds excluded). Der Spiegel’s report, apparently authorized by a German government official, was an official leak of the ECB’s intended QE programme. In effect, the ECB announced QE as soon as the SNB got out of the way. This can’t possibly be coincidence.
But how did the SNB know that it had to act as soon as the ECJ Advocate General’s opinion was published? And why did the SNB’s action include a rate cut that could only be intended to defend against rapid inflows of capital, which would be expected if ECB QE was imminent, rather than simply “being considered”? As my colleague Raoul Ruparel rightly asks, what did the SNB know that no-one else did? Did it merely guess that ECB QE would not be far behind – or was it told? Did the ECB inform the SNB about Draghi’s meeting with Merkel? In short, did the ECB tell the SNB to remove the cap in order to clear the way for ECB QE?
We call for cooperation between central banks to ensure that monetary policy changes by individual countries do not cause massive stresses in the global financial system, though all too often this call falls on deaf ears. I suppose you could call this cooperation. But to me it looks more like the opening skirmish in a currency war.
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1b1ed2ea52eeab6ca8f78a0117dede83 | https://www.forbes.com/sites/francescoppola/2015/01/31/so-whose-problem-is-greek-debt-anyway/ | So Whose Problem Is Greek Debt, Anyway? | So Whose Problem Is Greek Debt, Anyway?
The Greek government has refused to accept any more loans to meet future debt obligations, claiming that as Greece is insolvent, lending it more money simply makes matters worse. This move seems to have caught everyone by surprise, but in fact it was clearly signalled by the leader of Syriza before its election victory. In an “open letter to the people of Germany” published in Handelsblatt on January 13, Alexis Tsipras explained why Germany should support debt reduction for Greece (my emphasis):
In 2010, the Greek state ceased to be able to service its debt. Unfortunately, European officials decided to pretend that this problem could be overcome by means of the largest loan in history on condition of fiscal austerity that would, with mathematical precision, shrink the national income from which both new and old loans must be paid. An insolvency problem was thus dealt with as if it were a case of illiquidity. In other words, Europe adopted the tactics of the least reputable bankers who refuse to acknowledge bad loans, preferring to grant new ones to the insolvent entity so as to pretend that the original loan is performing while extending the bankruptcy into the future. Nothing more than common sense was required to see that the application of the 'extend and pretend' tactic would lead my country to a tragic state. That instead of Greece's stabilization, Europe was creating the circumstances for a self-reinforcing crisis that undermines the foundations of Europe itself. My party, and I personally, disagreed fiercely with the May 2010 loan agreement not because you, the citizens of Germany, did not give us enough money but because you gave us much, much more than you should have and our government accepted far, far more than it had a right to. Money that would, in any case, neither help the people of Greece (as it was being thrown into the black hole of an unsustainable debt) nor prevent the ballooning of Greek government debt, at great expense to the Greek and German taxpayer.
Tsipras has been proved correct on both counts. As this graphic from the FT shows, all but about 11% of the bailout money went straight back to the holders of Greek debt by one route or another:
And Greek debt has ballooned to 175% of GDP – a level which could force the IMF to reconsider any further lending. Under its own rules, the IMF is not allowed to lend unless the debt is sustainable.
But the actual cost of debt service for Greece is well below market rates, and much of it does not have to be repaid for a very long time. Greece also benefits from a concession that means it does not have to make principal repayments on EFSF loans until 2022. Greece’s debt service costs do not appear unaffordable, at an estimated 2.6% of GDP. On the face of it, therefore, Greece’s debt should be sustainable. Indeed, other highly-indebted Eurozone countries could rightly feel aggrieved if Greece receives further debt relief. So what is the justification for writing down Greece’s debt?
The real problem is not Greece’s debt. It is the Eurozone’s bailout conditions, as Phillipe Legrain explains in the FT in response to a letter by Hugo Dixon:
Syriza now wants to negotiate a haircut of the loans from eurozone governments. Mr Dixon argues that this would bring little immediate relief because the (nominal) interest rates on the loans are low and no principal is due until 2022. But he ignores the costs of requiring Greece to run a huge primary surplus of 4.5 per cent of GDP from next year on and the strictures of the EU fiscal compact, which requires governments with debts of more than 60 per cent of GDP to reduce the excess by one twentieth a year — a tall order with debts of more than 175 per cent of GDP.
What is really needed is less restrictive bailout conditions and relaxation of the fiscal compact rules. But the Greek government’s opening move was to risk default by refusing further bailouts and demanding debt relief. In my view this was for dramatic effect. The Finance Minister’s refusal to accept any more bailout money got the world’s attention, whereas a simple request for easier terms would have barely raised an eyebrow – and would therefore have been easily rebuffed by the Troika. Threatening to default is playing hardball.
And it got a hardball response. Germany’s Chancellor Merkel refused outright to consider further debt relief. And the ECB’s Liikainen warned that if the Greek government failed to secure a deal by the end of February, the ECB would pull the plug on funding for Greek banks.
As my colleague Tim Worstall explains, such an action by the ECB would force Greece’s immediate exit from the Euro:
Greece can only stay in if the ECB continues to provide liquidity to the banking system. Syriza insists that the Greeks want to stay in. But ECB liquidity will only be provided on the basis of two points. Either that the troika folds and agrees to the reduction in the debt that must be repaid. Or that Syriza negotiates with the troika and agrees that the current contract must be upheld. Which means that we’re in a game of chicken here. Who folds? Syriza or the troika?
As the economist Diane Coyle put it on twitter, this is “game theorists at dawn”. How the game will unfold is hard to predict. Worstall assumes that the game must be zero-sum – that it is “a question of who blinks first”. But as Steve Keen explains, the fact that this is a “prisoner’s dilemma” does not rule out the possibility of the participants cooperating. Yanis Varoufakis, the new Greek finance minister (and a game theory expert), clearly intends to push for a negotiated solution.
And his hand is much stronger than many people think. Germans may fantasise that Greece is no longer “systemically important”, but the reality is that forcing out a Euro member would signal the end of the single currency. Even admitting the possibility of exit (as has arguably already been done in the design of QE) undermines it, as Mario Draghi explained in a speech given in Helsinki in November 2014 (emphasis in final sentence mine):
…if there are parts of the euro area that are worse off inside the Union, doubts may grow about whether they might ultimately have to leave. And if one country can potentially leave the monetary union, then this creates a replicable precedent for all countries. This in turn would undermine the fungibility of money, as bank deposits and other financial contracts in any country would bear a redenomination risk….. …So it should be clear that the success of monetary union anywheredepends on its success everywhere. The euro is – and has to be – irrevocable in all its member states, not just because the Treaties say so, but because without this there cannot be a truly single money.
Grexit would be an unmitigated disaster not just for Greece, but for the whole Eurozone. And Varoufakis knows this perfectly well. Threatening to default is a powerful strategic move to which the Troika has so far found no satisfactory response. Withdrawing ELA from Greek banks would simply precipitate disorderly unwinding of the Euro. The ECB can no more follow through on this threat than it could when it threatened to do the same to the Irish banks in 2010. But Varoufakis is not Enda Kenny. The ECB may well find its bluff called this time.
Greek debt is everyone's problem. It is in everyone's interests to work together to find a solution.
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6617991bf92e953efca728d9b73ee842 | https://www.forbes.com/sites/francescoppola/2015/02/01/media-misinformation-on-greece-misleads-european-leaders/ | Media Misinformation On Greece Misleads European Leaders | Media Misinformation On Greece Misleads European Leaders
The amount of misinformation about the new Greek government being spread by the world’s media beggars belief.
On Friday, Greek financial minister Yanis Varoufakis supposedly refused to cooperate with the “Troika” of IMF , ECB and European Commission. What he actually did was refuse to cooperate with the overseers put in place by those three institutions to enforce their austerity program, which is progressively destroying the Greek economy.
Also on Friday, the Greek government’s refusal to accept further bailout loans was widely interpreted as an intention to default on its debts. This is an unwarranted assumption. Greece does not want to accept more bailout loans, because they are counterproductive for an insolvent country. But it wants to renegotiate its debts, not default on them.
Now we are told that Syriza is backtracking on its “initial defiance”. In an exclusive, Bloomberg reported that Alexis Tsipras, the Greek Prime Minister, had sent an email in which he committed Greece to paying its debts to the IMF and ECB:
Greece will repay its debts to the European Central Bank and the International Monetary Fund and reach a deal “soon” with the euro-area nations that funded most of the country’s financial rescue, Tsipras said in a statement e-mailed to Bloomberg News on Saturday. “The deliberation with our European partners has just begun,” Tsipras said. “Despite the fact that there are differences in perspective, I am absolutely confident that we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole.”
The world breathed a collective sigh of relief. Syriza had seen the error of its ways, the Troika had regained the upper hand and all was well with the world.
But this is a completely misleading interpretation of Tsipras’s email. The full text is here (via Yannis Koutsomitis):
The deliberation with our European partners has just begun. Despite the fact that there are differences in perspective, I am absolutely confident that we will soon manage to reach a mutually beneficial agreement, both for Greece and for Europe as a whole. No side is seeking conflict and it has never been our intention to act unilaterally on Greek debt. My obligation to respect the clear mandate of the Greek people with respect to ending the policies of austerity and returning to a growth agenda, in no way entails that we will not fulfill our loan obligations to the ECB or the IMF. On the contrary, it means that we need time to breathe and create our own medium-term recovery program, which amongst other things will incorporate the targets of primary balanced budgets and radical reforms to address the issues of tax evasion, corruption and clientelistic policies. I am convinced that an agreement on these lines will be acceptable to our partners, because our common interest is the economic stability and recovery for our common home, Europe.
This doesn’t look much like capitulation to me. In focusing only on his commitment to meet IMF and ECB loan obligations (though interestingly not loan obligations to other EU governments), Bloomberg completely missed Tsipras’ main message. Tsipras actually called for the Eurozone governments and institutions to support his party’s policies.
Jeroen Dijsselbloem. Photo credit: Der Spiegel
Bloomberg’s misleading reporting led Eurogroup chairman Jeroen Dijsselbloem, never the sharpest knife in the drawer, to rejoice:
Jeroen Dijsselbloem, chairman of the euro area finance ministers’ group, said he welcomed the prime minister’s comments. Their divisions had been laid bare during a meeting in Athens on Friday. “It is now up to the Greek government to determine its position on how to move forward,” Dijsselbloem said in a text message. “Further decisions will be taken jointly in the Eurogroup in the coming weeks.”
He couldn’t be more wrong. Syriza’s position can be summarized as follows:
Greece has no intention of leaving the Euro or the EU. (But others might force it out) Greece has no intention of defaulting on its debts to primary official creditors. (But others might force it to) Greece is committed to pursuing policies that promote the economic stability and recovery of Europe. (But others might not be)
Far from the ball in being in the Greek government’s court as Dijsselbloem suggests, Tsipras’s request for support sends it firmly back over the net. It is now essential that the other European governments – and EU institutions - demonstrate the same commitment to the future of Europe that Syriza has given in this email. Refusal to consider debt restructuring and demands for Troika “reforms” to continue despite their devastating economic effects do nothing whatsoever to foster European unity. And actions that would result in Greek default and exit actively undermine it.
The future not only of the Euro but of the European Union itself depends on the willingness of European governments and institutions to negotiate a New Deal for Greece and other distressed nations. Over to you, EU.
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6da8e99099d68382f5bc5e42e45cc7ab | https://www.forbes.com/sites/francescoppola/2015/05/25/greece-the-eu-and-the-imf-are-dancing-with-death/ | Greece, The EU And The IMF Are Dancing With Death | Greece, The EU And The IMF Are Dancing With Death
Over the last few months, the world has been watching with interest and growing concern the intricate moves in the deadly dance of Greece, the EU and the IMF . The latest move in the dance comes from Greece itself. The Interior Minister has announced that Greece cannot meet scheduled debt repayments to the IMF in June.
This does not mean that Greece intends not to pay. Rather, it is warning that intransigence by the EU may force it into an IMF default.
It is not the first time Greece has used the “IMF default” tactic. At the beginning of May, Greece said it couldn’t pay an IMF loan repayment. Then, in a surprising move, it drained its SDR reserve account at the IMF to make the payment. The IMF explains what the SDR reserve account is and how it can be used:
Each IMF member has been allocated SDRs. A country’s SDR holdings are part of the country's international reserves and belong to it, not to the Fund. Greece’s use of its SDRs was not a loan in any way, but use of its own international reserves. It is not uncommon for member countries to use their SDRs in transactions with the IMF.
Using the SDR account solved Greece’s immediate cash shortfall, buying time for further negotiations. However, it left Greece's SDR reserves very low. Although the IMF says countries are not obliged to replenish their SDR accounts, in practice it is usual to do so.
The IMF says it did not advise Greece to use the SDR account for the payment. But nevertheless, I wonder what strategy the IMF is playing. It seems to have decided to cooperate with Greece.
Superficially, the IMF’s aim is to recover the money it has already lent to Greece. But it has another, much larger concern. The Greek crisis is threatening the IMF’s own credibility.
Tourists walk past an abandoned house under the Byzantine castles in Thessaloniki on May 19, 2015.... [+] Greece's new radical Syriza-led government and its EU-IMF creditors have been stuck in a deadlock for four months over the reforms needed to release a final 7.2 billion euros ($8.2 billion) in bailout funds. AFP PHOTO / Sakis Mitrolidis (Photo credit should read SAKIS MITROLIDIS/AFP/Getty Images)
The IMF’s involvement in the Greek bailout was controversial from the start. It changed its own rules in order to lend to Greece in 2010, arguing that systemic risks justified lending to a country whose debt was not by any stretch of the imagination sustainable over the medium-term. It was severely criticized by members of its own board of directors, notably by emerging-market representatives who were understandably miffed at what appeared to be special treatment accorded to Greece, or more accurately, to the Eurozone’s banks. The Brazilian representative, Paulo Nogueiro Batista, observed that the program:
…may be seen not as a rescue of Greece, which will have to undergo a wrenching adjustment, but as a bailout of Greece's private debtholders, mainly European financial institutions.
And the Swiss representative tellingly asked why debt restructuring with losses for creditors was not on the table.
Two years later, debt restructuring was on the table. And there it remains.
The 2012 “private sector involvement” (PSI) restructuring wrote down up to 80% of the net present value of Greece’s private sector debts. But much of the debt had already been transferred to the public sector, not only as a result of the 2010 bailout but also through subsequent IMF and EU loans and ECB support of Greece’s banks. The PSI restructuring reduced Greece’s debt to just over 150% of its GDP. Everyone knew that this was inadequate. Everyone knew that the official sector would have to suffer a haircut as well, and the longer it was delayed, the more costly it would be. But the EU governments and institutions did not wish to accept a haircut, and the IMF didn’t want to force them to. So they played “extend and pretend”.
