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03f809d9b98bc4543f396bfa5445f228 | https://www.forbes.com/sites/jimgorzelany/2017/10/03/heres-where-to-find-the-nations-worst-traffic-tie-ups/ | Here's Where To Find The Nation's Worst Traffic Tie-Ups | Here's Where To Find The Nation's Worst Traffic Tie-Ups
Traffic is shown creeping along on northbound I-405 in Los Angeles, CA, which a recent study pegs as... [+] being one of the worst traffic "hot spots" in the U.S. (Photo by Kevork Djansezian/Getty Images)
The City of Angels is hardly angelic when it comes to traffic jams, as Los Angeles motorists suffer five of the 10 most congested stretches of road in the nation, and no fewer than 10,385 “hot spots” spread across its extensive freeway network. The worst of them is the stretch of I-405 north that runs between Exit 43 and Exit 21. That five-mile passage takes the average driver 23 minutes to traverse.
Widespread traffic bottlenecks have the potential to cost L.A. drivers a staggering $91 billion in time wasted sitting in traffic by 2026 unless the situation somehow improves. That’s according to a recent study conducted by the connected car services and transportation analytics company INRIX in Kirkland, WA. By definition, a traffic hot spot is one in which observed speeds drop below 65% of the road’s otherwise uncongested speed for at least two minutes.
Meanwhile, it will come as no surprise to New Yorkers that the Big Apple actually leads the nation in traffic hot spots with a stultifying 13,608 clogged passages, though its potential cost by 2026 is projected at “just” $64 billion. NYC’s worst traffic crawl occurs on the Brooklyn Queens Expressway east between Exit 28A and W Shore Expressway, where it takes the average driver 64 minutes to cover just 4.4 miles.
But the most consistently clogged stretch of road in the nation belongs can be found in our nation’s capital, specifically the stretch of I-95 south from Exit 133A to Fairfax County Parkway. That 6.5-mile chunk of roadway typically takes motorists 33 minutes to negotiate, and has the potential to cost commuters as much as $2.3 billion 10 years down the road.
"Many cities are calling for increased transportation infrastructure spending to fix ailing roads, bridges and transit networks," says INRIX’s senior economist Bob Pishue, "By identifying traffic hotspots and analyzing their root causes, cities can effectively combat congestion and maximize present and future investments."
As an example of how things can, in fact, change for the better in this regard, INRIX cites the improvement of traffic flow through Chicago's worst hot spot – I-90 westbound at North Newcastle Avenue – because of a nearby road expansion project. Adding another lane in each direction to the Jane Addams Memorial Tollway (which I-90 becomes north of the city), along with implementing so-called “smart” features like active lane management and allowing buses and emergency vehicles to ride on the road shoulders, reportedly increased westbound traffic flow by 64%.
That’s all fine and well, but in the meantime, commuters are sitting in their cars, trucks, and SUVs, moving along at a snail’s pace. Say what you will about the joys of motoring, but for those who suffer the worst traffic bottlenecks on a daily basis, the self-driving cars of tomorrow can’t come quickly enough.
Here’s the 15 most congested traffic hot spots in the U.S., according to INRIX:
Washington D.C.: I-95 S at Exit 133A to Fairfax County Parkway Los Angeles, CA: I-405 N at Exit 43 to Exit 21 Los Angeles, CA: I-405 S at Exit 22 to Exit 45 Los Angeles, CA: US-101 S at Exit 3B to CA-134/CA-170 Chicago, IL: I-90 W at 81A to Exit 56B Los Angeles, CA: I-405 N at Exit 53 to 38B Washington D.C.: I-95 N at Exit 143B to SR-608 Los Angeles, CA: US-101 S at Exit 13B to Exit 34 Washington D.C.: I-495 Beltway at Route 201 to Exit 4A San Diego, CA: I-15 N at Exit I-215 to Gopher Canyon Road New York, NY: Brooklyn Queens Expy E at Exit 28A to W Shore Expy Houston, TX: I-45 S Exit 46A to Exit 63 New York, NY: I-95 N / Cross Bronx Expy at Exit 4A to Route 46 San Francisco, CA: I-80 W at Emeryville to CA-4 Los Angeles, CA: I-5 S at I-10 to CA-170
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Gallery: The 10 Fastest-Selling Used Cars On The Lot 10 images View gallery
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8f85b2efb2e31a62018a64af70309cc7 | https://www.forbes.com/sites/jimgorzelany/2017/12/06/the-cheapest-to-fix-used-cars/ | The Cheapest-To-Fix Used Cars | The Cheapest-To-Fix Used Cars
Since discontinued, the 2012 Mazda5 “mini minivan” is the cheapest-to-fix model in CarMD’s 2017... [+] Vehicle Health Index. Mazda
Buying a pre-owned car or truck is already fraught with peril, particularly with regard to its mechanical condition. While the prudent course of action when considering any used vehicle is to take it to a trusted mechanic for a proper inspection, it’s a fact of life that an older car will almost certainly require regular trips to the shop for repairs, with the cost coming directly out of an owner’s pocket.
But as many motorists who've owned multiple models can attest, some cars inherently cost more or less than others to keep running. To that end, the statisticians are the auto-service website CarMD.com just compiled their annual Vehicle Health Index that highlights the cars and trucks from previous model years that are the least-expensive to repair when the “check engine” light on the instrument panel illuminates. The results are based upon reported repairs from Oct. 1, 2016 – Sept. 30, 2017 for 4.2 million cars and trucks from the 1996 through 2017 model years,
Among vehicle brands, Hyundai was found to exact the lowest check-engine-related repair costs at an average $306 per visit, followed by Mazda ($310), Kia ($317), Chrysler ($336), Dodge ($341), Infiniti ($352), Jeep ($352), and Chevrolet ($353).
Gallery: 10 Used Cars That Are Cheapest To Repair 10 images View gallery
The vehicle CarMD.com determined has the lowest repair costs when the check engine light flashes on is the (since discontinued) 2012 Mazda5 compact minivan, with an average cost per visit of just $109. It should be noted, however, that check-engine repairs are generally related to a vehicle’s emissions system, with (as in the Mazda5’s case) the most common symptom being a loose gas cap. Vehicles that have a high percentage of finicky gas caps often have lower average repair costs, simply because the issue is so cheap to resolve, either by just tightening a loose gas cap (free) or having a defective one replaced for around 10 bucks.
On the other hand, among the costliest common check engine repairs is having the car’s catalytic converter replaced at an estimated $1,190 or more. But CarMD notes that the highest-cost (though extremely rare) check-engine fixes include replacing the cylinder head assembly and spark plugs at an average $2,493, and the budget busting full engine replacement at a whopping $7,124.
We’re featuring the 10 cheapest-to-fix used cars, noting average repair costs and the most common reported check engine light-related issues in the accompanying slide show. Of course, noted repair costs may be higher or lower where you live, given the local prevailing wages for auto mechanics and other factors. According to CarMD.com, those living in the Northeast U.S. pay the most for check engine fixes, while Midwestern motorists enjoy the cheapest average repairs. Costs can also vary according to a vehicle’s age and how well or poorly it’s otherwise been maintained. The full 2017 Vehicle Health Index with year-over-year scores and top 100 vehicle rankings can be found here.
In Pictures: 10 Used Cars That Are Cheapest To Repair.
In addition, CarMD.com lets vehicle owners obtain a Vehicle Health Report, searchable by the car’s vehicle identification number, or the year, make, model and mileage here. The report includes upcoming maintenance procedures, repairs that are most likely to be needed in the coming year and the percentage of their likelihood, along with any safety-related recalls and/or technical service bulletins on the books for that particular make and model.
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3c7eadcf0d355d0a27bc7b7e14641264 | https://www.forbes.com/sites/jimgorzelany/2018/02/15/the-sum-not-the-whole-is-greater-when-it-comes-to-the-skyrocketing-cost-of-car-parts/?sh=71f13d3353df | Soaring Cost Of Parts Means Your Car Is More Likely To Be Totaled In An Accident | Soaring Cost Of Parts Means Your Car Is More Likely To Be Totaled In An Accident
Dana Kellerman replacing the headlight assembly in a 2002 Nissan Maxima at Bob Nagy's Auto Body shop... [+] in Edison, N.J., in 2004. (AP Photo/Daniel Hulshizer)
Not only are new vehicles becoming more expensive than ever – when last we looked, the average transaction price was in excess of $36,000 – the cost of parts and repairs following an accident is becoming so prohibitive that what might look repairable to the layperson might be considered a total loss to an insurance adjuster. According to the U.S. Bureau of Labor Statistics, prices for motor vehicle repairs were 61.07% higher in 2017 than they were in 2000.
In particular, sophisticated safety features like forward collision mitigation and blind-spot warning systems that employ multiple sensors and/or cameras embedded in bumpers and fenders are driving up repair costs and, in turn, the number of cars being totaled after crashes.
Airbags and related parts can likewise be prohibitively costly to replace following a collision and could cause a lower-valued car to become totaled even with otherwise minimal body damage. Generally, a car is declared to be “totaled” when the cost of repairs plus its scrap value equals or exceeds its pre-accident value (in some states this status is based on the cost of repairs exceeding a set percentage of the vehicle’s value).
But it’s not just complex high-tech elements that are becoming prohibitively costly to replace. As the National Insurance Crime Bureau (NICB) reports, the skyrocketing prices of even reasonably essential components is helping fuel an increase in auto thefts. Vehicle thefts rose last year by more than 4%, fueled largely by so-called chop shop rings that dismantle stolen cars and sell their parts to unscrupulous vendors.
As an example, the NICB computed the cost of 15 common replacement components for a few of the models on its most-stolen “Hot Wheels” list – we’re talking low-tech stuff like a headlamp assembly, fender, trunk lid, and alloy wheels, but not major components like the engine or transmission. Part prices were pulled from a database of over 24 million vehicle damage appraisals generated for insurance claims from 2016 and 2017. (Check out the NICB's handy infographic on car-part prices here.)
Altogether, the 15 essential items cost nearly $11,000 to purchase for a 2016 Toyota Camry midsize sedan, which was the most-stolen new car reported by the NICB for that particular model year. The most expensive part here is a quarter body panel at just over $1,700. And that’s not including the cost of labor, which when added would handily bust the threshold for a total loss on most 2016 Camry trim levels. It would seem to be even easier to total a 2016 Nissan Altima, with a lower residual value and higher replacement costs at over $14,000; here, the NICB says a headlamp assembly costs just over $2,000 … each.
Prefer a pickup truck? Those same 15 parts would cost over $21,000 in a full-size GMC Sierra 1500, with a headlamp assembly again being the costliest culprit, at nearly $2,300. Adding labor charges to the sum of these parts would certainly be enough to declare all but the costliest 2016 Sierra models total losses.
"For the professional theft ring, stealing and stripping vehicles for parts has always been a lucrative business," NICB senior vice president and COO Jim Schweitzer says. "On today's cars and trucks, the parts are often worth more than the intact vehicle and may be easier to move and sell. That's why we see so many thefts of key items like wheels and tires and tailgates. ... There's always a market for them."
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Gallery: 10 Vehicles With The Best Resale Values For 2018 10 images View gallery
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f9cd7db94edd8a31d84fe3444a8a8396 | https://www.forbes.com/sites/jimgorzelany/2019/02/14/when-buying-a-new-car-is-a-better-deal-than-a-used-one/ | When Buying A New Car Is A Better Deal Than A Used One | When Buying A New Car Is A Better Deal Than A Used One
The subcompact Honda HR-V crossover SUV holds onto its original value so tightly, a study shows... [+] there's little to lose by buying one new instead of used. (AP Photo/Jae C. Hong)
New-vehicle prices and loan payments have been rising steadily for the last five years and show no sign of retreating. According to Kelley Blue Book, the average transaction price is now at $36,692, with monthly loan payments averaging $548. This is due in part to the ongoing market shift away from sedans and into costlier sport-utility and vehicles and pickup trucks, and a growing number of buyers across the board who are willing to pay more for added comfort, convenience, and safety features.
Especially with a wave of two- and three-year-old vehicles coming off lease to crowd dealers’ inventories, the conventional wisdom would suggest that buying a used car or truck would be the better bargain. After all, the average new car reportedly costs 26.8% more than the one-year-old used version of the same vehicle.
However, there are situations in which fresh-off-the-showroom-floor models can be as good as or even a better deal as their year-old counterparts on the used-car lot. That’s according to a study of over 7 million new and used-car transactions monitored last year by the automotive data and research company iSeeCars.com.
Gallery: 10 Best Cars To Buy New Instead Of Used 10 images View gallery
The website identified 10 vehicles from the 2019 model year that are expected to hold onto their resale values so steadfastly, there’s little advantage to purchasing a one-year-old used version. Seven of the models on the list are crossover SUVs, with all but one being a subcompact or compact model. There’s also two bona fide automobiles represented for those who still eschew an SUV’s siren song, along with a single pickup truck. Four of the top 10 models come from Honda.
We’re featuring iSeeCars.com's 10 best models to buy new instead of used in the accompanying slideshow.
The top model in this regard will cost a buyer just 10.5% more used than new, while the vehicle in the 10th spot bumps that margin to 14.7%. That comes to a difference of around $2,300 at the low end, to as much as $8,300 depending on the model’s original price, which is nothing to sneeze at. However, when spread out over the length of a car loan, the added amount can be largely offset by getting an additional year of warranty coverage, financing at a lower interest rate, and any dealer incentives that may apply.
As an example, the compact Mazda CX-5 crossover SUV (8th on the list) is predicted to lose 13.4% of its original sticker price after one year, which amounts to $3,457 in depreciation. But that can be at least partially offset with a $1,000 cash-back rebate Mazda is offering this month or, as an alternative for eligible buyers, 2.9% financing for 60 months. If you borrow $22,000 to obtain the CX-5 that means you’ll pay $1,660 in interest at the promotional rate over five years, according to Bank Rate Monitor, versus $3,001 with conventional new-car financing at 5.15%
In addition, a new version of the same make and model may come with or offer one or more desired features – especially the latest high-tech safety systems and smartphone connectivity features – a used version lacks.
“Instead of buying a car that’s already been driven for one year, consumers can buy the new version of select vehicles for just a few thousand dollars more to avoid the uncertainties that come with purchasing a used vehicle,” says iSeeCars.com CEO Phong Ly.
The full version of the study, including separate lists of the best cars, SUVs and pickup trucks buy new instead of used, along with a rundown of which U.S. cities are best for new-car shoppers, can be found here.
In Pictures: 10 Best Cars To Buy New Instead Of Used.
The fine print: iSeeCars.com analyzed over 7 million vehicles sold between August 2018 and January 2019. New cars included in the analysis were from model years 2018 and 2019, while used vehicles from model years 2017 and 2018 were included. Vehicles with low sample size were excluded from the analysis, as were cars with outlier mileages. The average asking prices of the lightly used cars were compared to those of new cars from the same year. The difference in price for each car is expressed as a percentage of the used average prices.
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634ac12498e902e5a16b43ad81457c70 | https://www.forbes.com/sites/jimgorzelany/2019/09/11/how-some-states-are-discouraging-electric-car-ownership/ | How Some States Could Be Discouraging Electric Car Ownership With ‘Extremely Punitive’ Fees | How Some States Could Be Discouraging Electric Car Ownership With ‘Extremely Punitive’ Fees
Electric-car charging station outside a Walmart in Clarksville, IN. Electrify America
In a just issued report, Consumer Reports says electric vehicle owners in some states could see their registration fees skyrocket to the point where they pay up to four times the amount that owners of internal combustion engine vehicles pay in gasoline taxes.
The idea is to make up revenue that’s otherwise lost because electric car owners avoid paying the state tax on fuel. Many states are feeling the pinch at the pump with new cars becoming more fuel-efficient and gas-tax increases not being politically popular.
The gas tax is a source of funds used to pay for road improvements. However, CR notes that it’s not necessarily the primary source. In 2016 (the latest year for which data is currently available) the report notes that state gas taxes accounted for less than 29 percent of state revenues that went to highway funding. The remainder is funded via registration fees, tolls, and other sources of tax revenue.
CR says that seven of eight electric vehicle fees instituted or increased so far in 2019 will swell to the point where they are “extremely punitive” by 2025. Not only will they cost electric car owners far more in fees than conventional auto drivers, but the organization warns they could inhibit widespread EV adoption.
Earlier this year Illinois legislators proposed levying a $1,000 annual registration fee on all EVs. It had previously been an additional $17.50 on top of the standard charge. Predictably, opponents were both vocal and vicious over what would amount to a nearly 60-fold increase in registration charges that would become a major disincentive to EV sales. They included startup company Rivian, which is about to begin manufacturing the first in a new line of EVs at a former Mitsubishi plant in Normal, Ill.
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As it turned out, cooler heads prevailed and the so-called “EV tax” was reduced to a more sensible $100 on top of the also-increased annual $158 registration fee assessed for all cars.
Currently, 26 states have extra annual fees for EV owners on the books. Another eight are proposing them. Perhaps ironically, these include states like California and Colorado that otherwise grant EV buyers substantial financial incentives to help spur sales for the sake of reducing tailpipe emissions. Curiously, it also includes a number of states in which very few EVs are sold.
CR says the existing fees in Arkansas and Wyoming equate to paying the state gas tax on a vehicle that gets a mere 13 miles per gallon. Among proposed fees, the highest would be for EV owners in Missouri and Arizona. If enacted, they would essentially charge electric car owners the equivalent of gas taxes to keep cars running that are rated at 9 and 10 miles per gallon, respectively.
Not only that, but since these fees are based on registration, rather than miles driven (gallons of fuel consumed), they tend to be especially punitive to those owning electric cars having shorter operating ranges that are only driven sparingly. What’s more, CR notes that since EVs make up such a small percentage of all vehicles on the road, the added revenue received by hiking up registration fees will still be negligible in the battle to rebuild bridges and patch pockmarked pavement.
Could there be a better way to recover lost gas tax revenue that might not dissuade motorists from going electric? We figure one viable alternative would be to assess higher registration fees based upon a vehicle’s curb weight. Heavier vehicles – especially heavy-duty pickups, buses, commercial vehicles, and big-rig trucks – tend to cause more damage to roads and bridges than do lighter modes of transport. However, given the lobbying power of the businesses that would be affected, this probably wouldn't happen anytime soon.
Another idea some states have been considering is to assess a “use tax” that’s based upon the number of miles a vehicle is driven. One way to determine that would be via data collected by a small transponder that plugs into a car’s diagnostic (OBD II) port. This would be similar to those used by auto insurance companies to reward motorists who drive for only short distances and maintain mannerly driving habits. Privacy and fairness issues (rural drivers who drive more miles than their urban counterparts, though at more fuel-efficient higher speeds, would essentially be penalized) have largely prevented such programs from being implemented.
In the meantime, here’s a rundown of the states that currently charge electric-vehicle owners added fees according to CR’s report and additional information from the National Conference of State Legislatures:
Alabama: $200 annual fee; increasing by $3 per year beginning in 2023.
Arkansas: $200 annual fee.
California: $100 annual fee; starting in January 2021, annual increases will be indexed to the Consumer Price Index.
Colorado: $50 annual fee.
Georgia: $214 annual license fee. The fee is automatically adjusted on an annual basis.
Idaho: $140 annual fee.
Illinois: $100 annual fee.
Indiana: $150 annual fee.
Iowa: $65 annual fee; increases to $130 in 2022.
Michigan: $135 annual fee, indexed to the state gas tax.
Minnesota: $75 annual fee; an increase to $250 is being proposed.
Mississippi: $150 fee; beginning July 1, 2021, it will be indexed to the inflation rate.
Missouri: $75 annual fee; an increase to $210 is being proposed.
Nebraska: $75 annual fee; an increase to $125 is being proposed.
North Carolina: $130 annual fee; an increase to $230 is being proposed.
North Dakota: $120 annual fee.
Ohio: $200 annual fee.
Oregon: $110 annual fee beginning on January 1, 2020.
South Carolina: $120 biennial fee.
Tennessee: $100 annual fee.
Utah: $60 annual fee for EVs; it increases to $90 in 2020 and $120 in 2021. In 2022 increases will be indexed to the consumer price index.
Virginia: $64 annual fee.
Washington: $225 annual fee.
West Virginia: 200 annual fee.
Wisconsin: $100 annual fee.
Wyoming: $200 annual fee.
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cb02db1a7b92d7e49c56f5030e544109 | https://www.forbes.com/sites/jimgorzelany/2020/02/18/unconventional-wisdom-10-vehicles-that-are-better-deals-to-buy-new-instead-of-used/?sh=24c99ce24ada | Unconventional Wisdom: 10 Vehicles That Are Better Deals To Buy New Instead Of Used | Unconventional Wisdom: 10 Vehicles That Are Better Deals To Buy New Instead Of Used
According to the website iSeeCars.com, the Tesla Model 3 is the best car to buy new instead of used, ... [+] due to its market demand and stalwart resale value. Tesla
Much has been said about the swelling wave of two- and three-year old off-lease used vehicles returning to dealers’ lots for the benefit of those who are otherwise priced out of the new vehicle market. There’s no denying that, at an average price of around $37,000 being the first owner of a given model can be a pricey proposition.
Yet, there are advantages to choosing a shiny new ride instead of even a recent vintage pre-owned model. There is a certain allure to driving a new vehicle off a dealer’s lot that many held dear, not to mention that “new car smell.” You can get one equipped with the latest features, including some important driver-assist safety systems that may not have been available or widely offered on a given model two or three years ago. What’s more, you’re assured that a prior owner hasn’t abused or improperly serviced the vehicle.
Despite carrying higher asking prices, there are instances in which buying a new car instead of a used one can prove to be the better deal. That’s according to a study of over six million new and used-car transactions monitored between August 2019 and January 2020 by the automotive data and research company iSeeCars.com.
The website identifies 10 vehicles from the 2020 model year that are projected to hold onto their resale values so tenaciously, there’s far less financial advantage to choosing a one-year-old version. While the average car loses around 20 percent of its original value after a year on the road, the top performers in this regard drop far less than half that amount. Of course, new vehicles have the advantage of coming with full warranty coverage, usually including roadside assistance, for three years or longer. Many are sold with automaker’s incentives, including cash rebates and low-rate or even zero-percent financing, which can sometimes tip the financial scales even further in favor of a new model.
“While choosing a used car over a new car is typically associated with the greatest cost savings, sometimes the price difference isn’t that significant,” explains iSeeCars CEO Phong Ly. “Instead of buying a car that’s already been driven for one year, consumers can buy the new version of select vehicles with a purchase price of just a few thousand dollars more to avoid the uncertainties that come with purchasing a used vehicle.”
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The car that resides at the top of the list of best vehicles to buy new is the full-electric Tesla Model 3 sedan. Demand for it remains high, whether new or used, and that’s in a market otherwise dominated by SUVs and pickup trucks. Last year the Model 3 outsold all the other electric cars sold in the U.S. combined. The top 10 models here are an eclectic mix of vehicle types, including pickups, SUVs, sedans, and hatchbacks. All are highly ought-after in the pre-owned market, which means consumers are willing to pay more to acquire them than less desirable models. We’re featuring a gallery of the best cars to buy new instead of used below with our own commentary and are noting any automaker’s incentives that currently apply.
What about the models on the other side of the proverbial coin? According to iSeeCars.com data, luxury vehicles are usually a better bargain to buy used instead of new. That’s largely because they tend to depreciate so quickly, and because they’re costly when new, so there’s a lot more money at stake to lose.
The model iSeeCars.com says is the best deal among second-hand one-year-old rides is the flagship BMW 7 Series sedan, which loses an average 43.4 percent of its original value in the first year of ownership. That’s $47,447 saved by shopping the pre-owned lot instead of a new-car showroom. Other biggest losers in this regard include the Audi A6 (-41.0%), Jaguar XE (-40.9%), Volvo S90 (-40.0%), and the BMW 3 Series (-38.2%)
“Luxury cars depreciate quickly because buyers most luxury buyers aren’t willing to pay a high premium on a used or dated version of the vehicle,” says Ly. “They also have high maintenance and ownership costs, which also impact resale value.”
10 Best Cars To Buy New Instead Of Used
10. Dodge Charger
Dodge Charger FCA
Dodge’s retro-fueled muscle car can be fitted with engines that run from energetic to rocket-fast. It’s estimated to lose an average 13.9 percent of its original value after a year, which amounts to $4,097 at the least. Dodge sweetens the deal this month with a $1,000 cash rebate combined with 0.0 percent financing for 36 months. Rebates on remaining 2019 inventory are based on horsepower, with the base V6 Charger offering up to $3,920 cash back, and the top 707-horsepower SRT Hellcat getting a rebate as rich as $7,077.
9. Honda Ridgeline
Honda Ridgeline Honda
Honda’s midsize Ridgeline isn’t a huge seller as a new vehicle, but high demand for smaller pickups of any kind keeps its resale value high. Unlike all other haulers it’s based on a car’s unibody platform instead of a typical truck’s body-on-frame construction, which gives it exceptionally good road manners. It loses an average 13.9 percent of its original value after a year (-$4,663).
8. Honda Accord
Honda Accord Honda
The midsize Honda Accord remains a top seller, even at a time when shoppers are eschewing sedans for crossover SUVs. The brand’s reputation for reliability helps keep the car’s resale value robust, losing 13.7 percent after a year on the road (-$3,177). If you qualify, there’s a promotional 1.9 percent financing deal for 36 months on the Accord.
7. Chevrolet Corvette Stingray
Chevrolet Corvette Stingray Chevrolet
Production is just ramping up for the new mid-engine 2020 Corvette, with a long waiting list of prospective buyers, so we’re surprised it doesn’t wind up higher on this list. According to iSeeCars.com’s Ly, new 2019 Corvettes were deeply discounted before the introduction of the 2020, and as a result, there wasn’t as steep of a price difference between the new and used models. Expect a loss of 13.6 percent after the first year (-$8,113), but don’t expect to see incentives on this version of the venerable ‘Vette any time soon.
6. Subaru Crosstrek
Subaru Crosstrek Subaru
The Subaru Crosstrek is a popular choice among crossover SUVs, and consistently places on lists of models having the best resale values. Supplies were reportedly short during 2019, so demand (and, in turn, prices), remains high in the pre-owned market. The Crosstrek is expected to drop in value by 13,1 percent after 12 months of ownership (-$3,118). Subaru is offering 3.49 percent financing on the Crosstrek in February.
5. Honda Fit
Honda Fit Honda
While subcompacts have fallen out of favor among many brands, the Honda Fit hatchback remains popular for its surprisingly roomy interior and practical nature. It’s anticipated to lose 12.5% of its original value after year one (-$2,111). Honda is offering a financing deal at 1.9 percent financing for 36 months on the Fit through the end of the month.
4. Honda Civic Hatchback
Honda Civic Hatchback Honda
For some, the hatchback version of the Honda Civic can be a less-costly alternative to a compact crossover, and loses little in the way of utility in the bargain. It’s also one of the few cars that still offers a manual transmission, and in more than one trim level. The Civic Hatchback is estimated to lose 11.9 percent in value after the first year (-$2,704). Honda is offering 1.9 percent financing for 36 months on the Civic this month.
3. Chevrolet Traverse
Chevrolet Traverse Chevrolet
The roomy and family friendly Chevrolet Traverse three-row crossover was fully redesigned for 2018, and remains both fresh and is in demand among used-vehicle buyers. It’s anticipated to lose an average 11.7 percent after one year (-$4,198). Depending on the region, Chevy is offering cash rebates as rich as $2,500 on the 2020 Traverse (up to $6,000 on any remaining 2019s).
2. Ford Ranger
Ford Ranger Ford
The Ford Ranger was resurrected for the 2019 model year after a prolonged absence, and it returned at just the right time. Midsize pickup trucks are selling like gangbusters these days, and as the newest market entry, the Ranger offers all the latest bells and whistles. Big demand new and used means it can be expected to drop in value by just 11.4 percent by next February (-$3,716). At that we’ve seen Ford advertising deals this month with rebates up to $1,250 or 2.9 percent financing for 60 months.
1. Tesla Model 3
Tesla Model 3 Tesla
The best-selling electric car in the U.S. remains in big demand, and can be expected to depreciate just 5.5 percent after a year in the average owner’s driveway; that’s a mere $2,529 lost.
You can read the full iSeeCars.com report here, including the best and worst cars to buy new by vehicle category, and which top either list for major cities in the U.S.
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843904a9fdcf867017eb2d6c811cf119 | https://www.forbes.com/sites/jimgorzelany/2020/11/23/these-are-the-cheapest-used-cars-trucks-vans-and-suvs-to-insure/?sh=3549f47b2983 | These Are The Cheapest Used Cars, Trucks, Vans And SUVs To Insure | These Are The Cheapest Used Cars, Trucks, Vans And SUVs To Insure
According to Mercury Insurance, the 2016-2019 Chevrolet Spark is tied for first place among the ... [+] least expensive used cars to insure. ANDREW TRAHAN
Used-vehicle inventories have become precariously tight in recent months as demand for them has swelled considerably in the wake of the pandemic. A large number of what are now at-home workers, combined with a loss of faith in public transportation among those who still go to a workplace have largely fueled spiking sales in pre-owned models, and a subsequent rise in prices.
As is the proper course of action when shopping for a new car, those in the market for a used vehicle, will want to pay heed to a given model’s ongoing operating costs. Depreciation is less of factor here that it would be with selecting a brand-new model, as the average pre-owned vehicle has likely already lost around a third of its original worth after three years. You’ll certainly want to check a model’s fuel economy to see what you’ll be paying to keep the gas tank filled—this information is a few clicks away at fueleconomy.gov. And it pays to consider how much it will cost to insure any car, truck, van or SUV that’s under your consideration.
There are, of course, myriad websites that can provide estimates for specific makes and models, but the statisticians at Mercury Insurance have cut through the clutter and put together a trio of handy lists that show which pre-owned cars, trucks, vans, SUVs, and electric vehicles from the 2016-2019 model years are the cheapest, on average, to insure.
Mercury’s rankings are based on a full coverage policy for a hypothetical driver having average factors for each actuarial component that determines car insurance rates. Premiums are largely based on a policyholder’s statistical likelihood of getting into an accident or having a vehicle stolen or otherwise damaged, and vary depending on one’s age, sex, marital status, driving record, credit rating address, and the model driven.
Aside from choosing a model that’s inherently cheaper to insure, the best ways to help keep your car insurance rates low are to carry higher deductibles for collision and comprehensive coverage, waiving add-ons like rental reimbursement and roadside assistance, combining car and homeowners’ insurance with the same carrier, and making sure you obtain every applicable discount for which you’re entitled.
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In the meantime, here are the pre-owned models that Mercury Insurance says will generally garner the lowest insurance premiums:
10 Least-Expensive Used Cars To Insure
1. 2016-2019 Chevrolet Spark (tied)
1. 2016-2019 Chevrolet Sonic (tied)
3. 2016-2019 Fiat 500
4. 2017-2019 Fiat 124 Spider
5. 2016-2017 Chrysler 200
6. 2016-2017 Buick Verano
7. 2016-2018 Honda Fit
8. 2016-2018 Hyundai Elantra
9. 2016-2017 Hyundai Veloster
10. 2016-2017 Volkswagen Golf
10 Least-Expensive Used Trucks, Vans, And SUVs To Insure
1. 2016-2019 Chevrolet Express
2. 2016-2019 GMC Savana
3. 2016 Dodge Ram 1500
4. 2016-2018 Hyundai Santa Fe
5. 2016-2018 Honda Pilot
6. 2016-2017 Mazda CX-9
7. 2016 Kia Sportage
8. 2016 Chevrolet Colorado
9. 2016 Honda CR-V (tied)
9. 2016 Honda HR-V (tied)
10 Least-Expensive Used Electric Vehicles To Insure
1. 2016-2019 Fiat 500 Electric
2. 2016-2019 Kia Soul EV
3. 2016-2019 Nissan Leaf
4. 2016-2019 VW E-Golf
5. 2016-2019 Smart Fortwo
6. 2016-2018 Ford Focus
7. 2017-2019 Hyundai Ioniq
8. 2016-2019 BMW i3
9. 2016-2017 Mitsubishi iMIEV
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299e54ec4495d7a99451fdf417fb59ad | https://www.forbes.com/sites/jimgorzelany/2020/12/21/best-bets-the-safest-and-most-reliable-used-cars-that-hold-onto-their-values-best/ | Best Bets: The Safest And Most Reliable Used Cars That Hold Onto Their Values Best | Best Bets: The Safest And Most Reliable Used Cars That Hold Onto Their Values Best
You can save a bundle buying a pre-owned vehicle instead of a new one—here are the models that ... [+] should be at the top of your short list. ASSOCIATED PRESS
Used vehicles continue to be strong sellers in these pandemic-afflicted times. Healthy inventories of pre-owned cars, trucks, and SUVs are providing cash-strapped consumers with money saving alternatives to new models that are currently in shorter supply than normal thanks to COVID-19-related shutdowns earlier this year, and a recent spike in demand.
December in general, and the days preceding Christmas and New Years Day in particular are among the best times of the year in which to shop for a used vehicle. According to the analysts at the car search website iSeeCars.com, you’re 18.1 percent more likely than average to strike a great deal if you hit a dealer’s lot on Christmas Eve, with a 20.5 percent better chance of obtaining a deep discount on New Year’s Eve. And if you’re too busy to go car shopping before we close the books on 2020, take heed that there are historically 28.7 percent more deals offered in January and a whopping 39.2 percent better than average chance of scoring one on Martin Luther King, Jr. Day (January 18).
Of course, buying a used vehicle tends to be fraught with peril, and as such you’d want to look into a given model’s overall reliability to determine which will best be able to go the distance without draining your finances at the repair shop. All else being equal, you’d also want to choose a model that is deemed to be among the safest on the road, and one that holds onto its resale value most tenaciously to bring back more cash when trade-in time rolls along.
That’s a lot of research to dive into, but fortunately the aforementioned experts at iSeeCars.com have put together a list of the used vehicles that have best demonstrated long-term reliability and hold their values the best, based on two separate studies of over 20 million cars. They further culled down the top choices according to crash test results conducted by the National Highway Traffic Safety Administration from 2011-2020. While some, like the Honda CR-V, are typically among the top sellers in the new-vehicle market, others, including the Buick LaCrosse, have since been discontinued and can only be found on used-car lots.
Of course, no matter which make, model, and model year you ultimately choose, it still pays to do some due diligence before signing on the proverbial dotted line. For starters, it’s always prudent to take a used car or truck you’re considering to a trusted mechanic to ensure that it’s in good running order and to get an idea of which, if any, issues might surface in the near term. Always run a model’s vehicle identification number (VIN) through a title-search service like Carfax or AutoCheck to make sure it hasn’t been previously flood-damaged or salvaged and subsequently rebuilt. Such reports will also give you an idea of how well the car was maintained, how many times its changed hands, and whether it’s been in an accident, along with other key data.
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Here’s a quick look at what the site deemed as being the best and second best models in each of 21 used-vehicle segments, along with the top overall choices you can find going for less than $10,000 and $5,000:
Best Compact SUV: Honda CR-V; Runner-Up: Subaru Outback Best Luxury Compact SUV: Acura RDX; Runner-Up: N/A Best Midsize SUV: Toyota Highlander; Runner-Up: Toyota 4Runner Best Luxury Midsize SUV: Acura MDX; Runner-Up: Lexus RX 350 Best Full-Size SUV: Chevrolet Tahoe; Runner-Up: Ford Expedition Best Luxury Full-Size SUV: Lincoln Navigator; Runner-Up: Cadillac Escalade Best 3rd Row SUV: Toyota Highlander; Runner-Up: Honda Pilot Best Luxury 3rd Row SUV: Acura MDX; Runner-Up: Lincoln Navigator Best Midsize Truck: Toyota Tacoma; Runner-Up: N/A Best Full-Size Truck: Toyota Tundra; Runner-Up: Chevrolet Silverado 1500 Best Compact Car: Honda Civic; Runner-Up: Toyota Corolla Best Luxury Compact Car: Lexus IS; Runner-Up: 250 Lexus IS 350 Best Midsize Sedan: Honda Accord; Runner-Up: Toyota Camry Best Luxury Midsize Sedan: Lexus ES 350; Runner-Up: Cadillac CTS Best Large Sedan: Toyota Avalon; Runner-Up: Chevrolet Impala Best Luxury Large Sedan: Buick LaCrosse; Runner-Up: Cadillac XTS Best Sports Car: Ford Mustang; Runner-Up: Chevrolet Camaro Best Electric Car: Tesla Model S; Runner-Up: Tesla Model 3 Best Hybrid Car: Toyota Prius; Runner-Up: Toyota Camry Hybrid Best Hybrid SUV: Toyota Highlander Hybrid; Runner-Up: N/A Best Minivan: Honda Odyssey; Runner-Up: Toyota Sienna Best Car Under $10,000 Toyota Yaris; Runner-Up: Ford Focus Best Car Under $5,000: Mazda MAZDA3; Runner-Up: Buick Regal
You can read the full report here.
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f7e413c61858115780375cda84391ae1 | https://www.forbes.com/sites/jimgorzelany/2021/01/05/favorable-forecast-new-vehicle-financing-rates-expected-to-drop-during-2021/?sh=534da20616fc | Favorable Forecast: New-Vehicle Financing Rates Expected To Drop During 2021 | Favorable Forecast: New-Vehicle Financing Rates Expected To Drop During 2021
New-car loans are anticipated to become more affordable this year, which should benefit consumers, ... [+] automakers and dealers alike.. getty
Despite rising prices for new cars, SUVs, and especially pickup trucks, experts predict low interest rates should continue to work in the favor of buyers and lessees throughout the year. That’s welcome news not only for those who intend to buy or lease a vehicle, but it should help automakers and dealers move the metal in the wake of falling sales caused by the latest surge in coronavirus cases.
According to BankRate.com’s chief financial analyst Greg McBride, CFA, the national average for a five-year new-vehicle loan should drop to 4.08 percent in the coming months, with four-year financing expected to average 4.75 percent. By contrast, auto loan rates were at 4.60 percent last January for five-year terms, and 5.33 percent for five-year financing. They subsequently dropped to 4.22 percent and 4.88 percent, respectively, by year’s end.
With the typical new vehicle now costing around $39,000, the expected rate cuts would mean a consumer could expect a monthly payment of $627 on a five-year loan with $5,000 down and $779 with a four-year term.
“The backdrop of low interest rates and a recovering economy will bring about an easing of terms, especially rates, as competition heats up,” McBride says. “We’ll see rates for both new and used car loans trending lower throughout the year, but at a snail’s pace.”
Lower financing costs and still strong residual values will likely help new-vehicle leasing stay affordable as well. That’s because monthly payments are based on the difference between the transaction price and what it’s expected to be worth at the end of the term, financed at current rates. It would also make it easier for automakers’ financing subsidiaries to offer low-rate or zero-percent-interest loans on select models as needed to spur sales.
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If Bankrate’s predictions are, in fact, on the money, that would mean five-year auto financing would be the cheapest since early 2015, with four-year rates being the lowest since 2014. That’s when the Federal Reserve Board first began raising interest rates since the onset of the Great Recession. As it is, the Fed has already signaled to keep borrowing rates at zero percent through 2023 at the earliest to keep the U.S. economy in positive territory in wake of the COVID-19 pandemic’s punishing effects.
At that, we suggest anyone shopping for a new or used car, truck, or SUV in the coming months to compare rates among local lenders before heading for a showroom and see how they stack up compared to what the dealer may have to offer. Check with automaker’s websites to see if special financing or leasing offers are available for the vehicle of your choice; such deals sometimes extend to a brand’s recent model-year new cars.
But keep in mind that the lowest rates are reserved for those having pristine credit ratings. Those with borrowing histories that are pockmarked with late payments or delinquencies will be asked to pay more. In some cases much more.
According to a recent State of the Automotive Finance Market compiled by the financing experts at Experian, a new-vehicle buyer having a “super prime” FICO score of 720 or above was able to score an average financing rate of 3.65 percent last year, while someone suffering a “subprime” score of 580-619 was charged an average 11.92 percent. Those having the worst credit scores of 579 or below were forced to pay a whopping average 14.39 percent for a car loan.
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547bbad4193e80107bd8acf236f42add | https://www.forbes.com/sites/jimgorzelany/2021/01/15/heres-where-youll-pay-the-most-and-least-for-car-insurance-in-2021/?sh=783dacd415a4 | Here’s Where You’ll Pay The Most—And Least—For Car Insurance In 2021 | Here’s Where You’ll Pay The Most—And Least—For Car Insurance In 2021
The average annual cost to insure a car in the U.S. stands at $1,636, which is a whopping 106% ... [+] higher than it was a decade ago. Getty
The good news is that auto insurance premiums are, on average, becoming more affordable for the first time in 10 years, largely due to fewer claims because of the COVID-19 pandemic and the subsequent reduction in traffic. The bad news is they’re expected to jump back up next year as the nation (hopefully) gets back to normal, and claims rise due to more cars on the road and higher repair costs. That’s according to the State of Auto Insurance 2021 report compiled by the personal finance website ValuePenguin.com.
Overall, average auto insurance rates in the U.S. will decrease by 1.7% for 2021, with the largest drops expected in Arkansas (4.8%), Ohio (4.3%) and Michigan (4.3%). But not everyone will see cheaper car insurance bills this year. Premiums will rise by a slight amount in five states in 2021, led by New York and Indiana at 1.2% and 1.1%, respectively. The average annual cost to insure a car in the U.S. stands at $1,636, which is a whopping 106% higher than it was a decade ago.
In addition to a motorist’s driving record and personal factors like gender, age, and marital status, auto insurance rates are based on a person’s address. Generally, those living in outer suburbia and rural areas will pay less than motorists in urban areas where there is a greater probability of getting into a wreck and/or having a vehicle get damaged or stolen.
Beyond that, average rates will vary—sometimes dramatically—from one state to another. This is due to a number of variables, including crash/claim/crime rates, the number of uninsured drivers, the frequency of inclement weather, population density, the number of insurance companies doing business within a given state, the required minimum coverage amounts, and insurance industry regulations.
For example, those living in Maine will pay 40% less than the national average for car insurance, while Michigan residents will be charged a stiff 353% more than the norm for coverage. That’s an annual average out-of-pocket difference of $6,419. We’re featuring ValuePengiuin.com’s list of the 10 states in which motorists are charged the highest and lowest auto insurance rates below.
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Of course no matter in which state you reside, experts advise shopping around among competing carriers periodically to see which one offers the lowest rates based on your personal information. ValuePenguin.com says premiums can fluctuate by as much as 242% between select insurance companies for a given motorist. Getting quotes is especially important if any of your personal factors has recently changed. This includes buying a new car, adding a second or third vehicle to your policy, adding or removing a driver from your coverage, becoming married or divorced, moving to a new address, or buying a house.
You should definitely shop around if you’ve gotten into an accident or have been issued a moving violation. ValuePenguin.com says getting a traffic ticket will trigger, on average, a 117% boost in car insurance rates, with getting a DUI being the biggest budget-buster at 157%. Again, this varies from one state to another, with North Carolina residents seeing the biggest boost at an average 255%; those living in Florida catch a break in this regard with only a 55% average rise in rates.
Here are the states in which motorists will pay the highest average car insurance premiums for 2021:
Michigan: $7,406 Florida: $2,795 Rhode Island: $2,482 Louisiana: $2,337 Kentucky: $2,228 Arizona: $2,152 New York: $2,075 Nevada: $2,047 Delaware: $2,042 Colorado: $1,992
And here are the states where drivers will enjoy the lowest average rates:
Indiana: $987 Iowa: $1,033 Alaska: $1,034 Wisconsin: $1,037 Ohio: $1,043 Virginia: $1,130 Idaho: $1,132 Vermont: $1,135 Washington: $1,158 Tennessee: $1,192
Click here for more state-specific auto insurance data.
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8dcdbce27a96a54cec41eb3f3b703668 | https://www.forbes.com/sites/jimgorzelany/2021/02/15/heres-what-to-do-if-your-car-wont-start-in-the-cold-or-gets-stuck-in-the-snow/ | Here’s What To Do If Your Car Won’t Start In The Cold, Or Gets Stuck In The Snow | Here’s What To Do If Your Car Won’t Start In The Cold, Or Gets Stuck In The Snow
Take heed if you're getting hit with a storm, especially if you're not accustomed to driving on snow ... [+] or icy roads. getty
The Weather Channel has officially named the amalgamation of arctic cold conditions and blinding snowstorms that have crippled a huge swath of the U.S. “Uri.” He or she has wreaked havoc with record snowfall in Texas and will continue to spread snow and damaging ice from the South into parts of the Midwest and Northeast. Those living in Minnesota or upstate New York may be old hands at coping with the worst Old Man Winter can dish out, but much of the nation that’s getting hit with Uri’s wrath are not as accustomed to dealing with it, particularly with regard to their vehicles.
Here’s how to cope with the elements if you absolutely must take to the road in snowy and icy conditions:
First off, if it’s severely cold and you haven’t gotten a new battery in a few years, your car may not start. You can always call a tow truck, but you may have to wait for hours until an overburdened driver can come to the rescue. Jump-starting the car may be a more effective solution, assuming you have a set of jumper cables and a willing participant with a car that’s already running. Just be sure to dress warmly, and that means wearing a hat and gloves.
Park the running car as closely to the one with the dead battery as possible, preferably head-to-head, and switch off the ignition. (If it’s garaged you may have to push the car with the dead battery out and into position.) The battery usually resides under a removable plastic cover and is located to one side of the engine; on some cars you may have to remove this cover to get at the terminals, while other models may have specific jump-starting points–check your vehicle’s owner’s manual for specifics. Connect the positive (“+”) jumper cable to the positive terminal on the good battery and then the positive terminal on the dead battery, followed by the negative (“=”) connections.
Have the running car’s driver start the engine, and run it for 1-2 minutes while revving to higher rpm. Attempt to start the car with the dead battery; if you get no response at first go back and ensure the cables are firmly attached to the terminals. If the car doesn’t start after several tries, you’ll have no recourse other than to call for service.
Assuming your vehicle’s engine turns over, take particular caution once you hit the road. Turn on the car’s headlamps and take it easy on the accelerator – even if your vehicle is equipped with all- or four-wheel-drive. Driving all four wheels might make a vehicle go faster on wet pavement, but even the beefiest 4X4 trucks can spin out of control on a patch of ice or through a slick curve if it’s moving too quickly. Leave extra room between you and the traffic ahead – your car’s brakes won’t work as well as they would on dry asphalt. Keep an eye out for frozen patches, especially on bridges and overpasses which tend to freeze sooner than paved roads.
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Avoid using the vehicle’s cruise control to keep reaction times to a minimum. Accelerate smoothly when climbing hills to avoid spinning the wheels and maintain your car’s momentum without stopping; reduce speed and drive as slowly down hill as possible. If you do hit a slippery spot and the vehicle begins to skid, stay calm and steer in the direction you want to go, maintaining a light and steady foot on the accelerator. Slamming on the brakes is usually counter-productive when a car or truck is sliding sideways.
If you’re coming to a stop in straight line and feel the brake pedal pulsating or chattering (and/or the “ABS” light is flashing on the instrument panel), this means the antilock function is activated. Do not let up on the brakes should this occur – maintain a firm foot on the pedal until the vehicle comes to a stop. And if the stability control warning light flashes on the dashboard, meaning the system is engaging to help counter wheel spin, interpret it as a signal to slow down.
Should your vehicle become stuck in the snow, avoid spinning the tires, as you’ll only be digging yourself into a deeper rut. If you’re driving a four-wheel-drive SUV or pickup, engage the low-range gearing to help crawl out of a snow bank, though it may be of less value if all four wheels are sitting on icy patches. Be sure to disengage it once you get the vehicle up to speed to avoid damaging the system. Otherwise, disengage the car’s traction control – which tends to work against your efforts when there’s zero traction – and gradually “rock” the vehicle back and forth to get it unstuck. Shift into the lowest gear (second gear if it’s a manual transmission) and slowly creep ahead as far as possible – perhaps only an inch or two at a time – then engage the brakes, put the car into reverse and repeat the process back and forth several times to gradually get unstuck.
If rocking the vehicle out of the snow doesn’t work, throw several handfuls of sand or cat litter if you have it on hand to achieve just enough grip to get going(Experts suggest carrying some as part of winter-travel emergency kit). Otherwise wedge cardboard sheets or the car’s floor mats under the tires to help them catch; if there’s nothing else handy, try using tree branches or other organic debris. If you can’t get the vehicle free after several minutes, call a tow truck to avoid causing damage to your car’s transmission and other components.
If you’re driving in a more-remote area and roads become too slick or visibility is severely compromised, FEMA recommends pulling off the road when it’s safe to do so, turning on the car’s hazard lights and hanging something as a distress flag from the antenna. If there’s a safe haven in the immediate area in which you can take shelter, head for it. If not, stay in the car and either wait for a break in the weather or for help to arrive. Call for assistance and switch on an inside light so rescuers or workers can see you.
If you’re forced to remain in the car for an extended period, run the engine and heater for only about 10 minutes each hour to preserve fuel while keeping warm. Be sure to open a downwind window slightly for ventilation and periodically clear snow from the exhaust pipe to prevent possible carbon monoxide poisoning.
Hope that all helped salve that bout of seasonal affective disorder you’re likely suffering. Stay safe.
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0294584d483ab898cfb3b93d5bc5da48 | https://www.forbes.com/sites/jimgorzelany/2021/02/24/dirty-bakers-dozen-the-13-environmentally-meanest-vehicles-for-2021/ | Dirty Baker’s Dozen: The 13 Environmentally ‘Meanest’ Vehicles For 2021 | Dirty Baker’s Dozen: The 13 Environmentally ‘Meanest’ Vehicles For 2021
The high-flying Ram 1500 TRX was judged to be the "meanest" vehicle to the environment for 2020. Stellantis
In a separate post we highlighted what the American Council for an Energy Efficient Economy (ACEEE) says are the “greenest” rides on the road, based on an examination of over 1,000 models from the 2021 model year. All of the 12 cleanest cars in the organiztion’s GreenerCars ratings this year are either full-electric, gas/electric hybrid, or plug-in hybrid models, with the two tied for first place being the Hyundai Ioniq Electric and the MINI Cooper SE EVs.
While the greenest car list may not be populated with many particularly alluring models to drive, the opposite is true with the ACEEE’s list of the environmentally “meanest” vehicles for 2021. Eleven of the dirty dozen are either large SUVs or pickup trucks packing big gas guzzling engines that generate hundreds of horsepower, with many reinventing the phrase “fun to drive.”
The ACEEE gives each vehicle on the market an overall Green Score that can be used to compare the relative effects on the environment among competing models. Green Scores are tabulated on a 100-point scale, with higher numbers better. While the aforementioned Ioniq Electric and MINI Cooper SE received top Green Scores of 70, the worst offender of the year—the Ram 1500 TRX—manages a tally of just 22.
The TRX comes fitted with the outrageous supercharged V8 from the Dodge Challenger and Charger Hellcat models. It puts an uncanny 702 horsepower and 650 pound-feet of torque to the pavement, which enables a sprint to 60 mph in a sudden 4.5 seconds. That makes it the fastest full-size pickup on the planet, but it’s also the least fuel efficient at a paltry 10 mpg in the city and 14 mpg on the highway. In terms of tailpipe emissions, the 1500 TRX spews 748 grams of C02 into the environment per mile, according to the EPA. By comparison, the plug-in hybrid Toyota Prius Prime—with Green Score of 68—is estimated to emit just 78 grams of greenhouse gases per mile.
But the scores aren’t based on just fuel economy or tailpipe emissions. The ACEEE’s ratings take into consideration the “cradle to grave” impact a given model will have on the environment. This includes manufacturing disposal impact, a model’s energy source, emissions from manufacturing, the impact of disposal and recycling, and—while there are no EVs on the “meanest” list—emissions associated with electricity production.
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While the biggest vehicles tend to be the worst offenders environmentally, there’s good news on the horizon. A fleet of full-electric pickup trucks and SUVs are headed to market beginning later this year that will not only be kinder to Mother Nature, but will provide truck fans with ample power. These include the 2022 GMC Hummer pickup that promises 1,000 horsepower with zero emissions. An electric version of the Ford F-150 pickup is in the works, as are several large and powerful electrified trucks and people movers coming from startup automakers like Rivian and Lordstown Motors.
In the meantime, here are the ACEEE’s 13 environmentally “meanest” models for 2021:
Ram 1500 TRX 4x4 pickup; Green Score: 22 Lexus LX 570 SUV; Green Score: 27 Mercedes-Benz AMG G 63 SUV; Green Score: 27 Toyota Land Cruiser 4WD SUV; Green Score: 27 Toyota Sequoia 4WD SUV: Green Score: 28 Toyota Tundra 4WD pickup; Green Score: 29 Dodge Durango SRT SUV; Green Score: 29 Jeep Grand Cherokee SRT 4WD; Green Score: 29 Land Rover Range Rover SVA SUV: Green Score: 29 BMW X5 M SUV; Green Score: 29 BMW X6 M SUV: Green Score: 30 Dodge Charger SRT Widebody sedan; Green Score: 30 Audi RS Q8 SUV; Green Score: 30
Green Scores for all vehicles from the 2021 model year are available via the GreenerCars database, which also includes each model’s fuel economy, health-related pollution impacts, and greenhouse gas emissions.
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b49dbb5864068ff51659d4aeb246fc71 | https://www.forbes.com/sites/jimgorzelany/2021/03/02/best-bets-the-safest-and-most-reliable-off-lease-used-cars/ | Best Bets: The Safest And Most Reliable Off-Lease Used Cars | Best Bets: The Safest And Most Reliable Off-Lease Used Cars
Looking for a good used car? 2018 Toyota Corolla was named both a Top Safety Pick by the Insurance ... [+] Institute for Highway Safety and one of the most dependable three-year-old cars by JD Power. dewhurstphoto
New cars, trucks, and SUVs are approaching the breaking point in terms of affordability. According to Kelley Blue Book, the average new-vehicle now costs nearly $41,000. That’s one reason why six, seven, and even eight-year loans are becoming more popular among cash-strapped car buyers.
It’s also why leasing, with less cash due at signing and lower monthly payments than buying and financing, has become more prevalent with the rise in new-car prices. That’s resulting in a flood of three-year-old vehicles being turned back to dealers in mainly pristine conditions, which can prove to be the best transportation bargains of all.