A Memorandum of Understanding was prepared, underpinned by a detailed IMF program. The structural “reforms” agreed between the EU, the IMF and the then Greek government were supposed to reduce Greece’s debt/GDP to 120% of GDP by 2020. Although this forecast was founded on hilariously unrealistic assumptions regarding growth, inflation and tax revenues, it was dubbed “sustainable”. On that basis – and despite further objections from emerging-market representatives -- the IMF contributed new funds to the Greek bailout program.
The continuing depression in Greece has caused the debt burden to increase, not because nominal debt has increased much (Greece has managed to bring its budget into primary balance, more-or-less) but because GDP has collapsed. Debt is now around 175% of GDP and probably rising, which is where it was when the PSI was agreed. Greek debt is unsustainable. Everyone knows it is. The only question is when, and how, it will be restructured.
So the IMF is now in a difficult position. It cannot lend more to Greece, because to do so would be to admit that the EU’s measures to eliminate systemic risk have failed. But it can’t call for debt restructuring and relaxation of budget targets without raising the possibility that it may have to take a haircut itself. And the board members who originally opposed the deal are now vociferously saying “we told you so”.
Given all of this, the IMF’s best strategy is a fast exit. And that seems to be what it is aiming for. Christine Lagarde’s pointed insistence that the IMF program would end in March 2016 should be seen in this light. The Fund wants out – with its money.
The Fund’s strategy is oddly compatible with Greece’s. Jacques Sapir, in a blogpost back in February that blew my mind, explained that Greece was adopting a “strength through weakness” approach:
In this strategic game, it is clear that Greece has deliberately chosen the strategy qualified by Thomas Schelling, one of the founders of game theory, but also of nuclear dissuasion, as “coercive deficiency”. In fact, this term of “coercive deficiency” was imagined by L. Wilmerding in 1943 in order to describe a situation where agencies enter into expenses without prior financing, knowing that morally the government will not be able to refuse funding them…. it can be rational for an actor knowing himself to be in a position of weakness from the start, to increase his weakness in order to use it in negotiation. …… putting Greece voluntarily at the edge of the abyss and demonstrates all at once its resolve to go the bitter end (like Cortez burning his ships before moving up to Mexico) and to increase the pressure on Germany. We are here in a full blown exercise of “coercive deficiency”.
Greece stands as close as possible to the cliff edge and dares the other players to push it over, knowing that it is not in their interests to do so. It has played this hand extraordinarily well so far, managing to avoid a catastrophic default while steadfastly refusing to cooperate with the EU or – until now - the IMF.
But the IMF has now joined Greece on the cliff edge. The challenge to the EU has changed from Greece’s “Go on, push me” to “Sort this out or we’ll let go” from the IMF.
The ECB must be spitting blood. It has been trying the same strategy for months – hence the “asphyxiation” of Greek banks about which Greek finance minister Yanis Varoufakis complains. But the ECB has too much to lose. If Greece falls over the edge, there is a serious risk that it will take the Euro down with it – and that means the end for the ECB. The IMF can credibly play this strategy. The ECB cannot.
The European Commission’s position is equally difficult. For the present incumbents, allowing Greece to default and leave the Euro would threaten their own positions. It would, at the very least, be a mammoth policy failure, even if it didn’t fracture the Euro beyond repair. And default within the Euro is debt restructuring, which so far they aren’t prepared even to discuss. But they don’t want to give in to Greece’s demands, because that would undermine the austerity-based “fiscal compact” they have so carefully constructed. So they are happy to let Greece dangle, but they don’t want to see it fall. The IMF’s brinkmanship is therefore very worrying for them.
On the other hand, some European government leaders, notably the German finance minister Wolfgang Schaueble and his Austrian counterpart Hans Joerg Schelling, seem to be happy to allow Greece to fall. Indeed, popular opinion in their countries would be pleased if they cut the rope. But disorderly default and exit for Greece would have unquantifiable effects: those in favor of it may say, with some bravado, that they have protected their banks so Greece presents no systemic risks, but they can’t prove this. If they allow Greece to fall, and the economic consequences for Europe are catastrophic as many predict, they will face punishment at the hands of their own electorate. In their own way, the opponents of Greek debt restructuring are also on the edge of the cliff.
The EU, therefore, is a house divided. So how will it respond, faced with the deadly cooperation of Greece and the IMF?
There are some indications that it is starting to lose its nerve. On 18th May the Greek newspaper To Vima reported (Greek) that the EC had offered Greece a deal which made important concessions, particularly on the primary surplus and the timing of tax rises. The deal also allowed the IMF a graceful exit. Predictably, the EC denied it had made any such offer. But it does appear that President Juncker has been working on a proposal that he hopes would be acceptable to all sides.
Greece's Prime Minister Alexis Tsipras (L) is welcomed by European Commission President Jean-Claude... [+] Juncker at the European Commission in Brussels on March 13, 2015. AFP PHOTO / Emmanuel Dunand (Photo credit should read EMMANUEL DUNAND/AFP/Getty Images)
So how will this “death dance” end? Will Greece default? If it does, will it leave the Euro?
Leaving the Euro is in my view unlikely. Hardliners may be comfortable with Greece leaving the Euro – whether explicitly, or indirectly via a parallel currency - but no-one else wants that. Default, however, is a different matter. These negotiations are like a sword dance – precision is everything. If any of the participants makes a wrong move, default is certain. Furthermore, a run on the Euro is a possibility, particularly if the ECB pulls the plug on Greek banks.
The aim therefore is to achieve an agreed debt restructuring and establishment of a realistic reform program while enabling the IMF to get out and the EU to save face. So Greece will eventually get the debt restructuring that it wants, and some (though probably not all) of its economic demands, simply because the alternatives are worse. But getting to this point will test the nerves of the entire world: absolutely no-one wants to be seen to give in to Greece. And it will take the patience of a saint and the diplomatic skills of a Machiavelli. President Juncker seems to have taken this on. I wish him the very best of luck. He will need it.
Paragraphs 3 & 4 of this post have been amended at the request of the IMF to explain the use of SDR reserve accounts. Paragraph 7 has also been slightly amended to reflect more accurately the process that enabled the IMF to participate in the 2010 bailout.
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59ca532a8b5c502aae2794c5ee9bbcc5 | https://www.forbes.com/sites/francescoppola/2015/07/03/the-road-to-grexit/ | The Road To Grexit | The Road To Grexit
Ever since the Greek government called a referendum on the June 25th proposal from the Eurogroup, the Troika and representatives of other EU governments have insisted that the referendum is a vote on whether or not Greece stays in the Euro. Despite Greek objections, the media has generally echoed their view. Here, for example, is the BBC's Robert Peston in a very good blogpost explaining why a No vote in the referendum could mean Grexit:
So whether the Greek government likes it or not, and apparently it doesn't, the President of the European Commission, Jean-Claude Juncker has said that Sunday's referendum is a vote on whether Greece will stay in the euro….. A no vote would presumably see Greek banks subject to economy-crushingrestrictions on cash withdrawals and international transfers for the indefinite future. Greece would be careering towards the euro door marked exit, even though such a door was never supposed to exist, let alone be opened.
Robert Peston goes on to explain why this would be terrible for the whole Eurozone, not just for Greece. I have covered similar ground previously.
But what does Grexit actually mean? Most commentary on this quickly gets bogged down in whether or not there is any legal means for Greece to leave the monetary union. The legal position is actually unclear, since leaving the Euro was never intended to be a possibility. But the consensus appears to be as follows:
Greece cannot be ejected from the Euro by a coalition of the other Eurozone member states Greece cannot be ejected from the Euro by Eurozone institutions Greece cannot choose to leave the Euro while remaining within the EU (though this is disputed) Greece can choose to leave the EU, which would of course mean relinquishing Euro membership If Greece were to leave the EU, it could still continue to use the Euro, just as Panama uses the US dollar. The EU cannot prevent this.
Furthermore, sovereign default does not imply Euro or EU exit. The two are quite separate. Greece can default while remaining legally a member of the Euro – though there would be economic and political consequences.
So on the face of it, all this talk of Grexit appears to be so much hot air. But as usual with anything involving the Eurozone, it is not so simple.
Point 5 is key. Any country can use the Euro as its currency, whether or not it is a member of the Euro. And some do: Montenegro, for example, and Kosovo are both Euro users though they are very far from being accepted into the EU, let alone becoming Euro members. So what distinguishes a Euro member from a Euro user?
Normally, the distinction between a sovereign currency issuer and the (foreign) user of a currency is that the sovereign currency issuer has complete control of the money supply, whereas the user must earn, borrow or buy its currency from external sources. But Greece cannot be considered a sovereign currency issuer. Its central bank can only issue the amount of Euros that the ECB allows it to. That amount has just been frozen by the ECB. Greece must now borrow, buy or earn additional Euros from external sources. That is what currency users have to do, not currency issuers. So Greece has no control of its money supply. It is as if it were using a foreign currency as its domestic currency.
Bloomberg reports that Bulgaria, which is not a Euro member but backs its currency with Euro reserves, has just been allowed to borrow from the ECB at the same rate as Euro members, thus enabling it to firewall its banks from Greek contagion. This is a privilege normally only accorded to Euro members – and it has been WITHDRAWN from Greece. If this is true, then Bulgaria (non-Euro member) can obtain Euros from the ECB while Greece (Euro member) cannot. It is hard to see what benefit Greece’s Euro membership confers, apart from redistribution of seigniorage receipts.
Really, Greece is a “dollarized” (or “Euroized”) economy whose fiscal and trade position is so dire that it is not able to borrow, buy or earn the currency that it needs. It has a foreign exchange crisis.
Greece has imposed draconian measures to preserve its Euro reserves. It has closed its banks indefinitely and limited cash withdrawals from ATMs by Greek residents. And it has introduced capital controls: money is only allowed into Greece, not out of it. This is partial suspension of Greece’s use of the Target2 settlement system. Deposit flight has stopped, but so have payments for imports. The benefit of this is of course that there will now be a sharp correction to Greece’s trade balance. But this is far outweighed by the disastrous consequences for the economy of such a drastic tightening of monetary policy.
Two things should by now be apparent. Firstly, that the Euro is not in any sense “Greece’s” currency. And secondly, that this is true of all Euro members, not just Greece. None of the Euro members are sovereign currency issuers. All of them are using a foreign currency. But if none of them are sovereign currency issuers, who is the issuer of the Euro?
A banner reading 'No is everywhere' is attached to the Euro sign during an anti-austerity rally... [+] organised by the Blockupy movement in support of the Greek government in front of the former headquarters of European Central Bank (ECB) in Frankfurt am Main, western Germany on July 3, 2015. Greek Prime Minister Alexis Tsipras urged Greek voters to ignore European scaremongering and vote 'No' in this weekend's referendum as polls showed support swinging behind the 'Yes' campaign. Photo: FRANK RUMPENHORST/AFP/Getty Images
The issuer of the Euro is, of course, the ECB. It decides how much money each of the member states can have. This is not unique to Greece: money creation in all the member states is limited by the ECB. So we have supposedly sovereign states allowing their money supply to be determined by an unelected supranational body that is above the law and accountable to nobody. And that body can freeze or withdraw money from member states’ banks at any time and for any reason.
For the central bank of a currency union to deliberately restrict the money supply in regions within the currency union is bizarre. No other currency union central bank on earth does this. It would, for example, be unthinkable for the Bank of England to deny liquidity to Scotland’s banks. But the ECB has denied liquidity to Greece’s banks, not because they are insolvent (which is a reasonable reason to deny liquidity to banks) but because the sovereign won’t toe the fiscal line. It has taken on a political role that it should not have.
Of course, the ECB’s shareholders are the member state governments. But those governments have bound themselves by laws and treaties that prevent them interfering with or in any way controlling the ECB. So the Eurozone is in reality a financial dictatorship run by bankers. I struggle to see why anyone would voluntarily join it, let alone want to stay in it. But that's democracy for you.
Grexit is a process, not an event. And it is a process that has already begun. Greece’s membership of the Eurozone was partially suspended when the ECB capped ELA. Whether that suspension becomes permanent depends on the response of the ECB to forthcoming events.
If the ECB responds to a No vote in the referendum by increasing collateral haircuts for bank funding – in effect making cash margin calls on Greece’s banks – Greece’s money supply will dwindle still further and its banks may fail altogether, leaving it with little choice but to introduce a parallel currency. Greece may remain a Euro member in name, but using the Euro as its domestic currency may become impossible. Grexit, de facto if not de jure.
Greece’s Euro reserves would then slowly dry up, making it impossible to purchase essential imports such as oil. Redenominating deposits and bonds in the parallel currency would help preserve reserves, though that would be yet another step down the Grexit road. So would outright default. Why pay out scarce Euros to the very creditors who have made them scarce?
As Greece’s foreign exchange crisis intensified, mortgaging ports to China in return for US dollars, and hosting military bases for Russia, would suddenly make complete sense. Faced with a serious shortage of hard currency, it would be hard to blame Greece for looking east. No wonder the US is increasingly worried about the Eurozone’s handling of the Greek crisis.
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ba657934797976dfada4d6621115aaca | https://www.forbes.com/sites/francescoppola/2015/07/10/bankruptcy-looms-for-tiny-moldova/ | Bankruptcy Looms For Moldova | Bankruptcy Looms For Moldova
The tiny state of Moldova, sandwiched between Ukraine and Romania on Europe’s eastern border is in desperate financial trouble. A banking crisis has knocked a huge hole in its GDP and rendered its fiscal finances unsustainable. And the lack of a stable government means that it does not qualify for international support. The IMF canceled a visit in June, and the EU has now refused budgetary support:
Budget support payments are subject to the fulfilment of all conditions laid down in the agreements signed with the Government of the Republic of Moldova, in terms of sector policy objectives, macro-financial stability as well as respect of budgetary oversight and transparency principles. The achievement of policy goals is evaluated on the basis of benchmarks included in the budget support operations. Well-known issues around the Moldovan banking sector have raised concerns as regards macro-financial stability. In this context, the view of the European Union is that a program with the International Monetary Fund (IMF) would provide the guarantees that these concerns are being addressed. European Union budget support payments can only be processed once the IMF program is approved. As a program cannot be requested by an interim government, this issue is an additional, serious reason to accelerate the on-going process of formation of a new governing coalition.
This has all blown up rather quickly. Back in December 2014, the IMF projected respectable GDP growth of 3.5%, and Moldova seemed on course to join the EU after electing a pro-EU coalition government at the end of November. But that was before the banks collapsed.
Or rather, it was before anyone noticed the effect of the collapse. Three of Moldova’s banks – Banca de Economii Moldova, Banca Sociala and Unibank – failed November 23-27, four days before the election, due to a fraud of gigantic proportions. Writing as a guest here on Forbes, James George Jatras, manager of the Eastern Partnership Initiative of the American Institute in Ukraine, summarizes what happened:
At the end of last year, a scandal broke out following a series of statements made by several politicians that $1 billion had been embezzled from three of the country’s banks, including BEM. Fingers were pointed directly at private investors in the banks as the main culprits. The allegations spurred a popular panic and mass withdrawals of deposits in the banks concerned. The crisis reached a peak in February when the Moldavian currency (the leu) fell almost by 40% against the euro and the dollar.
The $1bn loss figure originally quoted amounted to about 12.5% of Moldova’s GDP. However, the governor of the Moldovan central bank pointed out that even a disastrous bank collapse would not usually mean 100% write-down of the assets of all the banks concerned, and adjusted the figure downwards to about $450m. But even this is a huge hit to Moldova’s economy.
The banking crisis is symptomatic of deep problems in the Moldovan political economy. The consultancy Kroll identified the businessman Ilan Shor as the principal culprit in the fraud, documenting an extensive network of opaque cross-shareholdings involving the three banks, Russian entities, UK shell companies and Latvian banks that somehow all led back to Shor. But Kroll’s report was denounced as a “fiction” by Viorel Chetraru, the head of Moldova’s anti-corruption unit.
I have read Kroll’s report, and I regard it as deeply flawed. I cannot comment on the accuracy of Kroll’s forensic investigation, but the explanation of the liquidity transfers between the entities concerned – particularly transfers between the three banks and Russian companies - displays a lamentable lack of understanding of how banks actually work. The important fact is that these banks expanded their lending massively, far more than their capital reserves should have allowed.
Why the Moldovan central bank did nothing to stop this is unclear, since it was responsible for regulating and supervising these banks. The governor’s comment that one of the banks, Banca Economii, had been insolvent since 2007 only makes matters worse. Why, if this bank was insolvent as he said, was it not wound up? And if the sale of the bank was intended to recapitalize it, why were the new owners allowed to expand its lending so massively that it was insolvent again only a few months later? The Moldovan central bank has some questions to answer. So far, no-one is asking them. Though the IMF’s comments about bank regulation in its December 2014 report speak volumes:
Directors underscored the urgency of addressing vulnerabilities in the banking sector, and strengthening the financial sector regulatory framework and its enforcement. Regretting limited progress, they stressed the importance of swiftly implementing recent FSAP recommendations. The regulatory and supervisory powers of the National Bank of Moldova (NBM) and the National Commission for Financial Markets should be fully restored, and the legal protection of their staff should be strengthened. Directors also recommended enhancing governance in the banking sector, including by improving the transparency of banks’ ultimate beneficial owners. They called on the authorities to maintain a high level of scrutiny over weak and vulnerable banks, to enhance the bank resolution and crisis management framework, and to rapidly resolve the banks recently intervened.
Hmm. Political capture of bank regulation and supervision, I’d guess.
The massive expansion of bank lending was funded with heavy borrowing from – among other things – Russian companies. The banks failed when this funding was abruptly withdrawn. Concurrently, there was also a retail bank run triggered by politicians. The timing of the funding withdrawal and bank run does not appear to me to be coincidental, coming as it did less than a week before the parliamentary election. The pro-EU government lost the election: the largest party, with 21.5% of the vote, was the Socialist Party, which is opposed to EU membership and favors Moldova joining Russia’s “Eurasian Union”. An unstable pro-EU coalition government was eventually formed. But it did not last long. The new Prime Minister, Chiril Gaburici, resigned in June after the authenticity of his college diplomas was challenged. Moldova is currently without a government.
It is disingenuous of Jatras to imply that private sector investors “rescued” these banks from a corrupt public sector and were then shafted by politicians. In Moldova, as in Bulgaria, there is no clear distinction between public and private sectors. The country is run by powerful business interests – we in the West like to call them “oligarchs” – who dominate government either directly, by being elected, or indirectly through patronage. They go into politics in order to further their business interests: they gain control of institutions such as central banks and the judiciary in order to protect their business interests: and they take over media channels in order to promote their businesses and discredit their rivals. Ilan Shor is one of them: he was elected mayor of the city of Orhei in June despite being under house arrest. There are no innocent parties in this fraud.
But even more importantly, Moldova is a house divided. A significant part of Moldova’s population is Russian-speaking and/or pro-Russia: an estimated 75% of its banking sector is Russian-owned, as are many of its businesses. Support for EU membership has declined significantly in the last year, partly due to heavy promotion of the Eurasian Union by Russian sympathisers, and is now at best marginal. The enclave of Transnistria openly faces East: Russia has military bases there and in March held military exercises along its border with Ukraine, escalating tensions. Ukraine has now denied Russia access to its Transnistrian military bases. But while the EU is distracted with the Greek crisis, Russia has been distributing Russian passports to Transnistrians.
So although I think Kroll’s report is flawed, I believe it is correct to highlight the involvement of Russians, not only the companies that funded the banks but their shareholders too. What Kroll missed was the geopolitical dimension. Bringing down pro-EU governments fits all too well with Russia’s ambitions in the region. In which case the EU’s denial of budgetary support to Moldova is political suicide. Without that support, Moldova will collapse. And a failed state sandwiched between the unstable Ukraine and fragile Balkans – and featuring a pro-Kremlin enclave described by the FT as a “flashpoint - is the last thing the EU needs. It should think again.
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c00c3b51a7b839daa8e6f978b20b2c89 | https://www.forbes.com/sites/francescoppola/2015/07/14/dr-schaeubles-master-plan/ | Dr. Schaeuble's Master Plan | Dr. Schaeuble's Master Plan
From Deutsche Wirtschafts Nachrichten today (original in German, my translation with help from Google):
The humiliation of Greece at the summit was not an accident. It is part of an agenda that Wolfgang Schäuble has long pursued: he considers the EU in its current form non-functional. He is committed to establishing a close political union. This is only possible with selected countries. At the end will be seen who fits with Germany and who does not. Grexit is already planned. Other states will follow. The tablecloth is cut. Irrevocably.
Let’s rethink how we see the German strategy, if the intention is to force Greece out of the Euro. On Sunday, it appeared as if Germany had capitulated, as Gideon Rachman says in the FT:
If anybody has capitulated, it is Germany. The German government has just agreed, in principle, to another multibillion-euro bailout of Greece — the third so far. In return, it has received promises of economic reform from a Greek government that makes it clear that it profoundly disagrees with everything that it has just agreed to. The Syriza government will clearly do all it can to thwart the deal it has just signed. If that is a German victory, I would hate to see a defeat.
But wait. As the talks proceeded on Sunday night, the aim of the Greek side – and indeed of observers around the world – shifted from achieving a sustainable deal to avoiding Grexit, now openly on the agenda. The deal that was finally agreed is not sustainable. Everyone knows that. It was widely panned not only by left-sympathising economists, but also by Wall Street. It is questionable whether the Greek government will be able to get the first tranche of contentious requirements through its own parliament by Wednesday July 15th, and if it does not then the whole deal is off. And as I write, the IMF has entered the fray, pointing out that recent deterioration in Greece’s economy makes the debt profile from the new deal unsustainable:
"The dramatic deterioration in debt sustainability points to the need for debt relief on a scale that would need to go well beyond what has been under consideration to date - and what has been proposed by the ESM," the IMF said, referring to the European Stability Mechanism bailout fund. European countries would have to give Greece a 30-year grace period on servicing all its European debt, including new loans, and a very dramatic maturity extension, or else make explicit annual fiscal transfers to the Greek budget or accept "deep upfront haircuts" on their loans to Athens, the report said.
Although the Euro leaders recognized that there are “serious concerns regarding the sustainability of Greek debt”, no debt relief is included in the new deal. It is mentioned as a “possibility” after completion of the first successful program review, though haircuts are ruled out:
Against this background, in the context of a possible future ESM program, and in line with the spirit of the Eurogroup statement of November 2012, the Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods) aiming at ensuring that gross financing needs remain at a sustainable level. These measures will be conditional upon full implementation of the measures to be agreed in a possible new program and will be considered after the first positive completion of a review. The Euro Summit stresses that nominal haircuts on the debt cannot be undertaken
As the chances of Greece actually meeting its fiscal targets are virtually nil, given the carpet bombing of its economy in the last couple of weeks and the likely continuation of bank closures and capital controls until at least the autumn and probably into 2016, there isn’t going to be a successful program review. Debt relief will therefore stay firmly off the agenda, and the Greeks can be blamed for it. Grexit is not avoided, merely delayed.
But the IMF’s intervention scuppers the entire deal. The second paragraph in the Eurosummit Statement reads thus:
A euro area Member State requesting financial assistance from the ESM is expected to address, wherever possible, a similar request to the IMF. This is a precondition for the Eurogroup to agree on a new ESM program. Therefore Greece will request continued IMF support (monitoring and financing) from March 2016.
The IMF’s rules do not allow it to lend where debt is unsustainable. It did lend to Greece in 2010 and 2012 despite evidence that the debt was unsustainable, because of systemic risks to the European banking system. But the EU assures us that systemic risks have been addressed and banks firewalled. Indeed, how could even a temporary Grexit be considered as a “plan B” by the Euro leadership if this were not the case? Therefore although Greece may request IMF support, it is not going to get it unless debt restructuring is included in the program up-front. That applies whether or not bridge finance is provided to allow Greece to settle its IMF arrears.
So for Dr. Schaueble, the master plan is proceeding well. The Greeks will either be forced to leave because they failed to comply with program requirements (in which case it is their fault), or the whole program will fail because the IMF refuses to contribute. Either way, he will achieve his objective of eliminating Greece from the Eurozone. And – importantly - Germany will escape blame.
But what of Deutsche Wirschaft Nachrichten’s claim that “others will follow”? Surely contagion has been contained?
In a sense, it has: disorderly unwinding of the Eurozone is now unlikely. But because the possibility of countries leaving the Euro is now openly accepted, contagion in the form of a permanent risk premium on periphery government debt and higher interest rates in those countries is inevitable. And this suits Dr. Schaeuble’s purpose very well. It tightens the screws on the deficit nations, rendering their recovery more uncertain, their fiscal position more fragile and their political situation more combustible. If they attempt to escape from the German straitjacket, their banks can be broken as Greece’s were, ruining their economies and raising their debt burdens to unsustainable levels. Like Greece, they can then be forced out through failure to meet fiscal targets. Those who wish to avoid this fate must become more like Germany.
We shall see who buys into Dr. Schaeuble’s dream. I fear for those who do not, but even more for those who do. If Dr. Schaeuble gets his way he will in effect create a German hegemon with vassal states. And the last time we had one of those it ended really well, didn’t it?
The world has watched the events of the last two weeks with growing distress and horror, from the use of banks as weapons to the mental torture of an elected representative of a sovereign country. Peter Kazimir, Finance Minister of Slovakia, even tweeted that Greece deserved its humiliation as the price of its “Greek Spring” – a reference to the Prague Spring of 1968 which ended when the Soviet Union invaded Czechoslovakia:
The Eurozone leadership stopped short of sending tanks onto the streets of Athens, but who needs tanks when you control a country’s banks?
As a European, I am ashamed at what was done. The Eurozone has moved several steps closer to totalitarianism.
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03864000b270c7d9035ce6a6c9c9abcd | https://www.forbes.com/sites/francescoppola/2015/07/18/the-willful-blindness-of-deutsche-banks-management/ | The Willful Blindness Of Deutsche Bank's Management | The Willful Blindness Of Deutsche Bank's Management
Deutsche Bank is in the wars again. The German regulator BAFIN has released a damning report (link courtesy of the Wall Street Journal) into regulatory and compliance failures regarding benchmark rate rigging – Libor and its relatives, plus ISDAfix and FX. They are all linked. The structure and culture of Deutsche Bank, right up to the present day, encourages and rewards bad behavior by traders and their management.
BAFIN finds that Deutsche Bank executives failed to notice irregularities, failed to investigate suspiciously large profits, failed to implement appropriate controls, failed to apply controls where they existed. Failed, failed, failed. BAFIN accuses almost the entire executive management team not of deliberate manipulation but of negligence. But this is a particularly active form of negligence. It involves what Margaret Heffernan calls “willful blindness”: deliberately turning a blind eye to malpractice and misconduct by traders, because profits are more important than principles.
Two top executives in the trading division are severely criticized:
Anshu Jain, co-CEO: improper management and organization of the business. Multiple serious failures. Suspected of deliberately misleading the Deutsche Bundesbank.
Alan Cloete, Global Head of GFFX: specifically responsible for organizational and procedural deficits concerning IBOR submissions, together with general failures in risk management, internal monitoring and business culture. Suspected of approving “low-balling” of IBOR submissions.
There is also less severe criticism of two other trading division executives.
But worryingly, Group Audit, Legal & Compliance, and Risk Management executives also come in for severe criticism, including both Chief Risk Officers (before and after May 2012) and the Group’s legal counsel, Richard Walker. Walker is particularly criticized for failing to take seriously requests for information from regulators and even treating a subpoena from the US's SEC in a cavalier manner. His behavior is considered by BAFIN to be symptomatic of a poisonous culture at the bank:
It appears to me that this is a manifestation of part of the culture that is possibly still characteristic to your bank, i.e. to prefer hiding, covering up or entirely negating problems instead of addressing them openly and actively in order to prevent similar issues in the future.
The Chief Operating Officer, Henry Richotte, is additionally criticized for failing to investigate IBOR submissions and/or for inadequate investigation and improvement measures. Depressingly, BAFIN observes in his defense that “Mr. Richotte is one of a very small number of people within senior management who took an early interest in the investigation of IBOR issues at all”.
What a rabble. It is bad enough when executives running profit centers behave in a less than ethical manner. But when negligence and corruption runs through those functions that are supposed to police profit center management, rules have no meaning and malpractice proliferates. Chris Arnade, who spent many years working as a trader on Wall Street, observed on Twitter:
In all cases managers encouraged bad behavior: rewarded it. The culture of Wall Street is entirely steeped in abusing rules and not just pushing, but living, in a gray area.
Nowhere, it seems, is this more the case than in Deutsche Bank.
The headquarters buildings of Deutsche Bank, Germany's biggest lender, pictured on June 9, 2015 as a... [+] number of its offices were searched by prosecutors looking for evidence of wrong-doing by clients. Deutsche Bank is currently mired in around 6,000 different litigation cases and in April was fined a record $2.5 billion (2.2 billion euros) for its involvement in an interest rate-rigging scandal. (Photo credit: DANIEL ROLAND/AFP/Getty Images)
Of course, Deutsche Bank is defending itself. It has rejected BAFIN’s findings, telling Reuters that the report “contains statements that were taken out of context” and complaining that it would be “unwarranted to infer conclusions about the behavior of the bank or of any individuals at this stage”. It appears that some of the individuals concerned have also written letters defending their conduct, though these have not been released to the press.