Nearly 30 percent of all vehicles sold back in 2018 were leased according to Cox Automotive. With just over 17 million new vehicles delivered to customers in 2018, that means there are roughly 5.1 million cars, trucks, and SUVs coming off lease this year. Edmunds.com says the average vehicle loses 42 percent of its original value over the first three years. That means a model that originally cost $40,000 in 2018 would be going for, on average, around $23,200 today.
Unfortunately, however, picking a pre-owned ride almost always involves an element of risk. Certain models inherently do a better job of protecting their occupants in a collision, or helping drivers avoid getting into a crash in the first place. And some have proven to be more mechanically and functionally reliable over their initial years on the road than others. Though some used vehicles may be covered under a warranty, nobody want to own a car that needs frequent repairs or is finicky to operate.
To that end, we’ve put together a short list of what should be the safest and most reliable three-year-old off-lease cars. We came up with 19 vehicles from the 2018 model year that both received the highest safety ratings from the Insurance Institute for Highway Safety (IIHS), and were cited as being among the most dependable thus far, based on owner surveys conducted by JD Power (JDP).
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Each year the IIHS puts a large proportion of new vehicles through rigorous tests to determine is annual Top Safety Pick and Top Safety Pick+ awards. To qualify for the former designation in 2018, a model needed to earn good ratings in the Institute’s driver-side small overlap front, moderate overlap front, side, roof strength and head restraint tests. In addition, it must receive an advanced or superior rating for front crash prevention and an acceptable or good headlight rating. To earn Top Safety Pick+ status, a given model must also earn an acceptable or good rating in the passenger-side small overlap front test and a good headlight rating.
JDP’s current U.S. Vehicle Dependability Study is based on responses from 33,251 original owners of 2018 model-year vehicles. The study looks at 177 specific potential problems grouped into eight major categories that include the engine and transmission, exterior and interior quality, climate control system, and seats. Also considered are a vehicle’s audio and infotainment system, and its features, controls, and displays, which continue to be confounding among many owners.
Here’s our list of the cars, trucks, and SUVs from 2018 that received Top Safety Pick (TSP) or Top Safety Pick+ (TSP+) status from the IIHS, and also placed among the top three vehicles per category in JDP’s dependability study:
The 19 Safest And Most Reliable Off-Lease Used Vehicles
Small/Compact Cars
Audi A3 (TSP, with specific headlights) BMW 2 Series Coupe (TSP, with optional crash protection and specific headlights) Toyota Corolla (TSP) Toyota Prius (TSP)
Midsize/Large Cars
BMW 5 Series (TSP+, with optional crash protection and specific headlights) Genesis G80 (TSP+, with specific headlights) Hyundai Sonata (TSP+, with optional crash protection and specific headlights) Kia Optima (TSP+, with optional crash protection and specific headlights) Toyota Avalon (TSP, with specific headlights)
Small/CompactSUVs
Hyundai Tucson (TSP, with optional crash protection and specific headlights) Kia Sportage (TSP, with optional crash protection and specific headlights) Lexus NX (TSP) Subaru Forester (TSP, with optional crash protection and specific headlights) Toyota RAV4 (TSP, with specific headlights)
Midsize SUVs
Kia Sorento (TSP+, with optional crash protection and specific headlights) Lexus RX (TSP, with specific headlights) Toyota Highlander (TSP)
Minivans
Chrysler Pacifica (TSP, with optional crash protection and specific headlights)
Pickup Trucks
Honda Ridgeline (TSP, with optional crash protection and specific headlights)
All of the IIHS’ Top Safety Picks for 2018 with links to detailed selection criteria noted are presented here. You can read the full results of the JDP 2021 U.S. Vehicle Dependability Study here.
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c8666c33d84ab17ba9c58a4a31c46cdc | https://www.forbes.com/sites/jimgorzelany/2021/03/05/these-are-the-vehicles-returning-the-best-resale-values-for-2021/ | These Are The Vehicles Returning The Best Resale Values For 2021 | These Are The Vehicles Returning The Best Resale Values For 2021
Kelley Blue Book predicts the Toyota Tundra will return the highest resale value of any 2021 ... [+] vehicle. Larry Chen
Astute new-vehicle shoppers know that depreciation, or how much of a car or truck’s original value is lost over time, is the largest long-term ownership expense. Picking a car that has a higher expected resale value not only affects how much a given model will be worth at trade-in time, but also determines how steep or affordable monthly payments will be among those who lease, as payments are based on the amount of depreciation incurred over the life of the contract.
According to Kelley Blue Book (KBB), the average 2021 model-year vehicle will lose about 60 percent of its original value after a typical five-year ownership period. Of course a given model’s ultimate resale value will depend on its mileage and condition, but all else being equal, that means a car priced at $40,000 today will only be worth around $16,000 after five years on the road.
Resale values are especially important with costlier models, simply because there’s more money at stake to lose. At the aforementioned average rate of depreciation a $65,000 luxury model will lose $39,000 of its initial sticker price after a half decade.
But some vehicles inherently retain more of their original values than others, and this is based on a plethora of factors. These include supply and demand issues, and a how deep the discounts or generous the automakers’ incentives it takes to sell a given vehicle line. Regional preferences also affect a given model’s long-term value – four or all-wheel-drive models are in greater demand in snowy parts of the country, for example, while big pickups rule the roads in the South.
Not surprisingly, Eric Ibara, director of residual values for Kelley Blue Book, says that the COVID-19 pandemic has had an effect on new-vehicle resale values. “We are seeing a slight increase in the overall average residual value for new vehicles, explained by the significantly reduced car supply as well as the market continuing to shift to SUVs, which tend to have higher resale values," he explains.
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X Factor: A Model X at the Tesla flagship store in Shanghai. (Photo by Gao Yuwen/VCG via Getty Images)
Fortunately for new-vehicle shoppers, KBB compiles an annual list of the models that are predicted to return the highest average five-year resale values. We’re featuring KBB’s best overall list by vehicle category below.
The mainstream brand that takes first place in terms of resale values this year is Toyota, with Porsche taking top honors among luxury makes. The top-performing models overall in terms of value retention for 2021 are all either pickup trucks or truck-based SUVs, with the Toyota Tundra full-size pickup leading the pack, estimated to hold onto 59 percent of its original cost after five years. Other top perfomers, which average a 56 percent resale value, include the GMC Sierra, Ford Ranger and F-150, Jeep Gladiator, Ram 1500, and the Toyota Tacoma pickups, along with the Jeep Wrangler and Toyota Land Cruiser and 4Runner SUVs.
These are the makes and models in each vehicle class KBB predicts will bring the highest rate of return after five years, and the percentages of value retained:
Compact Car: Subaru Impreza (43.1%) Midsize Car: Toyota Camry (40.9%) Entry-Level Luxury Car: Lexus IS (38.4%) Luxury Car: Lexus LS (33.0%) Sports Car: Chevrolet Corvette (49.5%) Hybrid Vehicle: Toyota RAV4 Hybrid (48.6%) Electric Vehicle: Tesla Model X (47.3%) Subcompact SUV: Subaru Crosstrek (50.4%) Compact SUV: Subaru Forester (45.0%) Midsize SUV – 2-Row: Subaru Outback (41.3%) Midsize SUV – 3-Row: Kia Telluride (47.0%) Full-Size SUV: GMC Yukon (46.4%) Luxury Subcompact SUV: Volvo XC40 (37.3%) Luxury Compact SUV: Porsche Macan (42.0%) Luxury Midsize SUV – 2-Row: Land Rover Range Rover Sport (34.8%) Luxury Midsize SUV – 3-Row: BMW X7 (37.8%) Luxury Full-Size SUV: Mercedes-Benz G-Class (48.0%) Off-Road SUV: Jeep Wrangler (55.8%) Midsize Pickup Truck: Toyota Tacoma (55.8%) Full-Size Pickup Truck: Toyota Tundra (59.0%) Full-Size Pickup Truck – Heavy-Duty: GMC Sierra 2500 (56.8%) Minivan: Toyota Sienna (44.7%)
Click here for more information on any of these models via KBB.com
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19531d2ab6910e8d702c6057cc6a537f | https://www.forbes.com/sites/jimhandy/2013/02/19/looking-into-the-far-future-of-chips/ | Looking into the Far Future of Chips | Looking into the Far Future of Chips
Every February the best and brightest researchers of the semiconductor industry converge on San Francisco to share their new developments in chip technology at the International Solid State Circuits Conference (ISSCC). As I attend a presentation I like to wonder just how astronomical the average IQ is of the attendees in the room.
This year, in celebration of the 60th anniversary of this conference, Cal Tech professor emeritus Carver mead was asked to present a keynote. The abstract put the topic of his speech concisely: "What's next?"
For those who have not heard of him, Dr Mead has been teaching the brilliant young minds at Cal Tech for 40 years now, and is considered one of the world's masters of quantum physic, especially as it applies to semiconductors. He explained to the audience that when Intel's Gordon Moore (of the famous "Moore's Law") came to him in 1967 asking for Mead to predict the scaling limits of semiconductor technology he replied, after careful evaluation, that current methods would work down to process geometries of 150 nanometers (billionths of a meter.) At the time this was one hundredth the size anticipated by the prevailing wisdom, and it would support nearly ten thousand times as many transistors as was then considered the limit.
This was all based on a simple insight: The behavior of the electron was dictated by the wave function rather than particle physics. He then went on to explain how those who considered practical physics from new perspectives had a way of taking science and its application beyond the limits of what standard approaches found to be possible.
Since that time, he said, quantum mechanics, optics, and other disciplines have matured to support developments far beyond Mead's 1967 projection to the point that devices are now being mass-produced at 20nm geometries, and processes as small as 14nm, 1/10th the limit he anticipated, are about to be phased into production.
He pointed out that established methods and respected leaders in those methods often disbelieved new notions that didn't follow their line of thought. He related a story of how Charlie Townes, father of the laser, brought his ideas before renowned physicists Niels Bohr and Werner Heisenberg who both told him: "You just don't seem to understand how quantum mechanics works." (As I write this Google is commemorating the 540th birthday of Nicolaus Copernicus, another radical thinker, who found that the earth rotates around the sun, rather than vice versa.)
Mead then explained that the revolution that is commonly said to have happened in physics 100 years ago was not yet finished - he said we might only be stuck about 1/4 of the way there. He said that we need to finish the revolution, that we need to treat electron wave functions as real wave functions, that we need to understand in an intuitive way how quantum mechanics really works, and that we have to find a way to pass that knowledge to the next generation without it being buried in complex math & "gobbledygook."
Mead's goal is to continue to strive in that direction to help develop a way of thinking that will be vastly more intuitive and vastly more complete.
I left the presentation awestruck, with new faith in the continuing ability of semiconductor researchers to push the technology ahead far beyond currently-anticipated limits.
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45c336ee2d9d2c5b5569b6d9903a87ac | https://www.forbes.com/sites/jimhandy/2014/02/22/is-samsung-losing-at-economies-of-scale/ | Is Samsung Losing at Economies of Scale? | Is Samsung Losing at Economies of Scale?
Samsung is known as a company whose key strategy is to use economies of scale to gain a competitive advantage.
The trouble is, the company doesn't always succeed in that quest. Surprisingly enough, one of the markets in which Samsung does the worst is in smart phones.
My colleague, Tom Starnes, Objective Analysis' processor expert, has produced a white paper that explains this finding. The following is excerpted from this white paper, which can be downloaded free of charge from the Objective Analysis website. (See: "Comparing Apple's and Samsung's Economies of Scale" on the Home Page.)
The smart phone is one of the prime drivers of the $300B semiconductor industry. There were numerous multi-purpose smart phones leading the high-end of the cellular industry before Apple joined the market, but it took Apple with its seminal iPhone to crystallize the wireless handset to a more robust industry that would draw thousands of additional participants, largely in software products. The company has had previous successes of this kind: Apple took over the MP3 music player with its iPod device backed by the iTunes store a decade ago.
Starnes tells us that the wireless handset and tablet businesses consist of two leading OEMs followed by many other vendors that he says are: "tumbling in the dust." Apple and Samsung top the charts in smart phone shipments and tablet shipments: in round numbers Samsung sold 300 million smart phones in 2013 while Apple sold 150 million out of a total market of nearly one billion handsets. The lower-grade feature phones add 800 million to the total of which Samsung shipped 150 million. Apple sells only smart phones.
But he points out a dichotomy in the makeup of the phones that Apple sells and those sold by Samsung. Apple gets its 15% market share with just three models of smart phones. While Samsung takes 30% of the market, it must produce 150 models of smart phones to do so. You could say that Apple averages 50 MU per handset model while Samsung averages just 2 MU per model. That's a 25x difference!
Apple proudly boasts of the applications processor in its phones, currently the A5, A6, and A7, increasingly higher performance chips designed by Apple (and manufactured by Samsung.) Mr. Starnes, who delves into processor chips, says that Samsung uses a broad range of applications processors designed by Texas Instruments , Qualcomm , and NVIDIA in their myriad smart phones. All the while, Samsung's semiconductor operations designed its own applications processor, called Exynos, but the company's cell phone organization has only recently started to use it in Samsung's own mobile devices. So far Samsung has had no success selling the processor into other vendors' handsets.
Volume drives cost advantages in electronics hardware. Software development and maintenance becomes complicated when it has to run on a broad range of hardware platforms. One has to wonder how Samsung can amortize the cost of 150 models of phones across 300 MU as profitably as Apple can amortize the cost of just 3 phones across 150 MU.
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94c77d2e47631f63d836f8f733e5794f | https://www.forbes.com/sites/jimhandy/2014/04/22/growth-market-enterprise-ssds/ | Growth Market: Enterprise SSDs | Growth Market: Enterprise SSDs
One of the businesses that my company obsesses about is the enterprise SSD market. This technology, which barely existed as recently as 2008, has zoomed up to almost $2 billion last year, and will continue to grow (though cyclically) through 2018. Today we introduced a report that explains and forecasts the enterprise SSD market in great detail.
Before I go any further, let me explain that there is still a lot of contention about what is and what is not an enterprise SSD. The definition my company uses is based largely upon interface - we count SSDs that use the SAS, PCIe, DIMM, and Fibre Channel interfaces. We do not include any SATA SSDs in our interpretation of the category, and this will cause our figures to differ substantially from those of our more inclusive competitors.
Our top-down and bottom-up forecasts reconcile, however, to conclude that there will be unit shipment growth in all of the 23 application segments we define and forecast, with the strongest growth (85%) in the virtualization market, although the largest segment will continue to be the data center.
While units shipped into all application segments will combine to grow relatively steadily at 32%, revenues will rise and fall with cyclical NAND flash prices. This is because flash memory chips account for about 80% of the cost of manufacture, and because enterprise SSD prices are cost-based. That's the reason for that violent drop in 2016 in the chart above. Although the corresponding unit shipment chart (not shown) rises smoothly, NAND's cyclical price collapses will serve to make the enterprise SSD's revenues far more "Interesting".
The looming flash shortage that Objective Analysis has been predicting for the past few years will come into play here - smaller enterprise SSD makers are likely to lose their sources of supply, while chip suppliers will profit. The outcome of HDD makers Seagate, WD, and Toshiba will depend on their value to the NAND chip suppliers Samsung, Toshiba, SanDisk , SK hynix, and Micron.
The enterprise SSD market is so significantly different from the markets that chip makers typically serve, though, that we do not anticipate for NAND flash companies to dominate it. While enterprise SSDs are a low volume high mix differentiated market, NAND flash chips are a high volume low mix undifferentiated market. It is more likely that NAND chip makers will continue to supply the chips for others to craft into high-performance enterprise SSDs.
What about that big drop in 2016? That's just a normal CapEx-driven NAND flash price collapse of the kind endemic to commodity memory markets. Although we predict that it will occur in 2016, there are signs that technology migration will stall soon, pushing that collapse out for a year, or maybe two - but that's another story.
This market will provide solid opportunities to those who understand it, and the report should help in that direction. It's 110 pages and includes a lot of charts and tables, and if you're interested, it can be purchased for immediate download from the Objective Analysis website.
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9fe2ed4b789dc5f0bd58aac222dec229 | https://www.forbes.com/sites/jimhenry/2012/01/03/best-bang-for-your-buck-cars-and-trucks-will-you-still-love-me-tomorrow/ | Best Bang for Your Buck Cars and Trucks: Will You Still Love Me Tomorrow? | Best Bang for Your Buck Cars and Trucks: Will You Still Love Me Tomorrow?
Gallery: Bang-for-Your-Buck Cars and Trucks 11 images View gallery
It’s tempting to assume only the smallest, cheapest cars offer the most value.
To an extent that’s true, but owning a car costs money in a lot of ways. Less obvious costs like depreciation, interest on a loan, repair and maintenance costs can outweigh the savings from a low sticker price, a big customer rebate and high gas mileage.
That’s where Vincentric LLC comes in. Vincentric, based in Bingham Farms, Mich., analyzes ownership costs for automotive fleets and other users. Based on historical data, they forecast ownership costs including transaction prices, depreciation, fuel costs, repairs, interest, fees and taxes, insurance, maintenance -- even an “opportunity cost” for how much you could make if you invested your money in something else.
“It’s important to look at how much it costs, not just to own, but to own and operate,” said Vincentric President David Wurster.
Taking all those factors into account, and the fact that since the recession owners are keeping their cars longer, Vincentric recently estimated total costs for a five-year ownership period.
Forbes asked Vincentric to sort the results, to identify cars with both the lowest possible costs and an overall “Excellent” rating from Vincentric. The resulting list includes pint-sized cars like the Honda Fit, but it also turned up a couple of gasoline-electric hybrids from Toyota, a diesel sedan from Volkswagen, a Toyota pickup truck, and even a small delivery van from Ford.
That’s surprising because the knock on hybrids – and diesels -- is that depending on how long you hang onto them, they’re too expensive upfront to justify the fuel savings over time. Vincentric shows that view may be outdated.
The Vincentric results also show that gasoline-powered internal combustion engines can deliver much higher fuel economy than we’re used to seeing, using high-tech measures like modern four-cylinder engines with gasoline direct injection, six-speed automatic transmissions that get better mileage than manuals, and even low rolling-resistance tires.
There’s more than one way for owners to get the Best Bang for the Buck.
Full List: The Best Bang For Your Buck Cars And Trucks
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6a8bee05de7daead77b8c6e8e674d3aa | https://www.forbes.com/sites/jimhenry/2012/02/28/turbocharging-to-save-gas-instead-of-to-go-fast/ | Turbocharging to Save Gas, Instead of to Go Fast | Turbocharging to Save Gas, Instead of to Go Fast
Turbocharging is rapidly growing, from a niche feature designed to make cars go fast, to a mainstream technology for saving fuel.
That’s because turbocharging allows an automaker to substitute a smaller, more fuel-efficient engine for a bigger engine, without sacrificing power.
For example, the upcoming 2013 Dodge Dart and the “Eco” version of the 2012 Chevy Cruze have turbocharged engine options. The Cruze Eco gets an EPA-estimated 42 mpg.
The 1.4-liter four-cylinder turbo in the Dodge Dart generates 160 hp, the same as a bigger, 2.0-liter engine without a turbo. Dodge hasn’t published an EPA estimate for the Dodge Dart yet. Sales begin in the second quarter.
Turbocharging is also making its way into larger vehicles, like the 2012 Ford Explorer, which gets an optional turbo engine. The four-cylinder engine gets an EPA-estimated 20 mpg city/28 mpg highway.
Fuel economy is very much on the front burner in the auto industry, because the U.S. government is imposing tougher mileage standards for the 2016 to 2025 model years. The new target increases in stages, to an average of 54.5 mpg by 2025, an increase of about 50 percent.
“It is a very tough standard,” said Tony Schultz, vice president of Honeywell Turbo
Technologies, a major turbocharger supplier.
A turbocharger is basically a pump that forces more air, and therefore more oxygen, into the fuel-air mixture an engine burns. Up until a few years ago, turbos were added to an engine to produce more power. If anything, adding a turbocharger could produce worse gas mileage, not better.
With a 54.5-mpg standard looming, car companies have stood that approach on its head. Instead of adding a turbo to get more power out of the same engine, they are adding a turbo to get the same amount of power out of a smaller engine. The turbo itself doesn’t save gas, but using the smaller engine does.
Turbos are often used together with direct injection. Direct injection shoots computer-controlled squirts of fuel into the combustion chamber inside the engine cylinders. The high pressure and precise control produce more thorough burning. The user benefits are more power and lower emissions from a given amount of fuel.
Ford calls its engines with turbocharging and direct injection “EcoBoost.” Its rivals, including GM and Chrysler plus several import brands, are employing the same concept as they introduce new models.
Today, about 7 percent of gasoline engines are turbocharged, but that’s set to grow to around 20 percent by 2015, according to Honeywell.
In addition, modern diesel engines for passenger cars are turbocharged, too. Including diesels, turbocharged engines could grow to about 23 percent of the total in about the next four years, Honeywell said.
That’s just a start. According to Schultz, based on the company’s experience in Europe, turbocharged engines could make up a majority of automobile engines in the United States by 2025, possibly as much as 80 percent, assuming a big increase in diesels. In some European markets, diesels make up a majority of passenger-car sales.
Schultz allowed that turbos aren’t the only answer. “You need to have all these capabilities -- better electric hybrids, better electric vehicles, better internal-combustion engines. Let the consumer decide what’s going to be best for them, based on their driving requirements,” he said.
“But we’re saying there’s a lot of room left for the internal-combustion engine to improve its performance,” he said. “The consumer still wants that vehicle that’s fun to drive.”
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ccb8c99769441dc56f62e178fe71e2a9 | https://www.forbes.com/sites/jimhenry/2012/02/29/the-surprising-ways-car-dealers-make-the-most-money-off-of-you/ | The Surprising Ways Car Dealers Make The Most Money Off You | The Surprising Ways Car Dealers Make The Most Money Off You
As much as people obsess about negotiating the lowest possible price for a new car, that’s not where car dealerships make the most money.
That would be the Service and Parts Department, where you’re probably not going to be able to negotiate a cheaper hourly labor rate for work that’s not covered by your warranty. You’re not likely to get very far with your best offer for a replacement transmission or a set of tires, either.
The Finance & Insurance Department, where dealerships are open to negotiation, is also highly profitable.
Financial results for the six publicly traded, new-car dealer groups in the United States show that to a great extent, dealerships are in the business of selling new and used cars so they can service them and finance them.
Compared to the new-car department, gross profit margins for dealerships are much higher for service and parts; also for arranging financing; and for selling extras like extended-service contracts, often called “extended warranties.”
For extended-service contracts, the markup can be as high as 100 percent. Dealerships also make a profit on loans and leases negotiated at the dealership. In effect, the dealer gets a cut of the interest rate profit made by the lender.
Dealerships also sell “F&I” products like GAP, which is short for Guaranteed Asset Protection. If your car is stolen or totaled in an accident, GAP covers the difference between the remaining balance on your loan and the car’s actual value, which is often a lot less than the remaining balance.
In the fourth quarter, between the dealer markup on loans and leases, plus the sale of F&I products, the six publicly traded dealer groups averaged about $1,100 per vehicle in F&I revenue. That average includes new and used cars and trucks.
For the Asbury Automotive Group, for instance, that means F&I represented only about 3 percent of revenues for 2011, but 20 percent of the gross profits.
Some consumer advocates, like the Center for Responsible Lending, argue that dealerships should at least disclose how much they make on loans and leases, and question whether they should be making anything at all on the interest rate.
Dealer groups and auto lenders argue that the ability to get financing at the dealership is convenient for customers. Dealerships typically send credit applications to multiple lenders, which compete for the business.
The theory goes that competition keeps interest rates in check. In discussions with the Federal Trade Commission last year, auto lender advocates argued that interest rates on “indirect” loans negotiated at dealerships are lower on average than “direct” loans where there’s no middleman. That's a pretty telling argument for indirect lending.
The Service and Parts Department is the real workhorse of dealership profits, representing both revenues and gross profit. For the Penske Automotive Group, which has operations in the United States and in the United Kingdom, service and parts represented 13 percent of annual revenues, but 44 percent of the gross profits.
The gross margin for service and parts was 57 percent for the Penske group, vs. just 8 percent for new-vehicle sales.
To be sure, dealerships still need the top line revenues they get from selling new and used cars. Customers shouldn’t get lazy about negotiating the best possible price. But they should also be aware where the real money is being made.
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af8623df8e399b249523de1e597a9214 | https://www.forbes.com/sites/jimhenry/2012/03/29/how-to-drive-like-a-democrat/ | How To Drive Like A Democrat | How To Drive Like A Democrat
Gallery: How To Drive Like A Democrat 5 images View gallery
Here's a fun piece of research, for an election year: the folks at Strategic Vision came up with lists of new-car purchases divided by Republicans and Democrats.
True to form, the Top Five Cars for Democrats include more imports and more small, fuel-efficient cars, including one hybrid, the Honda Civic Hybrid, and also the Nissan Leaf, the first mass-produced battery powered car.
The Top Five Cars (And Trucks) for Republicans (see "How To Roll Like a Republican," coming soon) include three red-white-and-blue Fords, including the most red-blooded American vehicle maybe ever, the Ford F-150 pickup.
Alexander Edwards, president of Strategic Vision, said that Democrats also tend to buy station wagons and hatchbacks. Edwards also noted that Republicans disproportionately buy convertibles. Strategic Vision, based in San Diego, is a widely used source of data in the auto industry on "reasons for purchase," based on surveys with thousands of new-vehicle buyers.
"If I were selling a convertible, I’d consider buying some air-time on Fox News,” he said.
It's tempting to indulge is a few stereotypes, no?
See the slide show, "How To Drive Like A Democrat." Not to worry, "How To Roll Like A Republican" is coming right up.
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b1145eb516d160c83922b6530ff0aacb | https://www.forbes.com/sites/jimhenry/2012/03/31/business-owners-beware-distracted-driving-can-cost-you-too/ | Business Owners Beware: Distracted Driving Can Cost You, Too | Business Owners Beware: Distracted Driving Can Cost You, Too
Parents, pedestrians and drivers in general aren’t the only ones who need to worry about distracted driving.
In case saving lives isn’t reason enough, the National Safety Council says businesses can be held liable for “large damage awards” for employees engaged in cell phone use while driving.
The group is sponsoring a distracted driving webinar for business owners on April 25, on the subject.
“Employers are responsible for ensuring their employees adhere to applicable federal agency regulations and federal, state and municipal laws. However, what is often not understood is that simply following the applicable laws and regulations is often not sufficient to protect your business and employees from liability and large damage awards in a cell phone crash,” the National Safety Council said.
The National Safety Council is promoting April as Distracted Driving Awareness Month.
Distracted driving has been in the news a lot lately. Particularly disturbing was a recent piece of research from the AAA Foundation that showed newly licensed teenage girls are around twice as likely as boys to use electronic devices while driving.
The AAA Foundation pointed out that doesn’t mean boys are necessarily much better at paying attention while driving. The group said boys are more likely than girls simply to be looking around, not looking where they’re going.
For what it’s worth in a good cause, the AAA Foundation offers a distracted driving pledge for people to take: “I pledge to drive distraction-free, with the goal to permanently reduce my distracted driving habits. I will spread the word about driving distraction-free among my family and friends, encouraging them to resist distracting behaviors while driving.”
The group said using a cell phone while driving quadruples your risk of crashing.
Talking or texting on the phone may be getting most of the attention lately, but the AAA Foundation pointed out that “eating, smoking, adjusting music or rubbernecking while driving can be just as dangerous as texting, emailing or talking on a cell phone.”
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35fe5717f56578caeb1c1d6c844d4f93 | https://www.forbes.com/sites/jimhenry/2012/05/30/subprime-auto-loans-grow-as-lenders-charge-a-premium/ | Subprime Auto Loans Grow As Lenders Charge A Premium | Subprime Auto Loans Grow As Lenders Charge A Premium
English: picture of piggy palz piggy bank (Photo credit: Wikipedia)
The riskiest borrowers pay the highest rates on auto loans.
How much higher? A lot. Like, four times what the least-risky customers pay.
That difference -- and the fact that subprime auto loans didn’t crash during the recession like subprime mortgages did -- is helping to fuel a boom in investments in subprime auto lending. According to a recent conference hosted by Standard & Poor's Ratings Services, investors bought $5.8 billion worth of asset-backed securities from subprime auto lenders in the first four months of 2012, up from $3.5 billion a year earlier.
Asset-backed securities are where investors buy the income from a package of loans. In effect, the investors collect the payments as the loans are repaid. The auto lenders get money right away with which to make new loans, instead of having to wait for repayment.
According to Experian Automotive, a division of the Experian credit bureau, subprime loans accounted for 23 percent of new-car loans in the first quarter of 2012, and 57 percent of used-car loans. Those figures are up from 21 percent and 55 percent, respectively, for the same quarter a year ago.
Experian said the riskiest, “deep subprime” customers paid an average of 17.9 percent interest on used-car loans in the first quarter of 2012, about even with a year ago.
The most creditworthy, “super-prime” customers paid an average of only 4.4 percent on used cars -- down from about 5 percent a year ago, Experian said.
Experian defines “deep subprime” as customers with a credit score below 550. “Super-prime” is 740 and above.
The average used-car monthly payment was $356 for deep-subprime customers in the first quarter, up from $351 a year earlier. For super-prime customers the average used-car monthly payment was $345, even with a year ago, Experian said.
From a lender standpoint, that reality is called “risk-based pricing,” and for lenders, it makes eminent good sense. Losses are higher on loans made to customers with a poor record of repayment, or on so-called “thin files” with no credit history. Therefore, they pay higher interest rates.
From a borrower standpoint, unfortunately it also means those who can least afford it pay the most.
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8acb8d83cc845148677b8369aa5eaa7a | https://www.forbes.com/sites/jimhenry/2013/12/30/u-s-auto-sales-are-looking-good-for-december-for-2013-and-for-2014/ | U.S. Auto Sales Are Looking Good For December, For 2013, And For 2014 | U.S. Auto Sales Are Looking Good For December, For 2013, And For 2014
Jeep Wranglers on the assembly line, Chrysler Group Toledo (Ohio) Assembly Complex; company photo
U.S. auto sales for 2013 are a shoo-in for the highest total in six years and a 50 percent improvement since auto sales bottomed out in 2009.
In addition, analysts expect U.S. auto sales to keep growing in 2014 to around 16.2 million, an increase of about 4 percent.
That’s a positive sign for the U.S. economy overall, and it shows consumers feel confident enough to buy a big-ticket item that carries a long-term financial commitment.
Specifically, analysts expect U.S. auto sales for 2013 to finish at about 15.6 million cars and light trucks.
The nomenclature is important. “Light” trucks means trucks aimed at individual consumers and small businesses, not counting “medium” delivery trucks and “heavy” trucks like 18-wheelers.
The 15.6 million also includes fleet sales to commercial, government and rental fleets. Fleet sales are typically less profitable for the car companies than retail sales.
For 2014, J.D. Power and Associates and LMC Automotive said earlier this month they expect U.S. auto sales of about 16.2 million cars and light trucks, including fleet sales. Ford Motor Co. made a similar forecast in a presentation on Dec. 18.
At 16.2 million, 2014 would roughly match 2007, pre-recession. What’s changed since then is that the U.S. car companies downsized and greatly lowered their break-even points. They are smaller, but far more profitable at lower volumes than they were before GM and Chrysler went bankrupt in 2009.
The car companies are expected to announce U.S. auto sales for December 2013 and for the full year on Friday, Jan. 3.
The sales reporting calendar for the U.S. auto industry lags a couple of days behind real time. Sales from Dec. 3 to Jan. 2 count as “December” sales.
J.D. Power predicted December sales would be around 1.4 million, about 4 percent higher than December 2012.
“Strong consumer demand in December is the culmination of another strong year for the automotive industry,” said John Humphrey, senior vice president of the global automotive practice at J.D. Power, in a written report.
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cbd1c51d08bac5007052ffce167723af | https://www.forbes.com/sites/jimhenry/2014/01/31/100-years-of-working-at-the-carwash/ | 100 Years Of Working At The Carwash | 100 Years Of Working At The Carwash
With untold millions of cars, including mine, crusted with salt from the recent snow and ice in the North, South, East and West, it’s a good time to consider the humble carwash.
Who knew? It turns out 2014 is the 100th anniversary of the “production line” car wash, according to the Chicago-based International Carwash Association.
Many of us Baby Boomers associate Workin’ at the Carwash with a catchy disco hit circa 1975, but the carwash as we know it actually started out in 1914.
Naturally enough that was in Detroit, according to the association. “Prior to this, car cleaning was largely done individually by hand. What started as a niche business in the Motor City has become a global industry,” the association said.
The International Carwash Association says there are more than 150,000 retail car wash locations worldwide. Even that seems like an understatement.
The trade association is getting ready to hold its annual conference, also in Chicago, in late March and early April.
Carwash Facebook page
In honor of the 100th anniversary the group is planning an entire year’s worth of observances, including a special carwash Facebook page where members are sharing old photos of vintage carwashes, plus coverage in trade magazines.
After many years working at a trade publication, Detroit-based Automotive News, I’m not at all surprised to learn there’s a carwash trade association, or that the industry has its own magazine – and probably more than one that follows the industry.
Car washes nowadays have a lot of environmental rules and regulations to meet, not least including water-conservation measures.
The auto dealer trade show at the recent National Automobile Dealers Association convention in New Orleans included a lot of automated carwash displays which were big on water conservation, organic materials, simple and quiet operation, and saving space.
Competition among car dealers is keen. Meanwhile, even customers for relatively humble brands are coming to expect a “free” carwash when they drop off their car for service. Nobody wants to lose a potential loyal customer over a carwash.
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7e7f3d3b313396abb9dbe77fed940d06 | https://www.forbes.com/sites/jimhenry/2014/03/31/toyota-financial-services-claims-the-industrys-first-green-bond/ | Toyota Financial Services Claims The Industry's First "Green" Bond | Toyota Financial Services Claims The Industry's First "Green" Bond
Toyota Financial Services last week issued what it claims is the first “Green Bond” in the auto finance industry, in the form of $1.75 billion in asset-backed securities.
What makes it “green” is that Toyota’s captive finance company said the proceeds would be used exclusively to fund consumer loans and leases for “green” vehicles including hybrids like the Toyota Prius.
Toyota Financial Services, Torrance, Calif., said investors liked the idea so much, TFS upsized the deal from $1.25 billion.
Qualifying models include the Toyota Avalon Hybrid, Camry Hybrid, Prius, Prius c, Prius Plug-in, Prius v and RAV4 EV; Lexus CT 200h and Lexus ES 300h, Toyota Financial Services said. TFS serves the Toyota, Lexus and Scion brands.
Toyota Prius c. Photo: Toyota Motor Sales U.S.A.
Those models all have a gas-electric hybrid or other alternative-fuel powertrain, and each gets at least 35 mpg or the equivalent, the company said.
In 2013, Toyota Motor Sales U.S.A. sold 234,228 Prius models, down 1 percent from 2012, according to AutoData Corp., Woodcliff Lake, N.J.
The sale of asset-backed securities is standard procedure for many auto lenders, especially captive finance companies that belong to the manufacturers and also independent finance companies. Most independent finance companies specialize in auto loans to customers with subprime credit.
In asset-backed securities, the lender sells off the income stream from a bundle of loans.
The lender earns less interest than it would earn if it simply collected the money, but it gets paid quicker. Investors earn less interest than they would compared with some other investments, but asset-backed securities come with ironclad guarantees that investors will get paid, even if the auto lender goes bankrupt.
Analysts said losses for bad loans went up in the Great Recession for automotive asset-backed securities, but they performed as expected – unlike asset-backed securities backed by subprime mortgages, which tanked, analysts said.
Toyota currently offers hybrid editions in nearly all of its vehicle categories, the company said.
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62a54ce986bc6f590b6958a120a54380 | https://www.forbes.com/sites/jimhenry/2014/06/30/average-car-on-the-road-still-getting-older-but-for-the-right-reasons/ | Average Car On The Road Still Getting Older, But For The Right Reasons | Average Car On The Road Still Getting Older, But For The Right Reasons
The age of the average car on the road has finally hit a plateau.
That’s good news for the auto industry, because it implies people are finally starting to replace their cars and trucks instead of hanging onto them.
For the last few years the age of the U.S. so-called “fleet” kept hitting new records, with the average car passing 10 years old, then 11 years old at an extraordinary pace even though new-vehicle sales had begun to recover.
That’s partly because new-car production dropped so low before, during and immediately after the Great Recession. With millions fewer new cars on the road, naturally that drove the average age up.
The other factor was that consumer confidence was so low and employment so apparently shaky that even consumers who could afford it and who had access to credit didn’t want to invest in a new car unless they absolutely had to replace one that broke beyond repair. Many of those that did, bought a used car instead of a new one.
And many consumers couldn’t afford it, and didn’t have easy access to credit, especially if they had subprime credit. Accordingly, the age of the average vehicle on American roads hit 11.4 years earlier this year, according to an IHS Automotive study based on Polk Co. registration data.
What’s new is that analysts expect the average age to stay there through 2015, and then very gradually increase to an estimated 11.7 years in 2019.
IHS Automotive graphic
If the run-up to 11.4 years through the end of 2013 was out of necessity, analysts attribute the gradual increase for the next five years to the fact that today’s cars are built with higher quality and last longer.
Meanwhile, the Power Information Network reported based on dealership transaction data that the average trade-in for the first quarter of 2014 was 6.5 years old. That marked a small increase from the same quarter a year ago, at 6.4 years, but it came after two quarters in a row of zero year-over-year increase, in the third and fourth quarters of 2013. That's another way of saying new vehicles and newer used cars are moving again.
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925d8e5b533cf88f960ac9e0d403c413 | https://www.forbes.com/sites/jimhenry/2014/10/02/warren-buffett-jumps-into-autos-buying-van-tuyl-group/ | Warren Buffett Jumps Into Autos, Buying Van Tuyl Group | Warren Buffett Jumps Into Autos, Buying Van Tuyl Group
Warren Buffett gave auto dealer groups a big stamp of approval, with Berkshire Hathaway Inc. announcing today it would acquire the Van Tuyl Group of dealerships, the nation’s biggest remaining privately held auto dealer group.
Van Tuyl, based in Phoenix, was the No. 5 U.S. auto retailer in 2013, based on new-vehicle sales of 130,447. The group had 75 dealerships, with total revenues of just under $8 billion, according to the Automotive News list of the Top 125 Dealership Groups.
The Van Tuyl Group is to be renamed Berkshire Hathaway Automotive. Terms were not disclosed. The transaction is expected to close in the first quarter of 2015, according to Berkshire Hathaway.
The four biggest U.S. new-car retailers are all publicly traded. Hendrick Automotive Group, Charlotte, N.C., is the next-biggest privately held auto retailer after Van Tuyl. It was No. 6 in 2013, with 87 dealerships and new-vehicle sales of 102,750 in 2013.
Investors have taken a shine to auto retailers since the Great Recession, when new-vehicle sales plummeted. Dealerships proved they could ride out cyclical downturns, Mike Jackson, chairman and CEO of AutoNation, has argued.
Van Tuyl Group graphic
Dealerships get more than half of their revenues from new-vehicle sales, but most of car dealership profits come from the sale of used cars, parts and service, from acting as a middleman in securing loans and leases, and from the sale of so-called Finance & Insurance products like extended-service contracts.
AutoNation is the biggest U.S. auto retailer, with 228 dealerships and new-vehicle sales of 292,922 units in 2013, according to Automotive News.
At the same time, even though publicly owned auto retailers have been around for almost 20 years, auto retail is still highly fragmented, allowing for lots of opportunity for mergers and acquisitions. According to Lithia Motors Inc., Medford, Ore., the Top 10 U.S. auto retailers accounted for only about 6 percent of sales in 2013.
On Oct. 1, Lithia completed the acquisition of DCH Auto Group USA, with 27 dealerships. In 2013, Lithia was the No. 8 U.S. auto retailer, with 94 dealerships and new-vehicle sales of 67,177, according to Automotive News.
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be5cd82a7ed759775fa3b4bab353151a | https://www.forbes.com/sites/jimhenry/2015/04/30/restoring-old-cars-is-a-big-new-business-that-is-short-of-new-blood/?sh=7330d40127fb | Restoring Old Cars Is A Big New Business That Is Short Of New Blood | Restoring Old Cars Is A Big New Business That Is Short Of New Blood
You might not think so, looking at glitzy, million-dollar auctions on cable TV, but classic car restoration is in danger of becoming a lost art, according to David Madeira, president and CEO of Tacoma, Washington-based America’s Car Museum.
“It is a real problem,” he said in an interview before the recent New York International Auto Show.
“The machines are incredibly hard to find, but the skills are even harder to find,” he said. “We hear from collectors all the time, ‘Who’s going to work on my car?’”
Among acres of new cars at the New York show, the museum had a display of classic antique cars, in part to draw attention to a program aimed at recruiting and training technicians to restore old cars.
The program is called the Hagerty Education Program at America’s Car Museum. It provides grants to fund educational programs, scholarships, paid internships and apprenticeships for 18- to 25-year olds.
1936 Hudson 65 custom 8 convertible (On loan from the Collection of Allentown Classic Motor Car,... [+] Inc.) Photo: Pacific Communications Group
Madeira said the program has awarded more than $2.5 million in scholarships and grants since 2005. Car collectors don’t all look like the millionaires on TV, Madeira said. Lot of owners with modest means are looking to restore their classic Mustang, but it’s hard to find anybody who’s qualified to do the work, he said. “It’s not only the high-end scene, the Barrett-Jacksons or Pebble Beach, or Amelia Island, where they have these million-dollar cars. Really, the budget can run anywhere from $30,000 to millions,” Madeira said.
On the positive side, glitzy TV coverage has helped drive greater interest in classic cars, he said.
Madeira said the Specialty Equipment Market Association estimated the restoration segment generated about $1.4 billion in retail parts sales in 2014. That’s not counting another estimated $1.3 billion for labor and installation plus the sale of collector cars, he said.
Training newcomers is essential, he said, “if this big industry is going to keep going.”
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e57309a3e3d9eb6ffd545feb91d78e33 | https://www.forbes.com/sites/jimhenry/2015/04/30/semi-autonomous-cars-make-insurers-wonder-who-is-driving/ | Semi-Autonomous Cars Make Insurers Wonder Who Is Driving | Semi-Autonomous Cars Make Insurers Wonder Who Is Driving
Hands-free driving isn’t going to arrive all at once.
So-called semi-autonomous cars are already raising a lot of auto insurance issues, starting with, “Who’s driving, anyway?”
This isn’t some academic question, with consequences decades away, whenever George Jetson-style flying cars finally arrive.
There are already a lot of cars on the road today with “forward-collision mitigation braking systems,” for instance, that can bring a car to a complete stop without driver intervention. That is, if sensors detect an imminent collision and the driver doesn’t react to visual and audible alarms.
The good news is, some analysts say as cars get safer, claims inevitably go down, and so do premiums.
But as high-tech systems gradually take over more responsibility for routine driving and for avoiding accidents, how is driver behavior going to evolve? What effect will that have on accidents and insurance claims?
Jeff Blecher, senior vice president of strategy at Agero Inc., Medford, Mass., is part of a team that’s studying how driver behavior evolves, working with the Massachusetts Institute of Technology, insurance companies, automakers, and suppliers.
Mercedes-Benz graphic
Forbes.com Contributor Jim Henry interviewed Blecher recently. The following are edited excerpts.
Are auto insurance rates already changing, in response to the limited number of “semi-autonomous” systems that are already out there?
Right now is really a period of learning. There’s not a lot of volume on the road now. From the insurance industry’s perspective, of course it’s all about the data, all about the actuarial data.
They’re looking at the numbers for cars with forward-collision mitigation braking systems. There’s also a lot of data from lab testing. For rear-end collisions they’re starting to collect actuarial data. We already know some systems are more effective than others.
These are pretty immediate concerns, aren’t they? As opposed to fully autonomous, George Jetson-style cars.
We are a long way off from that. What really matters is the next five, 10, 15 years as we make the transition from Level 2 to Level 3. That actually poses more problems in many ways than Level 4, when everything is autonomous.
Can you explain the levels?
These are levels that have been defined by the National Highway Traffic Safety Administration.
Level 1 is also called function-specific automation. It’s fairly basic. There is just one or more specific control function at a time, like electronic stability control, or cruise control.
Level 2 is where you have several functions working in unison, like adaptive cruise control combined with lane centering. The car is giving driving commands on its own, but the driver is responsible at all times, and the driver has to be alert.
Level 3 is where you have enough confidence to give control to the car under certain conditions. But the car has to give the driver enough warning so the driver can take over when that’s necessary. Say you get on a highway and you tell the car, “OK, car, you take over.” It drives to a programmed exit, and then just before you get there, the car says, “In 10 seconds you need to take control back.”
Level 4 is that George Jetson car you describe, the autonomous pod that’s fully in control of the vehicle under all circumstances.
It sounds like we are already pretty well along with introducing these technologies.
We’re driving down the highway, but even at Level 2, I need to be able to take over at a moment’s notice. As we get into this world, we’re getting cars from, say, Mercedes and Volvo that have these capabilities but they require the driver to stay engaged. You can have lane-keeping technology, but if you take your hands off the wheel for more than 10 seconds the system disengages.
What are the driver behavior issues?
Those sorts of systems, we’re going to see some unintended consequences. How are drivers going to behave? … If they know they can rely on these systems, will they be more apt to become drowsy? More apt to do other things while they’re driving? Will they start to trust the technology almost “too” much?
… You’re going to have two separate risk profiles now. One, there’s the risk profile of the driver driving the car. Two, there’s the car driving the car, in that semi-autonomous mode.
How often is the driver driving, and how often is the vehicle driving? Historically, when an insurance company offered a discount, it was based on what the car is equipped with – antilock brakes, how many air bags, a collision mitigating braking system, adaptive cruise control with lane-centering. Now the question also becomes, how often are those technologies used?
Is it too soon to say if these technologies result in a discount, like for having antilock brakes, or a car alarm?
It’s really too soon. We’re just getting to point where we’re getting some small samples of data.
If you think about the profitability of the insurance business, as cars get safer, the rate of claims goes down for a while before the premiums decline, until the companies get competitive, until they get comfortable with the level of claims and can reduce premiums.
We will start to see premiums come down for some of these technologies in the near future.
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f18e6e38505072077fc3a7446936a3c6 | https://www.forbes.com/sites/jimhenry/2015/08/30/one-ford-part-two-tweaking-the-master-plan/ | One Ford, Part Two; Tweaking The Master Plan | One Ford, Part Two; Tweaking The Master Plan
Ford Motor Co. is starting the second generation of One Ford, the company's all-embracing plan to get Ford's global operations all on the same page, and to wring efficiency and economies of scale out of the Ford system.
Hau Thai-Tang, Ford group vice president, global purchasing, said at the recent J.P. Morgan Automotive Conference in New York that since 2007 Ford has whittled 27 product platforms around the world to just nine, with a target of eight by the end of the current planning period.
Image: Ford Motor Co.
"Global sales volumes are higher than 2007," he said in a conference call on Aug. 12. Higher volume on fewer platforms equals scale, he said. "This is a huge source of efficiency for us."
Then-president and CEO Alan Mulally joined Ford in 2006 after a career at Boeing. He originally launched the One Ford concept, and handed it off to his successor, Mark Fields. Fields has been president and CEO since July 2014.
“Alan Mulally, with his outsider’s perspective, was able to say, ‘You guys are a global company but you’re not acting like it,’ “ said Thai-Tang.
What has Ford learned from the original One Ford plan and applied to One Ford 2.0? Thai-Tang explained that Ford is fine-tuning the balance between using the biggest possible number of parts in common to achieve economies of scale, vs. the need to tailor parts to regional requirements.
In some cases, he said consumers may not need or even want, for cost reasons, more-expensive components that suit other markets. In some cases, he said Ford has been able to work with parts manufacturers to develop parts that can be made in the same factory but that look different and perform differently.
Two different markets "don't necessarily have to have the same part, the same part number," he said. Yet Ford can "bundle" the different versions to the same supplier, "and allow them to operate at a high level of efficiency," he said.
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c2556626c6b8a9411b0d92fb5f4319a7 | https://www.forbes.com/sites/jimhenry/2015/12/31/u-s-auto-sales-look-record-breaking-in-2015/ | Best-Ever Auto Sales In 2015 | Best-Ever Auto Sales In 2015
Thanks in part to Black Friday deals and other specials that began well before Thanksgiving and continue to run past New Year’s Day, U.S. auto sales are set to break the all-time record in 2015, at about 17.5 million cars and trucks, forecasters said.
Automakers in the U.S. market won’t report December and full-year 2014 sales for another week, on Tuesday, Jan. 5. But several forecasters take a stab at sales results for the whole month, based on online shopping during the month, plus historical data.
GMC.com photo
Kelley Blue Book, for instance, said it expects December auto sales of around 1.7 million units, an increase of about 13 percent versus December 2014. That would put the 2015 total for the year at 17.5 million, the company said. A year ago, Kelly Blue Book, based in Irvine, Calif., predicted U.S. auto sales of 16.9 million in 2015.
TrueCar Inc., Santa Monica, Calif., had a similar forecast of about 1.7 million for December 2015 and about 17.5 million for the full year of 2015. A year ago, TrueCar said it expected sales of 17 million for 2015.
Due to the auto industry’s customary calendar magic -- Sundays and federal holidays, like Jan. 1 don’t count as quote-unquote “sales days” -- sales through Monday, Jan. 4, count as “December” sales.
Granted, at 17.5 million, 2015 auto sales would barely squeak past the old record of 17.4 million set back in 2000, but it would be an increase of about 6 percent from 16.5 million in 2014, and better than forecasters expected before the pace of auto sales started to pick up in the fall.
U.S. auto sales haven’t hit 17 million since 2005, when General Motors launched a ruinously expensive incentive program to get rid of an oversupply of unsold units. Once GM started its “Employee Pricing for Everyone” incentives back then, several of its biggest rivals felt compelled to follow suit.
Incentives are playing a significant role in 2015, too, but GM, Ford Motor Co. and FCA U.S. LLC, the former Chrysler Group, are all leaner than they were in 2005, with much lower breakeven points.
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7170bb9b2322fc4990019b45b4034634 | https://www.forbes.com/sites/jimhenry/2016/08/31/harley-davidson-settles-epa-emissions-complaint/ | Harley-Davidson Settles EPA Emissions Complaint | Harley-Davidson Settles EPA Emissions Complaint
Motorcycle icon Harley-Davidson reached a $15 million settlement with the Environmental Protection Agency, over the sale of so-called “super tuners” that enhance the motorcycles’ performance, but also cause them to emit unacceptable levels of air pollution.
“This settlement immediately stops the sale of illegal aftermarket defeat devices used on public roads that threaten the air we breathe,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance, in a written statement announcing the settlement earlier this month.
Photo: Harley-Davidson
The motorcycle “defeat devices” are not to be confused with similarly named defeat devices in the Volkswagen emissions-cheating scandal. VW admitted equipping some vehicles with software that turned on emissions-control equipment to fool emissions tests, but allowed illegal levels of emissions in normal operation. The devices also improved real-world fuel economy compared with EPA-tested miles per gallon.
In June, VW reached a partial settlement with the U.S. government and the attorneys general of 44 U.S. states, the District of Columbia and Puerto Rico for a total of around $15.6 billion. The manufacturer also agreed to establish a fund to mitigate environmental damage.
In Harley-Davidson’s case, the company considered the “tuners” to be legal as long as they were used strictly in racing conditions, said Ed Moreland, Harley-Davidson’s government affairs director. “For more than two decades, we have sold this product under an accepted regulatory approach that permitted the sale of competition-only parts,” he said in a written statement. In a consent decree, Harley-Davidson did not admit the EPA's allegations.
The EPA said that over the years, Harley manufactured and sold about 340,000 of the devices. The agency said Harley also manufactured and sold more than 12,000 motorcycles that EPA alleges did not undergo proper EPA certification to ensure they meet federal clean air standards.
In the settlement, which was announced Aug. 18, Harley agreed to pay a $12 million civil penalty and to fund a $3 million project to replace conventional wood stoves with cleaner-burning stoves in communities with extensive wood stove use. The company also agreed to stop selling the tuners, and to buy back unsold tuners from dealers and destroy them.
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28220c713db01b3f75c2af7b51bfde86 | https://www.forbes.com/sites/jimhenry/2018/02/22/rising-interest-rates-are-a-headwind-for-2018-auto-sales/ | Rising Interest Rates Are A Headwind For 2018 Auto Sales | Rising Interest Rates Are A Headwind For 2018 Auto Sales
The prospect of slightly higher interest rates is causing some concern — so far, relatively mild concern — for U.S. auto sales in 2018.
“Payments are rising — and likely hurting non-luxury demand at the margin,” Jonathan Smoke, Cox Automotive chief economist, said today in an email, in answer to questions about interest rates. Cox Automotive expects 2018 auto sales of about 16.7 million in 2018, down from 17.2 million in 2017.
Borrowers with lower credit scores are feeling the effect of higher rates, Smoke said. Meanwhile, lease payments have also increased as automakers try to reduce incentives on leases, he said. Overall, he said interest rates on auto loans are up about 30 basis points, or 0.3 percentage points, from a year ago.
The Fed is likely to nudge rates higher, which could crimp auto sales. Photo: Federal Reserve
By historical standards interest rates are pretty moderate to start with, and so far most customers are offsetting higher rates and higher sticker prices by taking out longer loans.
The Federal Open Market Committee on Wednesday published minutes of its late-January meeting. In the meeting, the Fed refrained from raising the federal funds rate and said it will continue to stand pat “for some time.” But the Fed repeated its willingness to bump up rates later this year.
“The Committee expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run,” the committee said in a written statement.
Since late 2016, the Fed has raised the federal funds rate three times, to the current target range of 1.25 to 1.5 percent.
Earlier this month, the Fed reported that the average 60-month, new-auto loan had an interest rate of 4.51 percent in the fourth quarter, up from 4.05 percent a year earlier.
For the full year, the average was 4.33 percent for 2017. That was in line with small ups and downs over the last five years, from a relative high of 4.46 percent for all of 2013, to a low for the five-year period of 4.14 percent, for 2016.
The 60-month rate is getting to be a less-relevant benchmark, because the average term for new-car loans is almost a year beyond that. For the third quarter of 2017, the most recent quarter for which Experian Automotive has published detailed results, the average new-vehicle loan term was 69 months.