But this is not the first time Deutsche Bank’s executives have been severely criticized for incompetence, negligence and deceit. BAFIN’s findings are eerily similar to those of three US regulators and the UK’s FCA back in April, and to the findings of the Dubai regulator a week or two earlier. A consistent theme running through all these regulators’ reports is that Deutstche Bank management treats regulators with disdain and rules with contempt. It is hard to see why Deutsche’s protestations should be taken seriously.
To make matters worse, Deutsche attempted to whitewash BAFIN’s findings in the press, to the annoyance of the regulator (my emphasis):
I have been astonished to learn in recent months from the press that the suggestion is that the audit by BAFIN supposedly resulted in clearing the senior management of DB, especially Mr. Jain, and that supposedly no banking supervisory measures are expected in this regard. In light of this background I expressly want to point out to you that this is not correct.
The regulator’s tone does not suggest that continuing to defend itself or its executives is a good strategy for Deutsche Bank. Remorse would be far more appropriate.
Deutsche Bank continues to insist that Anshu Jain's resignation has nothing to do with BAFIN's findings. Frankly I find this hard to believe. But the fact is that he is gone, and a new man is in place. In his letter to Deutsche Bank employees on July 1st, John Cryan indicated that there will be deep cuts to the investment bank (my emphasis):
We will continue to invest in our retail and business banking, asset and wealth management and investment banking businesses. No longer, however, can our securities and derivatives trading businesses be so heavily reliant on long-term balance sheet usage. We cannot afford that luxury. Furthermore, reducing this reliance should not place us at a competitive disadvantage as the market has anyway already moved in that direction. We can free up capacity for growth by managing existing positions more actively, and not just those in our Non-Core Operations Unit.
The last bastion of American-style investment banking in Europe is about to fall, it seems. I for one will not be sorry to see it go. Germany, like the UK and Switzerland, needs to rediscover its own distinctive style of banking, not try to compete with the USA on its own ground.
But in addition to strategic repositioning, there will clearly have to be a radical management shake-up at Deutsche Bank. I hope the new co-CEO is up to the job.
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456958fdb2656545d21ead0a4cdb79eb | https://www.forbes.com/sites/francescoppola/2015/08/11/china-joins-the-global-devaluation-party/ | China Joins The Global Devaluation Party | China Joins The Global Devaluation Party
China has devalued the yuan versus the dollar. In a statement, the PBOC explained the reasons for its action thus:
Currently, the international economic and financial conditions are very complex. The U.S. economy is recovering and markets are expecting at least one interest rate hike by the FOMC this year. As such, the U.S. dollar is strengthening, while the Euro and Japanese Yen are weakening. Emerging market and commodities currencies [sic] are facing downwards pressure, and we are seeing increasing volatilities in international capital flow. This complex situation is posing new challenges. As China is maintaining a relatively large trade surplus, RMB’s real effective exchange rate (REER) is relatively strong, which is not entirely consistent with market expectation. Therefore, it is a good time to improve quotation of the RMB central parity to make it more consistent with the needs of market development.
So the PBOC would like us to believe that this devaluation is all to do with gradual liberalisation of the exchange rate regime and opening of the capital account to prepare the yuan for SDR membership.
The PBOC is certainly right about the Fed signalling rate hikes, and the strength of the US dollar. And it is also right about the REER. It has risen by 13% in one year:
(source: BIS, via Wei Du on Twitter)
But the real reason for the parity cut is further down the statement:
We noticed that the central parity of RMB against US dollar of 11 August changed (in the depreciation direction) by nearly 2% compared with that of 10 August. The following two factors may be relevant. First, after the improvement of the quotation of the RMB central parity,, the market makers may quote by reference to the closing rate of the previous day, and therefore the accumulated gap between the central parity and the market rate received a one-time correction. Second, a series of macroeconomic and financial data released recently made the market expectation diverge. Market makers paid more attention to the changes of market demand and supply.
This needs some unpicking, but basically what seems to have happened is this. As Chinese economic performance has worsened in recent months there has been a growing divergence between RMB “central parity” (the unofficial official exchange rate) and the RMB’s market rate. This increased sharply when the most recent statistics were released. Maintaining a higher parity than the market wants is costly, as Russia could tell you: China has been unloading its foreign reserves at a rate of knots to support its currency.
Maintaining too high a parity is costly in other ways too. China’s precious export-led growth strategy is at risk from the rising dollar. The “macroeconomic and financial data” referred to by the PBOC includes sharply falling exports, particularly to the EU and Japan. July’s export figures were dismal, and the trade surplus was well below forecast. Add to this the massive over-leverage of the Chinese economy – overtly engineered by the government – and recent stock market volatility, and devaluation was inevitable. The only surprise is that the PBOC has not acted sooner.
Indeed, why hasn’t it acted sooner? After all, the Fed has been passively tightening monetary policy for a year now, ending QE and repeatedly signalling that rate hikes are on the horizon. This is principally why the yuan REER has been rising. Furthermore, both the ECB and the Bank of Japan are doing QE, depressing the Euro and the yen and forcing smaller countries to defend their currencies. Emerging market economies are particularly badly affected, but we shouldn’t forget about Switzerland, which is still trying to prevent its currency appreciating as capital flows in from the troubled Eurozone. Capital inflows can be every bit as damaging as capital outflows.
Reuters has an explanation for the PBOC’s reluctance to join the devaluation party (my emphasis):
Analysts say Beijing has been keeping its yuan strong to wean its economy off low-end export manufacturing. A strong yuan policy also supports domestic buying power, helps Chinese firms to borrow and invest abroad, and encourages foreign firms and governments to increase their use of the currency.
This brings us back to the liberalization of the Chinese financial economy. China needs the yuan to be widely accepted OUTSIDE China if it is to have any chance of becoming one of the IMF’s SDR basket currencies – the essential prelude to becoming a global reserve currency. Hence PBOC’s reluctance to devalue.
So now, having been forced to devalue because of bad economic news, the PBOC is making a virtue out of necessity. Devaluing the yuan is presented as part of its liberalization strategy. Not that the PBOC has any intention of moving to a free float any time soon, though its statement does signal that it might widen the band:
The PBC will enhance the flexibility of RMB exchange rate in both directions and keep the exchange rate basically stable, enabling the market rate to play its role, retiring from routine FX intervention, and improving the managed floating exchange rate regime based on market demand and supply.
You may wonder how a central bank can “retire” from routine FX intervention if it is running a managed exchange rate system. But the PBOC has some thoughts on that too:
Currently, under the complex international economic and financial condition, we are seeing increasingly large and volatile cross-border capital flow. As such, the PBC and SAFE will strengthen the examination of banks’ FX transactions according to relevant laws and regulations, adopt effective measures to fight money laundering, terrorist financing and tax evasion activities, and improve the monitoring of suspicious cross-border capital flow. The PBC and SAFE will severely punish illegal FX transactions, including underground banks, and maintain a compliant and orderly capital flow.
So the PBOC will control capital flows instead of the exchange rate. Capital account liberalization isn’t coming any time soon, then.
The reluctance of the PBOC to devalue may prove costly. Even with the partially-closed Chinese capital account, Fed monetary policy transmits itself to the Chinese economy through the REER. The economist David Beckworth argues that worsening Chinese economic conditions are due to the effects of passive Fed monetary tightening. I would argue that ECB and Bank of Japan monetary easing are significant factors too. But external effects are not the whole story by any means: government-engineered over-leverage is the proximate cause of China’s woes, and it is worrying that the Chinese government’s response to stock market crashes and fast deleveraging is to enforce further borrowing. The combination of exogenous monetary shocks with very high domestic leverage is a toxic mix. Even with this devaluation, and probably more to come, China is set for a very hard landing.
And because of this, Fed interest rate rises look unlikely. China’s economy is easily big enough for a hard landing to have significant global effects. The US’s recovery is not so strong that it can absorb a sharp global contraction: inflation is on the floor, there is still significant underemployment and a falling participation rate, and the balance of trade is worsening. Raising interest rates when the dollar is strong, the economy weak and China on the verge of a nasty crash would be unbelievably foolish. Those pricing in a September rate hike may want to reconsider.
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2d19df08d52f89dabf2df51ab558ff25 | https://www.forbes.com/sites/francescoppola/2016/09/13/dont-blame-globalization-for-western-middle-class-woes-blame-government-policy/ | Don't Blame Globalization For Western Middle-Class Woes, Blame Government Policy | Don't Blame Globalization For Western Middle-Class Woes, Blame Government Policy
Globalisation is widely blamed for the woes of the Western lower middle classes. Jobs have gone to China, and wages have been pushed down by competition from immigrants. Politicians are promising to impose trade restrictions on China, prevent firms offshoring jobs, and close the borders to prevent immigrants forcing down wages. That will restore lower middle-class prosperity, won’t it?
The chart below - known as the "elephant chart" - from researchers Branko Milanovic and Christoph Lakner appears to support the idea that Western middle classes have lost out in the globalization race. It was so widely reported that it attracted the attention of a British think-tank, the Resolution Foundation.
Using Milanovic & Lakner's data set, the Resolution Foundation's researchers deconstructed the chart. And they found that although globalization has indeed raised millions of people out of poverty, it has not done so at the expense of Western middle classes. The Resolution Foundation's new report shows that the story of general stagnation for Western lower middle classes due to the rise of China simply is not supported by the data.
Adam Corlett, the report’s author, says:
A deep exploration of the data behind the elephant curve and the reasons for its characteristic shape show that the average incomes of the lower and middle classes of rich Western countries have not in general stagnated over this period, though the US has experienced particularly unequal growth.
The start point of Milanovic & Lakner’s data is 1988, which is just before the fall of the Berlin Wall and the dissolution of the Soviet Union. So included in the data set are the former Soviet Union countries and satellites, including East Germany, the Baltic states, the Balkans and Eastern Europe. After the dissolution of the Soviet Union in 1991, these countries suffered terrible economic collapses: for example, Latvia’s GDP fell by 35% in 1992, and Bulgaria experienced hyperinflation in 1996.
Also included in the data set is Japan, which collapsed in 1990 and has since suffered over two decades of lost output. Conversely, China has experienced spectacular growth, particularly since it joined the World Trade Organization in 2001.
Removing Japan and the former Iron Curtain countries makes global incomes growth look a lot better:
So Western middle-class incomes have not fallen. They have actually grown, though not spectacularly.
But removing China from the dataset has an even more dramatic effect:
The rise in global middle-class incomes is ENTIRELY due to China. Western middle classes have not lost out at all. They are exactly where they would have been if the Chinese growth miracle had never happened. Globalization has benefited China hugely - but not at the expense of other countries.
Now, of course this is only a helicopter view. The devil is in the detail, as Adam Corlett says:
There is however a large variation between mature economies, suggesting we should be cautious about assuming that global forces mean the level of income growth for the lower middle class of the rich world is inevitable or that domestic policy choices do not play a big role.
This chart shows how the relative incomes of people in various Western countries have changed since 1988:
Of the Western countries listed here, the US is by far the most unequal. Moreover, lower middle class workers have fared worse in America than in any other country. US middle-class incomes have indeed been close to stagnation, while the very rich have done better than in any other country.
Is this down to China? It is hard to see how. If China were really the cause of US lower middle-class stagnation, we would expect the UK – which is a much more open economy than the US – to have suffered even more. The report shows that jobs in UK manufacturing have indeed diminished considerably since 1988. But UK lower middle-class incomes have grown, rather than stagnating like US middle-class incomes. In fact, the chart suggests that the UK’s lower middle classes have fared better than any other Western nation over the period of the data - although a deeper analysis in the report shows that their real incomes have fallen since the financial crisis.
Other possible causes are automation driving out skilled routine jobs, or immigrants driving down wages by competing for jobs. But again, we would expect the UK’s skilled workers to be hit as hard as the US’s, if not more so, since the UK has high immigration. It doesn’t look as if they have been.
So it seems likely that the causes of American middle-class gloom lie closer to home. The tax cuts of the Reagan era, perhaps. Or the disincentive to study caused by insanely high fees for university education. Or the extraordinary increases in remuneration for top managers in American corporations, perhaps paid for by depressing workers’ wages. Or major differences in remuneration levels between different types of American firm. There are many possible causes, and it is to be hoped that someone will now investigate this further to determine why American middle-class incomes have not grown at the rate of those in the rest of the world.
What seems clear is that it is not due to immigration, and it is not due to China. Globalization really does float all boats.
However, globalization does float some boats more than others. So to restore the prosperity of its lower middle classes, America needs government policies that keep the doors open to international trade and encourages technological progress, but support those for whom globalization and the march of the robots is a threat to their relative wellbeing. For my money, measures to reduce America's huge inequality would be a very good start.
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dbb40612e6ceb209b9f75d28057311b8 | https://www.forbes.com/sites/francescoppola/2018/03/20/bitcoins-bubble-is-bursting-how-low-will-prices-fall/?sh=52aebb10724e | Bitcoin's Bubble Is Bursting. How Low Will Prices Fall? | Bitcoin's Bubble Is Bursting. How Low Will Prices Fall?
Just before Christmas, 2017, Bitcoin seemed unstoppable. Its value was rising exponentially as more and more investors piled in to the digital currency, hoping to profit from its sudden popularity. Other cryptocurrencies benefited too, as investors diversified their cryptocurrency holdings and arbitraged differences. Demand was so heavy that cryptocurrency exchanges crashed. Those who had held (or HODLed) cryptocurrencies for some time received the biggest Christmas present of their lives.
A coin representing Bitcoin cryptocurrency is reflected on a polished surface as it sits in a pool... [+] of translucent liquid in this arranged photograph in London, U.K., on Thursday, Feb. 8, 2018. Cryptocurrencies tracked by Coinmarketcap.com have lost more than $500 billion of market value since early January as governments clamped down, credit-card issuers halted purchases and investors grew increasingly concerned that last year’s meteoric rise in digital assets was unjustified. Photographer: Luke MacGregor/Bloomberg
Professional investors and amateur traders alike predicted that Bitcoin’s price would increase even more in 2018. “Bitcoin will never crash,” said one Reddit user, “because then everyone would buy it when it’s much cheaper.” Like everyone buys the dips in a highly volatile high-yield market.
Others looked forward to universal adoption and a price tag in the millions. They might have trouble cashing in their windfall now, but that didn’t matter. Once everyone was using cryptocurrencies, fiat currency would be irrelevant and they would be the new super-rich. Some even started setting up a cryptocurrency Utopia in Puerto Rico, principally it seems to avoid the very large tax bills they would have to pay if they ever managed to convert their cryptocurrencies to dollars. Hmm.
Even in January 2018, as Bitcoin’s price crashed to less than half its December value, Bitcoin enthusiasts were still optimistic, predicting that Bitcoin’s price could rise to as much as $100,000 by the end of the year.
But here we are in March, and Bitcoin is still hovering around $8,000 dollars. Bitcoin bears are saying it is a classic bubble bursting, and making dark remarks about the price going to zero. If they are right, then a lot of people stand to lose a lot of money. How much further will Bitcoin fall?
The shape of Bitcoin’s price chart suggests a classic bubble bursting (this chart is from March 19th):
Bitcoin price chart, March 19th 2017 Coindesk
The fact that Bitcoin’s price rallied in February does not mean it is recovering. This chart shows one of the most famous stock market crashes in history – the Wall Street Crash of 1929:
Wall Street Crash FRED
There was a sizeable rally after the initial crash, followed by several smaller ones. But the underlying trend was still downward. Eventually, stocks lost all of the value they had built up over the previous decade. If Bitcoin’s collapse follows this pattern, its price could indeed fall to zero.
The characteristic "sharks-tooth" shape of a financial bubble stems from the three phases of its lifecycle, which I have annotated on the Wall Street Crash chart:
The "Free Lunch" period. A long, slow buildup of price distortion, during which investors convince themselves that rising prices are entirely justified by fundamentals, even though it is apparent to (rational) observers that they are buying castles built on sand. The "This is nuts, when's the crash?" period. Everyone knows prices are far out of line with fundamentals, but they carry on buying in the irrational belief they can get out before the crash they all know is coming. Speculators pile in, hoping to make a quick profit. Prices spike. The "Every man for himself" period. Prices crash as everyone runs for the exit. This can happen a number of times, separated by brief periods of stability when everyone congratulates themselves on a lucky escape. But they are wrong. The ship is sinking.
Bitcoin was in phase 2 before Christmas 2017. It is now in phase 3.
Understandably, HODLers are desperately talking up the market. Pointing to Bitcoin’s history of market crashes and recoveries, they insist that Bitcoin will rise again from the ashes, becoming bigger and better than ever before. Perhaps we should call this new improved cryptocurrency "Phoenixcoin".
They do have a point. “Bitcoin bear markets are nothing new,” say analysts at Morgan Stanley. “Since the coin's creation in 2009 there have been four prior bear markets, with price falls ranging from 28% to 92%, so the recent fall of 70% was nothing out of the ordinary.” Meh, apparently.
However, Morgan Stanley’s analysts think Bitcoin’s price chart looks much like the Nasdaq in the dot-com bubble of 2000. Indeed it does:
Dot-com bubble Bloomberg
I’m afraid this tends to support the argument that Bitcoin has much further to fall. It also suggests that there will soon be a major market shake-out in which most of the current crop of cryptocurrencies will vanish.
But not all of them. After all, some of the biggest tech companies in the world today are survivors of the dot-com crash. The survivors of the cryptocurrency bubble could become the financial giants of the future.
Right now, the problem for investors is this. How can you know which cryptocurrencies will live, and which will die? Bitcoin may be the oldest, the biggest and the most famous cryptocurrency, but that doesn’t necessarily mean that it will survive the coming apocalypse.
Personally, I would be looking at what really gives a cryptocurrency value – its real-world usefulness. After all, people still buy tulip bulbs today. They are not valueless. But now they are valued for their ability to produce pretty flowers that brighten up our lives. What flowers will Bitcoin and its relatives produce?
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07e77ec7cb1010ed8b5be137022a6fa0 | https://www.forbes.com/sites/francescoppola/2018/08/31/why-president-trumps-tax-cuts-are-making-the-trade-deficit-bigger/ | Why President Trump's Tax Cuts Are Making The U.S. Trade Deficit Bigger | Why President Trump's Tax Cuts Are Making The U.S. Trade Deficit Bigger
President Trump is on a mission. He has been reliably informed by economic advisers such as Peter Navarro that putting pressure on countries such as China and Germany to reduce their bilateral trade surpluses with the U.S. will close the U.S.’s large and growing trade deficit with the rest of the world. So he is using trade tariffs as a weapon in a growing “war” with the U.S.’s principal trade partners. “Trade wars are easy to win,” he says.
Attendees say the pledge of allegiance during a rally with U.S. President Donald Trump in... [+] Evansville, Indiana, U.S., on Thursday, Aug. 30, 2018. Trump rejected a European Union offer to scrap tariffs on cars, likening the bloc's trade policies to those of China. Photographer: Luke Sharrett/Bloomberg
So far, President Trump has introduced tariffs on goods imports from the EU, Canada, Mexico and China. All of these countries have retaliated with tariffs of their own, and the EU has lodged a dispute at the World Trade Organisation regarding the tariffs on steel and aluminium. President Trump has just announced tariffs on a further $200bn of Chinese imported goods, and has rejected an offer from the EU to cut tariffs on automobile imports to zero if the U.S. does likewise. Battle is most definitely joined, and President Trump clearly thinks he will win. The U.S. trade deficit should be on its way out.
But instead, the trade deficit is growing. The Commerce Bureau’s Advance Economic Indicators bulletin for July 2018 shows that the deficit in trade in goods has risen to $72.2 bn. Exports have fallen by $2.5bn since June, to $140bn, while imports have risen to $212.2 bn, $1.8bn more than in June. Admittedly, it is early days in the trade war, but this does not look promising. Why is the U.S. trade deficit rising, instead of falling in response to the tariff salvo?
Part of the reason is Federal Reserve interest rate policy. Higher interest rates attract inflows of foreign capital to the U.S. Since the capital account is the inverse of the current account, this necessarily widens the current account deficit, of which the trade deficit is a significant component. Additionally, the U.S. dollar has been on a tear all year, driven up by rising interest rates. This makes American exports more expensive relative to competitors in the rest of the world, and encourages imports. Thus, Fed monetary policy is helping to widen the U.S.’s trade deficit.
But part of the blame for the widening trade deficit also lies at President Trump’s door. The tax cuts have failed to “pay for themselves” and are driving up the U.S. fiscal deficit to its highest level since the Great Recession. Additional money in the pockets of Americans tends to into consumption spending rather than saving: some of that spending is inevitably on foreign goods. Also, many of the additional bonds the U.S. Treasury is issuing because of the rising deficit are being bought by foreign investors, thus increasing foreign capital flows into the U.S. and therefore - as a matter of arithmetic - widening the current account deficit.
Furthermore, the U.S. economy is thought to be close to full capacity. Wage growth remains subdued, but unemployment is very low and the participation rate is rising. The Congressional Budget Office says that the tax cuts will temporarily increase GDP growth above the U.S. economy’s productive capacity.
If the economy really is close to capacity, then production won't increase enough to mop up all the additional spending arising from the tax cuts. Spending will therefore go into imports, thus widening the trade deficit. Inflation is likely to rise too, making the prices of foreign goods more attractive than those of U.S.-produced goods; this loss of competitiveness again tends to widen the trade deficit.
Of course, rising interest rates might encourage Americans to save rather than spend. This would put downwards pressure on both inflation and interest rates, and help to narrow the trade deficit. But the American saving rate has been low for decades. How do you get leopards to change their spots?
Anyway, as Michael Pettis explains, the “low” American saving rate is simply the flip side of a persistently high investment rate. Other countries like to save in U.S. dollar-denominated assets, and this necessarily causes flows of investment dollars into the U.S. economy. These are not necessarily used productively, of course – real estate bubbles are hardly productive investment. But the problem is not so much a low saving rate in the U.S. as a high saving rate elsewhere.
Forcing up the U.S. saving rate by, for example, severe fiscal austerity would not necessarily reduce the trade deficit. If the U.S. (collectively) saved more, then unless other countries adjusted their saving rates downwards, the resulting dollar drought would cause the dollar’s exchange rate to head for the moon. Because of the dollar’s dominance in international trade, this would cause a global trade slump. But it wouldn’t close the U.S.’s trade deficit. Pettis points out that attempting to force up the U.S. saving rate when the rest of the world doesn’t want to adjust simply causes distributional changes within the U.S. itself.
From this point of view, it might appear that President Trump has a point. Can his trade war force countries such as Germany and China to save less?
Realistically, no. President Trump’s tariffs themselves tend to raise the value of the dollar and thus make U.S. exports less competitive. They also raise domestic prices, making Americans poorer. And if other nations retaliate, then everyone ends up poorer. Trade wars are unwinnable, Mr. Trump.
The reality is that President Trump can’t close the U.S.’s trade deficit by throwing money at rich Americans in the hope that they will invest it productively, nor by imposing punitive tariffs on countries with trade surpluses. But there is one sure-fire way of closing the trade deficit, and that is to mismanage the economy so badly that the U.S. dollar loses its credibility as global reserve currency. Why on earth would any U.S. President want to do that?
The U.S.’s trade deficit is not a sign of weakness, but of strength. It arises from the absolute dominance of the dollar in world trade, and the overwhelming preference of the rest of the world for U.S. Treasuries as safe savings vehicles. America’s greatest export is its debt. Why do you want to make the U.S. a smaller, meaner place, Mr. Trump?
It’s not too late to change direction. Give up this senseless trade war, stop giving money to your friends at the expense of poorer Americans, and direct the investment that necessarily flows into the U.S. into productive – and imaginative – public goods. That’s how to make America great again.
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bceb9f2272f53cd156ec240cd42df04f | https://www.forbes.com/sites/francescoppola/2019/03/23/everyone-is-fed-up-with-brexit/ | Everyone Is Fed Up With Brexit | Everyone Is Fed Up With Brexit
Last Sunday, in a church in Rochester, England, a minister looked her congregation in the eye. “You’ve all had enough of Brexit, haven’t you?” she said. Every member of the congregation nodded.
Rochester is an overwhelmingly Leave area. In 2016, 64% of its population voted to leave the EU, including many of that minister’s congregation. But chatting with some of them after the service, there was an overwhelming sense of disillusion. They had expected Britain to sail regally out of the bloc on March 29,, 2019, with the Union Jack flying proudly at its masthead. Instead, Brexit was disintegrating into a political mess, and Britain was becoming the laughing stock of the world.
Put It To The People march for a Peoples Vote on 23rd March 2019 in London, United Kingdom. With... [+] less than one week until the UK is supposed to be leaving the European Union, the final result still hangs in the balance and protesters gathered in their tens of thousands to make political leaders take notice and to give the British public a vote on the final Brexit deal. ( Getty
Prime Minister Theresa May’s speech on Wednesday, March 20, captured their concerns:
Of this, I am absolutely sure. You, the people, have had enough. You are tired of the infighting. You are tired of the political games and the arcane procedural rows.Tired of MPs talking about nothing else but Brexit when you have real concerns about our children’s schools, our National Health Service, and knife crime. You want this stage of the Brexit process to be over and done with.
This was indeed what the members of that Rochester congregation said to me. They have had enough. They want Brexit over and done with so that they can get on with their lives. I could imagine them cheering in the background.
But then it all went wrong. Mrs. May continued:
I agree. I am on your side.
And she proceeded to blame British parliamentarians for the mess:
So far, Parliament has done everything possible to avoid making a choice. Motion after motion and amendment after amendment have been tabled without Parliament ever deciding what it wants. All MPs have been willing to say is what they do not want.
But the members of that Rochester congregation don’t blame parliamentarians. They are in no doubt who is responsible for the Brexit mess. Theresa May.
Mrs. May and the EU between them have constructed an exit agreement that is cordially hated by everyone, including the Rochester congregation. But Mrs. May is determined to get it through Parliament come what may. She has put it to a Parliamentary vote twice now, only for it to be overwhelmingly defeated each time. She was only prevented from putting it to a vote for a third time by the Speaker of the House of Commons, John Bercow, invoking a 17th century law.
Stymied by the Speaker’s action, Mrs. May asked the EU to extend Article 50. But not to buy time to rethink her approach to Brexit. Dear me, no. Her letter to the EU makes her aim crystal clear:
I had intended to bring the vote back to the House of Commons this week. The Speaker of the House of Commons said on Monday that in order for a further meaningful vote to be brought back to the House of Commons, the agreement would have to be ‘fundamentally different – not different in terms of wording, but different in terms of substance.’ Some Members of Parliament have interpreted that this means a further change to the deal. This position has made it impossible in practice to call a further vote in advance of the European Council. However, it remains my intention to bring the deal back to the House.
Unsurprisingly, the EU refused to give her the three-month extension she requested. But it did appear to extend something of a lifeline. Accounts of Mrs. May’s meeting with EU leaders depict an exhausted woman ready to throw in the towel and allow Britain to leave the bloc on March 29 without a deal. The EU’s offer of an extension to May 22 if Parliament approves her deal, or to April 12 if it doesn’t, looks very much like a rescue act.
It would not be surprising if Mrs. May felt exhausted and disillusioned. She has taken a worse battering at the hands of her own supporters than any Prime Minister in living memory. Even though she has survived a vote of no confidence, she does not dare to face down the hardline Brexiters in her party. To do so would split the Tory party. And if there is one thing that really matters to Mrs. May – apart from controlling immigration, which appears to be something of an article of faith for her – it is keeping her party together, because she knows that if it splits, it will be out of power for a generation. Mrs. May is a Tory first and a Prime Minister second.
I have little sympathy for her. Brexit was a poisoned chalice, but she drank it willingly. And this mess arises entirely from her mistakes. Triggering Article 50 with no plan for Brexit; antagonizing her EU counterparts with an aggressive, high-handed attitude right from the start; sidelining knowledgeable people in favor of ignorant ideologues; her disastrous decision to call an election in May 2017, which fatally weakened her government; and above all, her determination to cling to power, regardless of the cost. At every step of the way, Theresa May has put party above country, and personal ideology above the best interests of the people of the U.K. The only reason why anyone would want her to remain in post now is that the alternatives are worse. Just imagine Boris Johnson or Jacob Rees-Mogg as Prime Minister. Or Jeremy Corbyn.
Perhaps for this reason, getting rid of Theresa May doesn’t seem to be as high on the priority list of ordinary Brits as getting rid of Brexit, one way or another. Opinion polls show growing support for no-deal Brexit, while a petition calling for Article 50 to be revoked was signed by over 4.5 million people in three days. And on Saturday March 23, an estimated one million people marched on Parliament demanding a second referendum. Increasingly, it seems, the people of the U.K. want to decide for themselves what form Brexit takes – if it happens at all.
But it is not just the people of the U.K. who have had enough of Brexit. Europeans have too. They want to get on with their lives, and they are heartily sick of Britain’s political shenanigans dominating the airwaves. Everyone wants to get it over and done with, and increasingly, they don’t much care how. Support for a second referendum, or even cancellation of Brexit, may be growing in the U.K., but many Europeans I have spoken to now just want rid of this thorn in their side. No-deal Brexit is beginning to look like lancing a boil: agony in the short term, but affording permanent relief from a deep nagging pain.
As the Walker Brothers say, “breaking up is so very hard to do.” It’s only surprising how many people thought it would be easy.