Loans from 61 to 72 months — that is, mostly 72-month loans — accounted for 43.2 percent of new-vehicle auto loans. That was the biggest category, followed by 73 to 84 months, at 30.5 percent, Experian Automotive said.
Analysts said customers are taking out longer-term loans, and agreeing to pay a greater amount of interest over the life of a loan, to try and hold down monthly payments.
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fbde897472c85d46398e11b189791bd6 | https://www.forbes.com/sites/jimhenry/2018/07/24/sorting-out-imported-cars-from-domestic-ones-it-can-be-complicated/?sh=4ce314aa7d95 | Sorting Out Imported Cars From Domestic Ones: It Can Be Complicated | Sorting Out Imported Cars From Domestic Ones: It Can Be Complicated
It could be clobbering time for imports, if the Trump Administration's U.S. Commerce Department imposes a 25 percent tariff on imported autos and auto parts. However, sorting out which cars are imports and which are domestic, based on their parts content and other factors isn’t as simple as it sounds.
“I think there’s a lot of lack of knowledge about the auto industry. A Japanese vehicle made in the U.S. may not be as Japanese as you think it is,” said Frank DuBois, and associate professor for the American University Kogod School of Business in Washington. “And a domestic-brand vehicle may not be as domestic as you think it is.”
DuBois today published his sixth annual Made In America Auto Index, ranking 544 individual car and truck models. The rankings take more than just nuts and bolts into account. The index attempts to measure, "what percentage of your vehicle's value contributes to the overall well-being of the U.S. economy," according to the study.
2019 Chevrolet Corvette ZR1 Photo: GM
Criteria include extra weighting if an automaker’s global headquarters is located in the United States; weighting for labor costs, if final assembly is in the United States; for R&D costs; for inventory, capital and other expenses, for U.S. assembly: plus additional weight depending on where the engine, transmission, body, chassis and electrical components are sourced.
The Top 5 models on the index are all American nameplates consumers might expect, including the No. 1 Chevy Corvette (which gets an index rating of 83.5 percent), the Chevy Volt plug-in hybrid, the Ford F-150 pickup, the Lincoln Continental and the Jeep Wrangler. However, the Honda Ridgeline pickup (index 78.5 percent), tied with the Honda Odyssey minivan, are also among the Top 10 “Made in America” models, and statistically not that far behind the leaders, according to the index.
Inside the auto industry it’s really, really old news that many of the best-known, foreign-based brands, especially Toyota, Nissan and Honda, have had U.S. assembly plants since the 1980s. Newer entries include smaller Asian brands plus BMW, Mercedes-Benz, Volkswagen and Volvo. (Before its newest U.S. plant in Chattanooga, Tenn., VW had an earlier U.S. plant in Westmoreland, Pa., starting in the late 1970s, which eventually folded due to quality problems.)
But a lot of consumers don’t realize that, DuBois said. Many consumers also don’t know that some models from domestic brands may be built overseas, like the Chevy Spark (index 12.5 percent). DuBois said a colleague was “flabbergasted” to learn that their Chevy Spark was built in South Korea.
DuBois said he hopes “cooler heads will prevail,” and across-the-board import tariffs won’t get imposed. He said, “I hope the Administration will pull back on this.”
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d121776323dafced019053fea7ff5971 | https://www.forbes.com/sites/jimhenry/2019/06/07/record-high-prices-continue-to-drive-some-new-car-intenders-to-used/ | Record-High Prices Continue To Drive Some New-Car Intenders To Used | Record-High Prices Continue To Drive Some New-Car Intenders To Used
Record-high loan amounts for new cars and trucks are driving some of the best-qualified borrowers — who could probably get a new-vehicle loan if they wanted one — to buy used vehicles instead, according to Experian Automotive.
“There’s a perception that people who buy new, buy new, and people who buy used, buy used,” said Melinda Zabritski, senior director, Financial Solutions, for Experian Automotive, Costa Mesa, Calif.
“But when you look at the trendline, and you assess the shift in a particular risk band, it makes you question some of the longstanding assumptions,” she said in a phone interview on June 6.
New cars and trucks are so expensive, used vehicles are starting to look good to some well-qualified... [+] buyers. Getty
Specifically, Experian data from the first quarter of 2019 showed an all-time high for the percentage of prime-risk buyers — 61.9% — who got a used-vehicle loan in the quarter. For super-prime borrowers, it was a record 44.8%. The last time those numbers were comparably high was the first quarter of 2009.
Experian Automotive defines the super-prime “risk band” as consumers with credit scores 781 and above; prime, as 661 to 780. For the quarter, the average credit score for new-vehicle loans was 725. For used vehicles, the average was 682. Those numbers have been on the rise the last three years in a row, as auto lenders have generally tightened their standards for approving loans.
Meanwhile, the average amount borrowed also hit record highs for the quarter, for both new and used, Experian said. In the first quarter of 2019, the average new-vehicle loan was $32,187, up 2.3% from a year ago. The average used-vehicle loan was $21,902, up 3.1%.
Tellingly, the gap between the average new-vehicle monthly payment vs. the average used-vehicle monthly payment is also on the rise, to $163 in the first quarter. For the first quarter, the average new-vehicle payment was $554, up 5.9% from a year ago. For used, it was $391, up 5.1%.
Another closely watched statistic, the level of delinquencies, stayed relatively flat in the first quarter vs. a year ago, Experian said. For the first quarter of 2019, 30-day delinquencies represented 1.98% of the outstanding balance, up from 1.9% a year ago. Zabritski said the 30-day delinquency rate was still below the latest cyclical high, at 2.81% in the first quarter of 2009.
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57884785be3e029f1e457676e90027a3 | https://www.forbes.com/sites/jimhenry/2020/01/30/automakers-are-ramping-up-electric-vehicle-production-slower-than-expected-supplier-lear-corp/ | Automakers Are Ramping Up Electric Vehicle Production Slower Than Expected: Supplier Lear Corp. | Automakers Are Ramping Up Electric Vehicle Production Slower Than Expected: Supplier Lear Corp.
Automakers have a pipeline full of electric vehicles to be introduced this year and next, but they are ramping up production volumes for electric vehicles more slowly than expected, an important supplier firm said — potentially a sign customer demand for EVs might not as strong as expected.
“I think maybe part of that could be initial demand, particularly in the U.S., being lower than anticipated,” said Lear Corp. President and CEO Ray Scott, in a Jan. 30 conference call.
Without saying which ones, Lear Corp. says some electric-vehicle customers are ramping up production ... [+] of EVs more slowly than expected. This photo shows the battery-powered Audi E-Tron GT Concept. Photo: Audi USA
Lear, based in Southfield, Mich., is a major supplier of seating and electronics to automakers, often called OEMs, short for original equipment manufacturers.
The supplier reported it has pushed back some of its order backlog to 2021 from 2020, in part because its car company customers aren’t ramping up production as quickly for EVs as they historically have done for cars with internal-combustion engines, or ICE for short.
“On the electric vehicle side, I think that, when we set our backlog assumptions back in December of 2018 there was just a very different view on how volumes would ramp up on these programs and that they'd be more similar to what you see with a traditional ICE vehicle ramping up,” Scott said.
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He said there could be other factors that contribute to the slower-than-expected increase in EVs, including maybe a shortage of parts.
“It could be capacity constraints on certain components at the OEM level,” he said. “I'm not certain of that, but we are seeing their planning volumes lower than what we had initially anticipated.”
In its Jan. 30 report on results for the fourth quarter of 2019, Lear said that on the electronics side of the house, electric vehicles in Lear’s global new-product components pipeline for 2020 include the Volvo Polestar 2, the Mazda MX-30, the Jaguar I-Pace, and the Ford Mustang Mach-E. On the seating side, Lear said the Audi E-Tron GT is also on its supplier timeline, in late 2020.
Lear didn’t provide any breakout of which vehicles might be delayed or in which global markets, in terms of ramping up production.
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fc7ce10c79c2b5909feb18985f43acbd | https://www.forbes.com/sites/jimhenry/2020/07/30/scarcity-raises-prices-for-new-vehicles-especially-trucks/ | Scarcity Raises Prices For New Vehicles, Especially Trucks | Scarcity Raises Prices For New Vehicles, Especially Trucks
A dealership lot in Linden, NJ Getty Images
Consumers looking to drive the hardest bargain on a new car or truck may want to sit on the sidelines for a while.
That’s because auto dealerships are still short of new-vehicle inventory because of factory shutdowns this spring. Until production catches up with demand, that scarcity is helping maintain high new-vehicle prices, according to second-quarter earnings reports.
“Inventory’s going to be the challenge,” for the rest of 2020, said Roger Penske, chairman and CEO of Penske Automotive Group, in a July 29 conference call to announce second-quarter earnings. He said the value of the group’s inventory in the second quarter was down more than $800 million, or about 20%, to $3.4 billion.
On the positive side for consumer demand, he cited low interest rates, good credit availability, and a high level of incentives, including some zero-percent auto loans from the automakers’ captive finance companies.
Nevertheless, there’s no escaping the impact of the pandemic on second-quarter results. Penske Automotive, Bloomfield Hills, Mich., said its U.S. new-vehicle unit sales fell 53% in April, 31% in May, and 12% in June, vs. the same period a year ago.
In a separate call on July 28, David Hult, president and CEO of Asbury Automotive Group, said availability varies by brand, but he said it would probably be this fall before new-vehicle inventory is back to normal.
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“We're certainly starting to get vehicles in, and we'll certainly get them in August. But with the demand currently that's out there, and the way the supply is coming in, I think it's mid-September before it starts to normalize,” he said.
Except for online transactions, new-vehicle sales were shut down across much of the country this spring, to try and arrest the spread of the coronavirus. Automakers also shut down North American factories, from late March through mid- to late-May.
General Motors, for instance, said in its second-quarter report on July 29, that its North American production was down for eight out of 13 weeks in the quarter.
GM reported is dealer inventory for GM North America (that is, U.S. and Canada) was 444,000 cars and trucks at the end of the second quarter. That was down 45% from a year ago, and also down 34% from the first quarter of 2020. As of July 25, GM said its dealership inventory had increased to 480,000 units.
CFO Dhivya Suryadevara said GM’s scenario for the second half of 2020 is to build dealer inventory back up to around 600,000 units by year end. “We will calibrate this based on the demand level we see,” she said, but she cautioned that GM plants — especially the ones building lucrative pickups and SUVs — are already running flat out.
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ebb330461e97a22fc70488d8603d4b9c | https://www.forbes.com/sites/jimhenry/2021/02/24/auto-dealerships-cash-in-while-short-supplies-last/?sh=10671684e2db | Auto Dealerships Cash In While Short Supplies Last | Auto Dealerships Cash In While Short Supplies Last
Jeep Wranglers on a snowy lot at a dealership in Gurnee, Ill. in January. Xinhua News Agency/Getty Images
Auto shoppers holding out for a big discount may have a long wait, as auto dealers expect supplies of new cars and trucks to remain relatively scarce for the first half of 2021, and maybe even into the third quarter.
The good news is, prices could moderate later this year, and the selection on dealer lots could improve, too, along with the supply of new cars and trucks.
Meanwhile, several publicly traded dealership groups report they made record gross profits per vehicle sold in the fourth quarter. “We think it will continue to be elevated,” while the supply shortage lasts, said Heath Byrd, CFO for Sonic Automotive, in a recent conference call.
Sonic, based in Charlotte, N.C., reported record quarterly revenues of $2.8 billion, up 1.8% from a year ago, and all-time record quarterly income from continuing operations before taxes of $90.4 million, up 48.3%.
Sonic said its new-vehicle gross profit per unit was a record $2,932 in the fourth quarter on a same-store basis, up 31.4% from a year ago.
AutoNation Inc., based in Fort Lauderdale, Fla., reported separately its new-vehicle gross profit per unit was a record $2,775 in the fourth quarter on a same-store basis, up 50% vs. a year ago.
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Sonic’s CFO said the inventory shortage should continue through the first half of 2021, and “start to normalize” in the second half. Supplies are short because consumer demand recovered faster than automakers could get their factories up and running again, following coronavirus-related shutdowns last year.
More recently, a shortage of computer chips is interrupting production, and prolonging the shortage of new vehicles.
It should also be noted dealership profits aren’t high only because demand is high and supplies are low. On the cost side, dealerships around the country cut costs last year, especially by reducing head count and cutting advertising, and that has also served to boost profits.
Those measures were emergency responses to the pandemic at first, but many dealer groups report they intend to stick to those cost cuts as much as possible, even though many jobs have been restored, and sales have largely recovered since last spring.
Dealerships also reorganized their businesses around digital selling, and pickup and delivery. Again, that was partly in response to the pandemic, but also responding to long-term customer demand for more and easier online access, similar to other retail industries.
Many dealership groups already had those changes in the works, but the coronavirus speeded up adoption.
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1816274b39a37e0893aa5d7283febb02 | https://www.forbes.com/sites/jimhenry/2021/02/26/auto-industry-message-to-new-car-shoppers-with-subprime-credit-forget-it/ | Auto Industry Message To New-Car Shoppers With Subprime Credit: Forget It | Auto Industry Message To New-Car Shoppers With Subprime Credit: Forget It
The 2021 Nissan Versa starts at $14,980 suggested retail. It's an exception to the rule, that many ... [+] automakers have dropped small cars in the U.S. market in favor of trucks, which are more profitable, and more expensive. Nissan North America
For shoppers with subprime credit who’d like to buy a new, entry-level car, the U.S. auto industry has a message: Fuhgeddaboudit.
How about a nice used car, instead?
“For the new-vehicle market, the pool of potential buyers is smaller now than it once was,” said Jonathan Smoke, chief economist for Cox Automotive Inc., at the American Financial Services Association annual Vehicle Finance Conference, on Feb. 26.
AFSA is a Washington-based trade association for lenders. Members include banks, the “captive” finance companies for automakers, and independent finance companies.
Used, certified pre-owned cars are “becoming the new entry level,” Smoke said at the conference, which was held online. “We essentially no longer have entry-level vehicles in the new-vehicle market.”
The belief that dealers can somehow find a new car to fit “any” household budget is just that, a myth, he said.
That’s been a gradual, long-term trend. Customers with subprime credit already account for only a small and shrinking percentage of new-vehicle purchases.
According to Experian Automotive, in the third quarter of 2020, new-vehicle auto loans to subprime customers accounted for less than 8% of the total. Five years ago, it was more than 11%. Experian defines credit scores of 600 and below to be subprime.
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The difference between haves and have-nots has become even more obvious because of the coronavirus pandemic, on top of the fact that Ford Motor Co., General Motors, and Stellantis, the former Fiat Chrysler have pretty much quit offering small cars in North America, in favor of more profitable small trucks.
Japanese and Korean brands insist they will stay in the car market, although even they have dropped some of the smallest econoboxes in the U.S. market.
Mike Colleran, senior vice president, U.S. marketing and sales for Nissan North America, told the Detroit-based Automotive Press Association in a recent webinar that Nissan will stick with cars, like the Nissan Versa and the Nissan Sentra. “We build great sedans, they are cost effective, they are in our future,” he said.
At the AFSA conference, Smoke said affordability doesn’t seem to be deterring prime-risk, new-vehicle buyers, even though average transaction prices are at or near record highs.
“To those with the best incomes, the best credit scores, there’s no problem with the consumer, even during the pandemic,” Smoke said. “They can easily afford” new-vehicle payments, he said.
Another panelist at the AFSA conference, Satyan Merchant, senior vice president and auto line of business leader at credit bureau TransUnion, said rather than a “V”-shaped recovery, the recovery from the pandemic has been more like a “K.”
That is, there’s a sharp divergence between consumers with stable, better-paying jobs, vs. consumers with low-paying jobs, or who may be unemployed due to the coronavirus.
Merchant said consumers who have to stretch to make a payment are running out of ways to minimize monthly payments.
Underlying interest rates are already low, and can’t get much lower. Loan terms are “capped out,” so borrowers probably don’t have much opportunity to lower their monthly payments by taking out longer-lasting loans, he said.
Meanwhile, “new and used prices keep going up,” he said. “The subprime consumer might be just out of the market.”
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1b20cb8f9d02ef1b506df632923982dd | https://www.forbes.com/sites/jimhenry/2021/02/27/bullish-outlook-for-2021-despite-a-bumpy-start-gm-executive-says/ | Bullish Outlook For 2021 Despite A Bumpy Start, GM Executive Says | Bullish Outlook For 2021 Despite A Bumpy Start, GM Executive Says
Steve Carlisle, president of General Motors North America, at the North American International Auto ... [+] Show in Detroit, in January 2019. At the time, he was president of Cadillac. Behind him is the Cadillac XT6 three-row crossover SUV. Getty Images
The U.S. auto industry is heading into 2021 with a number of “tailwinds,” said Steve Carlisle, president of General Motors, North America.
“Interest rates are favorable, and we can see fiscal stimulus coming,” he said at the American Financial Services Association Vehicle Finance Conference this week.
“Vaccines are improving almost daily. There’s an enormous rate of savings. There’s a lot of great product. So, I go beyond a bit of cautious optimism,” he said at the conference, which was held online.
Carlisle said he expects U.S. auto sales in 2021 in the range of “mid- to high-16 million.” That would be a big improvement over 2020, when sales were about 14.6 million cars and trucks, but still short of the 2019 total of almost 17.1 million.
Nevertheless, auto sales in 2020 finished a lot better than analysts feared, back in March and April 2020. Because of the coronavirus pandemic, showrooms representing more than half the previous year’s sales total were closed for several weeks, with vehicle sales limited to online-only in many states.
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“A year ago, in another couple of weeks, we were looking over the precipice,” Carlisle recalled. His remarks at the AFSA conference were posted on Feb. 24.
While he was optimistic about auto sales in 2021, it’s fair to say this year could be off to a better start, Carlisle said. “Arguably, it’s been a pretty bumpy start to the year,” he said. “We’ve got snow and ice. We still have COVID. There was an earthquake in Japan. There’s a semiconductor shortage globally.”
The semiconductor shortage has served to perpetuate a shortage of new-vehicle inventory, which began with factory shutdowns last spring. GM got an early start on the shortage, because of a strike in September and October 2019.
The upside for the industry, if not for bargain-hunting consumers, is that the shortage has helped drive higher prices.
“What we learned last year was we perform very well with lean inventories,” Carlisle said. “Which means business has been very profitable for dealers and good for us.”
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c5c44b812f208a4bebe62ab0eb54759b | https://www.forbes.com/sites/jimhenry/2021/03/26/huge-increase-in-march-auto-sales--since-sales-cratered-a-year-ago/?sh=43a91657230f | Huge Increase In March Auto Sales, Since Sales Cratered A Year Ago | Huge Increase In March Auto Sales, Since Sales Cratered A Year Ago
A 2021 Chevrolet Tahoe rolls off the line at GM's Arlington Assembly plant. Photo: GM
March auto sales are sure to show a huge percent increase, compared with March 2020, when auto sales fell sharply, in response to the coronavirus pandemic.
Nevertheless, it’s still a seller’s market. According to J.D. Power and LMC Automotive, average transaction price — the amount retail customers actually pay, taking incentives into account — is expected to reach a record high for the month of March of $37,286.
J.D. Power and LMC Automotive predict March sales of almost 1.5 million cars and trucks in March 2021. That would be up almost 44% vs. March 2020. To put that in some context, that would be down about 5% vs. March 2019.
TrueCar Inc. has a similar forecast, up about 42% from a year ago. Automakers in the U.S. market report March sales on April 1, according to Autodata Corp.
For the first quarter, J.D. Power and LMC Automotive expect auto sales of about 3.7 million, up 8% from the first quarter of 2020. TrueCar expects first-quarter sales to be up about 10% from a year ago.
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March 2020 was when auto factories started closing, and showrooms representing a majority of U.S. auto sales started shutting down, because of the coronavirus pandemic.
For all of 2020, U.S. auto sales were down 15%, to 14.5 million. Monthly auto sales bottomed out in April 2020, and it took until September 2020 for new-vehicle sales to get back to year-ago levels.
That was largely because of manufacturing plant shutdowns and a slow restart, and not for lack of demand, once showrooms started opening again in May 2020. In early 2021, a shortage of computer chips has served to further delay a full recovery in production.
The downside for consumers is that demand continues to outstrip supply. In addition, the consumer shift to trucks, especially pickups, SUVs and crossover vehicles, is also contributing to the rise in average transaction price, since trucks on average are bigger and more expensive than cars.
According to the forecast from J.D. Power and LMC, SUVs and trucks are on a pace to account for a combined 77% of retail sales. That would be the highest truck mix on record for the month of March, and up from 73% a year ago.
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4bf9cbe685fe5511fda8b1b917ecd35e | https://www.forbes.com/sites/jimingraham/2019/11/13/browns-vs-steelers-the-rivalry-that-isnt/ | Browns Vs. Steelers: The Rivalry That Isn’t | Browns Vs. Steelers: The Rivalry That Isn’t
Jimmy Haslam, a former minority owner of the Steelers, bought the Browns in 2012. Under Haslam's ... [+] ownership, the Browns are 2-11 vs. the Steelers. (AP Photo/David Richard) ASSOCIATED PRESS
Rivalry? What rivalry?
The Pittsburgh Steelers and Cleveland Browns, two of the storied franchises in NFL history, are frequently painted as heated rivals, when in fact, they are rivals in geography only. Cleveland’s FirstEnergy Stadium and Pittsburgh’s Heinz Field are separated by only 137 miles.
The Steelers and Browns, however, are separated by epochs. By decades. The two teams have almost never been good at the same time, and that trend seems to be the case again this year.
The turnpike twins will meet in Cleveland on Thursday night as two ships passing in the night. The Steelers have won their last four games in a row, the Browns have lost four of their last five games.
At 5-4, the Steelers are two games behind the Baltimore Ravens in the AFC North. As for the Browns, arguably the most disappointing team in the NFL this year, their season of high hopes is on life support, and the same can be said of coach Freddie Kitchens’ job security.
Speaking of coaches, nothing better reflects the rivalry-less nature of the faux Cleveland-Pittsburgh “rivalry”. Over the last 50 years, the Steelers have had three head coaches. The Browns have had 17. In the last 13 years, the Browns have had eight coaches. The Steelers have had one.
Mike Tomlin is in his 13th year as the Steelers coach. He succeeded Bill Cowher (15 years), who succeeded Chuck Noll (23 years).
Stability and winning have been the Steelers’ two hallmarks over the last half century. Chaos and losing have been the Browns’ hallmarks in this century.
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You have to go all the way back to the 1960s to find the last time the Browns dominated the Steelers for a decade. In the 60’s, the Browns had a record of 15-5 against the Steelers. But in the 1970s, it flipped, and the Steelers were 15-5 against Cleveland. The Browns rallied slightly in the 80’s, with a 12-8 advantage over the Steelers, but then the roof caved in on Cleveland.
In the ’90s the Browns lost nine of the 14 games between the two teams, and then it REALLY got ugly. From 2000 through 2009, the Steelers won 17 of 20 games with Cleveland, including, at one point, a streak of 12 in a row.
Since 2010, the teams have played 17 times, and the Browns have lost all of them but two.
PITTSBURGH, PA - OCTOBER 28: T.J. Watt #90 of the Pittsburgh Steelers in action against the ... [+] Cleveland Browns on October 28, 2018 at Heinz Field in Pittsburgh, Pennsylvania. (Photo by Justin K. Aller/Getty Images) Getty Images
So while the fans in both cities view the Browns-Steelers games as a hotly-contested backyard brawl, for most of the last 50 years the rivalry has been a big yawner. In the last 50 years, only in the 60’s did Cleveland dominate Pittsburgh. The Browns had a mini-run in the 80’s, but other than that the turnpike rivalry has been a turnpike nightmare for the Browns.
Kitchens, whose desperate team staggered to a much-needed 19-16 win over Buffalo on Sunday, has a short week to prepare for a game with their geographic rivals on Thursday night. So, of course, do the Steelers. But the Steelers are the Steelers and the Browns are the Browns.
“What they’ve been able to do is very impressive. Losing their quarterback, but never wavering. They’ve won four straight,” said the embattled Kitchens, who despite the win over Buffalo is still on the hot seat.
The Steelers surge, meanwhile, is coming with backup quarterback Mason Rudolph at the wheel. Rudolph had never appeared in an NFL game when he took over for injured Ben Roethlisberger in Pittsburgh’s second game of the season.
Since then, Rudolph has easily out-performed Browns quarterback Baker Mayfield, a comparison made even more intriguing by the fact that both players were selected in the 2018 Draft. Mayfield was the first player taken overall. Rudolph was the 76th player taken overall, and the sixth quarterback.
A look at both quarterback’s numbers this year goes a long way towards explaining why each team is where it is this year. Rudolph has completed 64.5% of his passes, with 11 touchdowns, four interceptions, nine sacks and a quarterback rating of 93.
Mayfield has completed 59.9% of his passes, with nine touchdowns, 12 interceptions, 25 sacks, and a 75.2 quarterback rating.
“Their quarterback doesn’t take sacks and doesn’t make mistakes,” Kitchens said. “We’ve got our work cut out for us.”
The Browns are coming off a bizarre victory over Buffalo, which was almost overshadowed by the Browns’ continuing ineptness in the red zone. In the second quarter Cleveland drove to the Buffalo 1-yard line, then ran eight consecutive plays, but failed to score a touchdown.
Last year the Browns ranked sixth in the NFL in red zone efficiency, scoring touchdowns on 66.6% of their trips into the red zone. This year they rank 26th, at 46.6%.
The Steelers, oddly enough, are even worse than the Browns. Pittsburgh is 28th in red zone efficiency with a mark of 39.1%.
But one team is flourishing and the other is floundering.
Kitchens suggested there is more to it than just numbers in explaining the Steelers four-game winning streak, when he said, “They know how to go win.”
The underachieving Browns do not.
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90eec25c566aa28c89fcca976b03b6c3 | https://www.forbes.com/sites/jimingraham/2020/12/05/is-this-the-week-the-cleveland-browns-get-a-signature-win/ | Is This The Week The Cleveland Browns Get A Signature Win? | Is This The Week The Cleveland Browns Get A Signature Win?
Cleveland Browns running backs Nick Chubb (24) and Kareem Hunt (27) are both on pace for 1,000-yard ... [+] rushing seasons. (AP Photo/Ron Schwane) ASSOCIATED PRESS
How good are the Cleveland Browns? Eleven games into the 2020 season we still don’t know for sure. Are they a legitimate emerging power in the AFC? Or are they the deceiving product of a lightweight schedule?
We’re about to find out.
Sunday in Tennessee, the 8-3 Browns will face the 8-3 Titans in a game that, for better or worse, will bring Browns rookie head coach Kevin Stefanski’s team into sharper focus.
It’s a franchise that could use some exactitude, some unambiguous confirmation. The signs thus far are encouraging, though not definitive. The next step would be to achieve a signature win against a substantial opponent, something they have yet to do, which would validate that a corner has finally been turned, that the Browns are genuine, and their growth this year carries weight.
Sunday in Tennessee will afford them that opportunity.
It’s been nearly 20 years (2002) since the Browns reached the playoffs, and over a quarter of a century (1994) since they last won a playoff game. Last year the Titans came within one win of reaching the Super Bowl, which the Browns have never won, never lost, and never played in.
Sunday’s game in Tennessee is a chance for the Browns to prove they are as good as their record, a validation that is still missing from their resume. It comes at a time when the Browns need a question mark-erasing “we’re finally back” moment, which they can conclusively produce with what for them would be a titanic win over the Titans.
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Because a closer look at the Browns’ record suggests that totally buying in on the results thus far is, at best, mildly risky, at worst, fool’s gold.
It’s the old “yeah, but who have you beat?” conundrum.
Cleveland’s eight wins have come against seven teams who have a combined winning percentage of .190 (24-51-2): Cincinnati (twice), Washington, Dallas, Indianapolis, Houston, Philadelphia, and Jacksonville.
Cleveland’s three losses have come against three teams with a combined winning percentage of .697 (23-10). Those three teams are Pittsburgh, Baltimore, and Las Vegas. The Browns were outscored in those three losses 92-19.
In their eight wins, the Browns have scored an average of 31 points per game. But they’ve also allowed 30 or more points in three of those eight wins, and allowed 23 or more in six of the eight. And all of those opponents, with the exception of the Colts, are bad teams.
In other words, the Browns have yet to beat a team that is as good as the Browns think they are. A win Sunday in Tennessee would check that empty box.
Only one of the Browns’ eight wins has come against a team that currently has a winning record. That’s Indianapolis. The Colts are 7-4. The Browns beat them 32-23.
In the Browns’ three losses, they’ve scored just two touchdowns in 12 quarters. Two of them were against division rivals the Steelers and Ravens, and the Browns were blown out of both games, losing by a combined score of 76-13. In the other loss, 16-6 to the Raiders, Cleveland gave up 209 yards rushing.
The Browns, obviously, can’t be blamed for the quality, or lack of quality of the teams on their schedule. In the NFL you can only beat the team you play every week.
You can, however, be blamed for not beating any of the good teams on your schedule, so that’s a yoke the Browns will have to wear until they beat a good team. The Colts are not a bad team, but for Cleveland that was not the signature win for which the Browns are still searching. They have three chances remaining: Sunday in Tennessee, December 14 vs. Baltimore, and January 3 vs. Pittsburgh. The games against the Ravens and Steelers will both be played in Cleveland.
The Browns’ other two remaining opponents are back-to-back games in New York, New York, against the Giants and Jets (combined record: 4-18).
Theoretically, the Browns could lose to the Titans, Ravens and Steelers and still make the playoffs with a record of 10-6, as long as they don’t lose their two layup games in New York.
But an 11-5 record would be much more comfortable, and impressive, because it would mean the Browns won at least one of their remaining games with Tennessee, Baltimore and Pittsburgh.
It’s hard to leave your mark in the playoffs without at least one signature win in the regular season. The Browns appear playoff-bound for the first time in forever, but a signature win would further fatten their resume.
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7dd2dafd82977509f393932915b5e0c2 | https://www.forbes.com/sites/jimingraham/2020/12/07/led-by-coach-kevin-stefanski-the-cleveland-browns-playoff-drought-appears-to-be-over/ | Behind Coach Kevin Stefanski, The Cleveland Browns’ Playoff Drought Appears To Be Over | Behind Coach Kevin Stefanski, The Cleveland Browns’ Playoff Drought Appears To Be Over
Rookie head coach Kevin Stefanski has the Cleveland Browns on the verge of reaching the playoffs for ... [+] the first time since 2002. (AP Photo/Wade Payne) ASSOCIATED PRESS
Non-Clevelanders might have trouble grasping the full significance of the Cleveland Browns’ current record, which is 9-3. Maybe this will help: The Browns’ combined record after 12 games in the 2016 and 2017 seasons was 0-24. You want to throw in 2015? Fine. That “improves” the record to 2-34.
Prior to this year, in the 21 years since the Browns re-entered the NFL in 1999, they had a winning record after 12 games only twice. They were 7-5 in 2014 and 7-5 in 2007. Those were two glaring aberrations.
For virtually all of this century, the Browns’ record after 12 games has been the very definition of a franchise lost in the woods. In addition to those two 0-12 seasons, they had one 1-11, two 2-10’s, two 3-9’s, seven 4-8’s and two 5-7’s. In a six-year stretch from 2003 to 2008 the Browns after 12 games were 4-8 four times and 3-9 once.
Put another way: prior to hiring Kevin Stefanski as head coach, in the 21 years since 1999, the Browns’ winning percentage at the 12-game mark was .315 (79-172).
Since hiring Stefanski, their winning percentage after 12 games is .750 (9-3).
That includes the signature win Cleveland needed and got on Sunday, a 41-35 win at Tennessee in a game the Browns led 38-7 at halftime. It was only the second win over a team with a winning record by the Browns this year. But it was a win that casts the Browns, and their rookie head coach in a much more flattering light.
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With four games left against (in order) the Ravens, Giants, Jets and Steelers, the Browns have a chance to win 11 games for the first time in over a quarter of a century (since 1994), and for only the second time in 35 years, since 1986, when their coach was Marty Schottenheimer.
Much of the credit for Cleveland’s emergence goes to Stefanski, who with no prior experience as an NFL head coach has had to navigate himself and his team through the most challenging season in NFL history.
Asked what was the difference between last year and this year, Browns center J.C. Tretter said, “Kevin coming in and shaping us the way he wants us to play and compete. The culture of a team starts with the head coach, and it’s up to the players to live up to it. So it starts with Kevin, and who he is as a person and a leader.”
After years of failure, Browns owners Jimmy and Dee Haslam appear to have finally gotten this coaching thing right. Stefanski is the seventh Browns head coach in the nine years since the Haslams became owners. Stefanski appeared to be the front-runner for the job in 2019, but then-general manager John Dorsey chose Freddie Kitchens instead.
Dorsey and Kitchens were both fired after a 6-10 season last year, and this time the Haslams didn’t whiff. They hired the 38-year-old Stefanski, who spent the previous 14 years on the Minnesota Vikings’ coaching staff, where he was the offensive coordinator in 2019.
Overcoming the obstacles of a limited training camp and no preseason games due to the pandemic, Stefanski has brought much-needed discipline, accountability, leadership, and a total cultural re-boot to a franchise that needed all of that.
After a shaky outing in his first game as coach, an ugly 38-6 loss at Baltimore, Stefanski has led the Browns to a 9-2 record, and has Cleveland on the brink of a trip to the playoffs for the first time since 2002.
Equally important is the progress quarterback Baker Mayfield has shown under Stefanski. Last year Mayfield threw 21 interceptions, the second highest total in the NFL. This year he’s thrown just seven, none in his last five games. Last year he was 21st in the league with a quarterback rating of 51.2. This year he’s 13th with a rating of 70.5.
In the win over Tennessee on Sunday Mayfield’s rating was 147, as he became the first Browns quarterback to throw four touchdown passes in the first half since Hall of Famer Otto Graham did it in 1951.
For the game, Mayfield completed 25 of 33 passes for 334 yards, four touchdowns and no sacks. Mayfield attributes his improvement to conversations he had with Stefanski during the bye week in early November.
“Baker’s very hard on himself, very critical of himself. We try to coach him up on things he needs to work on and double down on what he’s good at,” Stefanski said.
“Baker has been a leader since the day he was drafted,” Tretter said. “He has a magnetic personality. Guys want to be around him and follow him.”
Meanwhile, Cleveland fans are delirious over the possibility of the Browns’ long-awaited return to the playoffs.
“They are a big part of this,” Stefanski said. “I love seeing the (Browns) flags on everyone’s lawn. The excitement is there, and we’ve got to continue to give them something to be excited about.”
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7ab3f08aeba88c7fe3221fec8d90bc77 | https://www.forbes.com/sites/jimingraham/2021/02/25/payroll-purge-over-cleveland-indians-recalibrate/ | After Payroll Purge, The Cleveland Indians Are Ready To Recalibrate | After Payroll Purge, The Cleveland Indians Are Ready To Recalibrate
Cleveland Indians president Chris Antonetti (right), seen here with manager Terry Francona (center) ... [+] and general manager Mike Chernoff (left) says the extensive roster turnover the last couple of years, "Gives us flexibility on how we want to build our team." (AP Photo/Tony Dejak) ASSOCIATED PRESS
Now that the Cleveland Indians have pared their payroll down to the bone - an estimated $38 million this year - with zero guaranteed salary commitments beyond the 2021 season, they are in a position to selectively begin the cycle again.
It’s a plan and a process that was first popularized by the Indians, under general manager John Hart, in the early 1990s. The goal was cost certainty, and Hart and his staff achieved it by signing arbitration or pre-arbitration eligible players to multi-year contracts.
The players rarely sign second multi-year contracts because by that time they are too expensive for the Indians, who either trade the players or watch them leave as free agents. Just in the last three years, the list of players who have left the organization under those circumstances is an impressive one: Corey Kluber, Francisco Lindor, Trevor Bauer, Michael Brantley, Carlos Carrasco, Carlos Santana (twice), Jason Kipnis, and Yan Gomes.
Despite that talent drain, the Indians have managed to stay competitive, having reached the postseason in four of the last five years.
The purge of all that talent, all that expensive talent, has brought the Indians back to square one on their payroll. The team’s highest paid player this year will be third baseman Jose Ramirez who will make $9.4 million in the final year of a five-year contract, which includes two club options for $11 million in 2022 and $13 million in 2023.
Outfielder Eddie Rosario, signed as a free agent to a one-year $8 million contract, will the Indians’ second-highest paid player. Only five other players will make over $1 million, none of those over $5.5 million.
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On a Zoom call with reporters, Indians president Chris Antonetti acknowledged that the organization, with no guaranteed salary commitments beyond 2021, is now positioned to consider multi-year contracts for certain players in certain situations.
“This gives us a variety of options,” said Antonetti about the club’s lack of committed money beyond this year. “If you look at the composition of our roster, it’s a lot younger, and at different points in the service spectrum. So, I’d expect over the next six to twelve months, the guarantees we will have moving forward will increase. This does give us flexibility on how we want to build our team.”
The one Indians player who is an obvious candidate to become the first Cleveland player to receive a significant multi-year contract since Ramirez five years ago, is pitcher Shane Bieber. The 25-year-old right-hander fattened his portfolio by winning the Cy Young Award last year, when he was the best pitcher in baseball, and, with a salary of $559,600, the best bargain in baseball.
“It’s absolutely something I’d be open to,” said Bieber about the possibility of a contract extension. “But in terms of conversations, it hasn’t really happened yet. So that’s obviously something I’d love to dive into, and hopefully that will be reciprocated as well.”
Antonetti’s policy is to never publicly discuss the specific contract situation of individual players, but it’s clear that Bieber is at the top of the list of those for whom the organization would like to have some cost certainty.
“Obviously Shane represents all the things we want our players to be,” said Antonetti. “Both on the field, the teammate he is. The way he prepares. The way he competes. We are hopeful that Shane will be here for a really long time to come.”
The homegrown Bieber has developed into a star relatively quickly. A fourth-round draft pick by the Indians in the 2016 draft, he spent just one full season in the minors before joining the Indians’ rotation early in the 2018 season. He was MVP of the All-Star game in 2019, and he won the Cy Young Award in 2020.
“He’s a great building block to have,” Antonetti said. “Great performance on the field, a great leader, and a great teammate. It really makes it easy for us when young pitchers come up and we can tell them, ‘Watch Bieber, and do what he does.’”
It’s clear that the latest incarnation of the Indians is going to be pitching driven, more than ever before. Assuming there are no injuries, in addition to Bieber, the rotation will also include Zach Plesac, Aaron Civale, Triston McKenzie and Cal Quantrill, any of whom, depending on their performances in 2021, could be candidates for contract extensions somewhere down the road.
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fc3dce1e9bcb2adef1682192541272ee | https://www.forbes.com/sites/jimingraham/2021/03/04/cleveland-browns-gm-andrew-berry-on-baker-mayfield-hes-risen-above-it-all/ | Cleveland Browns GM Andrew Berry On Baker Mayfield: ‘He’s Risen Above It All’ | Cleveland Browns GM Andrew Berry On Baker Mayfield: ‘He’s Risen Above It All’
Over the Cleveland Browns' last 10 games last season, quarterback Baker Mayfield threw 16 touchdown ... [+] passes and just two interceptions. ASSOCIATED PRESS
The Cleveland Browns probably feel a little disoriented. They have found a quarterback that’s a keeper. In 2021 Baker Mayfield has a chance to become the first Browns quarterback in 40 years to start all of the team’s games in three consecutive seasons.
The last Browns quarterback to do that was Brian Sipe, who started all of the Browns’ games in a four-year span from 1978-81.
Since replacing injured Tyrod Taylor in week four of the 2018 season, Mayfield has started 45 consecutive games, 46 if you count last year’s playoff game.
Browns officials obviously like Mayfield. The next step will be defining in dollars exactly how much they like the former Heisman Trophy winner, who since being drafted No. 1 overall in 2018, has finally ended the conga line of here-today-gone-tomorrow quarterbacks who have littered the Browns’ roster in this century.
Mayfield is signed through the 2021 season. There is a fifth-year option that the Browns must exercise by May 3. Picking up that option is a formality. What comes next is not. Picking up the fifth-year option buys the team and the quarterback time to see if they can agree on a long-term deal.
After ending the franchise’s endless quarterback scavenger hunt, after leading the team to the playoffs for the first time in 18 years, after quarterbacking the team to its first playoff win in 26 years, Mayfield would seem to have some negotiating leverage.
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That said, this will be a pricey decision for Browns officials. Signing Mayfield to a long-term deal could mean paying him about $35 million per year. Not surprisingly, Browns general manager Andrew Berry chose only to speak in generalities about the team’s strategy in the Mayfield case.
“Baker really had a strong season for us and we really like the maturation and growth he showed on and off the field,” Berry told reporters Wednesday. “We look forward to seeing his growth in his second year in our offense.”
Mayfield showed plenty of growth in adapting to new coach Kevin Stefanski’s offense. The Browns’ 11-5 record with Mayfield at the helm speaks for itself. But the deeper into the season he went, the more Mayfield seemed to excel in Stefanski’s offense. In the last 10 games of the season Mayfield threw for 16 touchdowns and only two interceptions.
Berry mentioned Mayfield being the first quarterback to lead the Browns to the playoffs in 18 years as a major accomplishment, particularly given the context of that achievement.
“He’s endured an enormous amount of adversity in his career, just quite honestly, with the changes he’s gone through with the coaching staffs, front offices, offensive systems, and he’s risen above it all,” Berry said.
Mayfield, who will turn 26 on April 14, will get the 2021 season to make his closing argument to management that he’s worth a long-term deal, which, in the end, would seem to be the optimum outcome for both parties.
“We all saw him grow from week to week to week last year,” said Berry. “And we expect him to continue that progress and have a fantastic 2021 season for us.”
The Browns are counting on that, because, like every team in the NFL, they are counting on their quarterback to be a team leader, and consistent, winning-performer.
“The quarterback position in my mind is the most important position in professional sports,” Berry said. “And until you have a baseline of winning-level quarterback play, I think it’s really difficult to win and make progress in the NFL. Oftentimes, if that position isn’t productive, or isn’t solidified, it can feel a lot like operating in neutral, and so that’s something that’s certainly not lost on us, and it’s definitely lost on this organization.”
The high stakes of quarterback evaluation have been on display during this NFL offseason, in which Carson Wentz and Jared Goff were both traded after signing extensions.
“I think that maybe it would be a stretch to say that that’s going to serve as a cautionary tale or any type of blueprint,” Berry said. “We’ll make the best decision for us with the information that we have.”
The information the Browns have on Mayfield has gotten better every year. They are still in the gathering process. But after struggling for decades to find a quarterback who is a keeper, and now that they apparently have, Mayfield, barring a disastrous 2021 season, would seem to be in a good position to be a long term fit in Cleveland.
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f5c39f1b608848ebe0a26963b1456226 | https://www.forbes.com/sites/jimkeenan/2014/09/02/why-youre-missing-out-on-the-best-sales-people/ | Why You're Missing Out On The Best Sales People | Why You're Missing Out On The Best Sales People
Their list was ridiculous. It was a mile long, with every imaginable hiring requirement. They were hiring an EVP of Global Sales and the desired candidate had to have everything. They had to have industry knowledge. They had to have x years of experience. They had to have grown a sales organizations from 25 million to 200 million. This person had to have had global responsibilities. They had to have launched new products before. They had to have built new channels, built new go to market strategies and have off the chart business development skills. This person had to have implemented new sales process, sales development programs and more. The hiring criteria for this new VP of sales was specific, and long.
The company would receive resume after resume and just reject person after person if they couldn't check every box. If they didn't have industry experience, out. No experience growing a company from 25m to 200m, out. Never implemented a sales process, out. Never managed a global team, out. If the company couldn't check every requirement box, they were rejected on the spot. As you can imagine, they are having a hard time finding their "A" Player.
This is an extreme case, but it's not too far off from most companies. Too many sales organizations focus on checking boxes rather than finding talent and what's unfortunate is rarely does the hiring criteria, the "check boxes," companies are looking for correlate to success.
Here is the money quote when it comes to hiring, pay close attention.
The secret to hiring people who can crush it isn't to focus on what they've done, but to focus on what you need done.
You see, most organizations spend inordinate amounts of time focusing on what someone has done and not what they can do and that is a huge disconnect. Who cares what people have done, the only thing we should be focusing on is; can they do what we need them to do, what we need to get done. If we can answer that question, then we're gonna find that killer candidate.
I know, I know, your thinking duh! That's what we're doing when we're looking at what people have done. That's why we want years of experience, industry knowledge, etc. If they've done it before, they can do it again.
Really?
Think about what you're saying. Do you really believe it? If what you're saying is true, hiring would be easy. If years of experience, industry knowledge, GPA, contacts, etc. were predictors of success then everyone who had those skills or hiring criteria would be successful all the time and hiring would be pretty easy and predictable. But hiring isn't easy and predictable. Even when people have all the hiring criteria your looking for, they still fail.
Why? Why do people still fail when they meet our all of our requirements?
They fail because the things we chose to hire on almost always amount to a hill of beans when it comes to predicting future success. It all reminds me of the disclaimer the financial industry uses.
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).
You could replace "investments" with "the candidate" and it would work perfect.
Past performance may not be indicative of future results. Different types of candidates involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific candidate will be profitable or equal the corresponding indicated candidate performance level(s).
Sound familiar? Have you felt this way before. Have you been bitten by the perfect predigree, the perfect candidate who felt flat on their face?
Past performance does not guarantee future results.
Here's the deal. The key to hiring killer candidates is to stop targeting non correlating, outmoded, irrelevant hiring criteria and get serious about the position. Rather than starting with the hiring criteria, start with what exactly it is you expect this person to get done. In the most descriptive, detailed, robust manner possible, take an inventory of all the things this person must accomplish and deliver. Once you've done that, then ask the question; what will it take to get all of this done?
The key to hiring great sales people is aligning what needs to actually get done, the roll up your sleeves, dirty work of the job, with the specific abilities and capabilities necessary to to do it. Anything short of that is missing the target.
With that said, can anyone think of a sales position that would "require" a certain GPA or college degree? Exactly, me either! Yet, people use it as a hiring criteria all the time. And these are just two, simple examples of using the wrong hiring criteria.
Don't make this mistake. Learn to hire sales people or anyone at that matter based on what they can do. Anyone can check off lists of hiring criteria. That doesn't take skill. Identifying talent and the ability to get a job done, now that takes skill.
Don't be a box checker, be a talent finder.
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def4ba1dea996245663e7a21bb7a167c | https://www.forbes.com/sites/jimkeenan/2015/07/22/askgaryvee-changing-the-mentoring-game-for-young-entrepreneurs/ | The #AskGaryvee Show Changing The Mentoring Game For Young Entrepreneurs | The #AskGaryvee Show Changing The Mentoring Game For Young Entrepreneurs
Do you have a mentor? You should. I know I need one, but I've just been too lazy. That and I haven't found one that I think could handle me, has the attitude I want and the business, social, and financial acumen I want in a mentor.
Until I find one, Gary Vaynerchuk's #askgaryvee is filling the void.
If RedBull and Energizer batteries came together to sponsor one person, GaryVee would be it. Gary is a bolt of lightning shooting out of your computer screen and his show #askgaryvee is the perfect medium to capture the lightning.
As entrepreneurs having access to people who can help us grow and expand is a nice little asset. But, let's keep it real, a good mentor is hard to find. I know you like your Uncle Milton, your college professor or Booger, your best buddy from college, but killer mentors they are not.
What makes a truly killer mentor?
They motivate you They know "stuff" you don't They push you They challenge you They keep it real, no B.S. They are committed to your success They are available
This is a list of what a good mentor does, and you know exactly how valuable a good mentor can be if you can find one.
The #askgaryvee show meets this checklist and is why I'm impressed with what he's doing.
If you have a question, he'll answer it!
The premise of the show is simple. People ask him questions via social media using the #hashtag #askgaryvee and he answers them. To the tune of about two shows a week and three to six questions a show. There are no rules and no bounds to the questions he’ll take nor what he'll answer and that's what makes the show and his approach so unique.
Garyvee is completely unscripted, unedited, and off the cuff. He passionately answers questions about marketing, Facebook advertising (he’s a huge fan of FB dark posts), social media, future trends, go to market strategies, personal development, sales, all with an in your face, unapologetic, attitude. That's why he's redefining mentoring. He captures your attention. He provides value. His shows are unpredictable, tackling subjects many people won't, don't see the value in or are just too afraid to take on, all the while delivering actionable answers that viewers can put to use immediately.
To provide mentoring to tens of thousands of people at a time via a Youtube channel is impressive. It requires a unique approach. Connecting with thousands of people, who, generally speaking, only care about their issues is off the hook, and Gary deserves all the props in the world for accomplishing such a feat.
It starts with his energy and direct approach. You can feel his excitement to do the show from the second he jumps out of the screen at you. Wound up like a spring, you can feel the tension he's ready to unleash in his answers. There is nothing soft, passive or matter of fact about the #askgaryvee show and the questions he answers.
He gives the impression that his team picks the questions, and he's straight up improvising. However, there are times you know he wanted that question, and he's gonna unload the answer with unadulterated passion and it works.
The #askgaryvee show isn't the first question and answer show ever created. It is, however, the first show that delivers a mentoring experience for entrepreneurs and sales and marketing folks. Like most things, it's not what you do, but how you do it, and the #askgaryvee does it right.
He's a mentor in your pocket.
He's crazy motivating He knows his stuff. He's a New York Times Best Selling Author. He grew his family business from three million to sixty million, and he's successfully grown Vayner media to over 500 employees. He pushes you with his no non-sense, passionate approach He'll challenge you in almost every show, daring you to go further He is unabashedly in your face, no nonsense, no b.s. He's committed to your success. You can't help but feel he's talking to YOU. He's available. I've been extremely impressed with his commitment to connect with what he calls Vayner Nation. Garyvee is continually engaging with people via Twitter, Instagram, Snapchat and more. He's extremely available for someone with 1.1 million Twitter followers.
The Internet has created countless ways to redefine the world in which we operate, sometimes in huge ways with Airbnb and Uber. Other times in smaller ways like how we get direction, support for building and growing our business.
The #askgaryvee show is the perfect virtual mentor for anyone and everyone committed to getting better, learning and growing in business.
The #askgaryvee show is a must subscribe for growing your business. It's a virtual mentor for the 21st century
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2216bd154e3e421ad7e9d8ff70430e1f | https://www.forbes.com/sites/jimlawton/2015/02/24/mind-maker-manufacturers-rethink-robots/ | Mind + Maker: Manufacturers Rethink Robots | Mind + Maker: Manufacturers Rethink Robots
Say ‘robot’ and images of Rosie, or the Terminator, or R2D2 come to mind. Star Wars meets The Jetsons. Today’s reality, however, looks more like a fleet of industrially colored robots purchased by car makers to weld and assemble vehicles and move heavy metal.
But this reality is changing. Fast. Robots are smarter than ever before, safe enough to work among humans, and can perform physical tasks once considered impossible.
So, what does it mean to have robots among us? Advances in technology are paving the way for a new breed of robot that delivers entirely new ways of performing physical tasks. And when combined with the revolution in big data and advanced AI, these smart, collaborative robots are going to profoundly change how manufacturing gets done .
Breaking the Barriers to Widespread Automation of Physical Tasks
Today, more than 90% of physical tasks performed in manufacturing environments can’t be practically or economically automated. Why? Robots can’t adapt to the real-world variability in the workspace or operate effectively in semi-structured environments. Being agile enough to stop working on one task and shifting to another quickly and without requiring reprogramming extends beyond the capability of most existing automation. The list goes on. But advances in compliant motion control, integrated vision, extensible software platforms and advanced AI are tearing down these obstacles even as you read this post.
Sense, Adjust and Learn: Automating Cognitive Tasks
Much is being written about advances in AI. Some speculate on the arrival of malevolent robots that through conscious volition harm the human race. In truth, the opportunities over the next three, five and ten years are mundane by comparison but also much more practical.
Robots are now able to apply basic common sense to reduce the cognitive load of the user. Consider a robot picking parts out of an egg carton-type grid. If the robots learns that one of the parts has shifted and is now in a different location, it can infer that the other parts have shifted as well and can calculate the new locations without the intervention of a user. Robots are now able to sense the world around them and adapt on the fly to the changes typical in semi-structured, manufacturing environments.
The automation of cognition exponentially increases scalability of learning across the enterprise – and ultimately inter-enterprise – as well. Cloud robotics leverages cloud computing, storage and advanced analytics to coordinate the actions of large numbers of robots and allows one robot to benefit from the experiences of others. These advances replace the old model where robots are manually re-programmed one-at-a-time, increasing cost and risk and delaying the benefits of new knowledge.
The bottom line? Robots in the near future will gain knowledge from experience, learn from each other and leverage cognitive computation to make themselves, their processes and the products they produce better.
What does all this mean for manufacturing? Manufacturers recognize that they need to be more responsive to market changes, ready to deliver on customer preferences, and able to innovate faster and more efficiently. All adding up to the overwhelming demand for environments that are agile enough to meet all those needs.
Smart, collaborative robots will engender this agility. Factories will be smaller, and located more closely to markets and design centers, accelerating new product introduction and competitive advantage. Production lots of smaller sizes and mass customization will become economically viable, increasing customer loyalty and reducing risk. Companies will be able to retool their manufacturing systems to provide new roles for these mechanical “workers” as well as new roles for human workers.
The result? Yes, productivity and efficiency improve. Better yet, manufacturers find new ways to ignite creativity and fuel innovation.
I’d welcome your thoughts on what this new frontier in automation will mean to manufacturing and what it will take to seize the opportunity. You can reach me at @jim_lawton or tweet us up @rethinkrobotics.
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b38fbc35cf24fbc7629c50fbb6bddd0c | https://www.forbes.com/sites/jimlawton/2015/03/10/robots-and-the-human-touch/ | Robots and the Human Touch | Robots and the Human Touch
Have you thought much about what touch means to us as humans? Watch carefully a pianist and wonder at the range of sounds created by the seemingly simple touch of fingers on the keys. Observe a craftsman building a piece of furniture and count the times hands meet wood to measure smoothness, shape and feel. Or see a watchmaker tightening gears and screws at the perfect level of tension to create a masterful timepiece.
Our ability to touch and feel the environment around us is an extraordinary aspect of what makes us human. It also allows us to perform a wide variety of delicate and intricate tasks without harming the people around us or the objects with which we interact.