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ba7e1c9c3342ee5fc99d0dd320a9048c | https://www.forbes.com/sites/francinemckenna/2011/02/15/auditors-want-overtime-california-lawsuit-against-pwc-could-change-model/ | Auditors Want Overtime: California Lawsuit Against PwC Could Change Model | Auditors Want Overtime: California Lawsuit Against PwC Could Change Model
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Never in my twenty-five years of working as an accountant, an auditor, and a consultant have I ever been paid overtime. When you choose to work in a profession, you don’t expect it. My father belongs to three unions and has pensions and generous health benefits in retirement as a result. When I was growing up, as the oldest of six on the South Side of Chicago, his overtime pay as a fireman and bricklayer was what made extras like vacations and college possible. But it was the dream of an easier life for their kids - higher pay for less labor because they had worked long and hard to educate all of us - that drove my parents to give us the chance for a “professional” career.
So, I have mixed feelings about the pile of class action lawsuits against the public accounting firms brought by college graduates who, these days, don’t see the point in working eighty hours a week during the busy tax or audit season for a fixed salary. When they calculate their hourly rate, even given the fairly generous salaries, signing bonuses, and benefits the best and brightest get as new Audit Associates, many question the total cost of the sacrifices they’re making. All they see are strained relationships with family and friends, excessive stressful travel, late nights spent performing mind-numbing “monkey work” on laptops, non-stop scanning and photocopying, fewer partners and opportunities for promotion, and very little use of the ambition and brains they thought they were hired for.
It’s no wonder that with the increase in layoffs and cutbacks at the audit firms during the general economic slowdown, when Sarbanes-Oxley work slowed and the financial crisis hit, accountants starting careers in the new millennium have to squint to see the light at the end of the tunnel.
A few states like California, Wisconsin, and Massachusetts - and Canada where similar suits were settled with very little notice here - have wage and hour laws that are perceived as more employee-friendly. Some believe the audit firms are breaking the law in many states by treating non-licensed, non-supervisory, staff as “exempt” from overtime. Several overtime lawsuits are pending against some of the major accounting firms doing business in California. These suits were filed by non-CPAs, non-licensed associates (entry level college graduates), who believe they were misclassified under California law as exempt professionals and are due overtime and other benefits due to non-exempt employees.
The suits are all in various stages but the key case that may determine how the other cases will proceed is Campbell v. PricewaterhouseCoopers. On March 11, 2009 a lower court in California court granted plaintiffs’ motion for summary adjudication on the issue of exemption. The judge agreed that the audit associates at PwC in California are not exempt from overtime pay under the 2001 wage order.
But the court noted that the determination regarding exemption is one involving a controlling question of law, that there is substantial ground for difference of opinion, and that an immediate appeal from the order will materially advance the ultimate termination of the litigation. Therefore, Judge Karlton certified the matter for interlocutory appeal pursuant to 28 U.S.C. § 1292.
What all this legalese means is that the plaintiffs and their law firm are winning so far. The Ninth Circuit Court of Appeals accepted the appeal and Campbell will finally be argued today before the 9th Circuit Court of Appeals. The oral arguments will produce a ruling either affirming or reversing the lower court decision. That means either the audit associates will finally win or the issue will go to trial.
Bill Kershaw, attorney for the plaintiffs, spoke to me yesterday about the case:
“Judge Karlton decided that class members are entitled to overtime pay because they do not meet the requirements for either the "professional," "administrative," or "executive" exemptions. Specifically, he found that Attest Associates are not "exempt professionals" because they are not licensed CPAs, and they are not "exempt administrators" because they work under more than "general supervision." It’s especially ludicrous to me that, in environment of financial crisis and fraud, PwC would argue, and the AICPA would agree, that audit associates - the staff with the least amount of experience – should ever or actually do advise clients or make judgments during the audit without significant supervision.”
The PCAOB, the audit industry regulator established by the Sarbanes-Oxley Act of 2002, now has primary responsibility for establishing auditing standards, including those related to supervision of audit engagements. Auditing Standard 10, adopted December 10, 2010 addresses the supervision of audit engagements:
RESPONSIBILITY OF THE ENGAGEMENT PARTNER FOR SUPERVISION 3. The engagement partner1/ is responsible for the engagement and its performance. Accordingly, the engagement partner is responsible for proper supervision of the work of engagement team members and for compliance with PCAOB standards, including standards regarding using the work of specialists,2/ other auditors,3/ internal auditors,4/ and others who are involved in testing controls. 5/ Paragraphs 5-6 of this standard describe the nature and extent of supervisory activities necessary for proper supervision of engagement team members.6/ 4. The engagement partner may seek assistance from appropriate engagement team members in fulfilling his or her responsibilities pursuant to this standard. Engagement team members who assist the engagement partner with supervision of the work of other engagement team members also should comply with the requirements in this standard with respect to the supervisory responsibilities assigned to them.
There is sensitivity in the business community to the implications of a decision in the plaintiffs’ favor. Other “learned professionals” covered under the exemption from overtime in California law include unlicensed attorneys, engineers, teachers, and doctors, amongst others. Attorneys, who are both arguing this case and deciding it, have a tradition of working long hours as new associates with no overtime until they pass the bar exam and can be licensed. The long hours don’t stop with licensing but the designation in the law as an “exempt learned professional” is unambiguous at a much earlier stage of their professional career even before licensing, probably because the court considered the attainment of a graduate degree or additional practicum or residency to be probative.
In fact, the judge, when concluding that "unlicensed accounting assistants do not fall under the learned professional exemption", made this observation:
The court would be less than frank not to recognize the difficulties this interpretation tenders for some of the employees identified in PwC's brief. They are not before this court and thus no opinion concerning them need be reached. I note in passing, without intending to suggest resolution of other issues, that at least arguably the work engaged in by the class members is more like the work of paralegals than law clerks.
Does the requirement of a Masters in Accountancy in order to reach the 150-hour CPA licensing requirement in some states negate my assumption of a graduate degree as a sufficient, if not a necessary, condition to be considered a "professional" without a license? Will universities that provide their states' CPA hour requirements without the necessity of a graduate degree doom their graduates to status as "para-accountants" until licensing?
Most public accounting firms require that staff successfully pass their state’s CPA exam and become eligible for licensing based on additional years of experience before they are promoted to the manager level. That promotion occurs typically between 5-8 years after college graduation. Only partners of the firms, two more promotions from a manager, are allowed to sign/certify audit reports that meet regulatory requirements. The level of supervision of these professionals and the level of their responsibility to supervise and train others increases over time but does not dramatically change overnight until promotion to partner. Even then, professional, regulatory and internal quality and risk management policies generally require second partner reviews and other supervision of even the work of partner level licensed professionals.
In many smaller public accounting firms, unlicensed accounting graduates are paid overtime. That, I’m told, is a way for smaller firms to compete with the larger firms for qualified graduates by offering lower entry level salaries but the opportunity to earn more when excessive hours are worked. They also avoid paying a premium up front via higher salaries for overtime that may be worked unevenly throughout the year and not by all professionals at all times. The work of accountants and auditors in the first 3-5 years is often hugely clerical and closely directed and supervised. Sources have also told me that smaller firms feel more legally vulnerable to complaints about unpaid overtime than larger firms.
There’s an economic argument at play here: In this environment more work produced for less pay is both tolerated by labor and a business model that rewards firms with higher profitability. But there’s also a practical regulatory issue at stake: Can the regulators allow audit firms – who play a role as critical regulatory cogs in the financial system wheel – to delegate more judgment and decision making over financial reporting and disclosure to the lowest level of staff because they are the per-hour cheapest?
If you’ve watched any medical-themed TV show, you know what lack of sleep, overwork, crappy food, and low pay means for emergency room health care delivery. You may also be able to afford the sweatshop approach to media. But can your 401k afford “slave labor” when the product of using the lowest cost labor input is fraud and failure?
A PwC spokesperson asked that I return for their comment once the final decision is announced.
Here's the link to today’s oral arguments by David Frederic of Kellogg, Huber, Hansen, Todd, Evans & Figel for the plaintiffs and Dan Thomasch of Orrrick for PwC. The court’s decision is expected in a few months.
Caleb Newquist at Going Concern.com has posted the briefs to the oral arguments on his site.
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a8657ab27f18c89a606a96f009f52fba | https://www.forbes.com/sites/francinemckenna/2011/03/28/why-no-warnings-investors-press-audit-regulator/ | Why No Warnings? Investors Press Audit Regulator | Why No Warnings? Investors Press Audit Regulator
U.S. investors have finally joined shareholders, regulators, and legislators in the UK to demand one more crisis question be answered:
Where were the auditors during the financial crisis?
The Public Company Accounting Oversight Board (PCAOB), the U.S. accounting and audit industry regulator created by the Sarbanes-Oxley Act of 2002 in the aftermath of the Enron scandal, convened an Investor Advisory Group (IAG) last year to explore issues of interest to the Board’s primary constituency - investors. At a public meeting two weeks ago, the (IAG) presented reports on three issues:
Lessons Learned from the Financial Crisis, Global Networks and Audit Firm Governance, and The Auditor’s Report and the Role of the Auditor.
It’s the first time any U.S. legislative or regulatory body has formally, and publicly, attempted to seriously explore the actions, or inaction, of the audit industry during the financial crisis. The Congressional Oversight Panel, the Financial Crisis Inquiry Commission (FCIC), and the Senate Permanent Subcommittee on Investigations held no public hearings with auditors. There was minimal mention of a minimal number of audit firms in the final FCIC report. As far as we know, there have been no civil, criminal, or disciplinary proceedings initiated against audit firms or audit partners for the audit failures and bankruptcies, forced acquisitions and government bailouts of Lehman Brothers, Bear Stearns, Merrill Lynch, Washington Mutual, New Century Financial, Countrywide, American Home, and on, and on.
We did hear some good news last week from the PCAOB and its new Chairman Jim Doty. In contrast to my initial pessimism about where Doty's loyalties might lie, I heard him strongly support significant initiatives for investors and the good of the auditing profession. In his opening remarks to the PCAOB’s Standing Advisory Group (SAG) meeting last Thursday, Doty put the audit industry on notice: Now that the PCAOB’s existence was no longer in question, he was promotinge a decidedly pro-investor tone at the top.
Under the Sarbanes-Oxley Act as it exists today, the Board’s enforcement proceedings are non-public…The auditors and audit firms that we charge with violating PCAOB auditing standards, or with other types of violations, have little incentive to consent to opening the case against themto public view. On the contrary, the fact that, absent their consent, our enforcement proceedings are required to be secret creates a considerable incentive to litigate rather than settle…This state of affairs is not good for the public or the auditing profession. I support public proceedings. But we can’t wait for Congress to act to make that change.
There’s also a new sheriff in town on the investor beat. Lynn Turner, the former SEC Chief Accountant, used to be the one you could count on to criticize the audit industry publicly. He was, predictably, the most vocal and contrarian member of most panels, studies, and groups charged with investigating the audit industry during the last ten years. But Turner was fairly subdued during this SAG public hearing.
Instead, Damon Silvers, Director of Policy and Special Counsel of the AFL-CIO and the Deputy Chair of the Congressional Oversight Panel for the Troubled Asset Relief Program (TARP), started some fireworks last Thursday. Here’s an excerpt of one exchange with a member of the Financial Accounting Standards Board (FASB).
It starts at the 1:02:35 mark of this replay.
Damon Silvers: I’d appreciate if you’d answer my first question. Larry Smith (FASB): What was your question again? What have we done to address the fact that there were TARP assets your panel could not find or could not value? Damon Silvers: I find it surprising that you couldn’t follow me, but let me try it again…This question has preoccupied the country for four years so I’m not sure why it’s so hard for you to follow… There are these things called troubled assets, perhaps you’ve heard of them. They are not TARP assets. They are troubles assets on the balance sheets of TARP recipients. Many of them have something to do with home mortgages. The firms involved filed GAAP financial statements. When our panel, with a staff of thirty, solely devoted to this question tried to determine using GAAP financial statements what the troubled assets were on the balance sheets of publicly traded firms during the summer of 2009, we couldn't answer the question how many troubled assets were there… What does FASB conclude from the fact that you can’t answer this question under GAAP? Larry Smith: We have specific disclosure requirements with respect to marketable securities, etc. which compares fair value to cost and the extent to which there are delinquencies… Damon Silvers: Let me put it to you a different way. Is it that our staff is incompetent? Is it that Congress… Larry Smith: Damon, I don’t know specifically what you were doing in terms of identifying them and what your objectives were, so I can’t respond to that question. Damon Silvers: I’d like to remind you that I was acting on behalf of the Congress of the United States to determine what had happened and whether the objectives of the $700 billion TARP had been achieved and it ought to have been of some concern that we could not use the financial statements under your rules…ought to be of some concern to the FASB.
Damon Silvers, along with fellow SAG and IAG members Barbara Roper of the Consumer Federation of America and Lisa Lindsley of AFSCME are expected to continue to be vocal on these issues. The IAG is pushing for a separate study, a financial crisis autopsy report that would answer the questions posed by the initial report presented last week, “ The Dog That Didn’t Bark… Again”. They believe a look back is the only way to get to the root cause of why auditors did not, or could not, act to warn or mitigate the effects of the crisis. More importantly, this insight is necessary to establish a new framework for the future.
The Working Group on Lessons Learned from the Financial Crisis strongly recommends that the PCAOB launch an in-depth study into the role auditors played in the financial crisis. The goal of that study should be to identify both the causes of and remedies for those pervasive audit failures. In addition, we recommend that the PCAOB make this in-depth analysis of audit failures an on-going function of the Board, in order to ensure that changes in policy and oversight practices are adopted in a timely fashion to address correctable weaknesses in the audit process.
Others on the SAG would rather move forward with the myriad other proposals and initiatives before the Board rather than spend time reminiscing. Auditors have, inexplicably, defended their performance during the crisis. They’ve even claimed, in the U.K., that the government supported suppression of "going concern" warnings to prevent the self-fulfilling prophecy of failure and protect the public from the scary truth.
The U.K. House of Lords will publish their report on the audit industry's performance during the crisis on Wednesday and it's expected to be brutally critical of the Big 4 - Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers.
In evidence given to the committee, the auditors, who each deny they were asleep on the back seat as the car headed for the cliff edge, said that they were able to pass the banks’ accounts because no-one could predict the drying up of the wholesale markets which led to the crisis. Secondly, in the somewhat Alice in Wonderland world we appear to be in here, the auditors were prevented from raising issues because the very raising of a concern would constitute a material risk to the functioning of the bank, causing a possible run and the need for the Financial Services Authority and, ultimately, the Government to step in...The Lords’ report, which is set to be highly critical of the auditors, will make for particularly uncomfortable reading for PwC, the auditors of failed bank Northern Rock, and Deloitte, which audited Royal Bank of Scotland.
Back in November, the leaders of the U.K. audit firms promoted the paternalistic view of their duty to the public:
Reuters: John Griffith-Jones, chairman of KPMG in Europe, said the banking industry is built on confidence and that full disclosure is absolutely fine in a stable environment. “Come a crisis, the government of the day and Bank of England of the day may prefer the public not to know… to control events in those circumstances,” Griffith-Jones said.
I’m counting on the PCAOB to follow tough words with consistent and strong action that will hold auditors and their firms accountable for their failures during the crisis.
And I’m counting on the outspoken Damon Silvers.
“We are faced with a choice here,” Silvers closed. “We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can’t do both.”
Silvers is on the side of investors. And the side of right.
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f0718bf9e5f5e78318d3cde4ab9cd24c | https://www.forbes.com/sites/francinemckenna/2011/05/31/navistar-sues-deloitte-proving-no-statute-of-limitations-on-idiocy/ | Navistar Sues Deloitte Proving No Statute of Limitations On Idiocy | Navistar Sues Deloitte Proving No Statute of Limitations On Idiocy
Image by AFP/Getty Images via @daylife
A recent lawsuit filed by Chicago-area truck, bus, and defense vehicle manufacturer Navistar against their one-time auditor Deloitte disproves the adage, “The customer is always right.”
Navistar claims that Deloitte, their auditor for nearly one hundred happy years until they were ignominiously fired in early 2006, lied, deceived, was utterly incompetent, and left a trail of broken promises.
Sounds like a bad romance…
Navistar feels compelled, more than five years later, to sue Deloitte for, “fraud, fraudulent concealment, negligent misrepresentation, deceptive business practices, and breach of fiduciary duty arising from the accounting advice, audit services and internal controls advice that Deloitte provided to Navistar relating to Navistar’s financial statements from 2002 to 2005.”
Navistar’s problems began in late 2005 as Deloitte was wrapping up its audit for the fiscal year ending October 31, 2005. In December of 2005, Deloitte suddenly replaced the partner in charge of the audit - he was put on mysterious medical leave – with a new one.
The new lead engagement partner, a former Arthur Andersen partner, began questioning almost everything that had been done or approved previously, according to Navistar's suit. He refused to accept any of the work his former partners or the team had already done and basically, according to Navistar, started the audit over.
Navistar failed to file their 10-K on time as a result.
Navistar fired Deloitte in April 2006 and hired KPMG as their new auditor. They also hired a slew of consultants and other experts including Huron Consulting, Callaway Partners (now owned by Huron), PricewaterhouseCoopers, and Ernst & Young. Eventually Navistar spent more than $200 million dollars to re-conduct their 2002-2004 audits, re-do and complete their 2005 audit, and reevaluate and correct a never-ending list of material weaknesses and significant deficiencies in internal controls over financial reporting.
Their 2005 financial statements were not completed until December of 2007.
The 2005 financial statements also identified necessary restatements to 2003 and 2004 that resulted in a cumulative net reduction in stockholders equity of more than $4 billion for the two years.
Naturally, Navistar blames Deloitte. That’s because Deloitte continued, according to Navistar, to be more than an auditor to Navistar until 2005, long after prohibitions against the provision of such significant accounting advice to an audit client were put into law.
According to Navistar:
“Deloitte provided Navistar with much more than audit services. Deloitte also acted as Navistar’s business consultant and accountant. For example, Navistar retained Deloitte to advise it on how to structure its business transactions to obtain specific accounting treatment under Generally Accepted Accounting Principles (GAAP)…Deloitte advised and directed Navistar in the accounting treatments Navistar employed for numerous complex accounting issues apart from its audits of Navistar’s financial statements, functioning as a de facto adjunct to Navistar’s accounting department….Deloitte even had a role in selecting Navistar’s most senior accounting personnel by directly interviewing applicants.”
The Sarbanes-Oxley Act of 2002 made it very clear that audit clients were no longer supposed to utilize their audit firm as the accounting technical advisor. That was a hard habit to break for many clients. Audit firms did not necessarily charge more for this advice. It was considered part of their full-service package. For a client like Navistar, used to the highest level of service for nearly one hundred years, Deloitte may have tried to ease them out of this gradually, but obviously not quickly enough.
When the new Deloitte partner called out many of Navistar’s prior accounting treatments, agreements, and their own firm’s advice and approvals from prior years, he was doing what many other audit teams were doing at the time: Telling clients, “The buck stops here.”
Immediately after the Sarbanes-Oxley law was passed, audit firms were unwilling to risk scrutiny by the PCAOB and potential litigation under Sarbanes-Oxley over questionable accounting treatments or ones they were possibly coerced into agreeing to or ignoring for the sake of the relationship. Some firms were harder on some clients than others.
But the result was that many Fortune 500 companies changed auditors during the first three years after the law was passed, sometimes breaking up very long relationships, over the same kind of impasse or seemingly sudden disagreement over old issues. A July 2006 research report said 4,000 companies, about a third of all U.S. public companies, switched auditors in the period from 2003 to 2005.
Audit firms finally began to reduce the pressure on clients that reached a peak in 2006 because of their own litigation anxiety when Auditing Standard 5 was enacted in 2007. That set of policies and procedures, enacted by the new accounting regulator, the PCAOB, replaced the initial instructions auditors had interpreted very strictly and very lucratively.
Deloitte, I think, is getting a bum rap in this lawsuit. The firm was no more a bum than any of the other Big 4 audit firms who held on as long as they could to as much additional work and fees from audit clients as they could. But all the firms quickly saw that they could now charge a lot more for the audit itself given the new requirement for a separate opinion on internal controls over financial reporting and the amount of work some sloppy companies had to do to document, test, and confirm internal controls.
The auditors’ quick exploitation of the new law bred enormous resentment in clients who eventually rebelled against the significantly higher fees, once they got used to the new routine. The credit crisis, and then the financial crisis, ushered in a new austerity that has re-sized audit fees and put auditors on the defensive again, looking for new services and new ways to charge new and existing clients more.
Navistar’s cheeky lawsuit ignores some basic assumptions about the financial statements and an auditor’s opinion on them that I hope the judge is not ignorant of:
1) The financial statements are the ultimate responsibility of management. Overreliance on the auditor’s advice, even prior to Sarbanes-Oxley’s prohibitions on their assistance, is no excuse for a company’s lack of sufficient accounting expertise or their intransigence or incompetence in following good technical advice from an independent source.
2) It’s the Audit Committee’s responsibility to certify the independence of the auditor every year and to change or reduce the services they perform, or fire them, if their independence and objectivity becomes compromised. Designing internal controls and accounting strategies, approving journal entries, and giving final signoff on technical accounting treatments is a clear breach of independence for an external auditor. So is hiring the accounting staff you will be auditing.
Shame on Deloitte if they milked this fee cow longer than they should have.
But the ultimate responsibility for standing up on their own two feet and taking responsibility for their own financial statements rests with Navistar’s management. Their Audit Committee was supposed to make sure this happened.
Before Navistar was finished with all the restatements, SEC investigations, lawsuits, fines, clawbacks and disciplinary actions against their former CFO and current CEO, internal investigations, restructuring, and delisting and eventual re-listing on the New York Stock Exchange, the company admitted as much.
From the 2005 10K filed in December 2007. (Emphasis is mine.)
"The Audit Committee’s extensive investigation identified various accounting errors, instances of intentional misconduct and certain weaknesses in our internal controls. The Audit Committee’s investigation found that we did not have the organizational accounting expertise during 2003 through 2005 to effectively determine whether our financial statements were accurate. The investigation found that we did not have such expertise because we did not adequately support and invest in accounting functions, did not sufficiently develop our own expertise in technical accounting, and as a result, we relied more heavily than appropriate on our then outside auditor. The investigation also found that during the financial restatement period, this environment of weak financial controls and under-supported accounting functions allowed accounting errors to occur, some of which arose from certain instances of intentional misconduct to improve the financial results of specific business segments."
It was also listed as their first Material Weakness. Again from the same 10K:
Material Weakness Description 1. Accounting Personnel: We did not have a sufficient number of accounting personnel with an appropriate level of accounting knowledge, experience and training in the application of GAAP as it relates to accounting for receivable securitization transactions. This resulted in inadequate segregation of duties and insufficient review of the information pertaining to securitization accounting. Additionally, because of the lack of internal accounting personnel, we relied heavily on our prior independent registered public accounting firm to help us develop conclusions related to application of GAAP.
Deloitte spokesperson Jonathan Gandal had this statement:
“Navistar’s complaint is a cynical and baseless attempt to try to shift responsibility for the wrongdoing of Navistar’s own management. Several members of Navistar’s past or present management team were sanctioned by the SEC for the very matters alleged in the complaint. This claim is without merit and we will defend ourselves vigorously.”
I don’t often give the Big Four audit firms the benefit of the doubt. In fact, Deloitte has plenty to be sorry for related to the financial crisis. But in this case, Navistar would be better off wasting less money on vengeful litigation – they are still defending against a Sarbanes-Oxley whistleblower lawsuit - and more time improving controls over their government contracting process.
With the addition of Retired General Stanley A. McChrystal to the Navistar Board of Directors, it seems they have sewn up all the Defense Department connections they need to recover nicely from their embarrassing past lapses. Let’s make sure there are no new ones at taxpayers’ – and our soldiers’ – expense.
Deloitte is represented by Winston and Strawn.
Navistar is represented by four firms: Laurance H. Levine Law Offices, Kellog, Huber, Hansen, Evans, Todd & Figel P.L.L.C, Sedgwick LLP, and Richard J. Prendergast LTd.
Disclosure: I worked as a consultant to Navistar’s Internal Audit Department in 2007 and early 2008 supporting several simultaneous years of Sarbanes-Oxley effort. My former client is now suing the company in a Sarbanes-Oxley whistleblower suit.
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b84ff2e15b65d63725133f1dd061cbd9 | https://www.forbes.com/sites/francinemckenna/2012/05/08/chance-meetings-at-milken-global-conference-2012/ | Chance Meetings At Milken Global Conference 2012 | Chance Meetings At Milken Global Conference 2012
I subscribe to the John Carney philosophy of business conference attendance. Carney, editor of CNBC’s NetNet blog, has a decidedly different view of his duties than the typical print personality who does some on-air duties when the whim hits him:
When I’m not in one of the panels, I’m typically in the Tiki bar next to the pool at the Beverly Hills Hilton, where the conference takes place this year from April 29 to May 2. I’ll do my best to keep readers fully updated on what people are saying when they are “off mic” and hoisting cocktails. Last year, three hedge-fund traders told me what they thought markets would do in reaction to the killing of Osama Bin Laden.
John and I were both covering the Milken Global Conference last week, he for CNBC and me for my own intellectual stimulation and my blog, re: The Auditors. Why the conference asked me to show up on the basis of my writing there and not as part of a Forbes or American Banker entourage – although Steve Forbes and I do not actually swing in same circles and American Banker is somewhat allergic to central banker issues – I may never know.
I think it has something to do with my Twitter following and Twitter is where I ended up making my presence known. I put out no blog posts during the conference and, instead, focused on Tweets, mostly about what everyone was wearing. There were some serious ones, too. I will put up a Storify set tomorrow.
My spot, like Carney’s booth at Trader Vic’s, was the coffee lounge in the lobby next to the Bloomberg TV set. There, the Coffee Bean & Tea Leaf team served free java, all you could drink, and I was able to watch Stephanie Ruhle rule the airwaves in a different tangerine-tone shift dress each day. By sitting still, coffee in one hand, BlackBerry in the other, the question I got most often was not, “Where have you been all my life?” but, “You still use a BlackBerry?”
I confess my Twitter and email intensive life has prevented me from switching to the iPhone. BlackBerry is better for heavy typing. But this was a business crowd and, in addition, to finally meeting Carney in person – his hair is more red than it appears on TV – I had the pleasure of many other unplanned encounters with the rich, the semi-famous, and the very, very smart.
The opening night cocktail on Sunday included a long and lovely conversation with Lem Daniels of Deutsche Bank and Treasurer of the Greater Los Angeles African American Chamber of Commerce. He’s the spitting image of Samuel L. Jackson, a fierce supporter of opportunity for minority small businesses in Los Angeles and a Chicago native. We had fun reminiscing about the White Sox and De LaSalle High School where he’s an alumni.
David Cowen, President and CEO of the Mu$eum of American Finance, stopped by to introduce himself. Did you know there is a museum dedicated to finance, with some very heavyweight sponsors, right on Wall Street?
Monday was a blur of getting oriented and stopping in on several less than satisfying panels. One highlight of the whole conference was the sophisticated audio-visual coordination. Panelists and moderators must have had to submit slides with data to support their arguments well in advance - a huge feat for such a distinguished, busy list of presenters. Those submissions were turned into uniform, slick punctuation to the remarks. Everyone had the index for the slides and could see them on a monitor at their feet. They were called up by number during remarks as needed and it went smoothly each time, as far as I could tell. Very sharp.
Later that day I, too, went down to Trader Vics to find two journalists who I’ve tweeted with but never met – Kevin Roose of the New York Times DealBook and Lauren Tara LaCapra who works at Reuters. I found them. Both are smart and fun. Kevin described Global Conference 2012 as, “the hopeful reunion tour of a once-great rock band.” (We’ll see if he gets invited back…)
Hanging with Kevin and Lauren was Janet Janjigian, an Emmy Award winning television news and documentary journalist for NBC Nightly News, ABC News Nightline and CNN in Los Angeles who is now a PR pro. Janjigian’s client, Dr. Richard Merkin, President and CEO of Heritage Provider Network, moderated a panel at the conference the next day. Janet is an amazing woman and promised to be my guide next time I visited Los Angeles.
The next day started early with a panel that included my former Mayor Richard Daley and a Federal Reserve Bank President. I didn’t get much out of that session except that Daley has dropped his Southside accent since he started attending - I mean teaching at – the University of Chicago. I’ve written more about the serious issues discussed in my American Banker column yesterday.
The private equity session next up was good, as Carney said it would be. I would have to say my favorite PE guy is now Leon Black of Apollo Management. He had the best stuff. I shared my disappointment in some of moderator Maria Bartiromo’s questions for the panel, however, with Steve Judge, President and CEO of the Private Equity Growth Capital Council.
Tuesday afternoon's must see panel was Web 3.0 with Brad Keywell, Chicagoan, and co-founder and Managing Director of Lightbank as well as co-founder and Director of Groupon. You may recall Groupon was a featured subject of my recent magazine article for Forbes. I sat in the second row, but I was torn between introducing myself to Keywell and averting his gaze. I lost interest in Keywell, and his glib and bubbly remarks, when I spotted the interesting vintage but elegant couple sitting next to me, husband furiously taking notes by hand in a stenographer-size notebook. I whispered to the wife, “What's your interest in this subject?” She said, “That’s my son, the moderator.”
That moderator, Andrew Miller, is a successful serial entrepreneur who told me his parents come to the Global Conference with him every year. Miller’s latest venture is FootballNation.com. Dad is a name partner in the Boston labor law firm, Stoneman, Chandler & Miller. Mrs. Miller, Andrew’s mom, seemed pleased when I told her that her son was as smart as he was handsome.