It may seem odd to write about human touch in a piece on robots and automation, but until now, lacking this ability has sorely limited the use of robots in manufacturing environments. That’s all changing. While robots may never experience the emotions conjured in humans by the feel of a baby’s breath on their neck, they are more and more able to apply the incredible value of touch to tasks.
Consider what it takes to test a printed circuit board (PCB). A worker picks up an untested PCB, moves it through the air and carefully inserts it into a fixture that may have no more than 100 micron clearance. Once the results are known, the PCB is passed on to the next step in the manufacturing process or is set aside to be reworked or scrapped.
Humans are not particularly precise creatures. And yet without thought to what needs to happen, thousands of workers perform this task extraordinarily well every single day. How is this possible?
First, the worker can move the untested PCB through free space, stably and purposefully, into the test fixture. While high precision is not necessary for this step, collisions, erratic movement and rapid acceleration must all be avoided.
Next, the worker feels the forces being applied by the fixture as the PCB is inserted. They dynamically adjust the stiffness of their arm to securely snap the PCB into place without damaging the PCB or the fixture of the tester. The direction and the forces applied change constantly until the task is achieved.
Rigidity is not an option in this scenario or in many others. This spring-like nature of our limb allows us to use our arms to guide a dance partner or our legs to navigate uneven terrain and myriads of other tasks.
Why is this easy for humans and so hard for robots? Consider the difference between a bouncing ball and a human jumping. The ball hits the ground, forces interact, power is transferred, and the ball bounces back up. Unlike the ball, humans jump through free space, absorb the initial impact of the ground through the springiness in their legs, and then gradually stiffen the leg muscles to stabilize position.
Until now, robots have not been able to master this give-and-take that gives humans the ability to apply just the right amount of pressure to respond and react as needed:
Point-to-point, position-controlled robots work based on careful alignment of the object in play. This approach is fine, until the object isn’t exactly aligned or something gets in the path between point A and point B. The robot will keep applying force until the object is aligned, removed or more likely, damaged. Avoiding this requires sophisticated vision systems or complex, integration-heavy fixturing. These solutions are costly and very inflexible. The result? Robots are rarely used to perform tasks like PCB test. Alternatively, force-controlled robots interact with objects more gracefully and are better suited to tasks that require the finesse exemplified by the insertion of the PCB into the tester. Again fine, until we talk about moving around in free space. Then the robot becomes dangerous as it will move faster and faster until it finds something to stop it.
Neither option offers that “spring-like” nuance so essential to not damaging limbs or objects.
Today, cheap sensor technology and advances in robot design architecture make it possible to combine mechanical compliance (the ability to mimic the give-and-take of a human arm) and impedance control (dynamically controlling stiffness or springiness as described by the differences between a human jumper and a bouncing ball). As a result, smart, collaborative robots now bring the long-sought after ability to “touch” and “feel” their way through tasks like humans do. Today, robots can load PCB's for testing.
It’s hard to imagine our lives without the ability to touch. As manufacturers look to build the factories of the future, where human brain power will be more essential in every corner of the operation, robots able to perform tasks that require the abilities made possible through touch will be a critical asset .
Where do you see robots with human-like touch fitting into your operation? Share your perspectives with me @jim_lawton or tweet us @rethinkrobotics.
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bbd8677e1eb75584c03dac0fff752033 | https://www.forbes.com/sites/jimmagill/2020/09/10/oil-companies-see-methane-reductions-as-in-their-financial-interest/ | Why Big Oil Cares So Much About Reducing Methane Gas Leaks | Why Big Oil Cares So Much About Reducing Methane Gas Leaks
A portion of the Rocky Express Pipeline is lowered during its construction in Lancaster, Ohio, U.S., ... [+] on Tuesday, Aug. 25, 2009. Once complete, the natural gas pipeline system will stretch 1,679-miles from Rio Blanco County, Colorado, to Monroe County, Ohio. Photographer: Ty Wright/Bloomberg BLOOMBERG NEWS
In trying to figure out why major oil and gas companies operating in the U.S. seem to be more interested in controlling their emissions of methane than are the federal agencies that are supposed to be regulating them, it helps to remember the old journalism maxim – follow the money.
The EPA under President Trump recently rolled back Obama-era rules to require oil and gas companies to track and limit the volumes of the potent greenhouse gas they pumped into the atmosphere. While many small to midsized independent operators hailed the regulatory rollback, in general the integrated international companies such as ExxonMobil XOM and BP largely panned the regulatory rollback, saying they favored the regulatory certainty of a universally accepted set of rules.
In its 2019 annual report, Chevron CVX listed among potential risks faced by the company: “international agreements and national, regional, and state legislation and regulatory measures that aim to limit or reduce greenhouse gas (GHG) emissions.” ExxonMobil, in its most recent annual sustainability report, said that as of August 2019, methane emissions from its U.S. unconventional production and midstream operations were down by nearly 20% compared to 2016, and added that the company was on track to meet its company-wide methane reduction commitments by the end of this year.
“To achieve this progress, we implemented cost-effective methods that included structured leak detection and repair programs, which use optical natural gas imaging cameras to identify leaks for prompt repair, and replacement of high-bleed, pneumatic devices with lower-emission technology,” the company said.
BP, in its 2019 sustainability report said it is deploying drone-mounted sensors to inspect equipment in its U.S. onshore gas operations, because the drones are more efficient and safer than the use of hand-held sensors. The British supermajor said the innovation was part of its goal to install methane measurement at all its large oil and gas processing sites by 2023, targeting a methane intensity of 0.2%.
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Companies want to keep investors happy
One of the primary reasons that all three big companies are so focused on reducing their emissions of methane and other greenhouse gases is simple — they view it as being in the best economic interest, rather than risk seeing investors flee to other industry segments seen as being more environmentally friendly.
Activist investor groups, like As You Sow, have made great strides in recent years in convincing oil and gas companies to reduce their carbon footprints, Lila Holzman, energy program manager of the “green” shareholder advocacy organization, said in an interview.
She said the group focuses on reducing emissions of methane, because of the impact that the significant greenhouse gas has on global warming. “Methane has a much greater warming potential than carbon dioxide, especially when we look at the upstream side,” she said. In addition, getting methane emissions under control is technically within the grasp of most oil and gas companies. “It’s like a no-brainer, the low-hanging fruit.”
Holzman said that in recent years, As You Sow has seen a greater transparency on the part of energy companies as to the extent of their methane emissions and efforts to contain them. “We feel like we have seen an improvement in this area. In general, we see a shift in companies acknowledging they are responsible for these emissions and taking voluntary action to respond to our concerns,” she said.
“What we’ve seen, especially with some of the larger companies like Exxon and Shell, they are taking action voluntarily, but they publicly agree that methane should be regulated. It’s one of those instances where the regulation has gone even more lax than what industry would have wanted,” she said.
The most powerful tool that the activist shareholder groups wield is the shareholder resolution, which can be brought to a vote at the companies’ annual shareholder meetings.
“The last time we filed with an oil and gas company was with Chevron in 2018. At that time, the resolution received a 45% vote, which is really strong,” Holzman said. While it’s rare for these types of resolutions to get a majority vote, a vote of 45% result can give corporations a real showing of what a lot of their investors care about, she said.
Big Oil sees declining share of overall economy
Oil and gas companies can hardly afford to lose any more investors than is currently the case, if analysis by the Institute for Energy Economics and Financial Analysis, a non-profit think tank focused on the transition to cleaner energy, is correct.
“These companies have been in decline for at least a decade,” Kathy Hipple, an IEEFA financial analyst, said. “Even as the world economy is growing, the industry is shrinking.”
In 1980, oil and gas companies’ stocks comprised 28% of the S&P 500 while today they make up only about 2.5% of that index, she said. “The rest of the economy has grown and this industry on a relative basis has shrunk by more than 90%. Investors have said this industry is not the future and finance is all about the future.”
All that is not to say that Big Oil players are going to fade away overnight, she said. The biggest companies in the sector are still posting capital expenditure budgets of anywhere between about $10 billion to $20 billion annually. “That’s still a lot of money,” Hipple said.
The lion’s share of those investments, particularly on the part of U.S.-based companies are still going toward developing oil and gas assets, rather than greener forms of energy. “Exxon and Chevron are putting almost all of their capital investments to oil and gas. Some European companies have started to pivot a little bit, but at most, 5% to 8% of their capital expenditures are going toward renewables,” she said.
Perhaps a greater long-term worry for the oil and gas industry than meeting the concerns of environmentally minded shareholders is the growing movement led by universities and other big institutional investors to divest themselves of fossil fuels altogether.
“The divestment movement is really about challenging the power of fossil-fuel companies and challenging their ability to continue to hold us back from having effective climate policy, climate regulation,” said Richard Brooks, a senior strategist at 350.org, one of the leaders of the divestment campaigns.
Those campaigns started on university and college campuses about a decade ago and were modeled after the successful divestment campaign aimed at bringing down the apartheid system in South Africa. “We now have 1,200 institutions, with $14 trillion in assets who have made commitments to divest from fossil fuels,” Brooks said.
Just in the last few months three large well-funded university systems stepped up the anti-fossil fuel crusade. In April the U.K.’s Oxford University passed a motion requiring its endowment fund, amounting to almost $4 billion, to sell off all of its direct investments in fossil fuel companies, and to stop all future investment in funds that primarily hold stock in fossil fuel companies. In May the University of California announced that it had completed the divestment of more than $1 billion in assets from oil and gas-related companies.
Just last month, Harvard University alumni elected three anti-fossil fuel advocates to the school’s Board of Overseers, the governing body indirectly in charge of the university’s massive $40.9 billion endowment.
Brooks said unlike the activist investor movement, the divestment movement has taken the fight against climate change directly to what advocates consider the source of the problem, the fossil fuel industry itself.
“That’s where shareholder engagement has largely failed and continues to fail,” he said. “What does an oil company do if you ask them to stop drilling oil?
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3df18c79b57dbc4bd07fc3144fe460c5 | https://www.forbes.com/sites/jimmagill/2021/02/22/blue-vs-green-hydrogen-which-will-the-market-choose/?sh=227c53e73878 | Blue Vs. Green Hydrogen: Which Will The Market Choose? | Blue Vs. Green Hydrogen: Which Will The Market Choose?
As U.S regulators and industry leaders mull how to consider introducing hydrogen into the nation’s energy supply mix, they’re faced with a choice that sounds more like a decision pondered by the hosts of one of TV’s many home fixer-upper shows – should they go with blue hydrogen or green hydrogen, and what combination of the two will create the right mix?
The answers to those questions will likely have a great impact on the speed with which the U.S. economy makes the transition to a zero-carbon future and the cost of getting there.
Today about 99% of the hydrogen produced for industrial use – in refineries and manufacturing plants – is so-called “gray” hydrogen. Gray hydrogen principally is derived from natural gas, and its production results in the production of large volumes of CO₂, nine parts CO₂ for every one part hydrogen. Creating more environmentally friendly “blue” hydrogen, requires capturing that CO₂ and disposing of it in some manner, such as deep underground, or using it in some beneficial manner, such as in advanced oil recovery.
Green hydrogen on the other hand is produced via electrolysis, the process of separating water into hydrogen and oxygen. When the electricity used in the process comes from renewable sources, such as wind or solar, the result is a zero-carbon hydrogen. At a cost of about $6/kilogram, green hydrogen is the most expensive form of hydrogen to produce.
Today, green hydrogen is two to three times more expensive than blue hydrogen, according to a December 2020 report by the International Renewable Energy Agency. However green hydrogen costs are expected to decrease in the next several years, with improved electrolysis technology and the scaling up of that technology to industrial levels of production.
“The cost of alkaline electrolyzers made in North America and Europe fell 40% between 2014 and 2019, and Chinese-made systems are already up to 80% cheaper than those made in the West,” the report states. The IREA predicts that green hydrogen could be produced for between 8 cents/kg and $1.6/kg in most parts of the world before 2050.
“This is equivalent to gas priced at $6/MMBtu to $12/MMBtu, making it competitive with current natural gas prices in Brazil, China, India, Germany and Scandinavia on an energy-equivalent basis, and cheaper than producing hydrogen from natural gas or coal with carbon capture and storage.”
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Pros and cons of green and blue
Hydrogen experts differ on the rate at which blue and green hydrogen should be introduced into the U.S. energy mix, although most agree that there needs to be a transition period in which blue hydrogen, which is cheaper and whose production is more easily ramped up to a commercial scale, should be relied on to provide a bridge to an economy in which the zero-carbon green hydrogen is predominant.
“There are challenges to producing green hydrogen at large scale today,” Andy Sarantapoulas, a vice president of the international industrial gas and engineering company Linde LIN , said in an email statement. In addition to gas produced through electrolysis, Linde also characterized gas produced from a renewable feedstock, such as landfill gas, as green.
“Renewable electricity is still often subsidized by local or state governments and is not always available as baseload operations,” he said.
Sarantapoulas said gray, green and blue hydrogen would all be part of the hydrogen energy mix in the future. “The rate of growth of the blue and green hydrogen will solely depend on the demand for those products, driven by the market demand, production costs, and government regulations,” he said.
“In the end it all comes down to who’s paying for it,” Nico Bouwkamp, technical program manager at energy consulting firm Frontier Energy, said in an interview. “Green hydrogen is a great opportunity but it will take some time to develop.”
Bouwkamp represents Frontier on the California Fuel Cell Partnership industry/government collaboration aimed at expanding the market for hydrogen fuel-cell powered vehicles. California has led the nation in its embrace of the use of hydrogen as a vehicle fuel. The state has mandated that 100% of new passenger cars and trucks sold in-state be zero-emission vehicles by 2035.
California’s aggressive climate targets present an opportunity for other states such as Texas, which also have the potential to become big hydrogen consumers, to experiment with their mix of the various colors of hydrogen, before becoming locked in to single technology because of government mandates, he said.
“You have more flexibility in figuring out how to make it work financially and making the business case for it to be sustainable. You may start out with 20% renewable or low-carbon hydrogen, versus going to 100%, which is a costly proposition,” he said. “It’s a financial benefit as well as an engineering benefit.”
Raghu Kilambi, CEO Powertap Hydrogen Fueling Corp., said blue hydrogen “is the way to go in the next five to 10 years,” especially in California, where the company, which builds vehicle fueling stations, is based.
“Electricity is so expensive In the United States and it’s not very green,” he said. In California especially, the high cost of electric power makes green hydrogen less cost-effective than the blue variety. “Green hydrogen may have some applications internationally but not in the United States.”
Europe, Asia go for the green
Indeed, other parts of the world, notably Europe and Asia, have gone all-in on their endorsement of green hydrogen. Last July, the European Union unveiled its new Hydrogen Strategy, which calls for the accelerated adoption of green hydrogen to meet the EU’s net-zero emissions goal by 2050. The strategy calls for the installation of 6 gigawatts of renewable hydrogen electrolyzers on the Continent by 2024.
“In Europe there was absolutely no doubt that it would have to be green hydrogen. Blue hydrogen would never do,” said Robert Hebner, director of the Center for Electromechanics at the University of Texas at Austin.
Hebner, who is taking part in DOE-funded research into the development of new hydrogen production technologies, said the market ultimately would decide what colors of hydrogen are developed and when.
“Green hydrogen is what Europe absolutely wants. But blue hydrogen is what a lot of the world thinks we can afford sooner and it’s probably going to be good enough,” he said. “It’s really more of a market-driven thing than a technology thing.”
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e2232ba8b4d6fb16bd70b51d34c4fe6f | https://www.forbes.com/sites/jimmagill/2021/02/24/europe-asian-nations-leading-the-world-in-hydrogen-development/ | Europe, Asian Nations Leading The World In Hydrogen Development | Europe, Asian Nations Leading The World In Hydrogen Development
As the nations of the world turn to hydrogen as part of the solution to staving off the worst impacts of climate change, the European Union is leading the charge, followed by many nations of Asia, with North America trailing behind in its embrace of the clean-burning fuel.
According to Hydrogen Insights, a report issued last month by the Hydrogen Council and McKinsey & Company, of the 228 large-scale industrial, transport and infrastructure hydrogen projects across the world more than half, 126, are projected to be located in Europe, while 46 are planned to be built in Asia, 24 in Oceania and only 19 in North America.
These projects represent a potential investment of $300 billion, the equivalent of 1.4% of global energy funding. The momentum for much of this potential investment in hydrogen is coming from nations whose governments have committed to meeting zero-carbon emission goals.
According to the report, “75 countries representing over half the world’s GDP have net-zero carbon ambitions and more than 30 have hydrogen-specific strategies.”
Last July, the EU Commission adopted the EU Hydrogen strategy, which calls for the adoption of technologies for the production and use of renewable or “green” hydrogen as a way to help the Continent meet its goal of achieving carbon neutrality by 2050.
Between November 2019 and March 2020, estimates of planned global investments by 2030 in electrolyzers, used in the production of green hydrogen, jumped from 3.2 GW to 8.2 GW, with 57% of those investments planned to take place in Europe.
According to the strategy, today “hydrogen represents a modest fraction of the global and EU energy mix, and is still largely produced from fossil fuels, notably from natural gas or from coal.” Thus, hydrogen production in Europe currently results in the release of 70 million to 100 million metric tons of CO₂ per year. “For hydrogen to contribute to climate neutrality, it needs to achieve a far larger scale and its production must become fully decarbonized,” the strategy states.
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The EU projects that the share of hydrogen in Europe’s energy mix will grow from less than 2% currently to between 13% and 14% by 2050.
EU’s climate goals driving hydrogen investment
The pro-hydrogen policies adopted by the EU and by individual European nations, notably Germany, are creating the conditions for that part of the world to become the global leader in the emerging hydrogen energy industry.
“What we see in the European Union is the regulatory support,” Christin Schlensog, vice president of new energy business in North America for Siemens Energy. “That’s important to really give it a kick-start.”
She pointed to the 6MW H2Future plant, the world’s largest green-hydrogen production facility located at the site of steel maker Voestalpine’s mill in Linz, Austria, which started operation in November 2019. The hydrogen plant, which operates a Siemens polymer electrolyte membrane (PEM) electrolyzer, uses renewable electricity provided by Austrian utility Verbund to create green hydrogen, which Voestalpine uses in the production of low-carbon steel.
“We focus on PEM because it’s a green hydrogen. You just use water and electricity. You don’t have any chemicals in the system,” Schlensog said.
Developing a new hydrogen-energy economy represents the classic chicken-and-egg problem involved in the introduction of any new technology, she said. Hydrogen project developers require a demand for their product before spending the capital to build costly plants, but the demand will not be generated without an ample supply to fill it.
“The technology is still rather expensive,” Schlensog said. “You need a certain number of projects just to increase production; the increased production decreases the cost. But of, course the projects are looking for the lower costs, so who moves first?”
Daryl Wilson, executive director of the Hydrogen Council, said that in both Europe and in China “there’s a very strong focus on the business opportunity of introducing new clean energy sources to the world and growing those markets and the production of hydrogen.”
In Europe, where the adoption of a hydrogen energy industry is being driven by “a very strong political movement in support of mitigating climate change and reducing CO₂ emissions,” he said.
“The other driver is air quality. That’s the situation in China, where a lot of their energy is coming from coal,” Wilson said. “There, the use of hydrogen to mitigate air quality issues has been a big focus.”
As the hydrogen energy industry has taken root and grown in different regions across the world, a pattern has emerged, he said. “Initially, the industry comes forward with a road map of how hydrogen could be done. When those road maps become a strategy within a country, now you have multiple stakeholder input and involvement of the government,” he said.
The next step occurs when the countries establish specific targets for hydrogen production and usage, and the industry responds by proposing specific projects and seeking funding for those projects. “There are quite a number of countries in that leading stage where there’s a strategy, there are targets and substantial funding: China, Korea, Japan, the European Union, and within the EU, France and German and Spain,” Wilson said.
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6319645530b01868272efea914f0ef18 | https://www.forbes.com/sites/jimmagill/2021/02/25/us-must-adopt-proper-policies-to-ensure-bright-hydrogen-future/?sh=3eb23f097ad1 | U.S. Must Adopt Proper Policies To Ensure Bright Hydrogen Future | U.S. Must Adopt Proper Policies To Ensure Bright Hydrogen Future
For a hydrogen energy industry to take off in the United States — as advocates hope — will require the federal government to adopt a suite of pro-hydrogen policies, and with some of its earliest actions the Biden administration has signaled that it would likely drive such policies forward.
“We would anticipate that policies favorable to the development of hydrogen energy will be a cornerstone of any climate change legislation or regulations, including those proposed by President Biden,” Andy Sarantapoulas, vice president of international industrial gas company Linde LIN , said in a statement.
At her January 27 confirmation hearing before the U.S. Senate energy committee, Jennifer Granholm, Biden’s nominee for Energy secretary, said the development of infrastructure to convert natural gas into “blue” hydrogen was an important step in transitioning from traditional fossil fuels into cleaner forms of energy.
Granholm also said as secretary she would back other environmentally friendly Department of Energy policies, such as promoting the development technologies for carbon capture, utilization and storage, as well as those for capturing carbon directly from the air.
The Senate confirmed Granholm on Thursday by a bipartisan 64-35 vote. Her Senate testimony reflects the administration’s commitment to achieving net-zero carbon emissions by 2050, a goal that Biden already has reinforced through a number of executive orders and other actions.
On the same day as the Granholm confirmation hearing, President Biden signed a series of executive orders outlining the administration’s goals for tackling the climate crisis, creating jobs and restoring scientific integrity across the federal government.
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According to an administration fact sheet, the orders are designed “to lead a clean energy revolution that achieves a carbon pollution-free power sector by 2035 and puts the United States on an irreversible path to a net-zero economy by 2050.”
Among the presidential actions are: the creation of a special presidential envoy for climate, who will represent the U.S. abroad; establishing the White House Office of Domestic Climate Policy – led by the first-ever national climate advisor Gina McCarthy; and ordering a pause on issuing new offshore oil and gas leases and identifying steps to double renewable energy production from offshore wind by 2030.
In addition, on February 11, the administration announced the launch of a new research working group within the Department of Energy, and a new $100 million funding opportunity to support the development of transformational low-carbon energy technologies.
The newly created Climate Innovation Working Group, which will be part of the National Climate Task Force, will launch an Advanced Research Projects Agency-Climate (ARPA-C) office within DOE. Among the office’s funding targets will be technologies leading to the creation of “carbon-free hydrogen at a lower cost than hydrogen made from polluting alternatives.”
Other technologic innovations targeted by the ARPA-C for funding could also result in the development of hydrogen-based solutions. These include: energy storage at one-tenth the cost of today’s alternatives; very low-cost zero carbon on-road vehicles and transit systems; and new, sustainable fuels for ships.
In addition, the DOE announced $100 million in funding via its existing Advanced Research Projects Agency-Energy (ARPA-E) to support transformational low-carbon energy technologies. The ARPA-E “invites experts across the country to submit proposals for funding to support early-stage research into potentially disruptive energy technologies, specifically encouraging inter-disciplinary approaches and collaboration across sectors.”
Congressional buy-in needed
Although Biden’s executive orders and other actions signify the administration’s willingness to embrace hydrogen as part of its zero-emissions strategy, experts agree that most of the policies that need to be put into place to put the U.S. on the road to development of a robust hydrogen energy economy will have to be enacted through legislation. And here, with its razor-thin Democratic majority in the U.S. Senate, is where the administration might find more difficultly in achieving its more ambitious climate goals, particularly in regard to weening the nation off its dependence on fossil fuels.
However, the administration is likely to have more luck in putting forward policies promoting hydrogen development, as these will likely lead to new jobs and greater investment in the existing energy industries.
For example, the American Petroleum Institute, in congratulating Granholm on her confirmation, was almost fulsome in its praise of her stated plans for renewable industries. “We welcome the secretary’s recognition of the importance of technological advancement,” API’s CEO Mike Sommers, said in a statement. In a previous statement, Sommers had praised the Biden administration commitment to investing in innovation to “tackle our climate challenges.”
Experts weigh in
Hydrogen experts agree that developing a solid foundation of public policies supporting the production and use of hydrogen will be crucial to building out a robust U.S. hydrogen energy economy. “Favorable hydrogen policies will not only yield positive environmental impacts, but also economic benefits as a result of both capital investments and making businesses more sustainable” Sarantapoulas said.
He called for the federal government to enact policies that encourage an all-of-the-above approach to hydrogen technologies. “The current mix of energy production – natural gas, nuclear, renewables – ensures that we will have various colors of hydrogen for the foreseeable future,” he said.
“If climate and the energy transition become a core platform for the new administration, hydrogen will have a very clear role to play,” Michael Graff, chairman and CEO of American Air Liquide Holdings, said in an interview.
Raghu Kilambi, CEO Powertap Hydrogen Fueling Corp., said the carbon-credit program adopted by the state of California has been responsible for incentivizing the creation of a market for electric vehicles powered by hydrogen fuel cells, and the same result could be achieved on the federal level with the proper policies.
“The carbon credits that we have are state-based, so we’re expecting to see federal incentives,” he said.
Christin Schlensog, vice president of new energy business in North America for Siemens Energy, said the Biden administration’s push to double offshore wind production from its current level represents good news for the hydrogen industry, as the renewable wind energy can be used to produce green hydrogen through electrolysis.
“To decarbonize large-scale, heavy-duty industries and the mobility industry, we do need a lot of renewable energy, more than we have right now,” she said in an interview.
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ba24243c94da63d87f34b3a062768877 | https://www.forbes.com/sites/jimmagill/2021/03/24/artificial-intelligence-could-have-helped-alleviate-suffering-from-texas-blackouts/ | Artificial Intelligence Could Have Helped Alleviate Suffering From Texas Blackouts | Artificial Intelligence Could Have Helped Alleviate Suffering From Texas Blackouts
A powerful once-in-a-decade winter storm in February resulted in the near total collapse of Texas’ power grid, resulting in residential and commercial areas suffering days-long blackouts, which led to at least 57 deaths and billions of dollars in property damage across the state’s 254 counties.
In addition, some Texans who did have power are facing overcharges of about $16 billion for electricity consumed during the weeklong crisis, according to a watchdog for the Electric Reliability Council of Texas (ERCOT), the quasi-governmental entity that oversees the Lone Star State’s power grid.
While debates as to the root causes of the grid’s failure are likely to go on for months if not years, some energy experts contend that a potential solution exists that could have alleviated some of the worst effects of the power shutdown – the introduction of artificial intelligence (AI) into the management of the grid.
Artificial Intelligence is loosely defined as the use of computer systems to process large volumes of data in order to perform tasks that normally require human intelligence, such as visual perception, speech recognition and decision-making. Although AI technology has been embraced by a number of other economic sectors, such as retail and insurance industries, the operators of the U.S. power grid have been slower to adopt it.
“In general, AI provides a lot of promise in empowering businesses to understand what’s happening in their environment, to get context and insight,” said Leo Simonovich, vice president and global head of industrial cyber and digital security at Siemens. “Ultimately, it’s about getting down to what’s important and having a clear playbook for making decisions.”
One way that AI could aid grid operators such as ERCOT is in the field of predictive maintenance, using data to keep track of the physical condition of all the assets on the grid, from generation sources – gas-fired power plants, renewable sources and other generation — to the transmission lines and distribution networks “all the way down to the thermostats,” said Tom Siebel founder and CEO of C3.ai, a Redwood City, California-based AI enterprise company.
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Predictive maintenance could detect a potential equipment failure hours or days before an actual failure occurs, he said.
Another way in which AI could have helped alleviate the problems seen on the Texas grid in February would have been in providing improved long-term weather forecasts. This could have enabled the grid’s operators to determine in advance which units would have to go offline in order to protect the grid’s integrity, which in turn would have allowed electricity consumers more time to prepare for planned outages, said Steve Kwan, director of grid management for Beyond Limits, an AI software provider.
Artificial Intelligence technology could also help match up power supply with power demand, down to a minute-by-minute basis, which would have been especially helpful to the ERCOT regulators during the crisis.
“Texas is in a unique situation because ERCOT isn’t connected to the western and eastern grid so there are fewer opportunities to make up for a shortfall,” Kwan said.
Deregulated market
In addition, the deregulated nature of the Texas electricity market presents some unique challenges when it comes to ensuring the reliability and resiliency of the grid. Because generation companies are not compelled by regulation to build power plants to ensure there is sufficient generation capacity on the grid under emergency conditions, state regulators use power prices to incentivize merchant generators to build peaking plants necessary to add that emergency capacity.
This results in a grid that is increasingly complicated and less stable than in a regulated electricity market, said Ron Beck, marketing strategy director of AspenTech, a Bedford, Massachusetts-based asset performance management company.
“Basically, the price becomes elastic. You charge a higher price, because otherwise why would they build a peaking plant?” Beck said. “The system gets more complicated. The pricing gets more complicated.”
That’s where AI could play a role in providing grid operators with a tool to help manage the complex system during a crisis period by sorting through massive volumes of data and presenting the best options for decisive action, all at a speed that no human could achieve.
“You’ve got guys that are sitting in a command center trying to manage the grid when something begins going wrong. How can they see what’s happening when it all starts happening at once?” Beck asked.
AI in load balancing
AI could also have helped Texas regulators better balance the generation load coming from all the various generation assets on the grid, from gas- and coal-fired turbines, wind turbines, solar arrays and nuclear plants, said Colin Parris, senior vice president and chief technology officer at GE Digital.
For example, during the February freeze, some generation assets, including wind turbines and gas-fired power plants were knocked offline because of equipment freeze-ups, forcing grid operators to scramble to balance the load from all the other assets that were still running.
“It gets extremely difficult if you don’t have enough data,” said Parris. “If you have a lot of data, because you have the right sensors and AI systems, you can actually say, ‘I think I can run longer at maximum power potential.’”
All this is not to say that AI could have prevented the disastrous multiple failures experienced by the Texas power grid as the result of February’s freeze. A number of factors contributed to the near collapse of the grid, including: the failure of natural gas suppliers to winterize their pipelines, and the failure of gas-fired generators to fill out a two-page application that would have exempted their facilities from being subjected to forced power outages at the height of the disaster.
In other words, artificial intelligence is not a substitute for human intelligence.
“AI is not the panacea,” Simonovich said.
Additionally, in its current level of technological development, AI might not have been useful in predicting the sustained freeze that precipitated the Texas grid disaster, Beck said.
“In the future AI may be more intelligent, but today AI is largely based on looking at large quantities of data,” he said. “For something that hasn’t happened before or that happens extremely rarely, then it becomes harder for AI to predict it, because you don’t have historical data to say, ‘this happened three years ago.’”
AUSTIN, TX - FEBRUARY 17, 2021: A sign states that a Fiesta Mart is closed because of a power outage ... [+] in Austin, Texas on February 17, 2021. Millions of Texans are still without water and electric as winter storms continue. (Photo by Montinique Monroe/Getty Images) Getty Images
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eadfd5e2e1ee727fb25c2ba7c17a7c9d | https://www.forbes.com/sites/jimmagill/2021/03/27/cyber-security-playing-greater-role-in-energy-companies-digital-transformation/?sh=623ef6e847bc | Cyber Security Playing Greater Role In Energy Companies’ Digital Transformation | Cyber Security Playing Greater Role In Energy Companies’ Digital Transformation
As U.S. oil and gas operations and electric power systems increasingly turn to digital, cloud-based solutions to help operate their oilfields and generation plants, executives are becoming increasingly concerned about the need for cybersecurity to harden their defenses against hackers and bad actors seeking to damage or even shut down those systems.
A rash of recent cyber security breaches highlights the vulnerability of even the country’s most critical systems to cyber mischief. In the SolarWinds scandal uncovered last year, officials uncovered cyberattacks that had taken place against numerous U.S. government agencies and thousands of public and private-sector entities around the world.
More recently, in February the operator of a water-treatment plant in west-central Florida uncovered a potentially dangerous intrusion that had occurred on the plant’s computer system. The hacker or hackers set the levels of sodium hydroxide, a potentially dangerous chemical, to increase by more than 100 times the normal levels. The operator returned the chemical levels to their correct proportions and avoided a potential health disaster.
A recent report by MIT Technology Review, prepared in partnership with Siemens Energy finds that the digital transformation that the oil and gas industry is currently undergoing has brought with it both operational benefits as well as cybersecurity vulnerabilities.
Oil and gas companies are “collecting and analyzing data, connecting equipment to the internet of things and tapping cutting-edge technologies to improve planning and increase profits, as well as to detect and mitigate threats,” the report states. “At the same time, the industry’s collective digital transformation is widening the surface for cybercriminals to attack.”
Federal officials also are beginning to recognize the need to bolster the cyber-security defenses of critical infrastructure. In the House's new $312 billion infrastructure bill, supported by President Biden, about $3.5 billion has been earmarked for improving the cyber-security of the electric grid.
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Such hardening of the grid’s defenses against cyber intrusion is desperately needed, according to Tom Siebel, the founder, chairman and CEO of C3.ai, an enterprise software company specializing in providing artificial intelligence (AI) applications to industrial customers. The grid currently is vulnerable to attacks by bad actors operating out of other countries, many with the backing of those countries’ governments, he said.
“They could turn off the power grid from a cell phone in Kiev. We’re completely exposed,” he said.
Shoring up the defenses
Other industry experts agree on the need for energy companies to improve their cyber-security defenses as they begin to rely more heavily on digital technologies such as AI and cloud computing in their operations.
“Industrial cyber has become the new risk frontier and in particular, the energy vertical is the most attacked infrastructure vertical,” said Leo Simonovich, global head of Industrial Cyber and Digital Security at Siemens. “The number of attacks is increasing and the sophistication is increasing.”
He said an attack against a piece of critical infrastructure such as a power plant could lead to a temporary loss of power, total shutdown of operations or worse, a public safety incident. Siemens, he said, works with its customers to shore up their cyber defenses, “using next-generation built-for-purpose technologies powered by AI to stay ahead of attackers.”
Many energy companies are beginning to adopt AI — which mimics human intelligence by analyzing data in order to make decisions — to stay ahead of the cybercriminals and foreign government-backed hackers. Using its ability to analyze large volumes of data very quickly, AI software can detect deviations that could be the work of hackers trying to gain access to a system. The technology can also analyze the methods used in previous cyberattacks, giving systems operators the tools needed to find and thwart the next attack.
“AI is going mainstream and it’s increasingly being used for security” Simonovich said.
Reaching out, creating partnerships
As some energy companies adapt their operations to accommodate the challenges of digital transformation and cyber security, they frequently reach out to AI software providers such as Austin-based Spark Cognition, whose patented machine-learning algorithms protect the company’s clients from the more than 400,000 new variants of malware detected every year.
“Our main advantage is we block day-zero malware, without needing to have updates on your anti-malware,” said Vice President Phillippe Herve.
Other oil and gas players have partnered with companies across a wide range of disciplines to develop their own digital solutions. Royal Dutch Shell for example, has partnered with AI software company C3ai, digital tech giant Microsoft and oilfield services technology firm Baker Hughes to enhance the reliability of its equipment through the predictive maintenance of its assets.
“The bad actor risk is real,” said Dan Jeavons Shell’s general manager of data science. “Cybersecurity is hugely important to us.”
He said to ensure that its AI technology doesn’t expose the company to potential cyber threats, Shell employs the same level of technical safeguards in its data science operations as it does in its other engineering and scientific disciplines.
“We’re also cautious in how far we go. A lot of our systems are placed in an advisory mode rather than a full-control mode,” he said. “Humans are still making the decisions.”
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fddaa4057e146b97590a32d2655f7107 | https://www.forbes.com/sites/jimmagill/2021/03/28/oil-gas-companies-deploy-ai-in-the-fight-to-reduce-carbon-emissions/?sh=64f6acc0761e | Oil, Gas Companies Deploy AI In The Fight To Reduce Carbon Emissions | Oil, Gas Companies Deploy AI In The Fight To Reduce Carbon Emissions
For oil and gas companies to remain in existence in the second half of the 21st century, they must find ways to dramatically reduce, if not totally eliminate, their output of carbon dioxide and other greenhouse gases. Artificial intelligence technology could provide one tool to help the energy industry accomplish that staggeringly difficult goal.
According to an August 2020 report by the National Oceanic and Atmospheric Administration on the impacts of atmospheric carbon dioxide on climate change, CO2 levels — mostly caused by the burning of fossil fuels — rose to about 410 parts per million in 2019, the highest level seen on earth in more than 3 million years.
Oil and gas companies, especially the big international ones, are under increasing pressure to reduce their carbon footprint in accordance with the Paris Agreement’s goal to limit global warming to well below 2 degrees, preferably to 1.5 degrees Celsius, compared to pre-industrial levels. Most major companies have set carbon-reduction targets, such as BP and Royal Dutch Shell, which both have vowed to achieve net zero carbon emissions by 2050.
ExxonMobil has focused on more modest short-term climate goals, such as reducing greenhouse gas intensity of its upstream operations by 15% to 20% compared with 2016 levels by 2025.
AI technology, which has the ability to harness large volumes of data from divergent sources to come up with solutions to problems, has the potential to not only increase global productivity but also lower overall emissions of carbon and other potent greenhouse gases, according to a recent report published by Microsoft in association with PWC.
“Using AI for environmental applications has the potential to boost global GDP by 3.1 – 4.4% while also reducing global greenhouse gas emissions by around 1.5 – 4.0% by 2030,” the report states.
“These AI technologies can help the industry optimize energy management by using digital twins to better monitor and distribute energy resources and provide predictive forecasting,” said Darryl Willis, corporate vice president of Energy at Microsoft. A digital twin is a digital representation of a physical piece of equipment or an entire system.
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“They can also be used to create visualize simulations, improve decision-making, reduce operational costs, and manage and extend the life cycle of physical assets,” he said.
Multiple uses of AI
Companies in the exploration-and-production segment of the industry are using AI in multiple ways to lower their carbon footprint: from performing predictive monitoring of carbon emissions from a particular oilfield; to conducting analysis of the oil-producing potential of a given field, thus reducing the number of wells that need to be drilled; to optimizing the storage of CO₂, which can be used in the production of hard-to-get-at oil. Such enhanced oil recovery results in storing the CO₂ deep underground, rather than releasing it into the atmosphere.
“Just bringing that efficiency to the table, from exploration to bringing the first well to market, that gives not only monetary dividends, but also reduces the CO₂ footprint for every barrel of oil,” said Mike Krause, senior manager of AI software developer Beyond Limits.
Another way in which AI is helping producers such as Shell lower their carbon footprint is in conducting predictive maintenance of pieces of equipment or entire systems, which allows the companies to anticipate and address potential equipment failures before they occur.
“If we can be more proactive and predictive in terms of when things might go wrong, we have fewer likely incidents, more controlled deployment of spare parts, less travel for people to come to the site, less hot-shotting of spare parts. All of those things have a CO₂ impact,” said Dan Jeavons, Shell’s general manager of data science.
Shell is also implementing AI technology across its new lines of businesses, which has potentially major implications for the company’s overall carbon footprint. For example, Shell is using AI at scale in its Quest carbon capture and storage facility in Alberta, Canada, which began operations in 2015. By May 2019 Quest had captured and stored more than four million metric tons of CO2, roughly equal to the emissions from about one million cars, deep underground.
The company also deploys AI to optimize the operations of its wind farms, which supply carbon-free energy in locations around the world, Jeavons said.
Monitoring emissions across vast distances
Ron Beck, energy industry director at Boston-based AI technology company AspenTech, said in the future AI will be critical in helping oil and gas companies take the first step in lowering their carbon footprint, by accurately measuring their greenhouse gas emissions across their operation.
“Public companies are starting to set executives’ pay based on their progress. So, you see companies reporting in their sustainability reports, ‘This is our carbon footprint. This is our flaring,’” he said.
Big oil and gas companies such as ExxonMobil are using AI to sort through large volumes of data collected from sensors deployed across the wide swathes of territory that comprise their areas of operations.
The company is employing the AI technology to reduce its emissions of methane, a potent greenhouse gas, across the Permian Basin in the southwestern U.S. Collaborating with Microsoft, Exxon is using “Internet-of-things” technologies to monitor and optimize a vast number of its widely dispersed Permian field assets.
Working from anywhere and using data collected from its extensive network of sensors and stored in the cloud, Exxon’s engineers, scientists and analysts can strive to decrease emissions, lower costs and increase production from the field, according to the company’s website.
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de3f2ead287813a0fad8812d3f1dbac4 | https://www.forbes.com/sites/jimmagill/2021/03/29/as-it-undergoes-transformation-us-power-grid-embraces-ai/?sh=1dad07b47a52 | As It Undergoes Transformation, U.S. Power Grid Embraces AI | As It Undergoes Transformation, U.S. Power Grid Embraces AI
The U.S. electric power grid, once viewed as the most stable and secure power system in the world, is in the midst of undergoing a systemic transformation as grid operators are being forced to adapt to multiple challenges. Among these challenges are an anticipated surge in electricity demand, brought on by the proliferation of new electric vehicles and the digital systems needed to support the “Internet of Things,” and new generation coming on line from renewable sources — with their inherent intermittency issues — along with electricity storage capacity from next-generation rechargeable batteries.
With its ability to process large volumes of data to come up with solutions to complex problems, artificial intelligence (AI) technology is helping to guide this grid transformation. Industry experts agree that AI will be necessary to form the basis of the smart grid of the future.
“There are two things we look at. We need to decarbonize the planet,” said Colin Parris, chief technology officer at General Electric division GE Digital. “At the same time, you want to manage how you retire your coal [generation plants] and transform the gas [generation plants’] capabilities.”
In addition, steps must be taken to shore up the resiliency of the grid, to prevent significant power interruptions caused by cataclysmic weather events. The vulnerability of the electric grid to severe disruptions was demonstrated in two different states for widely disparate reasons within the past year.
In Texas, the deaths of more than 100 people have been blamed on power outages resulting from a severe winter storm in February. Last August, a record-breaking heatwave in California led grid operators to institute rolling blackouts that affected 800,000 homes and businesses across the state.
Stabilizing the grid
“We have to stabilize the grid,” Parris said. Unlike in the past, when the bulk of power was generated by stable sources such as coal or natural gas, the grid of today increasingly includes intermittent sources such as wind and solar, which don’t provide power when the wind isn’t blowing or the sun isn’t shining. This increasingly requires grid operators to employ advanced AI technology to ensure the grid remains in balance.
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“People can’t depend on one smooth flow of electricity or one flow of demand inside of the utility. It’s going to be fluctuating,” Parris said. “That is all run by software: the grid software, the transmission software, distribution software, market-management software.”
AI software is also being deployed to accommodate the addition of battery storage onto the grid as that technology becomes more mature and is commercialized. Stem, a Silicon Valley-based battery storage company, uses AI technology to determine the most optimal and economic times to recharge the batteries and to release the energy onto the grid.
“When you think about it, the battery doesn’t do anything by itself, so you need the intelligence to understand how best to use that battery,” Larsh Johnson, Stem chief technical officer, said.
The AI software helps the operators forecast what individual customers’ load patterns are going to be, when they’re going to be consuming power and what the cost of power will be during different times of day. “For our customer class, it’s quite dynamic. It changes from hour to hour, sometimes even every few minutes,” Johnson said.
Balancing power supply and demand
AI technology is playing an increasing vital role in managing the electric grid to ensure that there is power available when and where it’s needed. This is going to become more important in the future as the demand for electricity is expected to rise, with consumers increasingly purchasing smart devices able to transmit and receive data via the Internet, commonly known as the Internet of Things.
In addition, the adoption of electric vehicles (EV), which is expected to ramp up dramatically in the coming years, will have a significant effect on electricity demand and the timing of that demand. For example, power demand in a given area could spike as suburban commuters all return from the office in the evening and plug in their EVs to recharge for the night.
“Taking into account consumer behavior to ensure that supply matches demand as much as possible is a very large puzzle,” said Steve Kwan, director of power generation for Beyond Limits, an AI technology company.
“This is a perfect application of artificial intelligence, because you can take into account many variables and be able to provide a recommendation in a very timely manner to support the changing needs of the consumer on a 15-minute basis,” he said. “Using traditional physics-based modeling is inefficient or too slow.”
AI to help in carbon reduction
AI is also helping grid operators reduce their overall carbon footprint in several ways. One way involves the use of cognitive computing, based on AI and signal processing technologies, and neural networks, computer systems patterned after the networks in a human brain.
Because power generated by wind and solar energy is usually cheaper than power from natural gas-fired plants — as well as having greater climate benefits — grid operators tend to rely on these forms of renewable energy as much as they can. However, because of the intermittency of these renewable resources, they must be backed up by a more reliable form of generation, typically a combined-cycle gas-fired plant.
As the levels of renewables flow up and down the operators of the combined-cycle plant have to continuously increase and decrease the electricity they produce. Because the plants are designed to operate at a particular level, this up and down cycling decreases efficiency and burns more fuel than necessary, thereby contributing to the plant’s overall carbon emissions.
“Operators have a tendency to operate in a very narrow region of the operational envelope, simply because of historical behaviors,” Kwan said. “By applying AI and neural-network technology we can have the plant operate in a much more efficient manner than before.”
Another AI application, developed by AI software company C3.ai, helps lower the carbon emissions of a power grid by reducing “the amount of fuel that you need to power the grid by 8%” according to C3.ai founder, Chairman and CEO Tom Siebel.
Siebel said in the future every successful energy company will be employing AI technology in its operations.
“Those companies who adopt AI will be delivering cleaner, more reliable, safer energy with much lower environmental impact. Those that don’t adopt will be acquired by those that do,” he said.
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d08a1388d652c657e383a764c2fd1f8e | https://www.forbes.com/sites/jimmywatkins/2020/02/13/myles-garrett-reinstated/ | What’s Next For Myles Garrett? | What’s Next For Myles Garrett?
CLEVELAND, OH - NOVEMBER 10, 2019: Defensive end Myles Garrett #95 of the Cleveland Browns rushes ... [+] against offensive tackle Dion Dawkins #73 of the Buffalo Bills in the second quarter of a game on November 10, 2019 at FirstEnergy Stadium in Cleveland, Ohio. Cleveland won 19-16. (Photo by: 2019 Nick Cammett/Diamond Images via Getty Images) Diamond Images/Getty Images
Myles Garrett is back. The NFL reinstated the Browns’ Pro-Bowl defensive end on Wednesday. Garrett’s punishment in review: six games, about $1.1 million in fines and lost game checks and a hearty hit to his reputation.
As Garrett will surely tell the media in the coming days, the Mason Rudolph incident is behind him now. From now on, he’ll be focused on football (His recent Instagram posts suggest he’s already preparing for next season).
That’s the best way for Garrett to distance himself from his ugly dust up with Rudolph. Talented players have been forgiven for way worse in the NFL, and Garrett has proven himself to be one of the league's brightest young stars.
So what’s next for Garrett’s on-field development?
Become the Defensive Player of the Year
Garrett’s always talked a big game when it comes to being the league’s best. Where most players deflect questions about individual awards, Garrett is open about his pursuit of the league’s highest defensive accolade.
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He’s certainly capable of earning it. He plays one of the most impactful defensive positions, and he’s improved every season as a pass rusher. He had 10 sacks through 10 games before getting suspended in 2019. That was on pace to eclipse the 13.5 he recorded in 2018, which was almost double the seven he recorded his rookie season.
In total, his 30.5 career sacks are the most through three seasons in Browns history. And that's while missing 11 games.
The next step for Garrett is to make more game-changing plays. There’s no doubt he can wreck a game plan, and forcing turnovers requires a bit of luck. But he’s forced just six fumbles in his career. Three players forced as many or more than that last season alone.
Impact plays matter to awards voters.
Win
Winning also plays a factor during awards season. The last player to win Defensive Player of the Year on a team with a losing record was Jason Taylor in 2006.
But winning can do more than add to Garrett’s trophy case. It can do more than get the Browns in the playoffs. Winning, above all else, is what will help Garrett heal his public image.
Sports narratives are built around winners and losers. Andy Reid could never win the big one. After winning the Super Bowl, we always knew he was a legend. Eli Manning will probably make the Hall of Fame solely based off two postseason runs despite being a mediocre quarterback for much of his career.
If Garrett produces in key postseason moments, fans will still remember swinging a helmet at Rudolph. But it might not be the first thing they remember.
Get Paid
Barring another uncharacteristic misstep, Garrett will soon become a very expensive player. Elite pass rushers don’t usually give discounts.
Khalil Mack is the highest-paid pass rusher in the league at $23.5 million per year. If Garrett continues to improve, he’ll probably end up with a contract similar to or even more expensive than Mack’s. The NFL’s salary cap is increasing every year, and when the league signs a new television contract after 2022, there’s no telling how high the cap can go.
If Garrett is the player he’s shown signs of being, he’ll be worth the big contract. He’s already the Browns’ best player, and he’s good enough to be considered one of the league’s best defenders.
But when he returns to the field next season, he knows that no one will be watching him for those reasons. People will watch to see if he screws up again. The only way for him to change that is to remind them why they couldn't take their eyes off him in the first place.
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2fbe5deb3f25fafdd0c5e7b170853c62 | https://www.forbes.com/sites/jimosman/2019/09/09/champions-league-hedge-fund-puma/ | 'Champions League' Hedge Fund Says Puma Spinoff Is Part Of Its 17 Percent Stellar Performance | 'Champions League' Hedge Fund Says Puma Spinoff Is Part Of Its 17 Percent Stellar Performance
The personalized Puma boots of Vincent Kompany of Manchester City during the Premier League match... [+] between AFC Bournemouth and Manchester City Getty
When 40-year-old Per Johansson, CEO and founder of Sweden’s Bodenholm Capital AB, is picking staff, he keeps a piece of advice in mind that Charlie Munger of Berkshire Hathaway gave him 10 years ago.
In an exclusive interview with The Edge, who source underperforming companies for activist involvement, the Stockholm-based hedge fund star revealed: “I had the opportunity to meet Charlie Munger.
Warren Buffett (left), CEO of Berkshire Hathaway, and vice chairman Charlie Munger attend the 2019... [+] annual shareholders meeting in Omaha Getty
“He said, make sure you don’t hire high IQ guys that think they are even smarter, those guys will put you into big problems.
“Hire a team with high IQs but think they are just above average. I follow that advice, and we hire only countryside kids that have not gone to privileged high schools where the career focus has been fed to them with silver spoons.
“If they have been through military service, that’s a plus, which most Swedes, Eastern Europeans and Greeks (which is the majority of the team) have been.”
Per Johansson, CEO and Founder of Bodenholm Capital AB The Edge Consulting Group
Since starting Bodenholm Capital in 2015, Per has become the envy of the industry with his passion for nurturing talent and offering outstanding results.
He added: “We are like a football team with a lot of talent, we were promoted to premier league when we started the fund four years ago, and the second season is always the toughest.
“Then we were surprising everyone by being up 9% in 2018, which was like coming in the upper half of the league table, if not better.
“Now we are building on that with 17% year-to-date, which means we are almost getting to a Champions League place if we can keep this up, that would be huge.
“Going into the future we will aim for the top and consistency in the Champions League. Maybe we can win? That’s the motivation, being the countryside team in Stockholm that is delivering.”
Bodenholm's Tips to Adopt the Right Strategy
Bodenholm is a fan of technology company Philips Getty
When it comes to identifying great companies, Per has a strategy that he relies on every time.
He says: “We look for companies that are of pretty good quality or better-than that generate good cash flows, and are run by pretty good and honest management teams.
“There are some that the market doesn't recognize, as they are hidden behind a recently Spun out company or in the rubble of a conglomerate.”
Bodenholm is active in Spinoffs and spends a good proportion of their time researching them.
Johansson added: “We like the US company IAA and the European companies Adevinta and Puma, strong companies with strong market positions.
"Each of them is growing with structural tailwinds and as they have been Spun out the management teams have a lot of interesting things to do with the cash they generate.
“On the conglomerate side, we still like Philips despite its strong run. One of the cheaper medtech companies despite accelerating top-line growth, margin expansion and a rock solid balance sheet, the management will do bolt-on acquisitions, share buybacks and provide dividend growth.
“We have owned it almost since our fund launched, and there is one step left to de-conglomerize by spinning out parts or the whole consumer business, we think."
Bodenholm is proud of their Europe-focused fundamental equity long/short strategy with global analysis, but the firm is extremely well-equipped to do their own digging to ensure the team misses nothing.
Per says: “The simplest thing is understanding when receivables have shot through the roof, like in the case of Carillion that went bankrupt, or when factoring is disguising the true FCF, like Aryzta.
A worker takes down a sign showing the name of liquidated British construction and outsourcing group... [+] Carillion from a construction crane on a building site in the City of London Getty
“Often it’s there to consider but it takes a while until the market starts to wonder if it’s because the company has problems and why it’s happening.
“These companies also had off balance sheet debt disguised and a lot of other adjustments that made EBITDA look better, and the net debt figures better as well.”
Puma Has Untapped Potential
Knicks Rookie RJ Barrett Announces Puma Partnership on August 28, 2019 in New York City Getty
In May 2018 Kering Spun off Puma, going from strength to strength and Per is impressed by its numbers and the actions of the board.
The firm took over from Nike as the official kit supplier for Manchester City last year, and it’s only going to get better and Per is absolutely convinced the honchos steering the ship at the Herzogenaurach, Germany headquarters have their sights set on success.
He added: "Puma has untapped market share potential.
"A great management team that is navigating a smaller brand to catch up with the larger ones in geographies they are under-indexed in as well as some categories they have been less successful.
"The market has been worried they were too focused on fashionable shoes, but they go from strength to strength in the whole broader product categories and the market has started to recognize that their growth is the fastest among the peers.
"Add a net cash balance sheet. When it was Spun out of Kering Group, the French luxury conglomerate (owner of Gucci) that we used to own, it checked every box for an interesting Spinoff and still looks quite attractive today as a growth stock."
Procter & Gamble is Showing Red Flags
It is listed as one of the major US companies on the stock market Getty
Bodenholm has made a decision to cut back its shares in P&G for good reason, and perhaps they are predicting that others will follow suit.
Per added: “We have decreased P&G as we have had to do with some other names like Nestle, Compass Group, etc. as they have been running too fast ahead of good fundamentals.
“The bond rally probably helped these stocks YTD a bit more than what one thought could happen, and we take that of course, but we also reduced the names when multiples of 25x FCF and probably less defensiveness is there.
“P&G is a great example of a conglomerate performing a de-conglomeration and suddenly more focus and a smaller company reinvigorates growth, who would have though they would print 7 percent organic growth as they did last quarter two years ago?”
eBay Will Create Significant Value for Investors
The e-commerce platform run by CEO Devin Wenig is storming ahead, and is well worth a buy, says Per.
With news that investors could be up 350% in just 10 years, it's no wonder Bodenholm is keen to hold the stock, especially with news that it’s to launch a warehousing and shipping service that may rival “Fulfillment By Amazon.”
What’s more, Per says: “We like eBay, we own several of the classifieds businesses in Europe and have followed eBay since it Spun off Paypal.
“Now we think the US market doesn’t understand the value of the classified business in a consolation phase in the industry.
Ticket exchange company StubHub could be spun off from eBay Getty
“That, plus StubHub together has significant value, putting the rest of eBay on very high FCF yields, and we think it will grow its top-line quite decently in the coming three years.
“If they can sell or Spinoff those assets at the price we think they should be at, there is significant upside in the remaining company.”
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655c305a842f28d9ad4e8890e9d61683 | https://www.forbes.com/sites/jimosman/2020/04/17/gilead-coronavirus-drug-remdesivir-board-contagion-covid-19/ | Gilead’s Coronavirus Wonder-Drug Remdesivir Is Masking A Board Contagion | Gilead’s Coronavirus Wonder-Drug Remdesivir Is Masking A Board Contagion
Medics are inundated in the US epicenter of the coronavirus (COVID-19) pandemic in NY (Photo by ... [+] John Moore/Getty Images) Getty Images
When Gilead Sciences, Inc.’s CEO Daniel O’Day pushed the button on his March 28 open letter stating the firm’s new wonder-drug (the antiviral Remdesivir) could work against COVID-19, he had every hope the company's share price would soar - and he was right.
The fact that Gilead donated around 140,000 treatment courses to expedite its possible emergence into America’s emergency response offered a much needed boost, and the company is now going full-steam ahead with the experimental drug’s pandemic PR strategy, thanks to a previous report in the New England Medical Journal.
The report revealed that 36 of 53 patients hospitalized for severe COVID-19 who were treated with compassionate-use Remdesivir had clinical improvement.
Gilead's shares surged by more than 8% in early trading on Friday, after details leaked of a closely watched clinical trial of the company’s antiviral drug Remdesivir, showing what appears to be promising results in treating COVID-19. Gilead have yet to comment.
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Daniel O'Day, CEO of Gilead Sciences, testifies before the House Committee on Oversight and Reform ... [+] during a hearing on why its HIV prevention drug, Truvada, is so expensive on May, 16, 2019 in Washington, DC. The Washington Post via Getty Images
However, O’Day had other reasons to get ahead of the news agenda. Robin Washington, Gilead’s CFO of 11 years, left only 27 days earlier to join Google parent Alphabet’s board. Meanwhile, 10 other senior executives have departed the business in just two years, leaving O’Day’s existing board in mortal danger.
Serena Williams poses for a photo with Robin Washington, Executive Vice President and Chief ... [+] Financial Officer of Gilead, and guests during the 2019 Watermark Conference for Women Silicon Valley. WireImage
That’s why The Edge (the leading source for under-performing companies for activist involvement, Special Situations and Spinoffs) believes Gilead Sciences (first listed at $0.70 on January 24, 1992) is ripe for a Spinoff into two units to maximize return for shareholders.
Fresh CFO Andy Dickinson, who was promoted from Executive Vice President, Corporate Development and Strategy, should present a plan that can potentially revolutionize the research-based biopharmaceutical company he’s worked for since 2016. Alongside O’Day, Dickinson could become a hero in the new dawn of Gilead Sciences, Inc.
Bizarrely, China has just suspended one trial of the drug Remdesivir in Jin Yin-tan hospital in the outbreak capital of Wuhan and terminated another in Bin Cao Beijing, and the government report says, “The epidemic of COVID-19 has been controlled well at present, no eligible patients can be recruited.”
Medical staff transfer patients to Jin Yin-Tan hospital on January 17, 2020, in Wuhan, Hubei, China. ... [+] Local authorities have confirmed that a second person in the city has died of a pneumonia-like virus since the outbreak started in December. Getty Images
It is possible the Chinese government are worried Remdesivir is too effective and have moved to shut down the trials over fears the US drug could corner the global market. However, further tests are underway on the US west coast, including hundreds of hospitals and care homes.
Studies are currently being conducted at universities like University of Alabama at Birmingham School of Medicine - Infectious Disease, University of California, San Diego Health Jacobs Medical Center, and University of California Los Angeles Medical Center - Westwood Clinic.
Worldwide testing has begun in France, including studies in Paris, Nantes and Lille, there is testing underway in Oslo, Norway, and also in The Democratic Republic of the Congo in Africa.
Value in Splitting Performing and Struggling Franchises
The Edge originally examined GILD for potential break-up in November 2019, and all of the following metrics are represented as written in that report (available on request). Once their main cash-generating portfolio, the HCV franchise is now struggling due to increased competition, pricing pressure and declining marketplace.
The declining HCV business has had an impact on GILD’s share performance since 2015, underperforming the market as HCV sales dropped by close to -35% Y-o-Y in 2017 and by 57% Y-o-Y in 2018.
Even though the HCV business continues to be a high-margin and cash-generating business (as is the case with its peers), the shrinking marketplace and pricing competition is clawing at the franchise’s top-line.
On the other hand, GILD’s HIV drugs franchise, which was once anticipated to be a declining business on the verge of a patent cliff (its major blockbuster HIV drugs, Atripla and Truvada, were set to expire in 2017 in the EU and 2018-2021 in the US), has now propelled GILD to be a leader in HIV treatment.
It has seen its sales grow by 11.2% and 12.4% in FY17 and FY18, respectively, boosted by new drug launches of Genvoya (launched in 2015), Descovy (2016), Odefsy (2016) & Biktarvy (2018).
These newly launched drugs contribute around 55.3% (or ~$11.9bn) out of the total $14.6bn HIV sales registered by GILD for FY18. Even for 9MFY19, the HIV drugs contributed around 74% of total revenues, rising 12% Y-o-Y for the period.
Mature Product Concerns Overstated
Even with concerns over HCV’s sliding revenues, it continues to be highly profitable. Its mature products will continue to sustain current levels, which shows its ability to continue to be a cash generating franchise.
The Edge believes investors are ignoring this part of the story and are punishing the stock for the declining mature products’ sales.
Additionally, with GILD releasing a generic version (Epclusa) of their previous blockbuster HCV drugs, this new offering has the potential to gain traction in the market and help regain lost market share.
The Edge also believes the separation of the distinct franchises can help the HCV business emphasize its effectiveness and liquidity, whereas the HIV business can concentrate on research, development and innovation.
Why Break-Up Now Versus 2-3 Years Ago
It would have been difficult to find value in a split two or three years ago, since GILD’s HCV business was still contributing around 50% of its revenues (FY16) but was on the cusp of declining sales.
Likewise, there was limited clarity with its HIV franchise prospects due to the scheduled patent cliff. However, since 2017, GILD’s HIV business has taken off with new drug launches that have turned into blockbuster drugs and bringing billions in cash for GILD.
Therefore, with a performing HIV franchise and an expectation of a flattening performance of the HCV franchise, investors will be more willing to see a profitable split of the company compared to the case in late 2016 or early 2017.
GILD Franchise Revenues Over the Years ($m) as of November 2019. The Edge Consulting Group
The Edge believes the separation of the HCV franchise via a Spinoff will not only help to discover value for the high cash-generating HCV business, but also help unlock value for the HIV business, which seems currently under-appreciated by the market.
The HCV business can be rated based on GILD’s dividend yield, and the performing HIV business can therefore be valued based on its high-growth peer multiple, accounting for its lucrative upcoming pipeline.
GILD Will Benefit from Its Current CEO’s Impressive Resume
After the resignation of ex-CEO John Milligan, GILD announced the appointment of industry veteran, Roche’s (ROG) Daniel O’Day, as the new CEO in March 2019. He was brought in to stabilize the legacy businesses, mobilize the balance sheet (currently GILD boasts $22.8bn in cash on its balance sheet as of Q3FY19) and enter into as-yet-untouched markets where GILD has been lagging, like oncology, inflammation, etc.
During his time at ROG, Mr. O’Day was part of a functioning team tasked with acquisition/licensing tactics. Some of the recent noted acquisitions during his tenure at ROG include Tensha Therapeutics (2016, $115m, oncology), MySugr (2017, undisclosed value, diabetes management), Viewics (2017, undisclosed value, laboratory business solutions), Ignyta, Inc. (2017, $1.7bn, oncology), Flatiron Health (2018, $1.9bn, oncology) and Tusk Therapeutics (2018, $759m, immuno-oncology, T regulatory cells), among many others undertaken over his 26 years at the company.
With ample ammunition (~$23bn cash on GILD’s balance sheet) for major acquisitions, Mr. O’Day can undertake major transactions with a proactive board’s support, which will drive top-line growth for GILD.
Clearly Undervalued
At the most basic level, GILD is clearly undervalued in comparison to its other biotech peers. Where its peers are trading at an average one-year forward EV/EBITDA multiple of 11.2x and one- year forward P/E multiple of 13.9x, GILD is trading at 7.1x one year forward EV/EBITDA multiple (discount of ~37%) and 9.4x one-year forward P/E multiple (discount of ~32%).
Under-Performed Its Peers and the Broader Index
Over the past three years, GILD has not been able to beat the index’s performance and has under-performed its closest peers.
GILD 3-Year TSR Vs. Peers & Index as of November 2019. The Edge Consulting Group
Where the S&P 500’s annualized total shareholder returns for last 1, 2 and 3 years have been 20.5%, 12.2% & 14.6%, GILD was just able to manage around 3.4%, -0.1% & -0.4%, respectively, for the same comparable periods.
GILD last hit its all-time high in 2015 when it peaked at $108.45 (June 23, 2015) as its HCV franchise’s blockbuster drugs were performing exceedingly well. In FY15, the HCV franchise registered $19.1bn in total sales, representing around 60% of GILD’s total FY15 sales (now dropped to $3.7bn in reported sales in FY18).
Gilead’s Pipeline has Promise
GILD’s formerly major-performing HCV franchise has been losing its market share since the launch of AbbVie’s Mavyret in August 2017. As a result of rising competition, GILD’s HCV sales dropped sharply to ~$3.7bn in 2018 from $19.1bn in 2015 and is expected to drop to around $2bn+ globally in 2020.
However, GILD’s HIV franchise continues to offset lost revenues from HCV sales boosted by its robust Biktarvy launch. Furthermore, GILD’s Descovy is likely to receive a favorable FDA review. Filgotinib, which is partnered with Galapagos, is also one of the high-profile assets in GILD’s pipeline.
The consensus forecast for Filgotinib sales expects to surpass $1bn by 2024. The Edge feels the market is not accounting for these HIV franchise drivers and the stock will warrant a higher rerating once the drivers are clarified.
Given all of the above points, GILD’s management should explore strategic alternatives for its businesses as separate companies, which will unlock value for shareholders.
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c4c5af969cf11d59a73f31ed1edcacde | https://www.forbes.com/sites/jimpagels/2015/04/13/hockey-analytics-conferences-continue-growing-following-path-of-other-sports/ | Hockey Analytics Conferences Continue Growing, Following Path of Other Sports | Hockey Analytics Conferences Continue Growing, Following Path of Other Sports
The revolution was not televised, but it was at least live streamed.
In a small lecture hall in downtown Washington D.C., Saturday, roughly 30 analytics bloggers and fans met up at the DC Hockey Analytics Conference to share ideas and research in the rapidly growing hockey statistical movement.
Rob Vollman, an ESPN Insider and author of Rob Vollman's Hockey Abstract, who was in attendance Saturday, organized the first such meet-up of the hockey stats intelligentsia in May 2014 in Edmonton. Since then, there have been four other conferences in Calgary, Pittsburgh, Ottawa, and now this past weekend in Washington D.C.
"I think there's a small core, around which a lot of the rest of it is built. But don't kid yourself, a lot of this is picking up and spreading on its own and exploding on its own, and grassroots and mainstream conferences growing on their own," Vollman said. "It helps to have a few familiar names as anchors, whether that's Mike Schuckers or Sam Ventura or whatever, just so you have that common thread that ties it all together, but these really are separate initiatives taking place in these cities, and they really are growing on their own."
Hockey analytics—perhaps 15 years behind baseball and a few years behind basketball—has a clear path to follow. During the conference, numerous presenters discussed concepts like "value over replacement player" and on/off-ice player performance, concepts pioneered in other sports before making their way to hockey.
The growth of hockey analytics conferences comes off the heels of 2014's "summer of analytics," during which numerous analysts were hired by NHL teams. While the blogging community has championed their integration into front offices, it's also a bittersweet moment, as the secrecy demands of teams mean prominent voices are removed from the public forum.
"It's tough to lose those resources and tough to lose access to that work, because we've all loved it so much, but then look at how many people have risen up, if anything inspired by the fact that Darryl Metcalf was hired by the Maple Leafs or that Tyler Dellow started working for the Oilers," Vollman said. "And if that hadn't happened, perhaps a lot of people wouldn't have created their websites or started writing on their own, so in many ways, every time you lose one, you gain a lot more."
Arik Parnass, a student at Georgetown University who organized the D.C. conference, said that the most part, it's been largely different speakers at each conference, suggesting that the hockey analytics community has evolved from a circle of only a few faces to one with many different diverse voices.
"So many of us communicate, whether it's over Twitter, or emails or on the web all the time, and we never really get to meet," he said. "It really speeds the process along when we get to see what each other are doing and get to trade feedback."
Vollman said he'd previously have to go into a Yahoo message board or email a select few people who might have access to data. "Now, if you want something, you could right now go on Twitter and say something like, 'Does anyone know what the value of of face-offs are at home versus on the road?' and chances are, within a few minutes, you'll get three or four very different links from different analysts with different takes on that question. That's not something we could do without Twitter. That's not something we could do without that critical mass growth."
Unlike February's MIT Sloan Sports Analytics Conference in Boston—the largest and most well-known sports analytics conference, but one which many in the industry now view as merely a networking event—the D.C. event was much more focused on research. Attendees met not to exchange resumes nor schmooze with NHL executives, but to discuss their hockey analytics research, something Sloan was like in the early days of its founding eight years ago.
Vollman, who does not attend Sloan, is an outspoken critic of the MIT conference. "There's politics involved, business involved, secrecy involved, and so on and so forth. I think that everyone here today is here for the passion of analytics, passion for the numbers, and passion for this perspective of the sport, and if that's what you're interested in—don't get me in trouble here—but Sloan's not the place for you," he said. "If you want the cutting-edge stuff, the pure passion, the unadulterated joy of hockey analytics, you've got to come to one of these conferences. And they don't charge you a thing."
Sport-specific stats conferences are critical for more niche sports like hockey.
"The thing with Sloan, especially for hockey, is that hockey takes a back seat, which is, fine—it's not one of the biggest sports—but the great thing about Sloan is networking," Parnass said. "The great thing about these type of conferences, I mean, the networking is great too, but you really just get great in-depth ideas, because you don't have to dumb it down for people who don't really know hockey that well."
This hasn't stopped larger sports from hosting their own conferences. Baseball has its annual SABR convention, and a basketball conference is potentially in the works. This past week, there were also sports analytics conferences at the University of South Florida and Furman University.
As for hockey's future, its stats revolution may soon be revolutionized itself. The NHL implemented player-tracking cameras at January's All-Star Game in Columbus, and there's hope that technology will soon spread to every arena in the league and become a fixture of broadcasts and analysis. (The NBA installed similar technology in every arena starting with the 2013-14 season.)
Cameras would drastically overhaul analytics and provide teams—and potentially bloggers, should the NHL choose to make the data publicly available—with far greater insights than what are currently possible. Currently, many statistics such as zone entries and shot types are tabulated by hand over countless hours of meticulous hockey-watching.
Both Parnass and Vollman are hopeful the tracking data will be made available to the public for the hockey analytics community.
"Hockey analytics, it's a big wave, and it's been coming for years, and now it's crashing ashore," Vollman said.
Follow Jim Pagels on Twitter at @jimpagels
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3dc9ff03f0bb65b6a7843f3df43e75a8 | https://www.forbes.com/sites/jimpagels/2015/04/16/this-may-be-the-worst-bet-vegas-has-ever-offered/ | This May Be The Worst Bet Vegas Has Ever Offered | This May Be The Worst Bet Vegas Has Ever Offered
Vegas is full of sucker bets. Most are at the slot machines or games tables, where the odds are permanently stacked in favor of the house.
At least with sports betting, there's in theory a way for bettors to profit should one develop a system able to predict outcomes well enough to overcome the house edge. This edge is more difficult to overcome in futures markets, though, where the sum of the odds of all the teams winning a championship is well over 100 percent (usually around 120-140 percent, compared to only 102-105 percent for the two teams in individual games), which is why sports books particularly love them.
The other genius behind futures bets is that sportsbooks can hold on to bettors' money interest-free for long periods of time, so even if the bettor wins, books can recoup some percentage of the losses by keeping the bets in a high-return investment.
Most books open futures for the next season immediately after the champion is crowned for the current season, meaning some books can stash away bets in bonds or stocks for up to a year. Rarely do books offer any futures determined more than a year in the future. However, ESPN gambling journalist David Purdum tweeted out this image Wednesday evening of a prop bet offered by the Wynn Las Vegas sportsbook:
The Yes side of this bet, on whether the Cubs will win the World Series in any of the next three years, probably isn't too great. Even if you assume the Cubs win their division or make the wild card and win their one-game playoff to reach the LDS each of the next three years (a huge assumption), given that the MLB playoffs are mostly a crapshoot, the odds of the Cubs winning the World Series in any of the three years (33.0% at 1-in-8 chances) are only a little better than the odds a +320 bet would require (23.8%).
At least with the Yes side, you could potentially get your interest-free money back after only one or two years should the Cubs win in the first or second year of the bet. For the No bet, though, you'd have to wait until October 2017—2.5 years from now—before you'd see a penny of your money back, and that's why it's so amazingly terrible.
If you placed $100 on this wager at -400 odds, then after 2.5 years, you'd receive $125.00 if the Cubs didn't win the World Series during that time.
At the same time, if you invested that $100 in the stock market and assume an average 9.37% return (what the S&P 500 has averaged over the last 10 years), then after 2.5 years, you can expect to see $125.10—regardless of how the Cubs do.
So in other words, even if you had Biff's sports almanac and were 100 percent certain the Cubs would not win the World Series the next three seasons, you'd still expect to make less money than just investing you wager in the stock market. Now that's a true sucker bet.
Follow Jim Pagels on Twitter at @jimpagels
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36b3ef9b25bcc245a99d90576bfb00bf | https://www.forbes.com/sites/jimpaymar/2012/02/02/speak-like-a-leader/?sh=43629fea7144 | Speak Like a Leader | Speak Like a Leader
It's time to give that important presentation, speech, or interview. You're an expert in your field, but will what you say be remembered the next day?
In my many years working as a journalist at CNBC, BusinessWeek, WABC-TV and WNBC-TV in New York, I found that many C-level executives lack the ability to connect with their audience and emphasize what is important.
There are three basic components to any presentation: the presenter, the audience, and the message.
First, to believe in the message, the audience must first believe in you, the presenter. Start with a personalized story from your past that also relates to the message.
Second, the audience may forget much of what you say, but they will not forget how you made them feel. Make eye contact with the audience and speak from the heart.
Third, a memorable message must emphasize no more than three simple points. Everything you say must relate to the three main points.
As James Humes, a speechwriter for five Presidents, once said, "The art of communication is the language of leadership." If you want to be a leader, you must be a presenter that connects with the audience and delivers a memorable message.
My passion to teach these principles has led me to Molloy College, where I created the Molloy Business Channel to help college students get a head start on the communication skills that will make them leaders.
To learn more about us, please visit us at: www.molloy.edu/business
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ec5fb8106850905ef41590f93097b0ef | https://www.forbes.com/sites/jimrossi/2021/01/23/what-we-can-learn-from-tony-hsiehs-take-on-business-culture/?sh=616c8744223d | What We Can Learn From Tony Hsieh’s Take On Business Culture | What We Can Learn From Tony Hsieh’s Take On Business Culture
LAS VEGAS, NEVADA - NOVEMBER 28: An LED sign outside the D Las Vegas displays a tribute to tech ... [+] entrepreneur Tony Hsieh on November 28, 2020 in Las Vegas, Nevada. (Photo by Bryan Steffy/Getty Images) Getty Images
Tony Hsieh, the wildly successful, highly eccentric Vegas entrepreneur, died prematurely in November, shortly after retiring as the CEO at Zappos. While the cause of death was smoke inhalation from a house fire, reports suggest he was battling addiction problems. But that’s not what this article is about; it’s my second about Hsieh’s business lessons.
In December, I read Delivering Happiness, Hsieh’s anime-memoir describing how he built Zappos. Here I cover what I learned from the second half of the book – Hsieh’s meta-lessons about business culture.
Hsieh wasn’t just trying to deliver happiness to the customer. He believed the key to that was hiring the right kind of people, training them the right way – everyone would have a customer service focus – and making them happy at work.
Long before Zappos, Hsieh’s first successful startup was LinkExchange – Internet ad pioneers. But he grew unhappy, so disliking the job that he walked away from a lot of money rather than stick it out for a few more months.
“I don’t claim to be an expert in the field of the science of happiness,” Hsieh admitted in Delivering Happiness. “I’ve been reading books and articles about it because I find the topic interesting.”
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Hsieh read and cited psychologist Abraham Maslow, who posited a five-tier human “hierarchy of needs” ranging from basic survival like oxygen, water, and food to increasingly higher needs like safety, social belonging, esteem, and self-actualization. Taking our lessons from Hsieh’s fate, we can perhaps take these lessons not as a key to personal fulfillment, but business fulfillment.
What is your goal in life? Why? Many of us find these two deceptively simple questions devilishly difficult to answer. Hsieh believed defining and understanding the goal and the why behind it would reveal our values and also begin to chart a path through life. Again, easier said than done.
Hsieh believed happiness came down to four things: perceived control, perceived progress, connectedness, and vision/meaning. Hsieh shaped Zappos’ incentives structure around these ideas.
Abraham Maslow's hierarchy of needs pyramid. Image courtesy Wikimedia Commons
Perceived control. For example, Zappos call center employees used to get an annual raise. Hsieh changed that. Instead Hsieh implemented a “skills set system,” giving out small raises as each employee learned and mastered each of 20 skill sets laid out by the company. Having control over their raises, Hsieh believed, made employees happier.
Perceived progress. In other Zappos departments, Hsieh changed the related practice of one large promotion into smaller promotions given on merit every six months. “We’ve found that employees are much happier because there’s an ongoing sense of perceived progress.”
Connectedness. Hsieh believed happier employees made more productive employees, so Zappos tried to foster socializing and friendships at work – with things like discounted food and relaxation areas. And that improved Zappos’ bottom line. “When staff is happy, the turnover rate is lower, decreasing overhead cost,” according to Zappos. “A recent CAP study showed that the median cost of replacing an employee was between 10 and 30 percent of that employee’s annual salary.”
Vision/Meaning. Hsieh studied Chip Conley’s book Peak: How Great Companies Get Their Mojo from Maslow. Conley, founder and CEO of hotelier Joie de Vivre Hospitality, turned to Maslow’s hierarchy of needs after finding himself in trouble during the post-9/11 travel recession.
Conley posits three forms of happiness relating to “relationship truths” between employees, companies, and investors: pleasure, passion, and higher purpose. Pleasure is deep but brief. Passion creates the flow feeling, “in the zone,” where work is highly productive. Higher purpose is the most long-term. It’s goal-oriented and provides the foundation for dedication over the long term, despite obstacles, shortcomings, and failures.
When it came to customer satisfaction at Zappos, Hsieh built customer loyalty by exceeding expectations. A key strategy: having friendly, helpful customer reps talk over the phone, providing upgraded shipping, and more.
“We put our phone number at the top of every page of our site,” Hsieh said in Delivering Happiness, “because we want to talk to our customers.” Why? Isn’t it cheaper to interact through email, texts, apps and bots like virtually every other company? “The telephone is one of the best branding devices out there,” Hsieh said. “You have the customer’s undivided attention for 5-10 minutes, and if you get the interaction right, the customer remembers the experience for a long time and tells his or her friends about it.”
That was core to Zappos culture and a big reason for their high employee retention.
Hsieh’s controversial experiment in holocracy - decentralized decision-making - began long after he wrote Delivering Happiness, so it’s not covered.
“The biggest (and hardest) lesson I’ve learned in life,” Hsieh said presciently/ironically, “is that the external world is just a reflection of the world within.”
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a81e30e5bda4fa7d2b0b991597cd96a5 | https://www.forbes.com/sites/jimrossi/2021/01/24/remembering-sheldon-adelsons-philanthropy-legacy-in-las-vegas/?sh=3abbef442afc | Remembering Sheldon Adelson’s Philanthropy Legacy In Las Vegas | Remembering Sheldon Adelson’s Philanthropy Legacy In Las Vegas
WASHINGTON, DC - JANUARY 28: Founder, Chairman and CEO of Las Vegas Sands Sheldon Adelson and his ... [+] wife Miriam Ochsorn attend a press conference with U.S. President Donald Trump and Israeli Prime Minister Benjamin Netanyahu in the East Room of the White House on January 28, 2020 in Washington, DC. President Trump released details of his peace plan. (Photo by Alex Wong/Getty Images) Getty Images
Volumes have been written about Sheldon Adelson’s global casino empire, as well as his political contributions – in recent years as a top Republican donor but previously as a Democrat. So too his legendary philanthropy toward Israel and Jews worldwide. After his death from non-Hodgkin’s lymphoma last week at age 87, tributes poured in from across the world. I’m going to focus here for a short while on his Las Vegas-related philanthropy, which often flew under the radar.
The Jewish son of a Boston taxi driver, Adelson grew up during the Great Depression and led a remarkable American life. A college dropout and lifelong entrepreneur who peaked relatively late, Adelson and partners started the COMDEX computer conference in Vegas in the late 1970s. In 1995, they sold. Adelson didn’t get into the casino business until age 55, partnering to buy the Sands Hotel on The Strip in 1988. He soon started building the Sands Expo and Convention Center next door.
Honeymooning with his second wife Miriam in Venice, Italy reportedly inspired Adelson to build his two great Strip resorts, Venetian and Palazzo, after demolition-ing the old Sands. Adelson eventually expanded his casino empire into Singapore and Macau.
At his Adelson’s wealth grew, so did his philanthropy – aided by Miriam Adelson, a medical doctor.
The Adelson Foundation. Sheldon and Miriam founded the Adelson Foundation in Los Angeles. It has two branches: the Adelson Family Foundation, which focuses on helping Israel and Jews worldwide; and the Adelson Medical Research Foundation.
Adelson’s Medical Research Foundation, founded in 2006, aims to speed biomedical research by funding and fostering open collaboration that is highly integrated across medical and scientific fields, using Miriam’s medical knowledge and Sheldon’s business acumen. The Medical Research Foundation focuses on funding to combat cancer, inflammatory bowel disease, and neural repair and rehabilitation. “Instead of funding individual experiments that cautiously advance progress,” the foundation states, “we ask investigators who receive funding to interact with peers at many institutions within the context of creative and risk-taking approaches.”
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The foundation gave nearly $38 million in 2018 alone to recipients like the Boston Children’s Hospital Trust and John Wayne Cancer Center.
Adelson Clinic. In 2000, Sheldon and Miriam co-founded the Adelson Clinic for Drug Abuse Treatment and Research in Las Vegas. The cause was personal, as Sheldon’s sons Mitchell and Gary both battled drug addictions. Mitchell, his son with his first wife, succumbed to a cocaine and heroin overdose in 2005. Services at the Adelson Clinic include methadone and buprenorphine therapy for opiates, heroin, and painkillers like OxyContin and Lortab, with a focus on treating teens.
Nevada’s death rates from amphetamines and opioids rank among the highest in the US. Rates, however, decreased from 2017 to 2019 nationwide, and since 2012 in Nevada.
Sheldon, believing marijuana to be a “gateway drug” for his son, strongly opposed cannabis legalization. When he bought the Las Vegas Review-Journal for $140 million in 2015, the editorial page reversed its previous support.
The Adelson Educational Campus is a unique pre-kindergarten through 12th grade community school in scenic Summerlin, west of The Strip near Red Rock Canyon. It’s the only one of its kind in Nevada.
The Adelson’s also donated to the Congregation Ner Tamid in Henderson, the Maccabee Task Force Foundation to combat anti-Semitism on college campuses, and dozens if not hundreds more charitable causes. In contrast to political giving, Adelson often kept his philanthropy discreet.
And of course, Sheldon’ Adelson’s Las Vegas Sands-Venetian-Palazzo created tens of thousands of high-paying jobs in and around The Strip. Adelson continued paying salaries and insurance to his nearly 10,000 employees during the COVID-19 shutdown – setting an example some other companies emulated.
“I’m against very wealthy people attempting to or influencing elections,” Adelson told Forbes magazine in 2012. “But as long as it’s doable I’m going to do it.”
“If you do things differently, Adelson said in 2014, “success will follow you like a shadow.” In September 2020, Forbes ranked him No. 19 in the U.S., with an estimated net worth of $29.8 billion. Sheldon Adelson – his businesses and his philanthropy – helped shape modern Las Vegas.
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fe5d211eb3244f58c251d5320b5d1426 | https://www.forbes.com/sites/jimryan1/2020/03/31/billy-cox-looks-back-on-jimi-hendrix-as-band-of-gypsys-celebrates-50-with-new-vinyl-reissue/?sh=24d819885425 | Billy Cox Looks Back On Jimi Hendrix As Band Of Gypsys Celebrates 50 With New Vinyl Reissue | Billy Cox Looks Back On Jimi Hendrix As Band Of Gypsys Celebrates 50 With New Vinyl Reissue
SACRAMENTO - April 26: Jimi Hendrix performs at Golden Bear raceway in Sacramento, California on ... [+] April 26, 1970. (Photo by Larry Hulst/Michael Ochs Archives/Getty Images) Getty Images
The right venue can have a profound impact on the recording of a live album.
One of rock’s greatest, Band of Gypsys, was recorded over the course of two concerts on January 1, 1970 at the now defunct Fillmore East in New York City.
Four sets were actually recorded - two each on New Year’s Eve and New Year’s Day. Side one of the legendary album features recordings captured during the first show on New Year’s Day, while side two was culled from the last of the four performances.
The album has been reissued to celebrate its 50th anniversary. Overseen by producer Eddie Kramer, who worked with Hendrix on the original project, the six live tracks were mastered using the original analog stereo tapes for release on 180 gram vinyl.
It was the final full-length record Hendrix would release before his death and the first not to feature his Jimi Hendrix Experience bandmates Noel Redding and Mitch Mitchell. Rounding out Hendrix’s rhythm section in Band of Gypsys was drummer Buddy Miles and bassist Billy Cox.
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“After we did the first set, Jimi, Buddy and I were going back to the dressing rooms and he looked at both of us and said, ‘It’s gonna be alright now,’” recalled Cox of the uncertainty of debuting the group’s new music live on stage in front of fans. “So we went on and we did the next set.”
Cox served with Hendrix in the 101st Airborne Division of the United States Army. Stationed at Fort Campbell on the Tennessee/Kentucky border, Hendrix and Cox met in 1961 and cut their teeth touring the Chitlin’ Circuit, a collection of American venues which embraced and celebrated black culture.
“It was like a 150 mile radius here out of Nashville - those cities and hamlets you never even hear of. But those people, all they had at that particular time, when we were coming up, was maybe two channels on their television and their records - and the spot down the street where they cooked fish sandwiches, ribs and chitterlings,” said Cox of the performance spaces. “Basically, that was our beginning - our very, very beginning of our music. We all came up that way playing in those little dives and dens and stuff. People just dancing the night away and having a great time and enjoying themselves.”
Band of Gypsys marked a change in direction for Hendrix, infusing his blistering rock guitar work with elements of R&B, delta blues, jazz, funk and the spirit of improvisation. The album more or less serves as the genesis of the funk rock genre and was born out of each member’s formative musical experience.
“Musicians are influenced, always, by their predecessors. And that’s how we were. There was a lot of Jimmy Reed, B.B. King, Motown. We listened to even country and western, Bing Crosby - the world of music,” Cox explained. “We all listened to Muddy Waters and Howlin’ Wolf and all of the old blues guys of yesteryear - because that was a part of our heritage. Our fathers had those records and we listened to them. We all came about the same way and listened to the same music and our fathers influenced our lives.”
LOUISVILLE, KY - MARCH 18: Billy Cox performs at Whitney Hall on March 18, 2014 in Louisville, ... [+] Kentucky. (Photo by Stephen J. Cohen/Getty Images) Getty Images
Cox has written or co-written songs like Slim Harpo’s “I’ve Got My Finger on Your Trigger” and Percy Sledge’s “Push Mr. Pride Aside” and has worked with artists like Sam Cooke, Etta James and Little Richard. He gets a writing credit on “We Gotta Live Together,” the closing Band of Gypsys cut.
The record began a new chapter for Hendrix as a lyricist, with the idea of self-examination emerging as a theme. Positivity and growth also define the album.
“Jimi was a philosopher. He preached about ego,” said Cox. “He said, ‘The only time a musician should have ego is when he gets up in the morning and when he’s on stage. But to keep an ego all day long is not healthy for an individual.’ So we took him to heart on his philosophy about that. When you’re on stage, that’s when you project your talent out to the people that are listening to what you’re doing.”
“Machine Gun” stands as not only the album’s highlight but one of Hendrix’s crowning sonic achievements, pushing the limits of what was expected and accepted.
As John Fogerty’s time spent in the Army informed Creedence Clearwater Revival’s hit “Fortunate Son” in 1969, “Machine Gun” succeeds as an anti-war song thanks in part to Hendrix and Cox’s firsthand experiences in the military.
On stage that night, as captured on the live album, Hendrix dedicated the song to “all the soldiers that are fighting in Chicago and Milwaukee and New York. Oh, yes, and all the soldiers fighting in Vietnam.” The song addressed 60’s race riots in America as much as it did the Vietnam War and remains relevant fifty years later.
“I think the experiences in the army really impacted it - from the realistic aspect of having been military men. At that time, people were very adamant about the civil rights era - and by rights they should have been. Because I think, equally, my grandfather, my father and myself were in the military. And we loved this country. We’re here. And that’s the thing you do: you fight for your country when the time comes,” said Cox. “Jimi’s music is as relevant today as it was in the 20th century. It impacted many lives in many untold ways. To the soldiers who were there in the rice paddies and jungles in Vietnam to the brothers and sisters in the hood. From the young people who were lovers of peace and justice or those musicians who were looking for a new direction in music. And to those fabulous young people who held onto our music - because so many have told me that that was all they had.”
"The Marquee tells the story at the Fillmore East, which is to today's rock culture what the ... [+] Paramount was to the swingers of the 1940s. Guitarist Jimi Hendrix, 27, died in London yesterday of a drug overdose. September 19, 1970. (Photo by Jerry Engel/New York Post Archives /(c) NYP Holdings, Inc. via Getty Images)" The New York Post via Getty Images
Often viewed one-dimensionally, and pigeonholed as merely a great guitarist, Band of Gypsys marked the emergence of Hendrix as a visionary artist.
“He made a statement that it was in Nashville that he really learned to play. He could play country and western. He could play pop. He could play blues. A lot of people, the only thing they know is that he played hard rock. Well, he did quite a few songs on the acoustic. As a matter of fact, on ‘All Along the Watchtower,’ that was him playing the acoustic on that,” Cox said. “As the time progressed, people have told me, ‘Man, I’ve still got my Band of Gypsys album and I play it and it never gets old.’ And I said, ‘Yeah! We were writing in the now.’ I feel the Band of Gypsys left a lasting impact on rock, funk, R&B, hip-hop, reggae, jazz and blues.”
What’s incredible about Band of Gypsys is just how quickly everything came together - and ultimately fell apart.
Cox was at Hendrix’s side in August of 1969 at Woodstock, where he can be heard starting in at the beginning of the guitarist’s legendary rendition of “The Star-Spangled Banner,” before pulling back. The Band of Gypsys concerts kicked off 1970 and the album was released that March. Hendrix was able to record at his newly opened Electric Lady Studios for just ten weeks, famously passing away that September at the age of 27.
Cox, 80, is the only living member of either the Jimi Hendrix Experience or Band of Gypsys and carries forth the artist’s legacy annually during “Experience Hendrix” concert tours, a role he cherishes.
“It was amazing for me being close to him - watching all of the picks drop in the early years and the strings break and all of the negatives that happened for him to become this virtuoso. I was proud of him and I had fun,” said Cox of his friend and bandmate. “I was always amazed how his genius could write songs like he did and play like he did - but he had a vision. I realized he was like a cosmic messenger who saw music as a means to bring people together. He was global before the rest of the world became global and saw his music as uplifting for all people.”
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c54ed43d321bb212ff93ac6a139b036f | https://www.forbes.com/sites/jimryan1/2020/11/30/stone-gossard-and-mason-jennings-on-new-project-painted-shield-revived-loosegroove-records/ | Stone Gossard And Mason Jennings On New Project Painted Shield, Revived Loosegroove Records | Stone Gossard And Mason Jennings On New Project Painted Shield, Revived Loosegroove Records
BOSTON, MA - SEPTEMBER 2: Guitarist Stone Gossard of Pearl Jam performs live on stage at Fenway ... [+] Park on September 2, 2018 in Boston, Massachusetts. (Photo by Jim Bennett/Getty Images) Getty Images
For guitarist Stone Gossard, collaboration acts as a way of keeping music fresh, pushing it forward.
As a member of Seattle alternative pioneers Pearl Jam, the Rock and Roll Hall of Famer has sold nearly 90 million records worldwide. But his latest project Painted Shield is a new start.
The group’s self-titled debut album, now available via Loosegroove Records, is born out of collaboration, first with drummer Matt Chamberlain, who played briefly with Pearl Jam in the 90s (appearing in the group’s “Alive” video) and appears on the lastest Bob Dylan album Rough and Rowdy Ways.
The instrumental Chamberlain demos date back seven years and grew to include singer songwriter Mason Jennings, who breaks new musical ground of his own, alongside keyboard player and backing vocalist Brittany Davis and the mixing of Grammy winning producer and engineer John Congleton (St. Vincent, David Byrne, Nile Rogers). Themes of learning, self-forgiveness and moving forward emanate from each of the new record’s nine tracks, an album which emerges stronger as the sum of its parts.
I spoke with Gossard and Jennings about collaboration, the new single “I Am Your Country,” working outside their respective comfort zones and Painted Shield’s placement as the first release by the revived Loosegroove Records, a label launched by Gossard alongside Brad bandmate Regan Hagar in 1994. A transcript of our Zoom conversation, lightly edited for length and clarity, follows below.
Stone, I’ve heard you speak about the importance of collaboration. From the opening notes of “Orphan Ghost,” that’s exactly what this album felt like, the sum of all its parts. How important is that idea to you, especially when it comes to a project like Painted Shield?
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STONE GOSSARD: I love it. Maybe I love it because it’s sort of all I have - in terms of, really, the whole thing for me is that those moments of mixing two things together and suddenly it has life.
So I always chase after that. I’ve always looked for that. And when I’m not looking for that, and I’m just trying to make my own pie or whatever, it’s satisfying in a certain small way - but it never elevates in the way that it does when I’m sharing.
That’s happened on this record I think. The more we shared, and the more we sort of opened it up, the more things started to happen. Because we had songs that were unrealized for a while. We worked over these songs and really opened them up and thought about them and listened to them multiple times. At each layer, we sort of included somebody else. Or, at each layer, we sort of opened up our idea about what could be good. We were surprised, almost at every stage, that it got better with sort of more openness.
That’s not to say you can just open everything up. You can’t make a record by committee. I don’t think that works. But I do think there’s a way of just continuing to try to add nutrients to the mix. And I think different perspectives and different people’s grooves and their sense of melody and all of that layers on in a way that makes it feel more alive.
(Left to right) Matt Chamberlain, Brittany Davis, Stone Gossard and Mason Jennings of Painted ... [+] Shield. The group's self-titled debut album is now available via Loosegroove Records Photo courtesy of Missing Piece Group
How did this project kind of push each of you outside your comfort zone?
MASON JENNINGS: To piggyback on what Stone was saying, I don’t have to carry the whole load myself. Which is amazing. And it took a minute for me to kind of realize what would be the part that I should be carrying. I didn’t want to step off too much. But I also wanted to let other people get involved. So it was a really cool process. Where do I insert myself? And it really has allowed me to insert myself more. I can try stuff. I can just be really creative.
Stone would often say, “Hey, try something you would never try on a solo record…” And I’d try screaming. Or I’d try a whisper track. Or I’d have a perspective that’s maybe more straight angry - or maybe a perspective that was more irreverent than something I’d normally put on my own solo record.
And the music is just so interesting by itself. When it’s just me, I can kind of just create beds - beds for just the vocals and lyrics. But these guys are just creating this really interesting stuff. It was like, “OK. What part of the song would be good for me to really dig in? What part should I lay off?” So it’s been really cool like that to learn.
STONE: I live for this stuff. So, for me, this is like my oxygen - waking up and having a new mix to listen to or to think about and be challenged by. “I’ve got to put a part on a Matt Chamberlain/Mason Jennings song today.” I’ve got to think about something that could legitimately be in that space.
So the last song was “I Am Your Country.” Which was a Matt Chamberlain composition. Matt played on some of the earlier demos that Mason sang on like “Painted Shield.” Those songs had already happened. But, at the end, we were sort of talking to Matt about being really part of this a little bit more. And we encouraged him to send us music. And I knew he’s a songwriter - but he hides it. He started sending us tracks and we were like, these tracks are unbelievable - compositions of these drum grooves that shift just like they should, right at the right spot. They have those shifts that make it feel like whatever - is it verse-chorus or it just sort of elevates the energy. He knows how to rest. He’s doing these arrangements that have all of this shape to them and harmonics as well. Mason was putting a lyric on them and then me and Brittany were just sort of sprinkling stuff.
So it was really interesting and exciting to kind of think, “I’ve got to do something that makes sense…” It would be a real different role for me to play to be able to sprinkle. Because normally I’m kind of in there grinding away at the main body of the song.
But it’s fun to get a lot of delays and distortion and just kind of be a sound in there - sort of float around. Because there’s so much groove going on, you don’t want to muck it up, you know?
Mason, I know that “I Am Your Country” was kind of an idea that you had lyrically prior to Painted Shield but it was written and finished up during the pandemic. What was that process like and how did everything going on in the world at the moment impact it?
MASON: It was cool. I was glad that we had the time to put that last song on the record. Because I had a song but it didn’t sound anything like that. Some of the lyrics were similar but it was from a father’s perspective to kids. Then Matt Chamberlain sent those basic tracks and I just started singing over it. I thought, “Wow, this might be cool if I could sort of talk from the point of view of a country...” So I twisted a bunch of the words around and the rhythm is totally different.
I just thought it was awesome that we had the opportunity to finish the record with that song. We keep working on stuff and that sort of felt like the bridge - that was the last song for this record but it also serves as a gateway into where the band might be headed.
It’s not an overly political record but “I Am Your Country” heads that way a bit. One lyric jumped out at me: “Beware of hatred as a weapon against yourself.” There would seem to be no shortage of hatred in America at the moment. How important was it to speak to that and address it?
MASON: I didn’t really think about it. I just think it was a personal expression. I can feel the danger in my own life. So it was more just the personal feeling of, “I have to be very careful to not let hatred take over.”
So it was kind of a personal thing but I guess it is a more macro concept too.
CHICAGO - AUGUST 02: Mason Jennings performs during the second day of the 2008 Lollapalooza Music ... [+] Festival at Grant Park August 2, 2008 in Chicago, Illinois. (Photo by Jeff Gentner/Getty Images) Getty Images
Mason, a few things I picked up listening to the album again - the idea of learning from mistakes, learning to trust one’s self, kind of self-forgiveness, and generally moving forward. I felt like that emerged in a few songs: “Ten Years From Now,” “On the Level,” “Painted Shield” and “Raven.” Is that a theme that kind of emerges from this album?
MASON: I think so. I had a really rough divorce. Some of the songs, like “Ten Years From Now,” originally, it was just a really scathing song where I was screaming. It wasn’t called “Ten Years From Now.” It was called something else. But Stone was like, “Hey, I like this. But what if you look at that same perspective - but from ten years from now?” It was like, “Alright. I’ll give it a try…” And then it kind of opened that whole lyrical idea.
So that was kind of Stone too - encouraging me to rip into it first and then we’ll sit back and maybe try it from the perspective of more angry or from the perspective of ten years from now.
So that’s a really collaborative thing that happened there with that theme. Because there was definitely the feeling of self-forgiveness. But, at the early stage, it was more just rage, anger and frustration. Working with Stone opened it up. Which made it much better I think.
Stone, you were quite complimentary in the press release about Brittany. I particularly enjoyed her playing on “On the Level” - there’s a very funky keyboard part that kicks in there toward the end…
STONE: Clavinet. It’s awesome. She has a huge ear. She’s one of those players that you can play her a track once and from the first note… So that was her just reacting to it.
She’s a really adventurous player. She plays organ, clavinet and is just picking up guitar but is already doing stuff that I could never do.
She just has a huge ear. So, for her, she gets very joyous when it comes to music. When she reacts to a track, just roll tape. And there’s lots of stuff. She’s very natural in terms of interacting with a song, playing outside the harmony of it, anticipating chord changes, transitioning into parts. And that’s a powerful tool if you have that in your arsenal. She has it for sure.
I know John Congleton played on the album a bit and I love his mixing of it, particularly his handling of “Ten Years From Now.” What was kind of his impact on the finished product?
MASON: Humongous. It sounded really different before he got involved. We just let him rip. I was a huge fan of his from stuff he did with Bill Callahan and Thao & the Get Down Stay Down. He does really different kinds of stuff. Some of his production is very sparse. But, with this project, he kind of just went crazy. And started being super playful.
I just thought that since Stone and I had been working so many years back and forth, it kind of had a little bit of a blocky feel - because we weren’t in the same room. And then John just got in there and swirled it all around. He took paint brushes all over it. And it just felt super alive to me.
I’d be so over-controlling of my solo records. But I was just like, “Hey, let’s roll with this. Let’s just trust that John’s got a cool ear and a fresh ear. He’s gonna be the thing that makes it sound really alive when we had to do it more virtually.” Pieces would disappear. Stone’s main riff would just go away for half the song. Or my vocal would be so dry and ugly up front that I would be mortified normally.
To me, he’s like the live part of it all.
Guitarist Stone Gossard performs on stage at the New Orleans Jazz and Heritage Festival with Pearl ... [+] Jam. May 1, 2010 in New Orleans, LA Photo by Barry Brecheisen
Stone, in terms of relaunching Loosegroove Records, how involved are you in that? Why do that now?
STONE: Regan Hagar and I, we did Loosegrove. Regan is my partner at Loosegroove. He used to play in Malfunkshun and I played in Brad with Regan. So we have a long musical history.
But I think all of these things aligning - a lot of projects that had been kind of in the works for a long time. There’s a lot of things that I need to help facilitate as far as music and that I’m also excited about facilitating. Some of it is going back in time, like we do, and reconnecting with old friends.
There was this Painted Shield record. There’s a Brittany Davis solo record that’s going to come out soon. I hope to put a Brad record out. There’s one last Brad record that didn’t come out before Shawn Smith passed away.
There’s also The Living - which is Greg Gilmore from Mother Love Bone and Duff McKagan, a record they made in 1982 together that’s just priceless. It’s incredibly cool - Seattle punk rock right at that juncture, right before grunge.
So you can really hear how amazing Duff McKagan is. And Greg Gilmore. But Duff writes all of the songs and he wrote all of the lyrics. So he was already at that level. He did the Seattle punk thing. And then decided, “Well, I’m gonna go start Guns N’ Roses now.” You can see his talent in a great way in some of these early recordings.
So there’s a bunch of records that we’re just super excited about. And we got an opportunity through [a partnership with entertainment group] The Orchard. They said, “Do it. Let’s do a label.”
So I hope it’s a place that will be putting music out for a long time. I’m excited about it.
And you guys are already working on new material, right?
MASON: We have the time. We’re trying to get Matt to do more. Egg him on.
STONE: We’ve got about three or four tracks already real close right now. So we think we might get a record done sometime mid-next year, maybe even earlier. Who knows? It’s going quick. Mason’s on a roll right now too.
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ff83fbf35fbab01a09302d10d2a7b8d5 | https://www.forbes.com/sites/jimryan1/2021/03/18/steve-lukather-on-new-solo-album-totos-future-and-music-industry-economics/ | Steve Lukather On New Solo Album, Toto’s Future And Music Industry Economics | Steve Lukather On New Solo Album, Toto’s Future And Music Industry Economics
LAS VEGAS, NEVADA - SEPTEMBER 22: Steve Lukather of Toto performs at the Downtown Stage during the ... [+] 2019 Life is Beautiful Music & Art Festival on September 22, 2019 in Las Vegas, Nevada. (Photo by FilmMagic/FilmMagic for Life is Beautiful Music & Art Festival ) FilmMagic for Life is Beautiful Music & Art Festival
Wrapping up their most recent tour late in 2019, the future for 80s stalwarts Toto, who’ve sold more than 40 million records around the world, was an uncertain one, with acrimony, illness and lawsuits all conspiring to cloud the group’s path forward.
Longtime singer Joseph Williams and co-founding guitarist Steve Lukather were the only two members willing and able to tour and the pair quickly set to work on solo material in 2020, collaborating with one another throughout the process.
Lukather recorded quick, knocking out his new record I Found the Sun Again in just over two weeks while Williams took his time on Denizen Tenant. The resulting pair of solo albums (now available via The Players Club/Mascot Label Group on CD/vinyl, as a two album bundle or to stream via digital platforms) features not only Lukather and Williams but co-founding keyboardist and primary Toto songwriter David Paich alongside a handful of other Toto alums, lending both records a sense of familiarity despite the circumstances from which they were born.
I spoke with Steve Lukather about working with Williams, featuring former Beatle and current All Starr Band bandmate Ringo Starr on his latest album, the future of Toto, his history as a session musician and the sometimes frustrating nature of a major label record deal. A transcript of our Zoom conversation, lightly edited for length and clarity, follows below.
You and Joseph worked on each other’s albums. David Paich is obviously in the mix as well. Several former Toto players are on Joseph’s record too. But these aren’t Toto records. How does making music in this way kind of free you up creatively in maybe ways releasing under the Toto banner wouldn’t?
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STEVE LUKATHER: That version of Toto ended in October 2019. It was a sad ending to something so cool. But people weren’t getting along and there were lawsuits. David was ill. It was just a tough time and it was time to put it to bed for a while.
I thought that was going to be it. But then Joe was working on a record already and I knew I was going to be doing one. So we helped on each other’s records. I did about a song a day, finished, ready to mix. He spent about four months meticulously producing his. But, oddly enough, if you were to put the two albums on a shelf, it would be about as close to a Toto record as it can be without certain elements.
New solo albums by Toto members Joseph Williams (left) and Steve Lukather (right) are now available ... [+] via The Players Club/Mascot Label Group Photo by Alex Solca Photography
These records reflect a highly collaborative process between you and Joseph. What’s that musical relationship like between the two of you after all these years?
SL: Well, we’ve been working together for so long, we have one brain. He’s such a brilliant guy. And now he’s coming out of his shell. We wrote the new single [“Not Enough Love in the World”] for Ringo Starr’s new EP.
Me and Joe spent a lot of time together in this lockdown. Because he’s one of the few people I allow in the house. We get tested every week together. He’s got a 3 month old grandson. I have a 10 year old autistic son - so we can’t get this. So we’ve made a very serious pact.
But, while we’re here, we have creative ideas on what we want to do. We’re a great team.
Ringo also appears on I Found the Sun Again. What’s it like having him on “Run To Me?”
SL: Well, we wrote that song for his 80th birthday because we couldn’t have a present for him. So all of the All Starrs were going to submit either a “Hey, happy birthday!” or a song or poetry or something funny - just something to tell him we love him.
Me, David and Joseph wrote this song as sort of an homage to The Beatles - Tom Petty, ELO, that sort of thing - something he’d sink his teeth into. And he offered to play on it. He plays tambourine. So that made it legit. And it’s a song about our daughters.
“Run To Me” is a pop song - but a pop rock song. He graced it and it really gave it the reality with him on it.
VALLEY CENTER, CALIFORNIA - MARCH 21: Musicians Steve Lukather (L) and Ringo Starr of Ringo Starr ... [+] And His All Starr Band perform on stage at Harrah's Resort Southern California on March 21, 2019 in Valley Center, California. (Photo by Daniel Knighton/Getty Images) Getty Images
You’ve said that you never had so much fun recording. I’m guessing a lot of that has to do with how quickly you recorded?
SL: A lot. It was old school like we did it in the 70s. “Here’s the charts, let’s run it once - you solo here, you do this…”
I tried to pick songs and write songs that were vehicles to jam - but also were great songs. And that’s what the early 70s were for me: Traffic, Hendrix and all of that stuff - where you can feel everyone in the room just kind of learning the tune. And it can go anywhere. The dynamics change. Longer pieces of music - long fades that you can’t program into a computer. With interplay.
I just wanted to record a record like that.
You chose the three cover songs for this album first, which kind of set a tone, and then you worked toward the rest...
SL: That’s what I did. These are songs that I played in junior high and high school in bands and they were great vehicles - great to play with a lot of room to interpret. They were songs that influenced me by major artists. I played the Walsh tune [“Welcome to the Club”] for Joe and he really dug it. The homage to Robin Trower [“Bridge of Sighs”], with a little Jimi in there for good measure, was a great live jam in the studio. And that’s the whole record. It was just live.
I was really proud of having the chops to do that when most people record on 1s and 0s and can fix anything. You can make your dog bark the latest rap hit if you’ve got the right app.
I’m an old guy. What do I have to bring to the party but being honest? I made an honest record.
Here we are in this era where it's as difficult as it’s ever been for an artist to monetize recorded music. And now traditional touring remains off the table indefinitely. I think people might have a tendency to see their favorite artist doing a livestream and miss just how dire the situation is for a lot of musicians right now amidst pandemic. Just how important has touring become?
SL: It’s everything to us. It’s our main source of income. Because even though we have 3 billion streams, I haven’t seen any money yet.
And we have a good deal! I made a great deal with Sony. They don’t even give that deal anymore. And I’m like, “Where’s the money? Come on, guys. You take yours…” And we have to like sue them every two years and audit and get 25% of our measly 18%. We have a guy to get our own money that we get in the contract.