More later this week about some interesting “future of cities” and “state of the states” panels and a few more live meetings with heretofore virtual Twitter correspondents.
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0dcfaf44909a47d13a897faa221cafc8 | https://www.forbes.com/sites/francinemckenna/2012/07/02/barclays-manipulates-libor-while-auditor-pwc-snoozes/ | Barclays Manipulates Libor While Auditor PwC Snoozes | Barclays Manipulates Libor While Auditor PwC Snoozes
(Updated Tuesday 7:15 am: The Financial Times is reporting that CEO Bob Diamond has also resigned. Departing Chairman Agius will lead the search for a successor while Sir Mike Rake leads the search for Board Chairman Agius' successor. Diamond did himself no favors, most likely, when he obliquely threatened, according to earlier reports, to spill the beans on the role of the Central Bank of England in Libor manipulation and name names during his testimony to the Treasury Committee of Parliament this week. "Everybody is doing it," is, it seems, no longer a sufficient excuse for illegal acts.)
What do Barclays, JP Morgan, MF Global and Chesapeake Energy have in common?
They are all examples of risk management and audit failures and the auditor of all of them is PricewaterhouseCoopers.
It seems like only yesterday when everyone was asking me if Ernst & Young would be the next global audit firm to buckle under the weight of costly, and time consuming, litigation, especially as a result of the failure of Lehman Brothers. But the cases against Ernst & Young for Lehman drag on with no word from the SEC about their investigation – except rumor and innuendo about no likely charges passed along to other media - and no news about the case against the firm by the New York Attorney General. The UK’s accounting disciplinary board said recently they would bring no charges against E&Y for its role in Lehman’s Repo 105 accounting subterfuge.
The Financial Times reported on June 22, 2012:
“Ernst & Young will not face legal action over its handling of Lehman Brothers’ off-balance sheet transactions in the run-up to the financial crisis, the UK’s accounting regulator said. In 2010, the Accountancy and Actuarial Discipline Board opened an investigation after an official report into Lehman’s bankruptcy criticised E&Y – which had acted as Lehman’s auditor – for failing to question and challenge improper or inadequate disclosures in the bank’s financial statements… The accounting regulator continues to investigate E&Y’s supervision of Lehman’s compliance with UK rules on the protection of client money.”
Other than the fact that Ernst & Young issued clean audit opinions with no qualification of internal controls at UBS while the bank committed some of the worst tax offenses and an alleged “rogue” trader exploited controls on the trading floor for a loss of $2 billion, E&Y hasn’t much else going on. Oh, I forgot about that pending trial in California for performing “no audit at all” and allowing a backdating scheme to proliferate. And there’s alsothat messy fraud in Japan at audit client Olympus. Of course, audit client Wal-Mart’s bribery case in Mexico is sort of "feo" too and makes you wonder what Ernst & Young Mexico and Ernst & Young US were focused on when all the potential FCPA violations were going on. Audit client News Corp and its bribery case keeps on humming along on both sides of the Atlantic. Ernst & Young has been quite busy, too, writing new revenue recognition methodology justification for social media IPOs. And then there's this other "bribing a judge" thing…
We had a bit of a scare while Deloitte faced more lingering litigation than any of the other global audit firms as a result of the 2008-2009 financial crisis. Shareholders for Merrill Lynch, Bear Stearns, Washington Mutual and Taylor Bean & Whitaker have included the auditor in their complaints against executives and directors for fraud. Deloitte recently settled the primary claim against the firm for auditing Bear Stearns for a pittance. But, other than a nasty trial in Canada where Deloitte auditors have testified about how Nortel executives wrapped them around a tree while allegedly cooking the books and their role in the Kabul Bank fraud, things are relatively calm for Deloitte. Of course, we can't forget multiple complaints where Deloitte is being sued or investigated, including by the SEC, for its audits of Chinese frauds.
So much time and money spent on lawyers…
KPMG got out from under their financial crisis litigation rather early with settlements of claims against them for the failure of New Century and the forced acquisition on the brink of insolvency of Countrywide. Since then the firm has escaped any accountability for whatever havoc audit client Citigroup continues to wreak and the foreclosure fallout at Wells Fargo/Wachovia.
PwC’s woes are not limited to the U.S. and the U.K., unfortunately. An embarrassing trial in Australia for the firm’s audit failures at Centro, a real estate developer, were settled when initial trial testimony revealed how arrogant and oblivious the firm and its partners are about their duty to shareholders. PwC will pay more than three times what Deloitte will pay for Bear Stearns to close the books on Centro.
Major media has yet to mention the name of PwC, the external auditor, when talking about the Barclays Libor scandal, JP Morgan’s costly “whale” trade, or the woes brought to Chesapeake Energy by its imperial CEO, Aubrey McClendon. There was some mention of PwC early in the MF Global case, but interest in PwC died down quickly as has the general coverage of this scandal as the months wear on. No real truth has come out yet about who has $1.6 billion of customer funds illicitly used to cover CEO Corzine’s risky bets on sovereign debt.
(I guess it’s not easy to introduce the role of the auditors into the narrative of these scandals when you don’t really understand who they are and what they do, as a recent Reuters piece demonstrates.)
So let me give you something to chew on regarding PwC’s role and responsibilities in the Barclays, JP Morgan, MF Global and Chesapeake Energy cases.
The primary role of the external auditor for US listed companies is to give an opinion on whether the financial statements, taken as a whole,
(1) Have been prepared using Generally Accepted Accounting Principles (GAAP), or IFRS as issued by the IASB, which have been consistently applied;
(2) The Financial Statements comply with relevant statutory requirements and regulations;
(3) There is adequate disclosure of all material matters relevant to the proper presentation of the financial information subject to statutory requirements, where applicable; and
(4) Any changes in the accounting principles or in the method of their application and the effects thereof have been properly determined and disclosed in the Financial Statements.
In addition, for companies that are required under Sarbanes-Oxley to also have an audit of the internal controls over financial reporting, the external auditor gives an opinion on those internal controls. If everything is peachy, the opinion states:
“Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.”
Arguably, the Barclays scandal is more than just poor internal controls, bad corporate governance, audit failure or even multiple illegal acts.
The ethical culture of banking is in ruins.
Auditors judge a company’s internal controls over financial reporting by starting at the top. Evaluating the “tone at the top” is the first step in determining if anything management tells you or shows you later is to be believed. The less confident an auditor is that executives are setting the proper ethical and legal compliance tone, the more independent evidence the audit team must test to verify all of management’s assertions, judgments and estimates. In the worst case, when management clearly can not be trusted, the auditor must qualify the financial statement opinion or resign the engagement.
The Sarbanes-Oxley Act of 2002 authorized the Public Company Accounting Oversight Board ("PCAOB") to establish auditing and related professional practice standards to be used by registered public accounting firms.
For any auditing engagement performed in accordance with the auditing and related professional practice standards of the PCAOB, the auditor must now refer to "the standards of the Public Company Accounting Oversight Board (United States)” not Generally Accepted Auditing Standards or GAAS as previously required under the AICPA, the audit industry trade organization.
(Plaintiffs lawyers and judges, please also note this change for references in complaints to the standards auditors must follow for cases that refer to audits performed after passage of the Sarbanes-Oxley Act of 2002.)
According to PCAOB Auditing Standard Number 5, “When auditing internal controls over financial reporting, the auditor may become aware of fraud or possible illegal acts. In such circumstances, the auditor must determine his or her responsibilities under AU sec. 316, Consideration of Fraud in a Financial Statement Audit, AU sec. 317, Illegal Acts by Clients, and Section 10A of the Securities Exchange Act of 1934.”
I’ve written extensively about the auditors' responsibility to plan and perform their audit to address the risk of fraud or material misstatement and the auditors responsibility to report up, then possibly out to the SEC when the engagement team becomes aware of fraud or other illegal acts such as Foreign Corrupt Practices Act (FCPA) violations.
During initial planning for the scope of these audits PwC could have decided to do more rather than less. The auditor must increase the scope of the audit and testing if there are higher risks of material misstatements due to fraud or illegal acts. Then, during the audit itself and certainly during the audit of internal controls over financial reporting, PwC could have caught the risk management and internal control failures such as those that we are seeing at Barclays, JP Morgan, MF Global and Chesapeake.
So let’s talk about what happened in these four cases involving PwC clients.
Valuation of the trading book and investments in securities on the balance sheet is determined using third-party pricing services and models as well as market inputs, with controls over the models and elaborate compliance schemes to supposedly make sure the valuation meets accounting standards. Basic assumptions used to value assets or liabilities such as benchmark interest rates should not be subject to manipulation or collusion. PwC missed or looked the other way for years while Barclays, according to the CFTC who joined with UK regulators in fining Barclays more than $450 million dollars, “attempted to manipulate and made false reports concerning both benchmark interest rates to benefit the bank's derivatives trading positions by either increasing its profits or minimizing its losses. The conduct occurred regularly and was pervasive."
The bank also systematically suppressed its submissions to the Libor committee regarding its borrowing costs to mitigate perceptions of its weakness during the 2008 crisis. (In defense of PwC and Barclays, they are not the only bank that engaged in this fraud on the public and Barclays was the first to step up and take their medicine. But the auditors have a bad habit of doing what they're told instead of fulfilling their public duty to shareholders and taxpayers. That's exactly what they did during the crisis when none of the banks in the U.S. or U.K. received "going concern" warnings before failing, getting bailed out, being forcibly acquired or nationalized.)
Barclay’s auditor, PwC, is also under investigation for negligence regarding the bank’s non-compliance with rules on segregation of customer funds by its broker-dealer.
What, exactly, did PwC the auditor ever catch at Barclays?
Barclays board chairman Agius resigned on Monday. Top candidate to replace him? Sir Michael Rake, former global Chairman of KPMG, who presided over the tax shelter scandal that almost put that firm out of business in 2005.
Auditor PwC missed increased risk and poor controls over JP Morgan’s “whale” trades in the bank’s CIO. PwC missed the impact of the change to a bad VAR model, used to monitor risk. Did PwC also miss poor disclosure of the VAR model change by JPM and the use of a unique VAR model by CIO not aligned with the overall bank risk appetite? Was PwC unaware that other areas of the bank were placing trades that were the complete opposite of the CIO’s?
The SEC is now investigating.
PwC was also fined for negligence over JP Morgan’s non-compliance with rules on segregation of customer funds by its U.K. broker-dealer. What is PwC, who has been JP Morgan Chase’s auditor since 1965, actually doing to earn almost half a billion dollars of shareholders money in fees in just the last five years?
PwC also missed increased risk and deterioration controls under CEO Corzine at MF Global. It’s no coincidence that MF Global’s chief banker, JP Morgan, and MF Global both broke the rules on segregation of customer funds. A recent bankruptcy trustee investigative report tells us that customer funds were used at MF Global to cover margin calls and customer redemptions as Corzine’s risky trades in sovereign debt drained the firm’s cash. The report, however, doesn’t tell MF Global customers, who are still missing $1.6 billion in funds, who has their money. I suspect PwC, and the MF Global CFO who is a PwC alumnus, know who received the customer cash and securities.
Imperial CEOs like Jamie Dimon, Jon Corzine, Bob Diamond and Aubrey McClendon seem to stymie auditor professional skepticism, independence and auditors' willingness to step up scrutiny of increased risk and poor internal controls, let alone uncover and report evidence of possible illegal acts.
PwC missed the litany of issues and potential illegal acts at Chesapeake Energy. Chesapeake, and its CEO McClendon, are accused and under current investigation by the SEC, IRS, and other law enforcement authorities for:
Plotting with its top competitor, Encana, to suppress land prices in one of America's most promising oil and gas plays, according to a recent Reuters investigation. Potential conflicts of interest by CEO McClendon related to arrangements for more than $1 billion in personal financing for purchases of well interests - from a lender who is also a big source of funding for the company. Use of company assets by McClendon to manage personal business in an annex at the headquarters of Chesapeake Energy Corp in a unit informally known as AKM Operations. According to Reuters, “the unit's accountants, engineers and supervisors handled about $3 million of personal work for McClendon in 2010 alone. Among other tasks, the unit's controller once helped coordinate the repair of a McClendon house that was damaged by hailstones.” Use of company aircraft by McClendon for personal trips classified as business. Mixing of McClendon’s personal financial interest in the Thunder professional basketball team with Chesapeake business. According to Reuters, the energy company signed a $36 million sponsorship deal, and it pays up to $4 million annually to brand the stadium Chesapeake Energy Arena. McClendon also mortgaged his future proceeds from the team to secure two bank loans.
Also according to Reuters:
Restaurants McClendon has co-owned occupy buildings owned by Chesapeake. A Chesapeake executive has handled the CEO's personal land and oil- and gas-well transactions. A Chesapeake board member lent money to McClendon. McClendon sold his share of at least two large energy plays at the same time Chesapeake divested its interest. McClendon operated a private $200 million hedge fund from Chesapeake offices.
PwC has served as auditors of Chesapeake since its initial public offering in 1993. Chesapeake paid less than $2,000,000 to PwC for their audit until 2008 and then less then $3,000,000 until this year, 2011 when the audit only fees jumped $2,000,000 to a little over $5,000,000. That’s still pretty low given high risk associated with excess debt and the historical lack of tone at the top exhibited by CEO Aubrey McClendon. In addition, the audit fees for PwC are at the far low end of the spectrum compared to industry peers.
The company’s latest proxy names Occidental Petroleum Corporation (auditor KPMG), Anadarko Petroleum Corporation (auditor KPMG since 1986), Apache Corporation (auditor Ernst & Young), Devon Energy Corporation (auditor KPMG), and EOG Resources, Inc. (auditor Deloitte) as its peer group for compensation purposes, stating that all are, “similar to the company in scale, scope and nature of business operations.”
Occidental Petroleum paid its auditor KPMG $10.1 million and $9.2 million respectively in 2011 and 2010. Those fees are for audit and audit only as Occidental did not spend any money with KPMG for tax or consulting. Anadarko has paid KPMG at least $8 million for its services in each of the last two years. Apache Corporation has paid auditor Ernst & Young approximately $7 million in fees in each of the last two years. Devon Energy paid KPMG $4.6 million in 2011 and $3.6 million in 2010, although almost $300 thousand of the 2011 fee was for a consulting assignment that seems to me to be in conflict with auditor independence requirements. EOG Resources paid Deloitte approximately $2.3 million dollars in fees in each of the last two years.
Maybe, in the case of Chesapeake Energy, PwC is not charging enough for the work that needs to be done to keep McClendon in line and to put directors on notice that they work for shareholders not McClendon. PwC should do more digging and pushing back at Chesapeake. PwC should charge the company that Aubrey McClendon thinks he owns quite a bit more.
There may still be time to save Chesapeake from McClendon’s profligacy.
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