So it kind of sucks… But that’s the music business for ya!
Norway, Oslo - February 16, 2018. The American rock band Toto performs a live concert at Sentrum ... [+] Scene in Oslo. Here singer and songwriter Joseph Williams is pictured live on stage. Here guitarist Steve Lukather is seen live on stage. (Photo by: Gonzales Photo/Per-Otto Oppi/PYMCA/Avalon/Universal Images Group via Getty Images). Universal Images Group via Getty Images
I think of these amazing session bands like The Funk Brothers or The Wrecking Crew and how that idea of the great session player - that consummate pro who can just nail any style or sound or part quickly and perfectly and maybe even make a bad song better - is kind of a relic today. What does it mean to you to have carved out the legacy that you have as a great session musician?
SL: My heroes. That’s what the job was. The guys that we looked up to and learned from did that. So we had to have that ability otherwise you were in the wrong job. Best times of my life.
The musicians, artists and legendary people I got a chance to work with or create with and see what their process is... I was a sponge. I learned from everybody. Whenever you’re in the room with legends, there's plenty to learn. It’s humbling. All of the sudden you hear Joni Mitchell’s voice in your headphones or Aretha Franklin’s and you just go, “My god, I’m in the room with these people…” And then you realize their genius - because it’s real. It’s not a laptop and instant rockstar.
I haven’t done sessions in 25 years. But there was a time I was working 20 sessions a week for decades. And it was the most fun time. You had to be ready for anything! And not a lot of people can stomach that. There are better musicians per se as far as technique goes. But you put them in a room with a chart with just chord symbols and count off a tune? Well, they don’t know what to play. “Aren’t I supposed to solo now?”
Most of the gigs for guitar players aren’t about soloing. So if you really want to be a fully rounded player, you should learn all there is to learn about the instrument. And the most important thing about playing the guitar is great rhythm. You have to have great time and a great sound - and make the band feel good and find a little part that makes the singer sound good. And when it’s your time to play? Play! But you don’t have to play every note you know. You scare people that way.
I just show up going, “What are we going to play?” And I have an arranger’s ear - so I can hear music around music. And that’s why I got hired. Because I could come up with a hooky little part that complimented the song or made the feel better. That’s what you did on record dates.
And if they asked you to play a solo, they’d expect you to stay after and do it real fast. So you couldn’t be afraid of the red light. You had to be confident and ready to go. I saw some really famous, amazing guys fold under the pressure - but on their own gig, they’d kill.
So being a session musician is a lot harder than it looks. You have to bring more to it. You have to interpret the music, not just play what’s on the paper.
LAS VEGAS, NEVADA - SEPTEMBER 22: Steve Lukather of Toto performs at the Downtown Stage during the ... [+] 2019 Life is Beautiful Music & Art Festival on September 22, 2019 in Las Vegas, Nevada. (Photo by FilmMagic/FilmMagic for Life is Beautiful Music & Art Festival ) FilmMagic for Life is Beautiful Music & Art Festival
Keeping Toto together through not just the ups but maybe even more importantly the downs too - how important has that been for you now over almost 45 years?
SL: It’s a wild roller coaster ride. This isn’t the Toto of 1978. Jeff and Mike [Porcaro] are gone in heaven now. Steve [Porcaro] doesn’t want to tour anymore and David [Paich] can’t medically. So Joe and I are the only ones left that want to work. Dave will come out and sit in every once in a while when he’s in L.A. and he doesn’t have to travel. I still talk to him almost every morning at 6 AM on FaceTime and we go over business and talk about life. He’s one of my oldest friends and he stands with Joe and I during this madness.
But we have new music, plus we pay homage to our old music. We lost a lawsuit and paid for the percentage so now we’re going to go out and use it. We might as well. There’s tribute bands. So we might as well go be the best tribute band there is.
We did a live DVD that’s coming out in the summer that introduces the new band playing Toto music. There’s a companion piece with Paich, me and Joe, and all of the new guys, that explains why we’re doing it and why we’re carrying it on. There’s a live performance of the band without an audience or any of the bells and whistles. We’re all in a rehearsal room really. And it came out great.
And it makes more sense for us to take over as Toto - and not be in the back of the van eating bologna sandwiches again trying to break a new band at 63 years old, you know what I mean?
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18eb6a5b677ec6a37df75f915bf5913d | https://www.forbes.com/sites/jimvinoski/2019/02/04/a-robust-january-for-manufacturing-quiets-the-naysayers/ | A Robust January For Manufacturing Quiets The Naysayers | A Robust January For Manufacturing Quiets The Naysayers
It seems like ages ago that it was all doom and gloom for American manufacturing. But it was just a month ago, after the Institute for Supply Management’s Purchasing Managers Index (PMI) showed a steep December decline, to 54.3%, from November’s 58.8%. Coming amidst rising predictions of an impending U.S. recession, and representing the index’s lowest point since April 2016, it was excellent fodder for the doomsayers. That gloom led to a 660 point drop in the Dow Jones Industrial Average on January 3.
Now January’s numbers are in, and the PMI has bounced back up to 56.6%. Coupled with the month’s strong jobs report from the Labor Department, which showed the economy adding 304,000 new jobs in the month, this indicates strength in both the general economy and the industrial sector.
For manufacturing in particular, most economic indicators have turned solidly positive. Another key measure of the sector’s health, the National Electric Manufacturers Association’s Electroindustry Business Conditions Index, had been in contraction territory below 50% since last September, but it gained seven points to reach 53.3% in January. Manufacturing jobs growth was at a five-month low with over 13,000 sector jobs added in the first month of 2019, but this comes after a banner year of job growth, with 284,000 manufacturing jobs added – the largest gain in 20 years.
More good news was contained in the details of the PMI report. New Orders and Production were both roaring in January, coming in at 58.2% and 60.5%, respectively. Customers’ Inventories increased slightly, from 41.7% to 42.8%, but remain in too-low territory that indicate continued strong demand for manufactured goods.
Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM Manufacturing Business Survey Committee, who issued the PMI report, had this to say in the ISM’s press release:
Comments from the panel reflect continued expanding business strength, supported by strong demand and output. Demand expansion improved with the New Orders Index reading returning to the high 50s, the Customers’ Inventories Index remaining too low, and the Backlog of Orders remaining at a near-zero-expansion level. Consumption continued to strengthen, with production expanding strongly and employment continuing to expand at previous-month levels. Inputs — expressed as supplier deliveries, inventories and imports — continued to improve, but are negative to PMI expansion. Inputs reflect an easing business environment, confirmed by Prices Index contraction. “Exports continue to expand, but at the lowest level since the fourth quarter of 2016. Prices contracted for the first time since the first quarter of 2016. The manufacturing sector continues to expand, reversing December’s weak expansion, but inputs and prices indicate fundamental changes in supply chain constraints.”
Not all indicators were positive. ISM’s Chicago Business Barometer, widely viewed as an indicator of the nation’s overall economic health, fell 7.1 points from December’s adjusted 63.8% to 56.7%. As with last month’s PMI, that number remains in growth territory, but the large decrease is troubling. Also worrying are the significant declines in the Chicago Business Barometer’s Production and New Orders categories.
Also, part of the economic threat to the industrial sector from the beginning of 2019 remains, though it’s been delayed. There has been no resolution to the U.S.-China trade dispute, and the tariff increase from 10% to 25% on $200 billion worth of Chinese goods, originally slated for January 1 but delayed to March 2, will loom large this month. Failure to resolve this problem could lead to a tremendous drag not just on manufacturing, but on the U.S. economy as a whole.
Still, the overall picture looks markedly brighter than just a month ago. American manufacturing has shown itself to be remarkably resilient despite our turbulent times.
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ded6979978d1c8ed68e09e0abb133481 | https://www.forbes.com/sites/jimvinoski/2019/09/25/with-food-grade-3-d-printing-redefine-meat-is-out-to-well-redefine-meat/?sh=7102363775c7 | With Food-Grade 3-D Printing, Redefine Meat Is Out To… Well, Redefine Meat | With Food-Grade 3-D Printing, Redefine Meat Is Out To… Well, Redefine Meat
Redefine Meat's burger Image courtesy Redefine Meat
Faux meat is generating breathless headlines these days. The days of real meat are numbered, they would have you believe - you can’t even tell this stuff isn’t meat! That is, until you dig deeper and read actual reviews. Turns out the faux meat flavors and textures range from a high end of (I’m paraphrasing here) “tasty, but not quite right” to a low end of “dreadful flavor, with a kinda-like-wet-sawdust texture.” Meat, it would appear, is still safe.
Or is it?
Where lots of companies are aiming at burgers, dogs, tenders and nuggets so texture isn’t as big a hurdle, the folks at Tel Aviv’s Redefine Meat are shooting for a much more daunting target: making fake steaks. And their solution to achieving a product that’s not just passingly comparable, but an actual near-authentic copy of real meat, is 3-D printing.
“The way we apply 3-D printing is by combining different materials throughout the printing process,” explained Eshchar Ben-Shitrit, Redefine Meat’s CEO. “Real meat’s matrix is controlled by biology and the lifespan of the animal. Other technologies get you a meat flavored dough – we mimic the real thing, including muscle, pockets of fat and moisture that help release flavors when you bite.” The printing process is designed to give an overall material texture close to the real deal. “Flavor is determined not just by the material itself, but by the texture too. You have to have a similar overall eating experience to get anywhere close to the experience of real meat,” he said.
They’ve made some real believers, really fast. Redefine Meat is just a year and half old, but they announced last week that they’d raised $6 million in their seed fundraising round, led by CPT Capital.
Part of the draw is their technology. While food-grade 3-D printers exist, none of them suited the company’s purposes. “Unfortunately for us, the world of food 3-D printing is very small,” Ben-Shitrit said. “Existing ones are basically single tiny extruders focused on creating shapes. We built two of our own machines, which are designed specifically for our purpose, which is meat printing. All parts of the machines are stainless steel to address food safety standards and cleanability. That allows us to have more IP, since we have it in both the food formulations and the machines. In our shop, the mechanical engineer works alongside the food scientist.”
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One of Redefine Meat's proprietary 3-D printers Image courtesy Redefine Meat
The company got its start from a combination of factors in Ben-Shitrit’s personal and professional lives. “I was a big meat eater,” he said. “I’d cooked meat since I was nine, worked at a restaurant when I was 11, and at some point I even thought about becoming a butcher. But when my son was born, I stopped eating meat – I was seeing the animals as someone else’s child. And I thought humanity should eat less meat.”
Around the same time, he’d been working for about eight years marketing digital printers. “I got asking myself, ‘Why am I an expert in printing? Maybe I should use it for something I care about,” he said. “So one day I decided to quit my job and work on 3-D printed meat. Who else could 3-D print meat? It’s what I was meant to do.”
Redefine Meat hasn’t started selling printers yet. They’re still in development mode, but they expect next year to announce customers who will partner with them on roll-outs – “large, well-known brands,” according to Ben-Shitrit, which will allow them to launch across the world. They’re currently working to finalize both the machines and the formulations.
Still, they’ve done some taste tests. “The product is very tasty – we’ve gotten some great feedback,” Ben-Shitrit said. “We don’t tell people it is not real meat until after they’ve tasted it, and they’re always amazed.”
The product base consists of a mix of three vegetable proteins, which in combination are critical to the desired texture. It also contains plant-based fat, along with flavors and colors. It has no cholesterol, and should offer a long shelf life. Those are all factors that can help the company sell its stuff, but Ben-Shitrit is aiming for more: “It needs to be safe, healthy, and tasty. We focused on the food first, not the technology.”
Redefine Meat is aiming at not just the vegetarian market. “We target people who love meat,” said Ben-Shitrit. “I believe in this market, and I believe in this field. I think we can make a great product, one that they’ll want to eat, that I’ll want to eat.”
The company has a defined long-term strategy. “We see product quality and range as an ongoing effort over the next 30 years,” Ben-Shitrit said. “It will be an ongoing development of all different types of meat replacements, essentially until we can achieve what animals achieve today.” They also plan to shift their focus entirely to their products. “We don’t want to be machine builders,” he explained. “But it’s too early right now to farm that out. Ingredients and products will be our IP and our focus for the long haul.” Still, they’ll remain in both ends of the market. “We’re going to sell both machines and materials to companies who want to make a meat substitute.”
Ben-Shitrit knows they’ve got their work cut out for them. “People know food – they’ve always had the same ones and right now most are very comfortable with that,” he said. “This will change by technology, and what products are available out there. In 10, 20, 30 years, I think the shift could be dramatic.”
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2db99de1c460fc01c31586cc76bb8a98 | https://www.forbes.com/sites/jimvinoski/2020/01/20/new-research-shows-consumers-already-expect-mass-personalization-time-to-get-ready/?sh=7914cdc223e4 | New Research Shows Consumers Already Expect Mass Personalization. Time To Get Ready! | New Research Shows Consumers Already Expect Mass Personalization. Time To Get Ready!
There’s been lots of commentary in the past few years about the coming expectations by consumers for mass personalization of the products they want to buy. A new study says that time has now arrived.
According to Dassault Systèmes and CITE Research, nearly all consumers today expect some level of personalization in the things they purchase. In a press release from earlier this month, they revealed that - driven by younger purchasers, but present to some degree for all generations – expectations of product personalization are already a big deal in some market categories.
“We’re in the start of the move from mass production to mass personalization,” said Olivier Sappin, CEO CATIA at Dassault Systèmes. “We’re creating a whole new product ecosystem.”
The research was based on a survey of some 3,000 consumers from the U.S., China, and France, which studied personalization in healthcare, mobility, retail, and home and city environments. Some of the key findings are:
We want personalization now – 83% of consumers expect products to be personalized within moments or hours Consumers will pay an average premium of over 25% for personalization, but… Consumers also expect to be compensated over 25% for giving out their personal data Right now, what people perceive personalization to mean varies
It could be everything from simply picking from a drop-down menu to products being fully customized before they buy 63% of early technology adopters expect products and services customized based on personal data
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Health and personal safety are big areas of current opportunity for customization Data privacy is a concern for 96% of consumers
Image courtesy Dassault Systèmes
Clearly, it’s critical now for producers to understand consumer expectations for their particular product lines and for the demographics they serve. “Look at Canoo,” explained Sappin. “They offer mobility as a service. Their chassis and drivetrain is standard, then they customize everything else.” Canoo’s model of “membership, not ownership” of their electric vehicles, coupled with their personalization message of “everything you need and nothing you don’t,” should resonate strongly with younger consumers in urban areas.
For buyers still focused on the legacy model of auto ownership, there’s a different kind of customization, according to Sappin. “There’s more and more software in cars,” he said. “With that, you can personalize the vehicle much more when you buy it, and with frequent software updates it continues to be customized more and more for the owner.”
A more mundane, but still technologically savvy, customization example Sappin gave is ECCO. “They offer personalized shoes that start with a 3-D scan of your feet,” he said. The Danish company’s QUANT-U shoes are then made by using 3-D printing in silicone to produce a custom midsole that they promise offers better dynamics, cushioning and ventilation. The pilot project relies on the cloud-based 3DEXPERIENCE platform from Dassault Systèmes to crunch the scan data and convert it for 3-D printing. QUANT-U shoes are currently available at select ECCO retail stores in Europe and Japan.
Olivier Sappin Image courtesy Dassault Systèmes
Sappin sees other areas he expects to change rapidly. “In transportation, drones and air taxis could take over soon,” he said. “Look at consumer goods too – in garments, for example, we could also see a model where companies scan and create custom clothing. Smart phones are another area of opportunity, with customized apps that update daily. Insurance is going to change, too – imagine how customized insurance products based on consumers’ individual data can save insurers money. But the companies also need to realize customers will expect to pay less if they open up the details of their data.”
With consumer expectations changing quickly, one of the biggest problems will be for legacy companies to adapt. “Existing companies are working in the same track as new ones on this,” said Sappin. “They know it will affect their business model. Their challenge will be in trying to transform while they also work to keep existing market share.”
The transformation is probably bigger than most companies realize. “I don’t think there can be silos anymore,” Sappin said. “It really means redesigning the face of the company, the showroom, the product development process, manufacturing – and even the website and leadership team. Everything will be affected. The consumer is going to want to experience the product before buying. It will force companies to revamp from top to bottom.”
There are early examples of how to do this right. “Toyota has created a whole new entity to work on this kind of new tech,” said Sappin. “They’re working on creating a whole new kind of mobility, and they realize that has to be separate from the people who still need to deliver the current business.”
Another challenge is having the right expertise to go after the opportunities these changes present. “Think about IT, aerospace, and mobility, and how they’re coming together as one,” Sappin offered. “We’re creating a new ecosystem there too. That takes a much more diverse kind of expertise than in the past. Canoo is a good example – they have a product defined, but now they also need to create a whole new value chain, one that’s radically different from any existing automotive supply chain. That’s the kind of problem we need to tackle.”
Probably the biggest challenge of all is that this is happening right now. “People are aware, and everybody is trying to adjust,” said Sappin. “I see people looking at their products now and thinking about all the ways and all the areas where they can offer the best personalization experience. There’s a lot of risk, but there’s also a lot of potential for the ones who get it right.”
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47699ed3cb0b3698dd8f40538210f5b0 | https://www.forbes.com/sites/jimvinoski/2020/05/27/heres-how-van-dam-custom-boats-sets-a-new-standard-in-wooden-boatbuilding/?sh=44956da473aa | Here’s How Van Dam Custom Boats Sets A New Standard In Wooden Boatbuilding | Here’s How Van Dam Custom Boats Sets A New Standard In Wooden Boatbuilding
Craig.Geronimo_5353.8.31.18b Image courtesy Van Dam Custom Boats
Last summer, during a Scout Troop sailing adventure on the Great Lakes, I learned a whole lot about wooden pleasure boats. That led to my article last August about the modern-day makers of these iconic watercraft.
One of the builders mentioned in that article was Van Dam Custom Boats in Boyne City, Michigan. Just before our world went haywire, I was finally able to work in a visit to their shop in that beautiful northern Michigan lakefront resort town. I’m glad I did.
The hull structure Image courtesy Van Dam Custom Boats
Van Dam’s mission is clear. In the words of their President, Ben Van Dam, “We want to be number one, to make the best wooden boats in the world.” That means they play at a whole different level of craftsmanship, which drives all facets of their business–people, design, materials, methods, and throughput.
Laying down the hull Image courtesy Van Dam Custom Boats
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Van Dam is a small family-owned business. They work a few blocks from the edge of Lake Charlevoix on a campus that houses their headquarters and workshops and their separate boat storage, service and brokerage businesses. The company was founded by Ben Van Dam’s parents, Jean and Steve Van Dam, in 1977. From the start, it was about custom wooden boats of the highest quality.
A completed hull Image courtesy Van Dam Custom Boats
There are a few key elements that stand out in what they do. They’ve fundamentally redesigned how their boats go together. “The outer surface of our hulls is offset from the structural members, mounted on continuous horizontal supports that eliminate the rippling you see in older wooden boats,” explained Ben Van Dam. “Our hulls themselves are a unique structure, built up in quarter-inch layers with the grain of each perpendicular to the adjoining layer, just like they do with carbon fiber. That gives the completed structure a much greater overall strength.”
Hand-crafting metal parts Image courtesy Van Dam Custom Boats
Unlike most builders, they make most everything that goes on their boats themselves. They source their engines and drivetrains separately (though even these will be upgraded with heavy in-house modifications). But all other pieces of a Van Dam boat–things like hinges, railings, electrical systems and components, window frames and latches–are built on-site by their own craftsmen.
Hand-stitching a leather steering wheel cover Image courtesy Van Dam Custom Boats
That custom production isn’t confined to the boats themselves, either. “We cover everything involving the boat,” said Jeremy Pearson, Van Dam’s Director of Worldwide Sales. “We took a trip out to Lake Placid, New York, not too long ago, just to help a customer decide how to design and set up his boat lift.” Ben Van Dam agrees. “We’re soup to nuts,” he said. “We routinely do custom modifications to boat trailers–and we’re even building a whole new one ourselves from scratch for one job right now. For a recent build, we even did some work on the Ford F-650 the owner uses to haul his boat.”
All that custom fabrication requires skilled workers, which puts Van Dam right in the thick of the war for talent. Their skills development and company culture work are aimed at that challenge, and can serve as a model for all manufacturers. “We have an in-house apprenticeship program–it’s a four-year-long course in the basics of how we build boats. It’s tough. In the beginning it’s about building muscle memory, just doing things like sanding non-critical areas, so eventually when you’re working on the continuous curve on the boat’s deck, where you get one chance to get it right, you know exactly what you can and can’t do.” The company partners with several local school districts to funnel promising candidates from their technical programs into the boat-building school.
The completed custom cockpit Image courtesy Van Dam Custom Boats
While the most-skilled employees are highly valued, leading complete builds and serving as specialists in woodworking, metal machining and welding, all members of the team are like-minded in the company’s way of working. Van Dam has 37 cultural fundamentals they believe provide a healthy and balanced life. Some are core business principles such as, “Act with integrity,” “Pay attention to the details,” and “Go the extra mile” – but there are also life values such as, “Keep things fun,” and “Place your family first in your life.” “We have an accountability chart instead of an organizational chart,” Van Dam said. “It tells exactly what’s expected of every member of the team, from me to the apprentices.” Everyone has a voice. “Everyone owns our continuous improvement model, and we need input from everybody for it. We have improvement meetings during projects and debrief meetings after them, all aimed at constantly getting better at what we do.”
That feeds into how the business is run. “Our goal is to generate enough profit to pay people well and develop them better,” said Van Dam. “We invest in R&D and in construction technology improvements. I constantly look at increasing our budget to help us build better boats–I think about how we can spend more money to increase our profit margin. We try to grow, but to grow smart and slow. “
Image courtesy Van Dam Custom Boats
That’s a different approach from what you normally hear. Their business model is a different one too. “We do one or two boat builds a year,” Pearson said. Van Dam added, “Every build is the first time. We don’t have models. We only ever repeat a design if the first owner of that design approves, and that almost never happens.” In the entire history of the company, they’ve built about 61 boats of note. But the quality level of those boats is astonishing. For example, they finish and clear-coat every wood surface, inside and out, even if it’s a spot nobody will ever see. For another, they do what they call book-matching for their finished wood surfaces, milling their own boards from log-size lumber and selecting adjacent pieces so that on each side of the hull, or on corresponding planks on a wood ceiling, the color and grain are identical from side to side and front to back. It’s a level of quality few producers can match.
Image courtesy Van Dam Custom Boats
Their tie to their boats’ owners is unique as well. “I think when you really care about what you make, you wind up with that kind of care for the owner and the family,” said Van Dam. “We have a variety of different customers–some just want to be part of the conceptual work up front, but some want to be there throughout the entire build. We accommodate whatever level of involvement they want.” And their product drives continuing involvement, since their lifetime warranty requires an annual inspection by Van Dam technicians. The company does routine maintenance, but also does complete rebuilds and refurbishments. Those account for a fraction of their revenue, but are a constant presence in the shop. “Our boats are passed down in families,” Pearson explained. “When we get to the second or third generation, it might be about rebuilding the boat, or it might be helping them to sell it. Either way, we take care of the family.”
Image courtesy Van Dam Custom Boats
It doesn’t come cheap. As each build is custom, there are no standard prices. Typical projects range from $1 million to $3 million, and there’s really no upper limit. The price tag depends on all the features and details the owner wants the boat to have.
It’s not a big business, but their fervor for what they do is evident throughout. “We’re as passionate about our business as we are about our boats,” Van Dam offered. “We don’t have to come up with marketing jingles–we simply show people what we can do.”
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e8e582c88f382c37ca87d393da5e3783 | https://www.forbes.com/sites/jimvinoski/2020/06/26/mp-materials-says-theyre-our-fastest-path-to-re-establishing-the-american-rare-earths-supply-chain/ | MP Materials Says They’re Our Fastest Path To Re-Establishing The American Rare Earths Supply Chain | MP Materials Says They’re Our Fastest Path To Re-Establishing The American Rare Earths Supply Chain
Photographer: Joe Buglewicz/Bloomberg © 2019 Bloomberg Finance LP
Rare earth elements (REEs) are a hot topic right now, since they’re in high demand for defense and high-tech applications, but almost entirely sourced from China. There’s stiff market and government pressure to break the U.S. free of China’s stranglehold over these vital minerals. In an earlier article, I highlighted the current state of play and potential paths forward. One company I mentioned in that piece, MP Materials of Mountain Pass, California, claims to offer our best and fastest path toward domestic production of these vital metals.
MP Materials is privately held by affiliates of two U.S. investment advisers, JHL Capital Group LLC of Chicago and QVT Financial LP of New York City, with Leshan Shenghe Rare Earth Co. Ltd. of Shanghai holding a 9.9% non-voting share.
That minority ownership stake by a Chinese firm has led to unfortunate disinformation about the company. For example, there was a recent report by The Japan Times that the U.S. Department of Energy (DOE) had instructed its scientists not to work with the company because of that affiliation. But that report is false. “The Department of Energy does not have a policy ‘blacklisting’ MP Materials,” said DOE spokeswoman Jess Szymanski. “To say so is inaccurate and a mischaracterization of the Critical Materials Institute Interim Director’s comments. The research and development of rare earth elements and collaboration with industry in this area remain high priorities for DOE.”
The MP Materials Mountain Pass mine site and processing facility Image courtesy MP Materials
One part of MP’s claim that is indisputable is that they’re the only existing domestic extractor of REEs. Their Mountain Pass mine is indeed the sole American rare earths source currently in operation. MP has been operating it since 2017, and produces a rare earth concentrate product that amounts to in excess of 36,000 tons of rare earth oxide equivalent per year (or 15% of world rare earth market demand). The mine first opened in 1952 and was a strong domestic producer throughout the second half of the 20th century, but overseas competition and ever-increasing regulatory hurdles forced its closure in 2002. The mine was reopened about a decade ago by an investor-led company, Molycorp Inc., but they went bankrupt in 2015 as a result of operational challenges and subsidy-supported REE price undercutting by China.
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Now MP says they’ve got the answer to profitability. “We have an 8% concentration of REEs in our ore, one of the highest in the world,” said Jim Litinsky, MP’s Chairman. “We are the second largest producer in the world today (and largest outside of China), and, even with all China is doing, we’re still profitable. We’ve already proven that we’re a stable, economic source of supply.” The company currently has some 200 employees working at the Mountain Pass mine.
Having that domestic REE source has become an ever-greater priority in the past year. Chinese President Xi Jinping hinted at banning exports of REEs to the U.S. in May 2019 as retaliation for the trade war. More recently, China’s bad behavior and multiple supply chain problems related to the coronavirus crisis fueled a growing chorus calling for U.S. trade decoupling. For REEs specifically, China’s threatening behavior has led to both Congressional mandates as part of their defense reauthorizations, and administrative guidelines via Presidential Determinations, to source the critical metals from more reliable partners.
The Mountain Pass mine Image courtesy MP Materials
But the REE sourcing situation serves as a microcosm of our overall supply chain for manufactured goods, and the reality is that decoupling will take years (if we even have the wherewithal to make it happen at all). “A multi-billion dollar supply chain doesn’t move overnight,” Litinsky pointed out. While MP is indeed the only game in town for existing domestic extraction, the fact is that right now, 100% of the REEs they mine are sold to China, where they are further processed, refined and manufactured into critical high-tech products such as magnets and batteries. The reason for that is simple: there is no existing domestic capability for that post-extraction production.
MP is already working to address that situation. The former Molycorp assets they purchased at Mountain Pass included REE separation equipment, which is used to divide the intermingled multiple elements into individual REE components. Those systems as originally designed didn’t operate economically. Litinsky pointed out that in this case, technical know-how flowed into the U.S. rather than out of the country thanks to their Shenghe partnership. As a result of that collaboration, the systems are being upgraded to perform competitively. The company’s current goal is to have that part of the operation up and running by the end of 2021. At that point, as a Trump administration policy aide pointed out for my earlier article, the front end of the supply chain is secured.
Meanwhile, the company is moving forward with plans to build another plant to further refine the separated REEs into refined metals. It’s MP’s eventual goal to produce magnets domestically as well.
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a302511e75c30cdedac0a1fe9b0e2dca | https://www.forbes.com/sites/jimvinoski/2020/11/16/who-knew-cx-could-make-a-huge-difference-in-diy-toilet-repair/?sh=75181cb43d91 | Who Knew CX Could Make A Huge Difference In DIY Toilet Repair? | Who Knew CX Could Make A Huge Difference In DIY Toilet Repair?
Fluidmaster's headquarters in San Juan Capistrano, California Image courtesy Fluidmaster
When I spoke with the folks at Fluidmaster, maker of toilet repair parts, I shared with them that I’d recently finished rebuilding a couple of my own toilets at home using their products. I’d barely gotten the words out of my mouth before Dave McFarland, their VP of Global Marketing, asked me, “What did you think of our instruction booklet?”
That user manual, it turns out, is a big piece of the company’s top focus in recent years: improving the customer experience. Based on my own personal experience, they’ve hit the nail on the head. And it turns out I’m not alone with my appreciation of their clear and straightforward installation directions. “I never thought we’d have our instruction booklet in an Instagram post,” added Corinne AndersonSchoepe, Director, Global Brand.
Fluidmaster, headquartered in San Juan Capistrano, California, is the #1 toilet repair brand worldwide. They boast more than 80% U.S. market share, sell their products in over 90 countries, have about 1,500 employees worldwide, and produce about 100 million toilet repair products annually. They’re still privately held by the family of their founder, Adolf Schoepe, whose invention of a new style of fill valve led him to establish Fluidmaster in 1957. Corinne AndersonSchoepe represents the third generation of the family helping lead the company; her father, Robert AndersonSchoepe, is Chairman and CEO. “We’ve tried to keep the family feel as we’ve grown,” said Corinne AndersonSchoepe. “We have a very good group of people working with us around the world, who love Fluidmaster as much as we do. And we make it a point to give back to the communities we’re in.”
“The values of the family are reflected in the business,” added McFarland.
Toilet repair wasn’t even Mr. Schoepe’s first home hardware invention. He helped pioneer the tubular door lock in 1946, and launched a business whose name reflected the locks’ ease of installation: Kwikset. He wound up selling that company, then moved on to plumbing.
“He found a better way to fill a toilet tank,” McFarland explained. “It uses the force of the water to work for the valve, not against it. He was able to get rid of the ball float.” Over the years since, the company has steadily added more products–in the toilet, around the toilet, and serving other plumbing purposes. They started as a combination of a DIY business, with products sold in hardware stores, and a supply company for plumbers. It wasn’t too long before they became an OEM supplier as well, with partnerships with Kohler, American Standard, and the like. They also expanded production internationally, into the UK, the Netherlands, Slovenia, Turkey, China and Mexico.
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Like all DIY-oriented companies today, Fluidmaster is facing a changing customer base, with high school shop classes disappearing and fewer people working in the trades. “Our big focus for now and the future is understanding the customer’s journey,” McFarland said. “A lot goes into making the consumer experience better. We’ve brought consumers in and watched them use our products. There was a lot of stopping and starting, and we realized a lot of them weren’t reading the instructions. When we developed the new booklet and put that out, we cut the installation time in half. We’ve gotten more consumer focused and have designed that feedback into our products, and that’s been a huge win.”
Corinne AndersonSchoepe Image courtesy Fluidmaster
Another focus is sustainability. “We’re really working to dial in to the right water usage,” said AndersonSchoepe. “Everyone wants to use as little water as we can, but using too little in our applications can cause problems with your pipes. We’re working on optimizing water use.”
Growing the business is also a priority. “We’re busy trying to build our international expansion, mostly in Europe,” AndersonSchoepe said. “We’re stable here in the U.S. India is a big focus too. Our fundamentals, and how our products work, are the same country to country. How we go to market varies. Consumers have far more product choices in England, for example. And while the fill valve there is the same, the flush side is much more complicated. And in Europe, everything is inside the wall.”
“We’re working on making investments to get the lead market position and build our brand in other markets,” added McFarland. “We’re trying to ensure Fluidmaster relevance for the next 60 years.”
One way they’re doing that is looking at more advanced products and other business opportunities. “International will continue to be an opportunity for us, and we’re also looking at the direct to consumer business,” said AndersonSchoepe. “We’re looking at other ways to manage and control water, and at leak detection–smart products might help with that.”
“Smart products could help with the failure to flush right the first time,” added McFarland. “Water-saving toilets might use less water per flush, but then people have to flush them again and again. That’s another place we’re looking at smart solutions.”
“It’s all about being responsible with it,” AndersonSchoepe said. “We want to help the environment while helping people.”
They realize, of course, their business isn’t necessarily a popular topic. “The interesting thing about the products we sell is that the customers don’t want to think about them until they have to,” McFarland said. “That adds complexity to our marketing–how to help a consumer who doesn’t want to even think about it, successfully fix their toilet.”
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4cfcd49bd8bcbfa0fbd85cb1c91f4646 | https://www.forbes.com/sites/jimvinoski/2020/11/25/larry-bell-turned-his-homebrewing-obsession-into-something-really-big/?sh=2e2fb89eb0dd | Larry Bell Turned His Homebrewing Obsession Into Something Really Big | Larry Bell Turned His Homebrewing Obsession Into Something Really Big
Bell's iconic tap handles Image courtesy Bell's Brewery
Bell’s Brewery founder Larry Bell and I have some personal history in common. Way back when it was pretty tough to find any variety in the beers that were widely available here in America, we both decided to make our own. We both wanted to sample the many different styles from across the world–all the ones that the big domestic brewers had long since abandoned in favor of a common white-bread pilsner for the mass market.
But Bell’s passion ran far deeper than mine. I was a homebrewer only until a burgeoning imported beer market and then the craft brewing explosion made true variety accessible. He, on the other hand, was just getting started. In fact, he was one of the pioneers of that very craft beer movement that rendered my homebrewing no longer necessary. (That is an actual fact; my relocation from Memphis, Tennessee, to Cadillac, Michigan, in 1996, where I suddenly had access to Bell’s, Great Lakes, and other marvelous regional brands in various styles, marks the exact time I quit homebrewing for good.)
Founded in 1985, today Bell’s Brewery is one of the most successful of America’s hundreds of craft brewers. They’re the sixth-biggest craft brewer in the country and #16 in the world, and they’re Michigan’s largest independent craft brewery. The family-owned company’s modern brewery and headquarters are in Comstock, Michigan, while their original brewery, pub, restaurant, and entertainment venue are in Kalamazoo. They have a sister brewery, Upper Hand, in Escanaba in Michigan’s Upper Peninsula. Their brewing volume in 2019 was close to half a million barrels (or around 15 million gallons). They distribute to 43 states, Puerto Rico, and DC. But it truly did start with homebrewing.
The Bell's Brewery facility in Comstock, Michigan Image courtesy Bell's Brewery
“I started homebrewing when I was working in a bakery,” said Bell. “I worked with a guy there who invited me over for a homebrew. It foamed over and wasn’t very good. I thought, ‘I’m a better baker than him, so I bet I could do this better too.’ I wound up moving in with three other guys, and we got a kettle and a bad homebrewing book and got started.”
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Eventually, Bell says, his ‘homebrewing was getting out of control.” A couple of chance occurrences–a visit from a local bluegrass band wanting to buy a whole bunch of his beer for one of their road trips and a $200 gift from his mother–convinced him to go commercial. He spent $35 on incorporating and $165 on supplies. His initial capitalization was $39,000, including a $7,000 loan and $32,000 in stock (six shares of which went to a local landlord for space for his first brewery).
Bell knew the market he was up against. “I was aware of Anchor and Sierra Nevada [two successful California craft brewers],” he said. “I also knew about Real Ale Company in Chelsea, Michigan–I watched them fail. I sat in the bankruptcy attorney offices once myself, but never filed.” The early days were hand-to-mouth. “We kept the heat at 50 degrees, except on Fridays when we’d have customers in. Then we’d raise it to 60.” Unable to afford new commercial bottles, which required order quantities of three truckloads paid for in advance, Bell re-used another brewer’s bottles, hand-washing them, removing the old labels, then filling and labeling them by hand.
But slowly things started to turn around. “As the craft beer movement grew, people wanted beer from their own backyard,” said Bell. “As it started to catch on in the Midwest, we’d already been around awhile, so we were well-positioned to take advantage of the market. Around 1991, we turned the corner to be profitable. In 1993, we were able to get legislation passed to allow breweries to sell beer by the glass, and also got a law passed to reduce the tax burden on brewers.” That same year Bell’s became Michigan’s first brewery to open their onsite pub, the Eccentric Cafe.
My personal favorite, Bell's Two Hearted Ale, moves down the bottling line Image courtesy Bell's Brewery
But of course, success never would have come without good beer. “We have an established culture of who are as brewers,” Bell explained. “Customers have bought into that. One thing we’ve done well is that we’re good brand builders. Other brewers do the ‘flavor of the month,’ but we’ve focused on building great beer brands.”
That brand focus will remain the key as Bell’s looks to the future and anticipates more change. “When I started out, the U.S. had about 100 breweries,” Bell pointed out. “Now there are over 8,000. There’s always lots of change, and craft drinkers are promiscuous. That’s why we have our pilot facility and make use of test markets. Now that we’re at a bigger size, we’re a lot more data-driven, and we do lots of focus groups. I think online interaction has a lot of untapped potential, where we can get real-time input into what people think. And it’s a lot cheaper than focus groups.”
As for specific products, Bell was noncommittal. “Right now, seltzer is hot,” he said. “Over the next couple years, that will play out and there will be price wars. There’s not a lot of differentiation. But the better-for-you category will be with us for a while. Anyone below Generation X is more health-conscious about their drinks. And IPAs will continue to rule the craft world–people love their hops.”
In the meantime, he’s happy with where he is. “Macro beer is a volume business,” he said. “There’s not a lot of money per unit, but there are a lot of units. Craft beer brought back margin, and that’s why it’s been successful. Brewing is capital-intensive. It takes a lot of money to get up and running, but once you are you can be around a long time. After all, it’s five o’clock somewhere.”
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235cdab3a9a33277aa8d4180bf251c5b | https://www.forbes.com/sites/jimvinoski/2021/02/16/breakthroughs-in-3d-printed-transplantable-organs-have-3d-systems-expanding-its-investment-in-regenerative-medicine/?sh=5f6b618412bb | Breakthroughs In 3D-Printed Transplantable Organs Have 3D Systems Expanding Its Investment In Regenerative Medicine | Breakthroughs In 3D-Printed Transplantable Organs Have 3D Systems Expanding Its Investment In Regenerative Medicine
Human vasculature model created using the Print to Perfusion process. Image courtesy United Therapeutics
The notion of 3D printing human organs has been around for a while now. Just last year, after seeing one of my previous articles on additive manufacturing (AM), one of my astute readers asked me when organ printing might become a reality. I had to reply that I didn’t know.
I still don’t, but I have a better answer now: probably in the next several years, thanks in part to the progress made by 3D Systems in its collaboration with United Therapeutics Corporation (UT) and Lung Biotechnology PBC, their organ manufacturing subsidiary. 3D Systems announced a few weeks ago that they’re significantly expanding their investments and efforts in regenerative medicine based on new breakthroughs in bioprinting for lung replacement.
3D Systems has been on a tear in the new calendar year, with its stock rising by over 300% after its estimated 4th quarter revenue of $170 to $176 million beat analysts’ $140 million estimate, and on the heels of its announcement in early January of the sale of two software businesses. Now that announcement late last month has added to those tailwinds. UT, meanwhile, has seen its stock price rise as well, though less meteorically. It had already been rising fairly steadily and substantially through last year despite headwinds from Covid-19 causing mixed business results (earnings were down a few percentage points, but adjusted EPS were up slightly). UT’s share price rose about 75% (though admittedly from something of a trough) through all of 2020, and is now up another 6% this year.
One key driver for the decision by 3D Systems to expand their work in non-solid organ and tissue generation is the tremendous progress they’ve made in printing solid-organ scaffolds for lungs. It represents a big breakthrough in work that’s been underway for some time. “We started the program a few years ago with UT,” said Chuck Hull, who invented stereolithography, founded 3D Systems, and now serves as their CTO. “Their CEO, Martine Rothblatt, is a true visionary who was one of the founders of Sirius XM, then founded UT and asked, ‘Can we produce transplantable lungs?’ She looked at that a variety of ways, and proposed a solution to me: ‘Can you build scaffolds that we can perfuse with lung cells and grow complete lungs?’ At the time I said no, we can’t.”
Chuck Hull, CTO of 3D Systems. Image by Shant Kiraz, courtesy of 3D Systems
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But it didn’t end there. “I thought about her question for a year, and went back to Martine and said I think we can do it,” Hull continued. “We put a team together between the two companies. There was a lot to work out. We decided to print the scaffolds with hydrogels, because the body is mostly water—but that meant printing a material that’s gooey and soft. We’re used to printing in hard plastics. Once we got that figured out, then we knew the cells needed someplace to grow. That meant printing in fine detail to allow spaces for cells to live in. But printing smaller, with high resolution, slows things down, so then we needed higher print speeds. Those things have taken the last three years to figure out, and there’s still clinical trials and regulatory work to be done—but on the technology side of the scaffolds themselves, I’d say we could implement that now.”
The success in printing that unique structure is a milestone in a number of ways. “Imagine a very fine, highly detailed sponge-like structure with wall thicknesses a fraction of the diameter of a human hair, but yet strong enough to support cell growth and blood flow needed to sustain life,” said Dr. Jeffrey Graves, President and CEO of 3D Systems. “It allows for the creation of organs using actual human cells, which will reduce the chance the body rejects the transplant. The structure is designed and created to allow vascularization, so there’s plenty of blood flowing to the tissues. That’s what we’ve achieved with UT. What Chuck and the team have accomplished is nothing short of amazing. The potential for positively impacting humanity is remarkable. Outside of solid organs, think about replacement tissue for trauma patients, or tissue to allow for better breast reconstruction for cancer survivors. Having reached this state of the technology, there’s now a whole range of human applications, and we’re looking at developing other partnerships around those, while we continue our work with United Therapeutics on lungs and potentially other solid organs.”
Beyond the direct human applications, Graves sees research possibilities as well. “Another potential application is referred to as ‘tissue on a chip,’” he said. “That would produce better testing devices for drugs and other therapeutic purposes, such as cancer treatments. This could help accelerate that kind of development, and could reduce the need for animal testing as well.”
Dr. Jeff Graves, President and CEO of 3D Systems. Image courtesy 3D Systems
It’s interesting to contemplate that, as an inventor of one of the original 3D printing technologies, Hull helped launch an entire industry a few decades ago. Now his leadership of this bioprinting collaboration is not only accelerating the medical side of the 3D Systems business, but more importantly is also forging a new industrial path for revolutionary healthcare applications of AM.
“I think the takeaway is that we’re well on our way to having implantable tissues,” said Hull. “But that doesn’t happen fast. Long-term, I definitely see a business around this. Short-term, we see steadily increasing revenues.”
“While the technology itself is amazing in its potential benefits to humanity, the business model for 3D Systems is also exciting, and one that is not new to the company,” Graves said. “For years we have developed and produced advanced medical products for the human body using additive manufacturing in a highly disciplined, process-controlled and FDA-regulated environment. With this foundation, if you look at the progress we have now made in all of the essential hardware, software and materials elements of bioprinting, we have the opportunity as a company to address a variety of applications within the human body. That’s why we’re increasing our funding and investment and expanding our partnerships to make these applications a reality. When you see this tremendous scaffold printed, and then you see blood flowing through it that could sustain human life, it’s remarkable, even for someone from an R&D background like me. I am continually amazed at the potential this technology now offers.”
Graves sees the organs and tissues work as a natural extension of what’s already a strong business for 3D Systems. “In terms of the impact on our company, our healthcare business is growing nicely, now approaching half of the company revenue,” he said. “We believe that regenerative medicine will add to this growth, becoming a significant business in its own right in several years. This technology offers tremendous benefits for human life, whether helping people whose lungs or kidneys are failing, or offering remedies for someone who’s experienced facial or other traumas in their body. It’s sad when you think of the tremendous shortage of replacement organs today and that the primary supply originates from the loss of another person’s life. The only way to address these needs is through an alternative source of supply, and hopefully one that offers greater compatibility with the recipient of the new organ or tissue implant. With the progress we are now making, we believe that regenerative medicine, and the underlying bioprinting technology we have now demonstrated, can ultimately be an answer to this problem.”
All that being said, though, I still don’t have the specific answer for the question from the reader of last year’s article I mentioned above. But I do have this:
“I’m guessing some of your readers will be saying, ‘I have such-and-such condition—how soon will this solve it?’ Hull said. “And my answer is, as quick as we can.”
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f41287cc8f7fec11ebd71a460bd7c29c | https://www.forbes.com/sites/jimvinoski/2021/02/25/the-spacex-falcon-9-launch-brought-hawkeye-360-one-step-closer-to-commercializing-rf-monitoring/ | The SpaceX Falcon 9 Launch Brought HawkEye 360 One Step Closer To Commercializing RF Monitoring | The SpaceX Falcon 9 Launch Brought HawkEye 360 One Step Closer To Commercializing RF Monitoring
An artist's rendering of a HawkEye 360 satellite cluster. Image courtesy HawkEye 360
When the SpaceX Falcon 9 rocket launched at the end of last month, it did more than move the world another step forward in the ongoing democratization of space. It also carried something more concrete: a cluster of small satellites that represent a huge leap forward for the ability of HawkEye 360, a space tech startup based in Herndon, Virginia, just outside Washington, D.C., to monitor radio frequency (RF) emissions around the globe.
HawkEye 360 was founded in 2015 with that goal in mind, to revolutionize RF analytics. Its proprietary clusters of small satellites detect RF emissions from about 500 kilometers up, and are able to geolocate the wireless transmitters. They deliver that data to governments and private parties for such uses as defense programs, wildlife protection, and maritime applications. They’ve raised just over $100 million, with their most recent funding coming from a $70 million Series B round in August 2019 backed by Airbus and four other investors.
“We have great investors behind us,” said HawkEye 360’s CEO John Serafini. “We’re trying to create a new business model for the warfighter and the analyst.” The company’s satellites, each about the size of a large microwave with wings, have already been able to monitor Chinese military buildups at their border with India, and potential illegal fishing and poaching activities in Congo and around the Galapagos Islands.
“We had three satellites in our first cluster,” said Rob Rainhart, COO of HawkEye 360. “That was our proof of concept, and it’s been operational for about two years. We launched three more satellites with SpaceX in January, our second cluster.”
It was a doubling of the number of satellites, but it meant much more for their technical capabilities. “We’re really excited about the launch—it’s a huge deal,” said Serafini. “It provides ten times the collection capability of the first cluster. It takes us beyond proof of concept into meaningful commercial operations.”
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The three satellites of Hawkeye 360's cluster two prepped and ready for launch. Image courtesy HawkEye 360
They’ll soon have even more. “By mid-year, we’ll launch clusters three and four,” added Serafini. “They’ll give us thirty times the collection capacity.”
And they won’t stop there. “We’ll have six to ten clusters of three satellites each eventually,” said Rainhart. “They’re all already funded and under construction. We plan to launch cluster five at the end of 2021, and cluster six at the beginning of 2022.”
The added satellites will obviously increase the company’s capabilities through sheer numbers. But they’ll also help continue the development of the technology. “With each cluster, we expand our capability,” explained Adam Bennett, HawkEye 360’s Product Marketing Director. “The core design remains the same, but we have a very iterative process of improvement. We have to have some diversity of approach so we can go after different verticals and different markets.”
“I think the technology for small satellites will continue to evolve,” said Rainhart. “The parts and pieces are there, and we just have to tailor them to our own uses.”
In addition to the markets in which they’ve already demonstrated their capabilities, the company sees some other big opportunities. “One commercial application is in detecting RF interference, particularly interference with GPS systems,” said Serafini. “We’re moving in that direction quickly.”
A New Layer of RF Knowledge - YouTube
“There are possible supply chain applications too,” Rainhart added. “The difference in attention there pre-pandemic versus post-pandemic is huge. We could use RF tracking to monitor at-risk shipping vessels. We’ve seen lots of things in our data along those lines.”
Crisis response applications are another area the company sees as an opportunity. Those could include everything from helping search and rescue teams locate emergency beacons to assisting governments with disaster response by locating still-functioning communication infrastructure to help support efforts on the ground.
They see the ongoing rapid advances in technology continuing to be a benefit. “Automation in space and on the ground have made flying our constellation a lot easier,” Rainhart said. “There’s been a ton of investment—in AI and Cloud computing, for example—that enables us to do what we do. And SpaceX has given us competitive price points to get into space. You really can launch a sizable constellation affordably.”
Serafini agreed. “The technology is there,” he said. “Now it has to be matched by business processes. That’s where we really shine—in geolocation and the analysis of that data. The collection capacity is one end of the dumbbell. Visualization of the data and having it tailor-made for the customer application is the other.”
“We’re a great example of where things are headed,” said Bennett. “Twenty years ago this was all very much in dream status. It’s exciting to see it coming into being.”
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943c89866d16ca3e6e53b805647538c7 | https://www.forbes.com/sites/jimvinoski/2021/02/26/autodesk-industrial-digital-tools-help-laika-make-their-stop-motion-magic-happen/?sh=7bcc05db13ed | Autodesk Industrial Digital Tools Help LAIKA Make Their Stop-Motion Magic Happen | Autodesk Industrial Digital Tools Help LAIKA Make Their Stop-Motion Magic Happen
A typical LAIKA movie set. Image courtesy LAIKA Studios
Lately I’ve been exploring the world of Autodesk, whose self-description is that they “make software for people who make things.” They’ve been on a roll lately. Just this week they had two big announcements: that they’re acquiring Innovyze, Inc., a provider of water infrastructure software, for $1 billion; and that they beat earnings expectations for their fiscal fourth quarter, delivering adjusted earnings of $1.18 per share for the period, versus analysts’ expectations of $1.07. Their revenue for the quarter, at $1.04 billion, was up 15.6% over the same period last year.
I knew from personal experience that many of their customers are manufacturers. My own career dates back to the earliest days of their flagship product, AutoCAD, which I used for project design in the chemical industry. I was also aware of their involvement in construction and product development, thanks to a couple of earlier articles I wrote about them. But when I saw on their website that their work includes design applications involving 3D printing for LAIKA Studios, the modern-day masters of stop-motion animation and makers of such fan favorites as Coraline and ParaNorman, I knew I had to learn more.
Because how cool is it that a Hollywood movie studio whose specialty is the most amazing animation you’ve ever seen is using industrial tools to make its art happen? Well, so cool that my son John (who turned 16 today; Happy Birthday, John!), upon hearing I’d chatted with the folks at LAIKA, looked up from his phone and said, “I just texted that to my friend Robert. He said he wants your autograph—and he’s only half kidding.” That’s pretty cool right there. For teenagers like my two sons, LAIKA has always been part of their entertainment experience, and it’s made a big impact.
Like most studios, though, they’re facing the challenge of an increasingly competitive marketplace, and of course the pandemic impact on the movie theater business has only added to the difficulties. As they ramp up their efforts on their next stop-motion offering, they’ve got to be more on their game than ever before. But it turns out that Autodesk’s tools play a substantial part in both their everyday work and their constant efforts to get better at what they do, while helping them stay true to their stop-motion passion.
For the uninitiated, the genre that LAIKA specializes in is an amazing challenge. “Stop-motion animation is incredibly labor-intensive and time-consuming,” said Ben Fischler, Industry Strategy Manager at Autodesk. “They shoot on a stage with miniature puppets and sets, and it’s—take a picture, move things, take another picture, and so on. The animation plays back at 24 frames per second, and you get mere seconds of completed animation per week from the animators. But that’s part of LAIKA’s core values and culture. They’re a stop-motion studio, and they take it to a whole new level by combining technology and artistry.” Because of all that, their films take incredible amounts of time and talent. Their first film, 2009’s Coraline, for example, involved 500 people and took four years to make.
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A small sampling of LAIKA's 3D-printed assets. Image courtesy LAIKA Studios
“A lot of what we’re doing is realizing the full potential of stop-motion animation, and telling stories nobody else can,” said Steve Emerson, VFX Supervisor at LAIKA. “People want to go to the movies and be moved. That takes creating empathy, and since the characters’ faces are their main focus, our use of 3D printing becomes so important.”
Because of that need to create “living” and likeable characters, they’ve used 3D printing for puppet faces in all their movies. Using Autodesk’s 3D computer animation, modeling, simulation and rendering software Maya, they design thousands of different facial expressions and print them. “For Coraline, with the Stratasys polyjet printers we had back then, we could only print in one color, so the faces were all painted by hand,” said Jeff Stringer, Head of Production Technology at LAIKA. Rapid technology advances have made a big difference since then. “For Missing Link [LAIKA’s Golden Globe-winning film from 2019], we used Stratasys J750 color printers. We had eight printers running 24 hours a day making 2,000 faces a week. In the end we printed 106,000 bespoke faces.”
LAIKA digital character design work. Image courtesy LAIKA Studios
Maya is also used for digital visual effects, so it’s critical for all elements of production. “When you’re making an animated film, there are thousands of problems that will happen,” Emerson said. “Maya has been around since 1998, so we can count on it, and there’s tons of talent out there who know how to use it.”
Moving the puppets relies on another Autodesk tool, Inventor, which is used for 3D mechanical design. “LAIKA uses Inventor to design the armatures that allow the animators to pose the puppets,” Stringer explained. “All the armatures are made in-house in our machine shop. We have Haas and a Mazak CNC machines, as well as a laser cutter and a water-jet cutter.”
The construction of the armatures is critical. “You have to have super-tight tolerances, because any slop in the movement will show up onscreen,” said Fischler. Inventor enables the designers to evaluate what’s needed for a given puppet, and whether modular components (balls, sockets, joints, and the like) from LAIKA’s standard catalog will suffice, or whether custom elements will need to be designed and fabricated.
Perhaps the most important Autodesk tool for LAIKA, though, is Shotgun, their project management software. “Our films are constantly increasing in the scope of story-telling,” Emerson said. “That means budgets are always a challenge, so we attack time.”
Stringer agreed. “Our films have so much complexity I’d never seen before,” he said. “But we don’t want to have to work fast—we want to take our time with each step, and deliver everything as it’s needed just in time to the stage.”
Planning work being done in Autodesk's Shotgun. Image courtesy LAIKA Studios
“Shotgun gives everyone—the producer, the production managers, the production coordinators—a master control view of blending the digital and physical processes,” added Fischler. “It’s become a fundamental part of how they do things.”
A particularly helpful element of Shotgun for LAIKA is its generative scheduling feature. “It’s AI for scheduling,” Fischler explained. “They input all their parameters for production, and it gives the best five or six options in terms of schedule and budget.”
“It’s about finding a solution in a really complex space,” added Mike Haley, VP of Research at Autodesk. “Humans can consider two, three, maybe four variables. When we get to five our heads start to spin. Generative scheduling can run through hundreds of thousands of those variables. It enables more than humans are capable of.”
Scheduling with Shotgun. Image courtesy LAIKA Studios
“Their work has lots of moving parts—literally! If we can solve for LAIKA’s schedule, we can solve for anything,” Fischler added.
As LAIKA forges ahead with the ongoing work on its next magical stop-motion cinematic offering, a central part of their efforts will be further leveraging those digital tools that have delivered so well for them on their previous films. “We couldn’t do what we do without the expertise of companies like Autodesk,” Emerson said. “They know LAIKA’s DNA. There’s a sense of the impossible at the start of these films. It comes down to experience to pull it off, and they’ve been around since the Coraline days.”
“Creativity is what we’re about,” offered Haley. “It comes down to creativity and convergence: combining the digital and the physical. We can use information from the physical world, feed it back to the model, and have the digital then improve the physical. We bring together the best of everything. Kudos to LAIKA for seeing that.”
It was fascinating to me that tools so routinely used in my manufacturing world could apply so well in the moviemaking environment. “It’s been a journey for our group,” explained Stringer. “Steve and I both come from animation and digital effect backgrounds. We deal with a lot of the same kinds of problems as manufacturers. In the end, we have to make a product that satisfies our customers too. Autodesk is unique among our partners. We wind up helping each other a great deal.”
Let’s hope, then, that LAIKA is able to wring ever greater value out of their suite of Autodesk’s amazing industrial applications, and that they’re able to keep on making their simply astonishing—and yes, very cool—art for a long time to come.
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da000eb92f241b580d3ab8353df81bf3 | https://www.forbes.com/sites/jimvinoski/2021/03/22/one-of-americas-best-manufacturers-is-this-japanese-zipper-maker/?sh=2d28d9a4fa2c | One Of America’s Best Manufacturers Is This Japanese Zipper Maker | One Of America’s Best Manufacturers Is This Japanese Zipper Maker
You most likely know YKK through their most prominent product, zippers like these. Image courtesy YKK
A strong piece of evidence in support of the many current calls to reshore American manufacturing is the tremendous performance by the many thousands of existing producers already working here.
I already knew one such standout U.S. manufacturer: Carhartt, the maker of working apparel, which I wrote about recently. As a result of that article, I learned about another: YKK, maker of zippers, other fasteners, and much more. (Who invented the zipper? Learn more here.) I found out that Carhartt became a major customer of theirs all the way back in 1974. That year Carhartt bought a million YKK zippers; today they buy about 40 million per year globally. I remember seeing the “YKK” stamp on the zipper pull of my blue jeans back when I was a kid, and it’s right there on the Wranglers I’m wearing today. Clearly they’re an American mainstay.
YKK founder Tadao Yoshida and President Jimmy Carter, who became lifelong friends. Image courtesy YKK
But they’re Japanese-owned. Founded in 1934, YKK Corporation is headquartered in Tokyo, has 46,000 employees in more than 70 countries, and has annual revenue of over $7 billion. In addition to fasteners, the company manufactures architectural products and industrial machinery, and provides engineering and technical services. They’re one of the world’s leading zipper manufacturers, making enough every year to circle the earth 80 times.
They first came to America in 1960, establishing a sales office in the garment district in New York City. YKK founder Tadao Yoshida was a big believer in vertical integration, and his goal was to build a U.S. organization following that model. With the garment industry at that time centered in the southeastern states, he crossed paths with then-Governor Jimmy Carter of Georgia, and they became lifelong friends. In 1974, YKK acquired 54 acres in Macon, Georgia, and built a factory there. That began YKK’s commitment to American manufacturing, which would eventually grow to over 700 acres across the country as the company’s U.S. business grew solidly over most of the next two decades. But that commitment would eventually be seriously challenged when most American textiles manufacturing was sent overseas in the 1990s.
The signing of the land contract for YKK's Macon, Georgia, plant in Kurobe, Japan, in 1974. Image courtesy YKK
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“Our culture is to focus on the long-term success of our customers and employees,” said Jim Reed, President, YKK Corporation of America. “That’s part of YKK’s philosophy of the ‘Cycle of Goodness’— no one prospers without rendering benefit to others. That came from our founder, who declared that the company is more than a profit-making machine.” He was decades ahead of his time with that now-popular notion, but that didn’t make it easy to survive the huge downturn of the U.S. apparel business at the end of the 20th century.
But YKK’s commitment to America was real. The company not only survived, but prospered, through diversification. They began selling their fasteners into new markets such as automotive, safety, medical, hygiene and even military and space applications. That’s also when they expanded their U.S. business in architectural products such as doors, windows and curtain walls.
YKK's manufacturing facility in Macon, Georgia. Image courtesy YKK
“It was a stark shift in perspective when apparel went overseas,” Reed said. But the company’s prior focus on making the highest-quality fasteners paid off. “Automotive is very demanding. Their high standards for quality and performance fit our business well.”
In addition to pursuing other customers for its fasteners, the company also expanded its unique niche in machine production and engineering services to support all the new industries into which it was starting to ship products. “We provide machines that help our customers attach or dispense our products into theirs,” Reed explained. “We had our engineers begin talking to customers’ engineers about where they had problems. They could see where our technology might apply and help them solve those problems with our machinery or with unique fastener solutions.”
That focus on customers has paid off. “It’s really good to work with YKK,” said Amirtharajan Krishnasamy, Senior Product Development Engineering Manager at AccuMED Corporation, maker of such medical devices as PPE, test equipment, sensors and monitors. “They help us with the engineering and technical aspects of our products—issues in our production or issues from our customers. They customize products for us if needed. They’re a very strong partner, providing us solutions and support through the life of our products.”
Bill Cohoon, Engineering Manager at Truck Hero/Truxedo, producer of truck accessories, agreed. “They provide hook and loop closures for our soft roll-up covers,” he said. “They’ve been fantastic to work with. They first approached us with testing they’d already done to show us the benefits of their products. And they’ve been very receptive to doing further R&D work as well.”
Jim Reed, President, YKK Corporation of America. Image courtesy YKK
Through all the ups and downs, YKK has kept its focus on its Cycle of Goodness philosophy, particularly with respect to its own workforce and communities. “Every company is just an organization of people,” said Reed. “That’s all you are. YKK has been the beneficiary of the strength and resiliency of our employees.”
That philosophy extends to other business partners and the environment as well. “You can see that in how we treat our suppliers,” Reed explained. “You don’t beat your suppliers up, or else they can’t help make you better. We engage ours in our core values, so they help us work toward the Cycle of Goodness. You see it in our approach to the environment. For our founder wealth wasn’t in the bank—it was in everyone’s ability to enjoy the forests and streams. So we’re constantly focused on reducing our chemical, water and energy use, on recycling, on reducing or eliminating harmful processes, and on making our products recyclable or compostable.”
Reed sees a strong future ahead. “Frankly, there’s no downside right now, but lots of upside,” he said. “Apparel manufacturing may not return, but there’s still a role for America to play. Medical, for example, is a really exciting area. We’re already involved in it, but there are thousands of other potential applications for us there. U.S. manufacturing is on the cusp of a major revolution. It’s just beginning, but we’re in it for the long haul. YKK is diving right into it headlong.”
YKK® sustainable zipper: NATULON® (Mechanically Recycled) - YouTube
YKK NATULON® Ocean Sourced™ collection of zippers - YouTube
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e1f5c4515bf301eb3d57ee3e1756b248 | https://www.forbes.com/sites/jimwang/2020/01/07/think-the-stock-market-is-expensive-here-are-14-alternative-investment-ideas/?sh=6ff4305f1f6f | Think The Stock Market Is Expensive? Here Are 14 ‘Alternative’ Investment Ideas | Think The Stock Market Is Expensive? Here Are 14 ‘Alternative’ Investment Ideas
For most investors, it's best to put your money in a simple three-fund portfolio and move on with your day.
But if you have the discipline and the time to do extensive research and due diligence, there are other opportunities out there worth considering.
After yet another year in a historic bull run, you might be feeling that the stock market is relatively expensive.
Now's the time to do a little research into what else might be available. Should you seriously consider investing in assets besides stocks and bonds? Perhaps there are investments that can generate some passive income that'll buoy concerns of a market fall.
I want to give an overview of a few of the other investment options most people will have access to.
One big caveat… experts were saying the stock market was expensive at the start of 2019. Then it had another historic year. 2020 may very well be another monster year. I'm not suggesting that you skip the stock market and pick one of these. I am suggesting you become aware of these options to see how they might fit with your overall strategy.
CLARKSBURG, MD-DECEMBER 18: The Manchester Model Home at Cabin Branch on December 11, 2019 in ... [+] Clarksburg Maryland. (Photo by Benjamin C Tankersley/For The Washington Post via Getty Images) The Washington Post via Getty Images
Rental Properties
Long-time investors may cringe hearing the phrase real estate investing.
Despite the 2008 Great Recession asset meltdown, real estate can be one of the best tangible assets you can own.
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Most investors start by owning a single-family rental property or a duplex. You may offer a long-term rental where tenants sign a minimum 6-month lease. If you live in a touristy area, a vacation rental can be more lucrative. Before purchasing a short-term rental, check the local zoning laws and neighborhood bylaws to make Airbnb-type properties are permissible.
You can hire a property manager to handle the day-to-day responsibilities of being a landlord. This alternative asset arguably requires the most ongoing effort.
Crowdfunded Real Estate
Owning rental property isn't for everybody. Thankfully, it's not the only way to invest in private real estate. Crowdfund real estate investing is similar to a local real estate investing club but can require less time and cash.
Crowdfunding can also be an easy way to directly invest local real estate markets across the country if you want to expand beyond your local market. While you may feel comfortable buying local properties, you may only want to invest small amounts of money for properties in other markets you're unfamiliar with.
Online crowdfunded platforms let you directly invest in commercial properties and multifamily apartments. These properties have multiple tenants meaning you're more like to earn passive income.
You can invest in equity financing deals that earn income from price appreciation when the property sells. Debt investments earn monthly income from rent and interest payments.
Accredited investors have the ability to hand-pick projects. Non-accredited investors will need to invest their cash in a non-traded REIT (real estate investment trust that hold a variety of properties. You may also appreciate these REITs for the instant diversification.
Farmland
Commercial real estate investing, including crowdfunded, isn't appealing to some investors wanting to avoid tenant-occupied properties. A less common property type is farmland.
Farmland investing can be a unique alternative to investing in commodities. You can invest in fields that produce these cash crops:
· Almonds
· Corn
· Rice
· Sorghum
· Soybeans
Another step to diversify your portfolio is holding property in multiple states and geographic regions. Like all alternative investments, cyclical demand and weather patterns can affect your potential farmland investment income.
A secondary income stream for farmland can come from alternative energy or cell phone towers. If you can find a parcel, you have more upside potential.
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Gold
Investing in gold sometimes gets a negative perception. Precious metals including gold can be a good hedge when investors are uncertain about dollar-based assets. While physical gold doesn't earn a dividend, it has been a millennia-long vehicle to store value.
Rare coins or physical 0.999 fine gold bars can be your best way to hold physical gold.
Jewelry probably won't be a good investment as brands and styles change. Although you may consider buying pieces when the purchase price costs less than the melt value.
Silver
Another precious metal to consider is silver. The price per ounce is less than gold, which makes it easier to own if you have a tight budget. Also, silver's price doesn't move in direct correlation with gold. Gold's price typically increases first but silver still has room to run.
Silver coins and bars are the best way to hold this metal and enjoy stable market values. U.S. coins with a mint year of 1964 or earlier contain mostly silver. These coins can be worth more than the face value of the coin. For example, the same 1964 quarter may only be worth 25 cents to a store cashier but as much as $6 to a coin collector.
Cryptocurrency
If you're comfortable with holding digital assets, cryptocurrency is one of the newest stock market alternatives. Bitcoin is the most well-known crypto coin. You may decide to buy a position to start crypto investing.
After that, you might branch into the lesser-known coins. Accredited investors have exclusive access to security token offerings (STOs) that are similar to private placements. These coins let you invest in a specific business which is a narrower yet more focused investment approach.
Cryptos can be one of the most volatile alternative asset classes. Although they can also be highly liquid like stocks and can be an interesting short-term move.
Peer-to-Peer Loans
Years of low-interest rates have made bonds and other fixed-income assets less attractive. If you have a higher appetite for risk, you can invest in peer-to-peer loans. You lend directly to the borrower with these loans and can earn more interest income.
Banks usually keep the first portion of the interest payment and give you a reduced portion. For example, a 36-month bank CD may have a 2.00% annual yield. But a peer-to-peer loan may yield between 5% and 7% with a 36-month repayment term.
You earn monthly interest payments each time the borrower makes a payment. Although you can lose the remaining loan principal if the borrower defaults.
Small Business Loans
Do you want an alternative to investment-grade business bonds? You can also invest in small business loans. You can expect to earn a fixed 5% annual yield. These loans are asset-backed to limit your downside risk.
Tulip Fields in Holland (with a windmill). Painting by Claude Monet (1840-1926), oil on canvas ... [+] (65x81 cm), 1886. Musee d'Orsay, Paris, France (Photo by Leemage/Corbis via Getty Images) Corbis via Getty Images
Art
Owning fine art is another unique way to invest in something besides stocks and bonds. You may focus first on investing in objects from blue-chip artists like Picasso and Monet. Investments from these artists tend to have more stable values.
If you're more aggressive, you may the Post-War or Contemporary periods if you can find undervalued objects. However, these works tend to drop in value
Before investing, research past auction prices for that particular object or artist. Also, look for a certificate of authenticity and other items of proof to avoid counterfeits.
Fine Wine
A fun hobby you can turn into an investment is collecting fine wine. You may already have a competitive advantage if you're an oenophile. Knowing which vintages are better than others is a good start. Expanding into different winemakers, vineyards, and regions are some ideas.
For each bottle you collect, your storage method and history of ownership (provenance) are two important factors for increasing resale value. Buying an entire case instead of a single bottle also adds a layer of authenticity.
Antique Cars
Collectible vehicles can be another financial sweet spot. A Ford Pinto probably isn't a wise investment but a 1964 Chevy Impala Super Sport can be a different story. Like your current vehicle, maintenance costs and insurance premiums will be recurring investment costs.
Collectibles
Collectibles and antiques can also be a good opportunity if you know what's valuable. For instance, baseball cards and comic books from the 1950s have a collectible value. Yet similar items from the 1980s may only be worth the paper they are printed on due to overproduction.
As most alternative assets require a multi-year holding period to appreciate in value, certain collectibles can produce quick income.
Flipping collectibles for a certain craze can be lucrative. A classic example is Beanie Babies. More recent trends can include Pokémon or sneakers. Like swing trading stocks, you need to be aware when the trend is changing so you can sell and collect profits.
Your Own Business
Some investors say that investing in your own business can be the best investment. If you're an entrepreneur, you may start a local or online brand. Maybe your community needs a self-storage lot, laundromat, or car wash.
This idea can require a large amount of upfront cash and time. Although you can earn lifelong income as your business provides value to others.
Angel Investing
If you don't have the time or vision to launch your own business, angel investing gives you exposure to new businesses. This can be a risky investing idea as you try predicting the next Microsoft, Airbnb, Spotify, or Facebook. But some of your seed money can eventually turn into a giant fortune.
Startup investing might be of interest to you if you currently invest in IPOs or private placements. If not, consider starting small and only investing money you are comfortable losing.
These are just a handful of the potential alternative investments available to you. Do a little digging and you might find something that piques your interest!
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432a99d5dd89ce8cb7d6b0382c381bc0 | https://www.forbes.com/sites/jimwang/2020/03/06/6-reasons-why-market-timing-is-for-suckers/?sh=b51583449d8e | 6 Reasons Why Market Timing Is For Suckers | 6 Reasons Why Market Timing Is For Suckers
Every so often, the stock market goes wild. Volatility goes up, people start freaking out, and there’s talk of market timing.
When you have a bull market, as we’ve enjoyed for a very long time, it’s easy to listen to the folks who say you should buy-and-hold for the long term.
When the market starts fluctuating, it becomes much harder to toe the line.
With recent volatility, people have once again started talking about how they're buying or selling more stock. Or they're moving into bonds.
It’s all various forms of market timing. Trying to get out while it’s still relatively high and re-enter when it’s lower.
And we always think we can do this successfully.
The reality is most of us can’t. We have no edge or advantage.
It’s no different than seeing a string of red numbers on a roulette wheel’s history and thinking it’s time to bet black.
If you want to time the market, what's your edge?
The crazy thing is that the traditional retail investor has no edge during these times of volatility.
High-frequency traders have an edge - they're faster than you. Way faster. It's a clear advantage that they exploit on a daily basis and they know it.
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Speed is just one reason but there are a lot more. I hope I can convince you that market timing is a terrible idea.
The pros have access to data and tools you don't. And they're faster. Getty
You Don’t Have an Edge Against the Pros
The biggest reason is that you have no advantage.
Thanks to supercomputers and complex data algorithms, investing has never been easier for retail investors. As a result, it’s harder to find hidden opportunities unless you can quickly process complex data reports.
In the past, you could find legit investing ideas by reading the Wall Street Journal and trade the headlines with a slight competitive advantage.
To get ahead in 2020, you need to trade shares before the computers price a the potential of a future event (like COVID-19 or consumer sentiment) into their trading algorithms. Consistently finding anomalies is more challenging than you think.
You’ll definitely need a “Bloomberg Terminal,” which offers access to real-time market data, and a knack for technical analysis to even consider competing with the pros. Being able to spot “golden crosses” and “death crosses” on a chart is a start, but even then the computer algorithms will execute trades in nanoseconds.
Institutional traders use algorithms that automatically execute trades when stocks match certain factors. A human isn’t physically clicking a button for each trade.
Another new factor is index fund investing. Fund managers rebalance the fund portfolios daily to maintain the proper market capitalization for each stock in the benchmark index. Even though index funds match the broad market performance, the trade volume from rebalancing affects active traders.
Platform trading speeds also play an essential factor if you’re day trading or swing trading. You may need to use a platform with advanced routing options to get the quickest execution speeds. Oh, and you will pay a flat trade commission plus a tiny amount for each share too, which eats into profits.
You Need to Be Right (A Lot)
Investing is an excellent way to build wealth—if you buy the right investments.
If your timing is right, you can earn a fortune and look like an investing genius. But if you’re wrong, you can lose more than if you stuck with a plain-vanilla index fund.
Your time in the market can be more valuable than timing the market to buy individual stocks or sector ETFs. These assets are more volatile and can have a bumpier road to earning long-term gains.
Timing your trades makes you an active investor seeking to outperform the broad market. You have to predict who the winning companies or sectors are going to be each year. You must choose the right stocks at the right price and at the right time.
The Dogs of the Dow is one of the most popular investing strategies where you buy the ten stocks with the highest dividend yield in the Dow Jones Industrial Average (DJIA). While this strategy has outperformed the DJIA in most years, it lagged the broad index by 6% in 2019.
Choosing winning stocks each year is challenging. Look at the initial expert predictions for stocks, sport championship games and toss-up political elections to see how accurate most “experts” are. A 2019 Vanguard study indicates that only 35% of active fund managers beat their market benchmark.
It’s hard to determine if that hot stock tip you want to buy is causing you to invest in a financial bubble where the easy gains have already been made or purchasing a cheap stock that’s a “value trap” and may never reach a new all-time high during your investing career.
When the inevitable market selloff or bad earnings report arrives, you will also feel pressured to sell early. Premature selling is likely if you’re timing a short-term setup. You may need to follow tight stop losses requiring you to sell before all the chips fall in place, resulting in a loss.
If you have a regular day job, you can't expect to compete with full-time traders. Or their computer ... [+] algorithms! Getty
You Need to Be a Full-Time Investor
Most of us have a full-time job not related to stock investing. If you’re a hobby investor, that means you need to find free time to research potential trades.
Do you have enough extra time and energy after juggling life’s other demands?
Successful investors understand how the company makes money, their current balance sheet, and any potential risks to properly value a stock. This research can take hours as you read earnings call transcripts, EDGAR company filings and financial statements.
The hard work doesn’t stop once your buy order executes. You should review your positions at least once per month and potentially weekly. You must monitor share price movements and read any updated forms.
If shorting individual stocks or buying leveraged ETFs is your version of timing the market, you’ll want to check your portfolio daily.
Think you’ll do that?
Professional traders live and breathe stock market performance and company headlines to make educated investing decisions. If you’re expecting full-time results with part-time effort, you’re dreaming.
Market Timing is Stressful
Watching the hourly market movements or always having CNBC blaring in the background can be a massive emotional roller coaster.
It’s easy to second-guess your better judgment if you let the headlines, analyst ratings, and fluctuating share prices affect your emotions.
On good market days, you might buy because of FOMO (the fear of missing out). It can be even easier to panic sell on bad days to capture gains if this selloff is the start of a “black swan event.”
Once you sell, your original investment no longer has an opportunity to rebound. Most markets generally make money in the long-term despite short-term paper losses and that can challenge your risk tolerance.
What do you do when your brokerage platform is down during busy trading sessions? Timing the market may require a 24/7 uptime. Brokerage outages in critical trading periods can result in significant losses when you need to sell or lost income if you want to buy.
Market timing can be exciting if you're right and excruciating if you're wrong. Getty
The Future is Unpredictable
Market gyrations may also cause you to sit on the sidelines and not invest at all. As you see an index or stock reaching new highs, you may not buy shares because you think the market is too expensive. During a correction, you might wait for the stock to log lower lows instead.
For example, you might be waiting to buy an individual stock after an earnings report to see how the market reacts. If you haven’t done your due diligence or have a short-term investment horizon, it’s hard to decide if the market is overreacting or if the share price is fairly valued.
It’s only months or years later that we can see what the market peaks and troughs are for a particular cycle. You can’t recover these lost potential earnings if your cash sits idle because of fear.
A Merrill Edge study compared the hypothetical returns of investing $1,000 into an S&P 500 index fund from 2009 until 2018 for the entire decade and missing the best 10 months and 20 months. Below is how much the original $1,000 study would be worth:
Invested the entire period: $3,530 Missing the 10 best-performing months: $1,580 Missing the 20 best-performing months: $958
The next decade may have different long-term results than this Merrill Edge study. However, we know that some months will be better than others. Guessing what the good months will be ahead of time is near impossible even if you have the smartest algorithms and latest research.
Go to Vegas if You Want to Gamble
It’s easy to confuse market timing with speculation. Investing in the latest trends, IPOs, or poorly-researched stocks means you have less than 50-50 odds of earning a profit.
If you’re looking for some instant gratification, your odds of making money can be higher at the Blackjack table—or your favorite casino game. Counting cards can require less skill than poring over analyst reports. And, you also have fewer competitors at the table vying for the jackpot.
Even if you don’t bring home the jackpot, you can have more fun in the process.
If you're going to gamble, you might as well get some free drinks! Getty
One Last Question...
If I still haven’t convinced you of why market timing is bad, I have a quesiton.
Do you know what Level 2 data is? Level 2 is a subscription you can get from the NASDAQ that gives you market-level data. Sometimes brokerages will offer this to their customers but it's not common because it’s very expensive.
With market-level data for a stock, you can get all the available prices that are being posted by buyers and sellers (more accurately, by market makers and electronic communication networks). It gives you a sense of the scope and depth of the supply and demand around a stock.
If this was the first time you've ever heard of Level 2 market data, that's a sign you should not be market timing.
You are swimming in shark infested water and your life vest is a cow.
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fe5debc57f4b013013237b42b1b85145 | https://www.forbes.com/sites/jimwang/2020/03/14/how-to-simplify-your-money-during-the-coronavirus-crisis/?sh=7c9ff5e1578a | How To Simplify Your Money During The Coronavirus Crisis | How To Simplify Your Money During The Coronavirus Crisis
You may remember doing various emergency drills as a child for tornadoes, earthquakes, and fire. Many of us know how to prepare for seasonally extreme weather like blizzards by having extra food, water, and household supplies on hand.
But are you ready for life if you can’t leave home for several weeks—like in Italy and parts of Asia?
Many of us do not know how to adequately prepare for how novel coronavirus is going to affect our daily habits. Entire nations are undergoing total lockdown to limit the viral spread. It may only be a matter of time before we need to take similar steps.
“Social distancing” and “flattening the curve” are impacting our daily habits and canceling spring travel plans may just be the beginning.
When it comes to your money, there are steps you can take today to make your life a little bit easier, especially if you need to stay home for an extended period of time.
Automating your finances can save you time and money! Getty
Automate Your Finances
Automating your monthly banking activities is a good move under normal circumstances. It is an easy way to simplify your life. Reducing your public exposure can minimize your risk of getting sick too. Instead of running non-essential errands, you can do all of your monthly banking from home.
Enrolling in automatic payments prevents the chance of missing bill dates and paying late fees. Some merchants and utilities even give you a small payment discount—saving you both money and time.
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Also consider using online bill pay instead of paying your bill in-person or with a check. If there’s a self-service payment kiosk, can you guarantee it’s clean?
These are some of the bills you should auto-pay to avoid the bank or payment kiosk:
Utilities (i.e., electric, water, and gas) Cell phone Cable TV and internet Charitable donations Insurance Home mortgage or rent Credit card statements Recurring monthly subscriptions (i.e., gym membership, streaming apps) Sinking funds
You will still need to monitor your transactions on a weekly or monthly basis. Make sure your payment amounts don’t increase without notice.
Keep Investing for Retirement
Pandemics and other unexpected events make it easy to only focus on the near-term and panic about the long-term.
Auto-investing into your 401(k) or retirement plan with each paycheck encourages you to remember the long-term.
Stock market volatility is gut-wrenching—even if you’ve been through a previous recession. Seeing massive drops and jumps tests even the calmest investor.
But if you stop investing out of fear, it can be difficult to start again. It can be even harder to stay invested during the next period market volatility.
Cutting unnecessary subscriptions can save you valuable dollars during a crisis. Getty
Cancel Unnecessary Subscriptions
Your family may have more time to use digital video and music streaming apps during a self-quarantine. Reviewing your monthly spending is a prime opportunity to cancel unnecessary subscriptions.
This low-hanging fruit is an easy way to save money. As a quarantine is affecting many paychecks (not everyone can work from home), temporarily cutting expenses can be an act of necessity to pay your bills.
If you’re on unpaid leave with your regular job until business returns to normal, you can search for a temporary gig with minimal public exposure. These extra funds can spare you from dipping into your emergency fund.
Use Digital Payment Apps
Now that public payphones are no longer commonplace, paper money is one of the dirtiest items you can touch. Even if you keep the recommended six feet of separation between strangers in public, you can pass germs along by paying with cash.
Writing a paper check can be more sanitary, but you’re still making a physical payment. Not every business accepts check payments forcing you to pay with cash, plastic, or your phone.
You can always pay with a credit card or debit card instead of cash or check as well.
Digital wallet apps like Venmo, PayPal, Cash App, or Apple Pay permit a germ-free transaction. Some stores let you pay with digital wallets. Third-party apps and most bank mobile apps let you send money to friends for free.
Banking apps also have a nifty feature to remote deposit paper checks. If your employer doesn’t offer direct deposit, download the bank app. It takes about a minute to take a picture of the front and bank of your check using a smartphone.
Using delivery apps can limit your interactions with a large number of people. Getty
Use Home Delivery Apps
Businesses like grocery stores, supercenters, and pharmacies will remain open to provide constant supplies. In the Italian lockdown, a limited number of people can enter the store to maintain social distancing.
You might be able to avoid the long waiting lines and risking your health by using home delivery apps. Grocers and pharmacies provide home delivery in many cities. As long as delivery service is available, it’s an option to consider. Plus, it helps a fellow community member earn income during these uncertain times.
Remember that some delivery services charge a service fee for the convenience. CVS Pharmacy is waiving the fee on home deliveries. Consider this option if you have an at-risk immune system and avoid public exposure under normal circumstances.
Order Items Online for Home Delivery
Similar to home delivery apps, online stores can be your best friend for buying essentials. As long as the postal service runs and FedEx or UPS continue operations, you can get items sent to your front door.
As many other people are placing online orders, these platforms may have trouble keeping items in stock. Once again, you’re avoiding the general public and saving a trip to the store.
Use Telehealth
As the number of novel coronavirus cases increases, hospitals and urgent care clinics are other places to avoid—unless you have an emergency. You may not be carrying the novel coronavirus but you may come in contact with someone in the waiting room has an infection.
Medical centers may postpone elective procedures to allocate more resources and hospital beds for those needing urgent care. The most-affected hospitals in Italy are already running out of beds for patients.
As many businesses and schools are requiring telework, use telehealth platforms to speak with a doctor or nurse. A quick videoconference can be the remedy you need for non-emergency medical situations.
Your medical insurance provider may already offer telehealth as a way to save you money. These calls can also be cheaper than a visit to the doctor. Now you have an incentive to stay home and avoid unnecessary exposure to novel coronavirus or another illness.
If you believe you are experiencing the symptoms of novel coronavirus or COVID-19 (the disease that novel coronavirus causes) don’t go directly to the hospital for testing. Call the CDC hotline or a local hotline to get permission to visit a testing center. You reduce your exposure and reserve the testing kits for those who may feel worse than you.
Now is a good time to study up on skills you've always wanted to learn. Getty
Invest In Yourself
When you have mobility and the financial means, it’s easy to solve many of life’s problems by calling a service provider.
Use this time to learn more about the various parts of your home and see if you can stretch those DIY muscles. You won’t be able to do everything but you’d be surprised how much you can do.
One example is learning how to make your own cleaning supplies, as some may be out of stock in your local grocery store. Did you know you can make your own homemade hand sanitizer? If you need more ideas, search the internet or DIY platforms like Pinterest. The amount of creative ideas is astonishing.
Take advantage of free education resources to bulk up your knowledge in areas you feel weak in.
Be Flexible
Not panicking during uncertain times can be tough. An event like novel coronavirus is placing lifestyle restrictions on our lifestyle that American society hasn’t seen in living memory.
Having a financial plan in place is a good start. While each situation has many similarities, no event is identical. You will need to adapt to the current conditions. Stay in touch with your friends and family during these times. Mutual support can help your family and community persevere.
We don’t know what the full effects of this global pandemic yet. Implementing these steps can help bring some degree of normalcy until it passes. Continue practicing these recommendations so you are ready for life’s next surprise.
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d8dc89c6d9ba6a41f7b58c876c8fe974 | https://www.forbes.com/sites/jjcolao/2012/01/12/eight-reasons-startup-incubators-are-better-than-business-school/ | Eight Reasons Startup Incubators Are Better Than Business School | Eight Reasons Startup Incubators Are Better Than Business School
Gallery: The 10 Hottest Startup Incubators 11 images View gallery
Let’s get this straight: If you want to work at Goldman Sachs, McKinsey or General Electric , an MBA is a handy scrap of paper.
But if you’d prefer to bypass the corporate ladder and actually build something of your own, spending upwards of $140,000 and two years without pay is just about the worst way to go about it. Because looming outside those classroom walls is a creature far less merciful than any b-school professor: the market. Customers, you may be surprised to find, don’t give a damn about your degree---and the market will fire you faster than any ungrateful boss.
Want to take the plunge but need a bit of guidance and support? Applying to a so-called startup incubator may be a far better option than business school.
Business incubators have been around since the 1950s. Typically attached to universities, these entities offered a proving ground, with back-office resources, for fledgling entrepreneurs.
Now a new breed of incubator, catering mainly to technology types, is springing up all over the country. These startup hubs offer expert mentorship, resources like office space and legal counsel, and even seed money---typically in exchange for a small amount of equity in tiny (or theoretical) companies. More importantly, early-stage investors are paying close attention.
Paul Graham, founder of Y Combinator, is the father of all startup incubators. (Y Combinator birthed Dropbox, a file hosting company valued at $4 billion, among other newly minted tech stars.) Since Graham launched his incubator in 2005, about 100 more have come on the scene worldwide.
Like top business schools, startup incubators are particular about whom they let in. Actually, they’re stingier: With acceptance rates typically in the low single digits, your odds of getting a bid to Harvard Business School are about three times greater than nabbing a spot in a premium incubator.
For the lucky few, here are eight reasons why incubators beat out business school:
You Can’t Teach Entrepreneurship
The truth is that you’ll never be fully prepared to create a business—and no amount of classroom time will change that. Kathryn Minshew, founder of DailyMuse, a career advice and job placement site for young female professionals, is off to Y Combinator in January. Minshew decided to forego an MBA in favor of starting a company because “I felt like I could learn more by actually running a company and by talking to others who are running companies,” she says. “There were so many other ways to learn the skills I needed and they didn’t come with an MBA’s high price tag.”
Paul Graham offers a different, but equally persuasive, insight: “I’d tear my eyes out in some of the classes they have in business school.”
In Pictures: The 10 Hottest Startup Incubators
Eating Ramen Earns Respect
Bootstrapping sucks. But with the vast majority of your b-school classmates looking forward to lucrative careers as executives, investment bankers, or consultants (with the lifestyles to match), the prospect of living on peanut butter and bananas becomes even less palatable. Adam Neary, moved into his mother-in-law’s house in Clinton, NJ to save money to launch Profitably, a company that sells web-based planning and financial analysis software to small businesses. That’s the kind of suffer-for-your-startup story that incubator types love. Neary, husband of a Harvard Business School grad, puts it this way: “It’s a fact of life that in business school you’re surrounded by rich people, generally coming from banking and going into banking. When you’re surrounded by people living the good life and your six friends are flying off to Monaco with their badass signing bonuses, it becomes way harder to get into ‘ramen mode’.”
Spending $100,000 Isn’t Cool (You Know What Is Cool? Getting $100,000)
The idea that you can start a company with a fancy degree and $100,000 in loans hanging over your head is a joke. Even without debt, seed money is tough to find, especially in a recession. Incubators make this process a whole lot easier. This year Y Combinator will furnish every company entering the program with $150,000 in seed capital; TechStars, a Boulder, Colo. based program that runs sessions in several cities, provides $18,000 plus an optional $100,000 convertible note; and 500 Startups, in Mountain View, Calif., doles out $50,000. The incubators get roughly 6%-8% of equity in return, but the terms are fair and, hey, you need the money.
Investors Like Incubators
Most incubator programs culminate in one fateful day – Demo Day – when the entrepreneurs pitch their companies to a roomful of investors. It’s an effective way to get in front of people who matter - and who have the pockets to fund the next big step. Investors trust these programs to do a large part of their due diligence for them, so even the brand association of a premium incubator can really help. Brian Wang, CEO of Fitocracy, a website that turns users’ workout statistics into a social game, joined 500 Startups in the October of 2011. Even before arriving in California, Wang, a New Yorker, used Fitocracy’s acceptance to push indecisive investors to cough up some cash. “I could go back to investors we talked to and say ‘Are you in or are you out?’” says Wang. Most were in, and Fitocracy closed on a round of financing in November.
Your Business Is The Best Case Study
Case-study work is edifying. But it’s no match against focusing intensively on one ongoing case study---your own business---80 hours a week for three months. And because most incubators assign a squad of startup veterans to your venture, it’s like the whole faculty is on your team. David Tisch, Managing Director of the New York outpost of TechStars, says that mentorship at the program is completely customized for each business. “It’s really whatever the companies are looking for,” he says.
In Pictures: The 10 Hottest Startup Incubators
Time Is Money
You’re spending a lot more than $100,000 to go to business school: Tuition plus the opportunity cost of not working for two years can approach $300,000. Incubator programs eat just three months—still an eternity in the ever-changing technology industry.
The Networking Is Better
There’s no question that business school connections are unbelievably valuable. Yet even in this respect, incubators are a better bet. DailyMuse’s Minshew says: “I haven’t even started (at Y Combinator) and I’ve already spent hours on the phone with alumni, talking about hiring, closing financing, or moving to California. The fact that all of these people who have never met me are willing to give their time so generously is amazing.” Tisch adds that a tight, committed network of advisers is perhaps the most important asset incubators have to offer: “The biggest thing you walk away with is five to ten outside people who are deeply engaged in the company,” he says.
Incubators Are Fun
No one says you don't throw back a few cocktails in b-school. (Actually, it’s pretty much de rigueur.) But even in the name of networking, the good times generally come at the expense of the reason you’re there in the first place: to learn.
The joy of joining an incubator is intimately connected to the task at hand: building and selling a real product that came out of your head. It’s fun to read your first press coverage, to close a big round of financing. And it’s a hell of a lot of fun to snare that first big customer.
In Pictures: The 10 Hottest Startup Incubators
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92e49e177366d8b5df63ad395aac9783 | https://www.forbes.com/sites/jjcolao/2012/05/08/fred-wilson-and-the-death-of-venture-capital/ | Fred Wilson And The Death Of Venture Capital | Fred Wilson And The Death Of Venture Capital
Fred Wilson has seen the future of the venture capital industry, and it's not pretty.
This morning at Grind, a co-working space in Manhattan, New York’s favorite venture capitalist (and #20 on this year's Midas List) spelled out the forces currently conspiring to make the old VC model obsolete.
The biggest issue: there is simply too much money. Although $30 billion continues to flow unabated into venture-backed companies annually in the U.S., venture capital as an asset class hasn’t outperformed the market since the early 90’s, when only $10 billion was put to work. Things look even bleaker when you add in the additional $10 billion that angel investors dish out (a threefold increase from five years ago), growing interest from places like Russia and the Middle East (think Yuri Milner and Prince Alwaleed's Twitter investment), the rise of accelerator programs (YCombinator and TechStars) and non-equity financing options like Kickstarter. The prospect of equity-based crowdfunding, as legalized by the JOBS Act, may present an even graver threat.
Wilson, a partner at Union Square Ventures, asked the audience to consider this scenario: if U.S. families devote just 1% of their assets to investing in startups via crowdfunding, that would unleash a torrent of $300 billion annually. “The problems with venture capital now are dwarfed by the potential problems down the line," he observes. Even with just $40-$50 billion aimed at financing scalable startups (the sum of the sources listed above), VC's can't beat the markets. With nearly ten times that amount of capital let loose, the attractiveness of venture capital as an asset class will only deteriorate further.
Wilson's speech coincides with the Kaufman Foundation's damning report on the industry, which effectively blames funds' lackluster returns on institutional investors who continue to pour money into venture capital despite its abysmal track record.
Of course, the trends threatening VC's bode well for entrepreneurs. More competition among investors means easier financing and better terms for startups. The eye-popping valuations of some companies may already be a reflection of this phenomenon. Wilson admits that this glut of funding is also probably good news for the economy, job creation and the proliferation of new goods and services.
In terms of how venture capitalists should respond to this shifting landscape, he proposes a couple of options. As he sees it, VC's currently provide four important functions for startups:
1.) They aggregate and allocate large pools of capital.
2.) They offer advice and governance (hold board seats, help with recruitment, etc.).
3.) They help with exits (offer an investment banker service pro bono).
4.) They blog.
In Wilson's view, VC's will have to rethink both aspects of #1. In order to generate their promised returns, firms will eventually have to limit the size of the funds they raise (and take a cut in the their 2% management fees). For nearly 20 years, the industry has proven that it cannot realistically put $30 billion of capital to work. Maybe $15 billion is a more manageable number.
In terms of allocation, VC's may want to develop new methods of choosing companies--and rethink the herd mentality that dominates the industry. "Maybe we’re not good at picking companies," he admits. "Maybe we’re funding the 50th or 100th local-social-mobile startup when we should be funding cancer research. "
For those looking to shake things up a bit more, Wilson points out the possibilities of working off of crowdfunding platforms. By leading rounds and endorsing companies with small increments of capital, venture firms can use their brand names to attract crowdfunds to startups they deem the most promising. Since large pools of civilian investors don't offer much in terms advice and governance, venture firms could provide such services for additional equity.
And if that doesn't work out, there's always blogging.
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3c808723dd64bfa9105b300be3d18184 | https://www.forbes.com/sites/jjcolao/2012/06/07/apples-biggest-unknown-supplier-of-e-books/ | Apple's Biggest (Unknown) Supplier of E-Books | Apple's Biggest (Unknown) Supplier of E-Books
Smashwords founder Mark Coker still owns 88 percent of his business.
Mark Coker and his wife, Lesleyann, a former reporter for Soap Opera Weekly, had spent a year writing Boob Tube, a satirical novel depicting the seedy private lives of Hollywood soap opera actresses. Though lauded by agents at Dystel & Goderich, an agency best known for representing President Obama, publishers fretted over the novel’s salability. Why gamble on a couple of unknown authors? Two years, several revisions and a dozen rejections later Coker and his wife were out of options. “Commercial merit is a dangerous way to judge a book,” he argues. “It means you get more stuff by Kim Kardashian than by undiscovered authors potentially writing future classics.”
Instead of getting mad, Coker got entrepreneurial, launching a printing press in the cloud. As the CEO of Smashwords, a 14-person company in Los Gatos, Calif., Coker gives authors free self-publishing software that converts Word documents into
e-book files—and lets them set the price. Through distribution partnerships those e-books line the shelves of digital bookstores run by Apple, Barnes & Noble, Sony and Kobo. No deal yet with Amazon.
Smashwords publishes 127,000 titles by 44,000 writers, each of whom collects at least 60% of royalties—four times the amount offered by traditional publishers. The company takes a 10% cut of the proceeds from partner sales and 15% (after credit card fees) from books sold through its own website.
Launched in May 2008, Smashwords published 140 books in its first seven months—a number Coker found thrilling, until he looked at sales. On a good day the company was selling $6 worth of books through its website, its own take barely more than a dollar. Coker switched to a distribution model the following year, offering retailers a 30% commission in exchange for digital shelf space. After inking agreements with four major partners in a matter of months, Smashwords debuted in the iBookstore with 2,200 titles when the iPad launched in January 2010.
The company has grown at a steady clip since. Now a top supplier of titles to the iBookstore, Smashwords reached profitability in September 2010. Coker projects $12 million in revenue this year, double last year’s take. With an expected 2012 pretax profit approaching $1 million, the company intentionally keeps margins slim to squeeze out competitors, though Coker expects fatter profits as the company scales. “It costs essentially the same to pump 10,000 new books a month through our network as it will cost to do 100,000 a month,” he reasons.
Since authors enjoy a healthy cut of sales, most set prices low. A Smashwords book retails, on average, for just above $3; 15,000 titles are free. Romance and erotica books account for nearly 40% of sales—no surprise for a medium that lends itself to anonymity (no nosy cashier, no bodice-ripping covers).
Coker, 47, is soft-spoken, spending much of his free time in a home library that bulges with thousands of the trade paperbacks he’s helping to push into a diminishing number of used bookstores. He began his entrepreneurial career at the age of 5, selling a pet chicken’s eggs door-to-door in Los Gatos. After graduating with a business degree from UC Berkeley he ran his own p.r. firm, then created BestCalls.com, a directory for public corporate earnings calls, in 1999. He sold the company to Shareholder.com for an undisclosed sum in 2003, profiting again when Nasdaq acquired Shareholder in 2006.
In building Smashwords Coker shunned outside investment, took an $80,000 home equity line of credit and borrowed another $200,000 from his mother. He ran a lean, three-man operation well into 2010, working as his own customer-service rep while nailing down partnerships with corporate giants. He still holds 88% of the company’s equity. “It gives me an incredible amount of freedom,” he gushes.
What’s that freedom worth? That’s an unwritten chapter. Smashwords saw attrition when Barnes & Noble opened its own self-publishing platform in 2010, offering authors an extra 5% of royalties compared with Smashwords’ terms. Apple, Amazon and Kobo have similar options, though Coker argues that none offers sales generation via multiple retailers. Rivals that cater to independent e-book authors—BookBaby of Portland, Ore., Author Solutions in Bloomington, Ind. and Lulu of Raleigh, N.C. among them—match Smashwords’ breadth of distribution. But Coker points out they goose sales by hawking conversion, formatting and other services. Smashwords, he says, prefers to live and die by its authors’ sales.
One other twist in the plot: Smashwords has no formal distribution agreement with Amazon, the current heavyweight of e-reading. “I actually think that’s one of our greatest strengths,” Coker contends. Hmmmmm. Maybe. Smashwords has reached profitability without Amazon, but because Coker refuses to give up control over pricing, the e-commerce behemoth denies his company access to the automated distribution system that supplies the Kindle Store. A compromise has been worked out for Smashwords to publish titles in bulk through Amazon’s self-publishing system, though plans are over a year behind.
Coker & Co. also have some exposure in the feds’ case accusing Apple and several book publishers of colluding to keep e-book prices high. Like the iBookstore, Smashwords’ agency pricing model allows authors to set their own prices. Though he is not a party to the case, Coker himself spent an hour on the phone with DOJ investigators, sharing data that demonstrated the drop of Smashwords’ book pricing over time.
For now, Coker is focused on speed. The lag between the submission of a manuscript or the tweak of a book price and its appearance in retailer bookstores is currently a matter of days. Soon it will be minutes, by dint of code being done in-house. Smashwords is working to offer authors instant, aggregated sales data from its myriad partners, all part of an effort to give ink slingers real-time control over their livelihoods. To cope with the growing volume of books, the company is adding two employees to its three-person vetting team to make sure that each book is formatted correctly and contains original content.
“This is the best time in history to be a writer,” Coker muses. If a Smashwords title doesn’t do well in its debut, it has plenty of time to pick up readers and gain an audience. Once upon a time your words lived forever only if you were Homer or Shakespeare or Dickens. Now, thanks to cloud-based publishers, any book can become “immortal.”
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More stories from the June 25, 2012 issue of FORBES magazine:
How Reddit’s Alexis Ohanian Became The Mayor Of The Internet
Silicon Valley Is Creating Real Jobs By Making Real Things
How Would You Like A Graduate Degree For $100?
Microsoft Xbox Is Winning The Living Room War. Here's Why.
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e18f7533b100362d912c90e57c7530ae | https://www.forbes.com/sites/jjcolao/2012/08/01/steve-blank-introduces-scientists-to-a-new-variable-customers/ | Steve Blank Introduces Scientists To A New Variable: Customers | Steve Blank Introduces Scientists To A New Variable: Customers
This article appears in the August 20 issue of Forbes Magazine.
Last spring Errol Arkilic, a program director for the NSF, called Steve Blank at his ranch in Pescadero, Calif. He wanted Blank, a four-time entrepreneur and renowned academician, to design the curriculum for a new government program called the Innovation Corps. Blank, 58, loved the idea, but he had one question: “What the f--- is the NSF?”
A big source of government booty, among other things, receiving about a tenth of the $60 billion-plus the feds spend on nondefense R&D each year. Arkilic wanted Blank to lead the education side of I-Corps, a new eight-week National Science Foundation course to help government-funded researchers turn their technology into breathing businesses. In the role, Arkilic explained, Blank would transform stolid university profs into red-blooded entrepreneurs. It would be, as Blank said later, one of “the most audacious experiments in entrepreneurship since World War II.”
Since the start of the program in October I-Corps has trained 45 three-person teams, typically a professor, a graduate student or postdoctoral fellow, and a mentor from the private sector. Fifty-four additional teams are currently in training. Their R&D ranges from an industrial process for making graphene, a “nanomaterial” and the subject of a 2010 Nobel Prize in Physics, to a blanket that converts lumber waste to soil additives. Each group gets $50,000 from the NSF for the program.
From day one researchers who arrive for class at Stanford University learn the most practical advice that every entrepreneur must master: Talk to potential customers. It’s at the core of Blank’s philosophy: The greatest product or service ever invented is worthless unless someone agrees to buy it. By the time teams return on day two, those who don’t have feedback from ten customers are thrown out of the room. “We needed to figure out how to make these guys in their 40s and 50s, who are unquestioned in their field, get out and move as fast as kids in hoodies and flip-flops,” Blank explains. The answer, he figured, was to humiliate them as ruthlessly as Werner Erhard. The boot-camp tenor, straight from Blank’s own experience as an airplane mechanic in Thailand during the Vietnam War, is designed to break years of bad habits in one traumatic day.
“They let you know you’re a complete novice at business,” says Sophie Lebrecht, a postdoctoral fellow at Carnegie Mellon who went through the course in the spring. “It’s very humbling.” Newbies present their business model on day one. From the rear of the class, Blank follows each introduction by “ripping them a new asshole.” Students may be brilliant white coats, he says, but he lets them know that “in my world you don’t know s---.”
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Classes start with three days of in-person training, at Stanford, the University of Michigan or Georgia Tech. By the end of their time on campus teams from the first course were ambushing professors on their way to classes, surveying people on the streets of Palo Alto and visiting Home Depots to poll lighting salesmen—anything to satisfy the quotas of customer feedback. Once back in their labs, teams present progress in an online meeting each week until a final presentation at the end of the course.
The approach synchs with current NSF goals, which help catalyze gains in the private economy, funding tech that trickles in through licensing agreements and new companies. Sergey Brin and Larry Page originally developed link-based ranking for Google as Stanford grad students supported by an NSF fellowship. Now, during the endless recession, bureaucrats are trying to boost the economic impact of federal funds.
Bearded, bespectacled and blunt, Blank didn’t always have such laser-sharp focus. As a freshman at Michigan State he was on his way to earning a 0.5 GPA before dropping out. He hitchhiked to Florida, found a job loading racehorses into cargo planes in Miami and decided to work with avionics. He joined the Air Force as a technician.
Blank got to Silicon Valley in 1978 via ESL, now a part of Northrop Grumman, which did defense electronics work. Over three decades he served as an early employee or founder of eight high-tech startups. In the 1980s he did a walking interview with Steve Jobs for a marketing slot at NeXT. They made it about 100 yards outside headquarters in Redwood City before Jobs suggested turning back. “I just had the feeling that this would be the worst guy ever to work for,” Blank recalls, laughing. Jobs, it seemed, wanted a marketer to blithely execute his ideas. Blank was not the guy, though he’s a huge fan of Jobs. Blank’s last venture, enterprise software provider E.piphany, sold for $329 million in 2005 to SSA Global Technologies.
Blank didn’t reap those profits. He left in 1999, took up teaching and has since jolted the practice of entrepreneurship. His 2003 book, The Four Steps to the Epiphany, introduces the idea of customer development—the process of verifying that people actually want a product before spending enormous sums to build it. Duh, you may say, but Blank has demonstrated how “smart” corporations and startups repeatedly ignore the principle to their detriment. One notable example: Motorola’s failed $5 billion Iridium satellite-based phone system.
Blank was the first to articulate customer development as a disciplined approach to building companies. Before creating and refining products, he suggested, entrepreneurs need to “get out of the building” and talk to anyone on the other side of a possible transaction. Hastily self-published as class notes for his entrepreneurship course at the University of California, Berkeley’s Haas School of Business, Four Steps steadily found disciples when Eric Ries, then CTO of online gaming company IMVU, convinced Blank to offer the book on Amazon. Though Blank admits it “looks like a 6-year-old wrote it,” the book went on to sell 50,000 copies in four languages and remains a keystone work in entrepreneurial circles.
I-Corps is modeled on the “Lean LaunchPad” class Blank teaches at Stanford, combining customer development with what he calls the “business model canvas.” Teams start with a set of hypotheses that add up to a tentative strategy. As they go out and gather customer feedback, different parts of the model change—customer identity, sales channels, even the product—until teams feel they have enough evidence to launch.
The fact that Blank’s methods parallel those used by research scientists in the lab wasn’t lost on the NSF’s Arkilic. “It’s a scientific-method approach to fleshing out a business model,” he says. “It has hypotheses and a framework, and it’s process-oriented. That’s exactly what scientists and engineers need.”
Sophie Lebrecht, who spent five years at Brown researching the brain’s responses to visual stimuli, assumed her research could be best applied to designing product packaging for consumer goods companies. A customer development meeting with YouTube representatives in San Bruno, Calif. pried open her eyes. Her Neon Labs is now integrating her research into an algorithm that helps determine which online images produce the greatest number of clicks. (YouTube is not yet a customer.) “I never would have found that problem without taking the course,” she says.
Jason Gu’s team at SenSevere, which develops sensors to detect flammable gases during chlorine production, took the course in October. Aside from the customer-development focus, Gu admired the command of Blank and fellow instructors. “You can ask a question about intellectual property or something, and he’ll go, ‘Well I know 30 entrepreneurs who did that, and they all failed.’” The online part of the class, where roughly two dozen teams give 15-minute presentations in a single session each week, he says, didn’t seem as valuable. (He also suggests that Blank isn’t quite as terrifying as he likes to make out.)
How do you measure the success of I-Corps? It’s not yet clear how many teams have raised additional funding. But 95% of participants, in a poll conducted at the end of the first two courses, said they had identified a scalable business model for their technology, and 92% intended to seek funding.
Either way, the NSF is wasting no time expanding the program. I-Corps is looking to fatten its budget from a measly $7.5 million this year, less than 0.15% of the NSF’s overall funds, to $18.8 million in 2013. With 99 teams set to complete the program in 2012, Arkilic is aiming for 250 in 2013. Other government agencies that fund basic research have raised their hands to start programs. Blank and the team of venture capitalists and entrepreneurs who serve as consultants during the course don’t accept any compensation.
I-Corps is creating “nodes” at research universities across the country; Ann Arbor and Atlanta are the first two outside Palo Alto. Regional hubs, schooled in the Blank method, will serve as resources for researchers as they commercialize their findings. They can also cross-fertilize one another, pairing, say, Michigan’s manufacturing expertise with Silicon Valley’s tech-heavy output.
Blank loves the uniquely American aspect of the program. His approach wouldn’t translate well to Asia, he claims, where a culture of saving face (and a low tolerance for failure) precludes public humiliation. In the U.S., he says, “every time I piss somebody off, they show me how good they are.”
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de23b744da0ae443f075ffd52d4205fd | https://www.forbes.com/sites/jjcolao/2012/08/21/the-art-of-hiring-three-secrets-from-americas-most-promising-companies/ | The Art Of Hiring: Three Secrets From America's Most Promising Companies | The Art Of Hiring: Three Secrets From America's Most Promising Companies
It’s a well-worn truism: Hiring is both one of the most important and difficult tasks any entrepreneur faces in building a business. The quality of people filling a company's ranks ripples through every measure of performance – sales, product development and partner relations included. More importantly, it determines whether you actually enjoy heading into work every day. With each new recruit, business owners fine-tune the DNA of their firms, so it pays to get it right.
By definition, members of Forbes' list of America’s Most Promising Companies have all found some answers to the eternal mystery of hiring effectively. Yet with sales doubling each year and companies expanding at a breakneck pace, the issue of recruiting high-caliber employees takes on a new level of urgency and challenge.
Nominate A Fast-Growing Business For Our List Of America's Most Promising Companies
Last April, in a panel moderated by Joni Fedders, President of Clay Mathile's Aileron Institute outside of Dayton, Ohio, we gathered three representatives from our list of America’s Most Promising Companies to sit down and discuss issues facing their businesses, including hiring.
One refrain we heard on the subject: It’s really, really hard.
But look past that unfortunate reality and each company has found reliable mechanisms to make sure they’re getting the people they need, when they need them. Right from the mouths of three stunningly talented entrepreneurs, here are three tips on hiring:
Recognize The Need, Early
When business is booming, it’s easy to get complacent. “If it ain’t broke…”right? In that vein, Alan Martin, the 33 year-old CEO of CampusBookRentals, makes a valuable point before deferring to his elders on the issue of hiring. “Part of the art,” he says, “is recognizing that you need to find new people in the first place. I think it’s easy to get pretty comfortable with the team that’s around you.”
There are always reasons to put off expanding a payroll, and too often, entrepreneurs wait until the absolute last minute to add a key hire. Sure, no one wants to over-recruit or mess with a dynamic that’s delivering great results, but do you really think you’re going to make a considered recruitment decision while scrambling to add a new account rep? Eric Stromberg, a veteran of Hunch who now runs a startup called Oyster, writes about the idea of having a “bench” - a running list of candidates to call on once a key spot opens up. Anticipating your recruitment needs with smart, simple solutions like this will make life that much easier when new business sends you running to a recruitment firm.
Even if the need isn’t urgent, Martin mentions that new blood can add an unexpected spark to humming operations. If you can burn off the clouds cloaking the vision of your growing business, you’ll often see that the need for more personnel is right around the corner.
Don’t Skimp On HR
E-Cycle CEO Christopher Irion has what many business owners would enviably classify as a “good problem.” It’s also a classic dilemma facing many of America’s Most Promising Companies.
His company, which recycles smart phones for corporate clients, is on pace to add 25 people each quarter of 2012, nearly doubling the size of its 2011 payroll. But as Irion points out, pulling the trigger on hiring isn’t enough – companies also need the logistical infrastructure to stomach new recruits. As growth ramped up last year, he found that an under-resourced recruitment division stymied his ability to hire and keep pace with sales. Even as new positions opened up, e-Cycle “just didn’t have the HR bandwidth to get it done,” he remembers.
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In response, Irion “over-invested” in recruitment this year, hiring two HR generalists and two corporate recruiters. The lesson: Hiring effectively at volume requires a logistical framework that takes time to put in place. The earlier, the better.
Screening Techniques Pay Off
As our pick for America’s most promising company last year, Smashburger does a lot of things right. In an industry that founder and Chief Concept Officer Tom Ryan describes as a “people business”, one standout is recruiting. With clinical psychologist Bill van Bark on retainer, the company has developed its own system of evaluating potential hires, both at the corporate level and across its 170 locations.
We're On The Hunt For America's Most Promising Companies
"We are highly committed to using testing as a preliminary screen," Ryan says. For corporate candidates, Smashburger tests verbal and analytical skills - or "raw intellect" and decision-making prowess. At the field level, managers take an online exam that measures 40 skills, including the ability to keep a budget and cope with stress. Potential hires further down the chain are evaluated to make sure they have what Ryan calls "the hospitality gene". For $100-$150 per candidate, the company doubles employee retention, more than recouping the cost of screening while ensuring that its locations across the country are staffed with quality people.
"We think that's going to give us a distinctive level of advantage in the marketplace," Ryan says.
Though effective, not every business needs a psychologist on retainer to create a customized evaluation system for new hires. Just gathering your team to generate a list of the qualities and skills they'd like to see in each candidate, and developing means for assessing those qualities, is often enough to make sure that new recruits fit a mold jives with your company's mission and culture. Even at the startup level, it's important to have a codified set of expectations for each new candidate.
Haphazard hiring never pays off.
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America's Most Promising Companies Nominate a top-performer for the annual list.
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ef2b703802073a898881a9b0cafa0532 | https://www.forbes.com/sites/jjcolao/2012/11/21/can-an-hour-long-aptitude-test-predict-startup-home-runs-adeo-ressi-thinks-so/ | Can An Hour-Long Aptitude Test Predict Startup Home Runs? Adeo Ressi Thinks So | Can An Hour-Long Aptitude Test Predict Startup Home Runs? Adeo Ressi Thinks So
Adeo Ressi believes he can read the future. His 6-foot-5 frame hunched towards a laptop, Ressi trains a finger at a column of numbers, each data point like a genetic marker in the DNA of an entrepreneur. With uncanny accuracy, Ressi insists, he can predict the success of a founder over the duration of his four-month course and afterward. "That one is doing worse than we predicted," he admits, pointing to an outlier. "He'll probably leave the program."
As head of the Founder Institute, a training program for entrepreneurs headquartered in Mountain View, Calif., Ressi is trying to nail down a mathematical relationship between the personality traits of founders and the future investment returns of their companies. His premise: that there's a verifiable correlation between an entrepreneur's fluid intelligence, for example, and his success. Eventually he hopes to see thousands of aspiring entrepreneurs take an hourlong aptitude test every year; in seconds an algorithm will tally their scores and not only cull the doomed from the future Jack Dorseys but also spit out a rough valuation of their companies years on. "If we can do it," he muses, "it'll be one of the most significant innovations in finance that I've ever heard of."
But is the psychological key to entrepreneurship really knowable? No one has applied social science to startups with the rigor, reliance and scale of the Institute. The Silicon Valley establishment is doubtful.
At 40, Ressi appears ageless. His towering physique is topped by a bald head, punctuated with thick-rimmed black glasses and a big toothy smile. Raised in Manhattan, he speaks with a slow, sunny cadence more reflective of his Palo Alto home. As an undergraduate at Penn, he and his roommate, Tesla and SpaceX founder Elon Musk, started a nightclub in a rented 17-room house near campus. They charged students $5 for all the beer they could drink. Musk, who handled the money, was the sober one.
Since then Ressi has kept pace with his roommate, starting eight companies and selling three. Dropping out of college in 1994, he began Total New York, an online city guide that was sold to AOL three years later. His Methodfive, a Web-development firm, garnered an $88 million exit price in 2000. A gaming startup followed, and in 2007 he launched TheFunded, a website for anonymously rating venture capitalists, which he still runs.
As the Great Recession hit in 2008, Ressi caught wind of data showing that only one of every 1,000 startups reached a meaningful valuation. "I thought, 'Well, if we could bend that curve a little bit, that would be a really big help,' " he remembers.
Now offered in 35 cities in 22 countries—the most recent outpost is in Alexandria, Egypt—the Institute is a sort of night school for entrepreneurs. The for-profit program has graduated 650 companies; 90% are still running. They collectively employ about 5,000 people. Online education website Udemy and Retailigence, a location-based mobile marketing company, are notable graduates.
Students keep their day jobs while attending a three-and-a-half-hour class each week, run by mentors including Evernote CEO Phil Libin and Mint.com founder Aaron Patzer. In 15 sessions they learn about marketing, fundraising, product design and legal issues. Says Adriana Herrera, a grad who runs Fashioning Change, which offers eco-friendly, humanely manufactured alternatives to popular clothing styles: "Unless you can translate it into baby steps, you fall by the wayside."
Each week founders endure a battery of evaluations from mentors and peers rating their progress. "It brought people literally to tears sometimes," Herrera remembers. To graduate they present an incorporated business with a revenue model and clear goals for growth. Fewer than half make it through the program.
Participants pay a $1,000 course fee, which covers the program's costs. Unlike accelerators TechStars and Y Combinator, the Institute doesn't directly invest in companies—that would require a pool of capital rivaling the largest venture firms. Instead, those who graduate give up 3.5% of their companies' equity, 85% of which enters a pool divvied up among mentors and students. Founder Institute keeps the rest. Companies that raise more than $50,000 pay another $4,500 in tuition to fund the Institute's growth.
Ten thousand people have applied since launch. To eliminate admissions bias—the fact that venture firms funded mostly 20-something white male Ivy League grads annoyed Ressi—the Institute developed an entrance exam in partnership with a psychology professor. They originally looked for IQ and conscientiousness, the latter a measure of self-discipline known in the psych community as one of the Big Fiv e traits of human personalities. Tracking an initial group of 72 applicants for 18 months, they tweaked the test after finding that neither quality correlated with startup success.
Two years later they think they're on to something. "It turns out entrepreneurs have more in common with artists than they do with managers," says the test's designer, a psychology prof whose identity Ressi guards closely. ("He's part of our secret sauce.") Openness, a Big Five trait associated with curiosity, creativity and a penchant for novelty, is more important than conscientiousness. By asking test-takers to rank the personal relevance of statements like, "I am not interested in abstract ideas," the Institute forces applicants to reveal their openness or lack thereof.
IQ doesn't matter much, either. But fluid intelligence, the ability to analyze abstract situations involving novel sets of rules, plays an outsize role. Seventeen questions, a full one-third of the test, mine for the trait, challenging applicants to pick the shape that best fits into a complex pattern.
Bursting the pop culture bubble of Web-savvy wunderkinds, the Institute asserts that youth is actually a disadvantage. According to the data, up to age 40 older entrepreneurs tend to perform better than young'uns. Ressi has two theories: As people get older, they gain experience performing increasingly complicated tasks. The breadth of their social networks, a vital resource when seeking support and expertise, also increases with age.
In scoring applicants the Institute weighs openness and fluid intelligence most heavily, factoring in measures of other traits--conscientiousness, agreeableness, extroversion --to a lesser degree. The final score is based on a 1?5 scale. Ressi, along with most mentors in the program, scores in the mid-threes; applicants scoring below a 2.2 get cut. For now the correlation between test results and course performance is .45 (roughly the same as between SAT scores and college GPA). The same goes for the relationship between course performance and startup success.
Though Ressi is enthused that 85% of students perform at or above expected levels, data from the last 240 founders in the program show nearly half do significantly better than the test predicts--meaning it underestimates the potential of many applicants. Ressi counters that such results show the program is effective in pushing students beyond their expected outcomes. Meanwhile, the Institute's graduation rate is just 40%.
Among the skeptics: Paul Graham, founder of Y Combinator, the preeminent Silicon Valley startup incubator, who doesn't believe qualities of ?successful entrepreneurs can be ?captured in a formula. His seven-person admissions team still scores thousands of applications by hand, granting spots based on the average grade. As for predicting the value of a group of companies, he's certain it can't be done. "Not a chance," he says. "There is far too much randomness."
Ressi says the Institute expects to graduate 1,000 companies in 2013. The next version of the admissions test will be tweaked to look for industriousness, a measure of work ethic, and to flag disruptive neuroses. The program's global reach means that Ressi is gaining insights into overlooked markets in places like Colombia, Vietnam and Ukraine. Musk can have space, he says. "I'll get the Earth."
Do You Have A Founder's DNA?
The Founder Institute tests for a range of personality traits, but these are the essentials:
Fluid Intelligence: The ability to learn and apply new sets of rules. Excel at puzzles and brain teasers? You may fit the bill.
Openness: Open people devour fresh ideas and experiences. Symptoms include wanderlust, moderate drug experimentation and creativity.
Agreeableness: A measure of warmth and cooperation. Don't be a pushover, though—the best entrepreneurs fall somewhere in the middle range.
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a02baed80f0e825698fed441bd6b7b5b | https://www.forbes.com/sites/jjcolao/2012/12/07/excel-vs-ai-udemy-vies-for-a-chunk-of-the-3-9-trillion-education-market/ | Excel vs. AI: Udemy Vies For A Chunk Of The $3.9 Trillion Education Market | Excel vs. AI: Udemy Vies For A Chunk Of The $3.9 Trillion Education Market
Why go to class when you have a computer?
The education tech space is crowded, but demand isn't in short supply. Take the case of Sebastian Thrun. When the Stanford computer science professor offered a graduate-level course on artificial intelligence for free online last year, 160,000 people from 190 different countries signed up. For a graduate-level course on artificial intelligence.
Udemy, a three-year-old company that delivers classes online, aims for a more practical mix of content. Skill-based courses like excel tutorials and "Become a Web Developer From Scratch" are among the most popular, while the faculty ranges from tenured Ivy League professors to some guy down the street. Today, the company announced that it's raised $12 million in Series B funding from Insight Venture Partners, Lightbank, MHS Capital and Learn Capital.
Among the upstarts vying to train minds online—Thrun's Udacity, 2U, Coursera and non-profit Khan Academy—Udemy is the only company that maintains an open platform, meaning anybody, regardless of credentials, can log on and create a course available to its 500,000 registered users. The site currently hosts 5,000 courses, each a mix of video, audio and PowerPoint that users follow along with note-taking software off to the side. Three-quarters of the offerings are free; others charge anywhere from $12 to $399. Udemy keeps 30% of sales with instructors keeping the rest.
The company is mum on sales, but revealed in May that its top ten instructors earned $1.65 million over the course of a year. Given Udemy's business model, Udemy took in less than half that from the same set of instructors. Dennis Yang, the company's President and COO, says that 2012 revenue has grown five times compared to 2011.
Udemy's open model means the company can save cash on content production while focusing on improvements to the online product. Of their 25 employees, half currently work directly with product. The company released an iPad app last month and plans to release mobile apps for Android and iOS next year. "We tend to find our audience is more in the adult learner category, so the product needs to be super convenient for when and where they want to learn," says Yang. Students can also download course materials for offline access.
In the coming year, Udemy plans to produce more conventional, university-level courses similar to those offered by Udacity, 2U and Coursera. Their non-profit "Faculty Project" already streams university courses from faculty at Northwestern, Vanderbilt and Dartmouth among others, but Yang says accredited curricula of the for-profit variety are on the way.
FORBES' Michael Noer recently reported that worldwide spending on education accounts for $3.9 trillion a year, or 5.6% of global GDP. U.S. student debt meanwhile, recently passed the $1 trillion mark, yet only 30% of adults in the U.S. have a bachelor's degree. "There's massive tension in the space," Yang quips. And massive opportunity.
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6de48e98066afc26195eacfd5495644e | https://www.forbes.com/sites/jjcolao/2012/12/14/snapchat-adds-video-now-seeing-50-million-photos-a-day/ | Snapchat Adds Video, Now Seeing 50 Million Photos A Day | Snapchat Adds Video, Now Seeing 50 Million Photos A Day
There’s no rest for the absurdly popular photo-sharing app these days. As rumors swirl about a potential $8 million round of funding and bloggers shame the company for the app's sexting potential, Snapchat released a large update this afternoon. The biggest addition: Video.
The Los Angeles company’s mobile app, which allows users to send pictures that disappear in a matter of seconds, has exploded in recent months. CEO Evan Spiegel, 22, says that the application currently sees 50 million photos sent each day. The company is now applying that same formula to video, allowing users to take and share videos up to ten seconds long. After a single viewing, those videos then disappear forever.
Though Spiegel won’t go into details about the technology involved in the new video functionality, he says that the way the application initiates network connections allows the video data to be compressed to the size of a photo. To capture a video, users simply hold a finger on the photo button of the app for as long as they'd like to record. This seemingly simple innovation has apparently never been done on a phone before.
The update introduces a new “friending” process that requires users to approve each other before exchanging photos. The new version also allows users to take and caption landscape photos.
Asked to comment on the recent controversy surrounding a Tumblr which posted Snapchat screenshots of nude women--often young women--Spiegel responded, "At 50 million snaps a day, there are bound to be a few that make people uncomfortable. I think we just do the best we can to make users aware of the risks."
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6de87f93b5a90503eed78feacf215ce6 | https://www.forbes.com/sites/jjcolao/2013/02/13/8m-in-two-weeks-the-inside-story-of-the-largest-crowdfunded-series-a-round-of-all-time/ | $8M In Two Weeks: The Inside Story Of The Largest, Crowdfunded Series A Round Of All Time | $8M In Two Weeks: The Inside Story Of The Largest, Crowdfunded Series A Round Of All Time
Tom Serres faced a choice. The 30-year-old CEO of Rally.org --a three-year-old fundraising website for nonprofits, political campaigns and other causes--had just raised $3.5 million in Series A financing from some serious Silicon Valley investors: LinkedIn founder Reid Hoffman from Greylock Partners, Mike Maples of Floodgate and Lean Startup author Eric Ries. But he needed more dough.
Serres and his 4 year-old daughter Madison covered the length of the country while he pitched... [+] investors.
With such endorsement Serres could've raised money in a drawn-out road show that would distract him from Rally for months. Or the crowdfunding evangelist could do something completely unprecedented: "Eat his own dog food" and raise cash--for a multimillion-dollar venture round--from the Internet in one manic flash. By opening the round to investors around the world, Serres theorized, he could capitalize on the attraction of his brand-name investors, set a definite time line and condense the fundraising process into a matter of days.
Dog food it was. On May 15 he broadcast Rally's venture round over AngelList, a social network for startups and investors, and watched as the offers poured in ... and kept coming. Over 12 days the single father embarked on a voyage that would have felled a lesser man: fielding nearly 3,000 e-mails; traveling to Texas, Louisiana and Washington, D.C.; and pitching to 70-plus investors, often with his 4-year-old daughter, Madison, in tow. By the end he'd reeled in 18 new backers and put another $4.4 million in the bank--all without a call to social services.
Monday, May 14
Maples, Hoffman and Ries agree to lead Rally's Series A financing with $3.5 million.
Tuesday, May 15
10:11 a.m. PST From Rally's headquarters in San Francisco's SoMa neighborhood, Serres clicks "submit" on an AngelList fundraising page. This action notifies site users the company is seeking investors for its Series A round.
10:12 a.m. The first investor e-mail arrives in Serres' inbox from an Austin-based venture capitalist. Sixty-one more follow in the next hour.
12 p.m. After an anxious, phone-buzzing-filled offsite meeting, Serres is caught off-guard by the influx of interest and tells his assistant, Sam Burkett, to clear appointments for the week and schedule investor meetings.
5:18 p.m. 4-hour Workweek author Tim Ferriss reaches out. Serres responds to the e-mail four minutes later.
7 p.m. A dinner of spaghetti--her favorite--a bath and a bedtime story for Madison.
8:19 p.m. Ferriss phones and asks to see a pitch deck--the PowerPoint presentations founders use to raise cash from investors--ASAP. Serres frantically calls creative director Jeff Castellana to update the company's deck.
10:15 p.m. Ferriss calls back, saying, "This is the most beautiful deck I've ever seen." He commits to invest and asks to reserve space in the round for Kevin Rose, founder of Digg and recent Google Ventures partner.
Wednesday, May 16
1 a.m. Serres falls asleep. E-mail count for the day: roughly 550.
6:30 a.m. Phone call with potential investor Josh Spear, founder of Undercurrent, a consultancy.
10:43 p.m. Five in-person meetings and six investor phone calls later, Serres checks in with Burkett, who later confides, "I would freak out when I had to take a shower in the morning."
Thursday, May 17
5:14 a.m. Vignette Corp. founder Ross Garber commits to invest by texting Serres: "In."
8:34 a.m. Serres and Madison fly out to Austin, Tex. for a panel and meetings with University of Texas officials.
12:31 p.m. CST "I understand you are on a tight schedule to wrap up this funding," e-mails Peter Boboff of Transmedia Capital. "I would not normally act so quickly but I would like to commit."
3 p.m. Babysitter arrives for Madison. Serres heads to UT--where he'd dropped out--to discuss using Rally for alumni fundraising.
8 p.m. Serres comes home to find Madison asleep. He responds to e-mails until past 10.
Friday, May 18
6 a.m. CST Skype call to Beirut with Habib Haddad, an entrepreneur and investor.
8 a.m. While Serres participates in a panel discussion ("Why I Moved My Company to San Francisco"), Madison sits in the front row of the auditorium in Austin's Downtown Hilton, playing on a coloring book app on her iPad.
9:30 a.m. Madison joins Serres for a meeting with Vianovo Ventures at the Java Jive coffee shop in Austin. Her drink of choice: a juice box.
3:22 p.m. Serres' phone dies after a flight from Austin to New Orleans for the college graduation of his fiance's brother.
5:10 p.m. Walking down Bourbon Street, Serres (with newly charged phone) pitches to Kevin Rose, who says yes.
6 p.m. Calls to the venture arm of a U.S. corporation, a tech accelerator and John Occhipinti from Relay Ventures (early-stage mobile tech).
Monday, May 21
9 a.m. PST After a weekend catching up on e-mail and traveling back to SF, Serres meets with Occhipinti for an hour at Rally offices.
12 p.m. Phone call with Jessica Jackley of Collaborative Fund, which invests in emerging technologies.
3 p.m. Following a couple more investor meetings, Serres checks in by phone with Mike Maples, who connects him with Tom Steyer, the billionaire founder of money management firm Farallon Capital.
4 p.m. Serres speaks with Rob Hayes and Kent Goldman from First Round Capital while watching Madison's ballet class in San Francisco's Lower Haight neighborhood.
5:30 p.m. Phone calls with Steyer and, later, British entrepreneur and investor Michael Birch (Bebo, Birthday Alarm).
Tuesday, May 22
7:30 a.m. Another phoner with Relay's Occhipinti.
8:30 a.m. Phone call with former adman Alex Bogusky (Crispin Porter + Bogusky).
9:30 a.m. Videoconference with Occhipinti and Relay partners, who try to complete due diligence in record time.
3:17 p.m. An e-mail arrives from Michael Birch: "Would love to be a part of this."
5:30 p.m. Happy hour at San Francisco bar with Rally employees.
Wednesday, May 23
8 a.m. Call with Ephraim Luft, former CEO of Circle of Moms. Five more investor meetings scheduled for the day.
5 p.m. Serres meets with the painters working on the house he's moving into.
6:15 p.m. Steyer commits to round over e-mail. "I'm exhausted just trying to keep up with all the investors," e-mails Robin Stenerson, an associate attorney at Gunderson Dettmer LLP, at 6:55.
Thursday, May 24
8:30 a.m. Call with a Menlo Park VC firm.
10 a.m. Breakfast with Todd Rulon-Miller, former CEO of KnowNow.
12 p.m. Meeting with Relay Ventures.
2:15 p.m. Sit-down with Kevin Rose and Google Ventures in Mountain View.
8:41 p.m. Asleep in a living room chair, Serres receives a text from Occhipinti: "We're in." Up an hour later, he responds and packs for a flight to Washington, D.C. for a friend's wedding.
Friday, May 25
9 a.m. Meeting with Transmedia Capital at Rally headquarters. Madison watches a Disney movie in another room.
11:51 a.m. Madison and Serres take off for D.C.
12 p.m. The Series A round officially closes.
2:54 p.m. Serres consoles a venture capital firm that was too late to make it into the round: "Apologies for the delay. ... This was certainly not a normal funding situation."
Monday, Dec. 10
4:10 p.m. EST Ten minutes late for a New York City interview with this reporter, Serres spends an hour discussing the direction of crowdfunding and cultural shifts behind the "cause economy," then darts for a cab downtown. He's due for lunch with Bill Clinton in Austin the next day; Bon Jovi's Hurricane Sandy relief fundraiser launches on Rally the following week.
Thursday, Jan. 31
1 p.m. PST Serres updates us on recent events, including the search for a kindergarten for Madison, his engagement, a partnership with the Bon Jovi Soul Foundation to encourage celebs at the Sundance Film Festival to donate corporate baksheesh to Hurricane Sandy relief efforts and the beta launch of "Covers," a new look for Rally campaign pages. A New York office opens Feb. 1, the same day that he flies to Berlin to launch Rally Europe.
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Gallery: America's Most Promising Companies: The Top 25 25 images View gallery
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383123c8c4b8de61f31b26f8c89b43d1 | https://www.forbes.com/sites/jjcolao/2013/02/13/forbes-up-and-comers-josh-reed-jo-webber-and-derek-flanzraich/ | Forbes Up And Comers: Josh Reed, Jo Webber and Derek Flanzraich | Forbes Up And Comers: Josh Reed, Jo Webber and Derek Flanzraich
In the Leaderboard section of each magazine, we highlight three lesser-known figures in the business world, each one worthy of keeping on your radar. Here are the latest Up And Comers:
Josh Reed Gents
The p.r. vet, 34, spent 12 years at brands like David Yurman and Calvin Klein before repping celebs as an agent at Todd Shemarya Artists. He noticed clients like Brad Pitt wore baseball hats to avoid recognition. His company, Gents, makes minimalist customizable caps ($59) designed to be appropriate for both jeans or a tuxedo. The brand launched in the fall with help from two angel investors. Coming soon: ties, bags.
Jo Webber Virtual Piggy
How do you pay your kids' allowances in the age of online shopping? Jo Webber, a quantum physicist, created money management tool Virtual Piggy, which lets parents fund their kids' accounts--and allows kids to safely make purchases from approved sites. Parents can set spending limits or opt to approve every purchase. Board of advisors includes Stedman Graham, Sela Ward and John Paul DeJoria.
Derek Flanzraich Greatist
The 25-year-old Harvard grad launched Greatist, a health-and-fitness startup, in April 2011. The advice site now attracts 3 million unique visitors each month, hooking its audience with fact-checked health articles that then spread widely via social media. One recent article, "77 Healthy Crock-Pot Recipes," garnered 186,000 shares on Pinterest. Revenue comes from banner ads, sponsored content and an e-commerce shop.
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8f155c2f0997709d471040b1a1028974 | https://www.forbes.com/sites/jjcolao/2013/03/11/silicon-valley-is-the-new-hollywood-ignore-the-hype-and-keep-working/ | Silicon Valley Is The New Hollywood: Ignore The Hype And Keep Working | Silicon Valley Is The New Hollywood: Ignore The Hype And Keep Working
[newsincvid id="24577750"]
To begin his talk at the Startup Village at South By Southwest, Steve Blank--eight-time entrepreneur and The Four Steps to the Epiphany author--played a clip from Bravo’s reality show “Start-Ups: Silicon Valley.” Ben and Hermione Way, two aspiring entrepreneurs who haven’t built a product or previously founded any companies, pitch investor Dave McClure. When McClure gently grabs the computer and runs through their pitch deck on his own, Way complains to the camera, “I found it slightly disrespectful, him just going through the whole thing and making his own judgments.”
Steve Blank
Following the clip, Blank displayed Way’s quote on the screen, then read it aloud so the audience could fully appreciate its absurdity. Incredulously, he asked, “What the f--- is going on?”
There was once a time when the goings on of Silicon Valley, and the technology industry in general, didn’t interest anyone aside from a relative handful of engineers and scientists. For decades the valley quietly plodded along, creating chips and rockets unbothered by the gawking masses—or even MBAs. Those quiet years are now gone.
Tech wunderkinds routinely grace the covers of magazines (ours included). Dozens of websites have popped up, devoted exclusively to covering the gossip, personalities and developments of technology companies. An entire ecosystem of lawyers, PR reps, conference planners, investors, gurus and talking heads has formed, all clamoring for a piece of the industry’s cash. For those on the outside, it’s easy to get the idea that only two things matter: funding and press coverage.
Blank points out that this evolution closely parallels the formation of the movie industry in the early 20th century. What started out as a technological novelty with nameless actors, directors and engineers working in obscurity, quickly grew into an industry dominated by buzz and cults of personality as movie-going became commonplace for tens of millions of Americans. The attributes of the “star ecosystem” that followed are familiar to any recent observer of the technology industry: gossip press, gatekeepers, herd effects, fad investing, poseurs. Hidden somewhere among them—hard workers.
“Our time as an industry of just hard workers is over,” Blank declared. “It’s no longer populated by just people who actually do s—t. It’s now full of those who make money off people who actually do s—t.”
The result of all this: “People now believe you can show up in Silicon Valley with a slide deck and get a million dollars. They say, ‘I haven’t done any work yet, but fund me.’"
Even talented, hardworking CEOs and founders can get caught up in the hype. Why? Blank lists seven reasons:
Ego Ego Ego Vanity metrics Attract talent Get funding Drive customer demand
If CEOs get caught up in doing press for reasons other than the last three, he says, their companies are doomed. The only mantra that startups need: “Build a great product for people who will grab it out of your hand.”
"Just showing up and talking is not building a company. Those who fall in love with seeing their name in print without understanding one of those three, I can tell you with 90% certainty that their companies will fail."
Citing Elon Musk as an example of a CEO who understands the balance between press and real work, Blank showed a video of a SpaceX rocket launch. He reminded the audience, “Remember, he’s building this and Tesla at the same time! So take a good look at your mobile app and remember that you could do this too.”
Bonus footage (explicit content):
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9f036d846006f2c8a17c5e72abc2e776 | https://www.forbes.com/sites/jjcolao/2013/05/09/can-a-crowdsourcing-invention-company-become-the-best-retailer-in-the-world/ | Can A Crowdsourcing Invention Company Become 'The Best Retailer In The World?' | Can A Crowdsourcing Invention Company Become 'The Best Retailer In The World?'
Every Thursday night Quirky 's Manhattan headquarters turns into a television studio. On a recent April evening the airy Chelsea loft is host to a buzzing mix of beer-sipping twentysomethings, businessmen in dark suits and a dozen 10-year-olds from the Concord, N.H. Young Inventors Club. Facing the audience, at the center of a Last Supperish array of panelists, stands Ben Kaufman, Quirky's CEO, dressed in his signature black T-shirt and jeans. "Ladies and gentlemen," he booms, "welcome to Quirky product evaluation!"
"Eval," as they call it, is the centerpiece of Quirky's freewheeling brand of capitalist democracy. Tonight Kaufman, 26, runs through 15 ideas submitted by the company's 405,000-member online community of would-be inventors. Among the items: a coin-counting, app-connected piggy bank; a plastic overlay to turn a staircase into a slide; and a device to extract Popsicle-shaped chunks of watermelon. After a few minutes of debate the room votes. A simple majority kicks off a process: Quirky will design, manufacture and sell the product. Inventors, along with community members who contribute to a product's design and branding, get a small cut of sales.
This is what industrial production looks like, American Idol-style. Quirky's crowdsourcing process has already created such hits as Pivot Power (a flexible power strip that bends to fit large three-prong plugs in each outlet) and Crates (modular plastic milk crates used as shelving), as well as bombs like Silo (a dry-food container that pours premeasured amounts) and Travelstacks (mini-storage units that attach to car cupholders). Most of its items are kitchen gadgets, electronics accessories and home organizers.
Venture capitalists love the model. Since launching in June 2009 Quirky has raised $91 million, including a $68 million kick from Andreessen Horowitz at a reported $150 million-plus valuation last September. Last year Quirky launched 121 new products, selling 2.3 million units through retailers like Target , Bed Bath & Beyond and Best Buy . The company had revenue of $18 million in 2012, and, while it lost money, Kaufman insists that profits will be there whenever it chooses to rein in investment. Sales this year will reach $50 million, he predicts, without a hint of modesty, with "a huge chance of us crushing the s--t out of that number."
That's contingent, though, on Quirky solving its distribution problem. While retailers sell 95% of its inventory, the company's idea machine is starting to churn out far more stuff than the pipeline can handle. "There's no store big enough in the world," says Kaufman, "that's going to be able to launch three products a week." So Quirky is moving quickly--and expensively--to build its own branded stores.
It's an audacious move for someone who in school would've been voted least likely to succeed ... at anything. With jet-black hair and a teddy-bear build, he grew up in Melville, N.Y., a terrible high school student (GPA: 1.7) who once scored a 4 out of 100 on a chemistry test.
But his cerebral cortex wasn't dead. Struggling to listen to his iPod without tipping off his math teacher, Kaufman designed a hollow lanyard to conceal the headphone wires up to his neck. He demanded backing from his parents to mass-produce his furtive product. "They realized there was nothing they could do to stop me," he recalls. "They knew I would've been calling up my dad's friends asking for money if they didn't give it to me."
His mother, Mindy, a retail strategist, forced him to create a detailed business plan for the lanyard headphone startup, which he named mophie, a portmanteau based on the names of the family dogs. In return for $185,000, his parents took 90% of the equity, allowing Ben to regain ownership after he repaid the loan. "I've raised $100 million since then," he says, "and that was the hardest money I ever got."
A week before high school graduation he flew to China to meet with manufacturers, knowing nothing about production, packaging, merchandising, logistics or sales. His parents' cash disappeared "on the backstreets of Shenzhen," as the headphones went through five redesigns. Back in the States he expanded into iPod cases, having persuaded Vermont angel investors to invest $500,000. After winning a Best in Show award at MacWorld in 2006 for designs of iPod cases that were half-baked, mophie raised $1.5 million from a Vermont venture fund.
But Kaufman lost control of his company. Investors, smelling promise, hired an experienced CEO, and the 20-year-old founder left. Mophie, meanwhile, now based in Kalamazoo, Mich., sold $150 million in iPhone and iPad accessories last year.
The experience wasn't a total loss: Kaufman took enough money out of the company to sow the seeds of Quirky. For a year and a half a team consisting of Kaufman and three others worked out of his apartment in Manhattan's East Village, slogging through the details of building an online community for devising new products. They launched Web pages for contributors to pitch ideas, tested feedback tools, devised voting systems and selection criteria, and established rules for divvying up credit among the community.
Here's how it works. Once a product is out of the chute, Quirky sells it to retail partners at wholesale. Ten cents of every revenue dollar is held as a royalty for those who contributed to a product's creation. The inventor gets 42% of royalties; the community that tweaked designs, voted on names and responded to market research surveys splits the rest. For sales from Quirky's online store, the group divvies up a more generous portion: 30% of sales. Quirky, meanwhile, makes a 20% to 60% margin on each item sold to retailers, as well as a $10 fee from those who submit ideas.
Today the company employs 140 people, split among design, branding, engineering and sales teams. The offices hold $2 million worth of 3-D printing and prototyping equipment. Twenty employees in Hong Kong oversee manufacturing in China. Inventory sits there in company warehouses, as well as in Ontario, Calif. and Allentown, Pa. Each week the Quirky crew combs through 3,000 idea submissions, settling on 15 to discuss at Eval.
But does the world really need another smartphone-connected pet food dispenser or mousetrap? Scott Weiss, a partner at Andreessen Horowitz and Quirky board member, thinks Kaufman's could easily be a $1 billion company. "He's disaggregating the entire process of invention," says Weiss. "Could this be the next Procter & Gamble?"
But there's a wide stretch between here and there, especially given the grand plans to open up stores, starting with three--likely in New York, Los Angeles and Oklahoma City--perhaps next year. (Quirky originally planned to open up stores this year. During the writing of this story, the company decided that timeline was too ambitious. ) Kaufman does seem a whiz at packaging: Each product carries the Quirky logo, as well as a photo and bio of the inventor. But retail? "I will have this figured out by July 4," boasts Kaufman. He envisions a hands-on Sharper Image, where customers can either come in to pitch inventions or buy others. "From the very beginning we said we wanted to be the best product machine in the world so we could be the best retailer in the world."
Even in the best of circumstances, opening stores will drain capital and distract from the core business of making stuff; in the worst case it could end up another backstreets-of-Shenzhen-like disaster. "I don't know whether it's the smartest thing for them to do," says Sucharita Mulpuru, a retail analyst for Forrester. "One of the scariest things about opening a physical store is that you get one shot. It's very difficult to pivot or change."
If that happens Kaufman risks repeating his mophie experience. While he refuses to discuss his equity stake, all that venture funding almost surely means he's ceded absolute control.
Not that he seems concerned. Back at Eval the clear winner is the large plastic overlay that folds over a staircase to create a slide. The Young Inventors whoop with excitement. "This is an insurance killer," warns Charlie Kwalwasser, Quirky's general counsel. Kaufman sides with the 10-year-olds. "The kids don't care about how much our insurance costs," he declares to laughter, "nor should they!"
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c28a04ec1d064ccd06a9c751ad6dcc8b | https://www.forbes.com/sites/jjcolao/2013/06/05/in-the-crowdfunding-gold-rush-this-company-has-a-rare-edge/ | In The Crowdfunding Gold Rush, This Company Has A Rare Edge | In The Crowdfunding Gold Rush, This Company Has A Rare Edge
Playing armchair venture capitalist has never been easier. For investors registered with MicroVentures, an eight-person crowdfunding outfit based in San Francisco, opportunities to invest in young tech startups arrive via e-mail. A link takes you to an eight-page summary of each company, laying out management bios, market size, competition and financials. You can also sign up for a webinar with the startup's CEO. Or call up a MicroVentures broker who can speak for the company and relay questions to the founders. If you're ready to commit, type in the amount you want to invest--usual minimum: $5,000--and click. The money sits in escrow until the deal closes.
This may well be the future for helping accredited investors--with $200,000-plus in annual income or a net worth exceeding $1 million--get an equity stake in up-and-comers. This sort of crowdfunding is getting ever more crowded. RockThePost (a Forbes.com contributor), AngelList, WeFunder and others offer platforms to attract small grubstakes in prevetted opportunities. You no longer need to rely on a savvy angel network to learn of deals--or to wait for the SEC finally to settle the rules for equity crowdfunding.
Here's where MicroVentures has an edge: It's the only major player with a broker-dealer license. (*Note: CircleUp, a platform for equity investing in consumer-packaged goods startups, also received a broker-dealer license in May. It is not yet a direct competitor to MicroVentures.) Founder Bill Clark navigated Finra's application process almost single-handedly in 2010, before the crowdfunding gold rush. Rivals have to bring in a middleman--a broker-dealer partner who can legally distribute shares--to take a cut of revenues or forgo commissions altogether.
That's helped MicroVentures funnel more money into startup equity investments than anyone--$16 million to date, spread among 34 companies. The 10,000 investors registered with the site can sink as little as $3,000 into each startup. The targets, 6- to 18-months old, typically offer around 8% of their equity in exchange for $300,000.
MicroVentures now takes a 10% cut of every deal, 5% from both parties. With $12 million in funding last year, it eked out a small profit on only $600,000 in sales. When investors cash out of a company--via IPO, acquisition or investment round--MicroVentures gets 10% of the gains. In August Clark hired Tim Sullivan, then president of SharesPost, an online marketplace for trading shares of private companies, to replace him as CEO. Clark, now president, and Sullivan hope to help 35 companies raise a total of $40 million this year, translating into company revenue of $4 million.
A 6-foot-5, soft-spoken Michigander, Clark, 35, grew up in the Detroit suburb of Grosse Pointe. He majored in finance at Michigan State, then joined GMAC, General Motors ' financial arm, as a credit analyst. "A glorified title for a collections agent," he cautions. "I was literally repo-ing cars." After a stint at Comerica he moved to Austin to join Dell in 2001, lending to small businesses. After Dell squeezed credit for those customers at the end of 2007, "I said there's got to be a way to help these guys," he recalls.
He spent nearly two years researching how to create an online platform for making equity investments in young, private companies. All routes led to the impossible: a broker-dealer license--required for any company that trades securities on behalf of customers--from the SEC, which demanded at least three years of experience in the securities (not lending) business. Worse, his model, which would enable private placements over the Internet, was largely unprecedented--a red flag for regulators. Still, Clark incorporated, spending $100,000 on consulting fees and a website. He submitted his application to the SEC in February 2010.
To jump-start the paperwork, he cooked up an excuse to visit Finra, the self-regulatory agency tasked by the SEC with approving broker-dealers, to make his case in person. Such a meeting was also unprecedented but went well. He was approved four months later.
One hurdle down. He still had to convince investors and startups to join, a chicken-and-egg bind: No backers would sign without companies, and no businesses wanted to be first. So four months before Finra approved his license in August 2010, Clark took his story to the digital press. By the time he was credentialed, he had 600 investors on an e-mail list; 250 had signed up by year-end.
Now to find a company. Reading about Clark online, the founders of Republic Project, then a tiny ad-tech company in Phoenix, reached out. While it had no revenue or customers, it did have nifty software to help advertisers manage digital-media campaigns. Clark pitched the company to his investors, found interest, then ran background checks on the founders, researched the competition, gathered Republic's financials and evaluated the market. With a 60-page private-placement memorandum for investors, the deal opened on the site in January 2011. It took Clark three months and hundreds of phone calls with cautious investors to round up 19 commitments worth $100,000. "That deal was 100% handholding," says Clark. "But it's only gotten easier from there."
He met Sullivan, 46, that April while visiting the SharesPost offices in San Bruno, Calif., looking for a partnership. "Our CEO said no after about 30 seconds," recalls Sullivan. "But I thought Bill was on to something."
Sullivan stayed in touch. A former salesman at IBM and Oracle , he had moved into financial services, managing private placements for a Philadelphia investment firm, before opening his own boutique in 2008. When Micro?Ventures faced an SEC audit last year, Sullivan was the first person a startled Clark called. Sullivan guided him through the process, reassuring Clark that the agency was just interested in learning more about crowdfunding.
Since joining MicroVentures, he's been streamlining the process with the idea of scaling. Instead of gauging investor interest just through phone calls and e-mails, deals now goes through two phases. First, MicroVentures displays a company summary on investors' home pages; if you're hooked, you record what you're willing to invest. If the company attracts more than $200,000 in pledges, MicroVentures completes due diligence and reposts the opportunity for actual investment. "We've got to automate this as much as possible," says Sullivan. "But you can't build rapport with a computer. Every investor has to have a verbal conversation with us."
How does MicroVentures know it's done enough due diligence on companies? "Entrepreneurs are optimistic," says Clark. "If they're fraudulently presenting information, there could be some risk, but if we researched it and it was intentional misrepresentation--and there was nothing we could do about it--our liability should be minimal."
For each deal, MicroVentures creates a limited-liability corporation to pool investor money. This simplifies companies' capitalization tables--the spreadsheets that document ownership stakes. It also creates a buffer between investors and the startups they fund, which keeps founders sane. "With other platforms I'd have to deal with every single investor," says Micah Baldwin, the CEO of Graphicly, a maker of e-book conversion software that's raised $1 million in two rounds.
One thing MicroVentures hasn't been able to change: the fact that early-stage companies are still a dicey, illiquid investment. Though the company is working on ways to free up investments sooner, it tells backers to expect a 5- to 7-year lag for liquidity. As much transparency as they've built into the system, concedes Clark, "It's very risky, and there's a very high likelihood that you will lose your money."
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29447ef2989e5de9c52bccd124ee27b4 | https://www.forbes.com/sites/jjcolao/2013/07/01/breaking-into-asia-as-a-venture-investor-the-where-and-how/ | Breaking Into Asia As A Venture Investor: The Where And How | Breaking Into Asia As A Venture Investor: The Where And How
This is a guest post by Anis Uzzaman and Tom Maxim. Uzzaman is the CEO of Fenox Venture Capital, a San Jose-based firm focused on early-stage, international investments. Maxim is an associate at the firm.
Want to invest in Asia? Try Singapore for starters.
The U.S. venture capital industry is at a crossroads. Market over-saturation has led to inflated valuations and poor investment outcomes. To tackle this problem, venture capitalists have increasingly searched for markets outside of the U.S. In this respect, China and India loom large. In China though, new ventures are threatened with regulatory laxity, while unreliable infrastructure plagues Indian investments. Many have overlooked the investment ecosystems of Southeast Asia and a resurgent Japan.
The Where: Singapore and Indonesia
We like to call Southeast Asia, "New Asia." These countries have large populations, even larger economies, and are creating dynamic communities of entrepreneurs. Founders in this region, we've seen, are increasingly willing to take on risk and innovate.
Singapore, due to its strategic location, top-notch infrastructure and political stability, is the gateway to Southeast Asia. It’s a major financial hub, regarded by the World Bank as the friendliest place in the world to do business. Just as U.S. entrepreneurs prefer to incorporate their companies in Delaware, founders in Southeast Asia, Australia, New Zealand, and even India often opt to register their companies in Singapore. The Singapore government has been providing startups with substantial support, including office space, training, mentoring, and incubation programs, along with tax and funding incentives.
Indonesia, meanwhile, is on track to place among world’s 10 largest economies by 2050 according to McKinsey. With a population of 240 million, it’s the fourth most populous country in the world. The country’s middle class will grow from 45 million to 135 million by 2030. It’s poised to become the world’s third largest mobile market after India and China.
Southeast Asia as a whole has been increasing regional integration while improving its regulatory and business environment. New entrepreneurship communities have emerged in cities like Bangkok, Kuala Lumpur and Jakarta. Software developers cost a fraction of those in developed markets. More critically, these communities are attracting seasoned entrepreneurs who have honed their skills in mature markets. Arip Tirta, for example, spent seven years in Silicon Valley as an investor at Hercules Growth Capital Management before heading home to Jakarta to found UrbanIndo, a real estate marketplace.
E-commerce looks particularly promising in the region. Zalora, a Singapore-based fashion e-commerce store born out of Germany’s Rocket Internet, raised $100 million last month. Other prominent players include Kaskus, an Indonesian forum that offers an eBay-like marketplace, and Reebonz, a Singaporean fashion company. As we learned from the emergence of eBay in the U.S., e-commerce preludes the consumption of other technologies. As consumers get comfortable making purchases online, other industries like advertising technology and analytics will gain traction.
Japan
Long a hub of innovation, Japan is repositioning itself for another burst of invention. The Japanese government launched a $107 billion fiscal-stimulus package popularly known as “Abenomics” (after Prime Minister Shinzo Abe) to address deflation, tepid growth and the country’s structural dependence on deficit spending. Devaluation of the Yen has created favorable conditions for foreign investors, who now enjoy a greater bang for their buck when buying shares in a domestic stock market that has risen significantly since November. To accelerate growth and attract foreign investment, a special financial zone has been planned to offer tax incentives and simplified paperwork for foreign companies.
Often early adopters of technology, the Japanese have been browsing the Internet on their mobile phones for years, far ahead of other developed countries. The high purchasing power of the average Japanese citizen permits such habits. Driving the creation of new ventures is the availability of skilled labor, fueled by an education system ranked fourth in the world.
The creativity of Japanese game designers, meanwhile, has produced video game classics like Sonic the Hedgehog and Mario Bros. Puzzles and Dragons, a hit mobile game by GungHo Entertainment, is grossing $2-3 million in daily sales. At the other end of the spectrum, there is a massive opportunity for companies that target Japan’s aging population. By 2060, more than 40% of the country will have passed retirement age. Specialty products for the elderly, like home monitoring systems and robot aides are expected to surge in demand.
The How: Norms and Nuances
Asian culture is often a major roadblock for foreign investors, as each country has unique social norms. Take the exchange of business cards for example, which is an important start to any business meeting in Japan, Korea, Taiwan or Hong Kong. Instead of tucking your host’s business card into the back pocket of your pants, try receiving it with both hands, studying its content intently, then placing it carefully in your cardholder or front shirt pocket.
In Japan, seating is determined by the status of the participants. As a guest, you will be directed to the appropriate seat while the host sits at the head of the table. You should stand at your seat and sit only when asked to do so by the host. In a restaurant setting, always order the same drink as the host, and certainly drink only after the host takes his first sip. As the meeting adjourns, take care to leave your seat only after the host has stood up.
A friend of ours was once invited to a dinner with the Japanese startup he intended to invest in as an angel. Not only did he seat himself at the head of the table, but he also kindly passed around food--with amateurish chopstick skills. Puzzled that the deal went sour, considering all the terms were agreed on prior to the meeting, a local friend revealed that only the remains of one’s family are passed by chopsticks in a funeral ritual.
Social encounters take a twist in Indonesia where foreigners are often surprised that making friends comes before talking business. Friendly discussions about one’s family, hobby or food preference comes first, while business details are left to subsequent meetings. Foreigners may view this as a waste of time, but the concept of harmony and relationships are valued over the milestones of a project. Yet tales of Westerners who ask for actionable items at a first meeting with a client and deliverables by the next are common. Don’t be surprised if the client becomes perpetually unavailable in such instances.
Bottom line: It takes more than a checkbook to invest in Asia. Asian customs mean you need to be trusted by the locals before entering business agreements. That trust is only gained through sincerity and sustained presence. Pay attention to cultural nuances and be sure to dedicate resources for the long haul. Otherwise, just stick to the Valley.
Follow me @JJColao and on Facebook. Check out my blog here.
Gallery: The Ten Most Innovative Companies in Asia 10 images View gallery
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25283e5b80ae063d8aadeb37394a2736 | https://www.forbes.com/sites/jjcolao/2013/07/30/the-10-best-venture-capitalist-blogs-for-entrepreneurs/ | The 10 Best Venture Capitalist Blogs For Entrepreneurs | The 10 Best Venture Capitalist Blogs For Entrepreneurs
In the increasingly competitive world of venture capital, it pays to be helpful—literally. To get in on the best deals, VCs need to be seen as smart, insightful and supportive. And since VCs are all about scale, what better way to do that than a blog?
This is good news for entrepreneurs, because despite the bad rep that the venture industry gets (these guys are technically in finance after all) VCs occasionally know what they’re talking about. Whether you're looking for recruiting strategies, pricing models, a glimpse into an industry's future or tips for pitching, odds are that a VC has a post for it.
The picks here are based on a very unscientific method—my own judgment of bloggers’ frequency and content quality. (Posts that lack any evergreen value whatsoever, like those celebrating the funding of a portfolio company, do not count in either case.) For this reason I left off some more popular names, like Dave McClure and David Hornik, in favor of lesser-known VCs who have posted better content more regularly. The list here is weighted in favor of smart analysis or directly applicable advice rather than anecdotes and assertions.
For those of you who follow the space closely, many of the names in the full list below will likely be familiar. But here are a couple that might be new:
Tomasz Tunguz – ex post facto
Tunguz, a principal at Redpoint Ventures, relies on short, punchy posts to get his point across. His penchant for expressing ideas in terms of frameworks (see: “The Three Phases of Startup Sales” or “The Five Characteristic of an Ideal SaaS Company”) makes for effective, easily digestible pieces.
Standout Post: The Compounding Returns of Content Marketing
David Skok – For Entrepreneurs
Matrix Partners’ David Skok only blogs a couple of times a year, but the resources available in that small pool of posts make for a virtual textbook of financial models and startup strategies. If you prefer Excel over anecdotes, Skok’s blog is a treasure trove of charts, graphs and equations. In terms of directly applicable MBA-level insights, For Entrepreneurs is unmatched.
Standout Post: SaaS Metrics 2.0
Chris Dixon – Cdixon.org
A New York entrepreneur and seed investor turned Silicon Valley VC, Dixon likes to take the macro view. Many of his posts consider industry-wide trends, then examine the consequences of those trends for entrepreneurs. Some noteworthy insights: app stores have trained consumers to expect cheap software, while startups going after popular incumbents (like Craigslist) are better off focusing on niche products.
Standout Post: Some Thoughts on Mobile
First Round Capital – The Review
The Review is a bit of an outlier on this list. A compilation of startup-centric content rather than the musings of an individual VC, the Review is First Round Capital’s attempt at creating “a Harvard Business Review for startups.” (It’s also the most comprehensive attempt at content marketing in the industry.) The Review’s preferred mode of instruction: case studies on the experiences of individual entrepreneurs and companies.
Standout Post: The management framework that propelled LinkedIn to a $20 billion company
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273343fa380709fc27dc03eb31cec2e2 | https://www.forbes.com/sites/jjcolao/2013/08/21/when-an-accidental-feature-becomes-your-entire-business-vayable-turns-to-custom-travel/ | When An Accidental Feature Becomes Your Entire Business: Vayable Turns To Custom Travel | When An Accidental Feature Becomes Your Entire Business: Vayable Turns To Custom Travel
Looking for a sunset cruise in Paris? For a fee, Vayable can help you book it.
Vayable began life as a sort of travel marketplace. Customers perused the site for premade tours created by amateur travel guides around the world. You could book a private flight over Berlin, dinner with a Fijian prince or a walking tour of New York street art. Though promising enough to secure a spot in Y Combinator and $2.1 million in venture funding, the business never really caught on. “We just never saw the growth we wanted,” says Jamie Wong, Vayable’s 32 year-old CEO.
The marketplace offerings were so scarce that thirty percent of users received a “no results” page when they searched the site. To make up for Vayable’s shortcomings Wong and her five-person team often jumped in to directly ask customers what they were looking for, then went out and organized trips themselves. “We really just thought of it as a way to bootstrap the marketplace,” she admits.
Turns out, it’s the real business. Since quietly shifting away from the marketplace model in June the company’s bookings have soared. Vayable now enlists “Insiders,” the same travel guides who once offered premade tours, to create custom travel experiences for customers, or just help with bookings and logistics.
June bookings from the program were $350,000. In July they shot up to $1.4 million—all without any way for users to intentionally access the feature. “This was literally an accidental feature that someone would only discover if they didn’t get search results,” says Wong. (The company did give access to friends and family, and spent “a few hundred bucks” on ads.) With marketplace sales lagging and custom sales skyrocketing, Vayable is now betting its business on custom travel. Today the company unveiled a redesigned website focused entirely on custom tours and vacations.
Interested customers fill out a short survey to gauge their interests and travel style, then get paired with a Vayable travel guide based in their destination to design a bespoke tour. The company has a roster of 5,000 guides stationed in 500 cities. Travelers pay a $45 trip development fee whether they accept the package or not. Travel guides, who are often available for advice on the ground, charge whatever they think is fair. Wong says that the average guide fee is $250.
Vayable takes a 15% cut of that fee and a 3% commission on the overall package. On a $3000 package, for instance, the company takes $90. If a guide charges $300, Vayable gets another $45. For the month of July then, the company took in $42,000 from package commissions and maybe another $20,000 or so in guide commissions. Not bad, but not exactly lavish either.
Wong says that going forward the company will take a 15-30% commission on hotel bookings completed through the site. The bulk of Vayable’s future revenues, she predicts, will come from hotel bookings. The company is also looking to develop mobile software in the coming year to connect guides with travelers on the ground, and hopefully make money off such interactions. Wong says that Vayable intends to evolve into a comprehensive travel service, beginning at the discovery and booking phase while extending into day-to-day travel minutiae.
In September the company will move out of its San Francisco headquarters to set up a temporary office in Paris, followed by stints in Spain, Italy, New York and Buenos Aires. The move will both cut operational costs, according to Wong, and help the company solidify relationships with travel guides and develop insights for travelers.
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