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cd83cccf5bb7a1851d74e3798313d6c2 | https://www.forbes.com/sites/joannmuller/2012/12/24/think-how-much-smarter-your-car-will-be-in-a-few-years/ | Think How Much Smarter Your Car Will Be In A Few Years | Think How Much Smarter Your Car Will Be In A Few Years
The circuit board in Ford's SYNC module (Photo credit: Wikipedia)
Did you ever stop to think how smart your car is?
The new Ford Focus, for example, has more than 145 actuators, 4,716 signals, and 74 sensors -- radar, sonar, cameras, accelerometers, temperature and even rain sensors -- that produce more than 25 gigabytes of data per hour. That data is analyzed by more than 70 on-board computers. The actuators combined with signal information from the sensors can alert the driver to potential dangers, and help with things like parking or staying within highway lane markings.
But that's just the beginning, according to Paul Mascarenas, vice president and chief technical officer at Ford Motor. The next phase of automotive technology involves what he calls "sensor fusion" where engineers learn how to blend multiple signals and add information from the cloud to help a car "think" and act in a way that keeps consumers connected and makes their lives easier.
This gibes with what Joel Kremke, senior vice president of Covisint, told me over lunch the other day. "True connectivity means so much more than creating the latest interactive dashboard feature; it's about placing the consumer--and not the car--at the center of the digital equation," he said.
"The vehicle is quickly becoming just another 'node' in the car owner's hyper-connected world," Kremke said. Car companies that figure out how to fully immerse the vehicle into that digital ecosystem will have a clear advantage, he said, just as Apple did with the iPhone.
Right now, for instance, some carmakers use remote diagnostics to alert you via email when your car needs an oil change. A truly connected car would not just alert you to the need for an oil change, but would offer you six appointment times to choose from and let you schedule it with the click of a button.
And what if your car, which knows your commuting route to work, could tell you the cheapest place to get gas along that route? And, because it knows you have a Shell credit card, what if it offered you a 10-cent-per-gallon discount if you stop at a certain Shell station in the next 10 minutes?
And what if that car, which also knows how long it will take you to get home from work, could instruct your household thermostat to crank up the heat 10 minutes before your scheduled arrival?
"All of this technology is doable today," said Kremke, an admitted evangelist for connected vehicles. "We're at the forefront of a revolution," he told me.
Ford seems to be on the same page. The carmaker issued a press release Friday afternoon listing Mascarenas' predictions for automotive technology in the coming years, and most of them are along the same lines:
“Big data” analysis and intelligent decision making: Ford is researching the use of real-time sensor data – radar and camera-based – that can help evaluate external factors affecting driver attention, such as traffic congestion, and thus limit potential distractions such as an incoming phone call Upgradeable, customizable hardware: Ford’s OpenXC research platform looks at the potential for open-source, community-driven innovation of plug-and-play hardware modules that provide infinite opportunities for rapid customization Seamless integration across cloud ecosystems: The success of Ford SYNC® has been linked to its open, agnostic platform strategy that has allowed for adoption and compatibility with the burgeoning mobile ecosystem; the next step is to do the same for the consumer shift toward cloud-based services Advanced machine learning: The new Fusion and C-MAX Energi plug-in hybrids utilize EV+, a feature that learns the typical locations of charging, such as home and office, and then automatically maximizes electric-only driving mode when nearing those locations Biometrics: Ford is researching biometric sensors, such as those embedded in a car seat, to measure stress levels for a more personalized response from driver assist technologies, because skill levels – and thus stress – can vary in certain situations Prediction: Ford researchers are looking at ways to predict driver behavior, such as a driver’s destination based on prior history, to help optimize and configure vehicle controls for improved performance such as better energy management Rapid data authentication: Ford sees significant potential in vehicle-to-vehicle communications and is actively researching the technology globally, including advanced Wi-Fi® with rapid authentication capability so that cars can exchange information quickly and securely, helping drivers avoid potential collisions
“All of these areas of research are well within our reach,” Mascarenas said. “The key to readiness and implementation in Ford vehicles is ensuring the customer experience of these technology features trumps the technology itself.”
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03f7e33aa843ea0be1402ae3f1c6d04d | https://www.forbes.com/sites/joannmuller/2013/01/04/ford-makes-a-great-car-and-gets-slammed-anyway/ | C-Max: Ford Makes A Great Car -- And Gets Slammed Anyway | C-Max: Ford Makes A Great Car -- And Gets Slammed Anyway
There's been a lot of griping lately about Ford Motor's new hybrids not living up to their promised fuel economy, so I was anxious to spend some time behind the wheel of the new 2013 Ford C-Max utility and test its performance for myself.
The C-Max is Ford's first dedicated hybrid, aimed squarely at the Toyota Prius V, and the carmaker has been getting a lot of advertising mileage out of its "47/47/47" miles per gallon ratings in city/highway/combined driving.
The problem is nobody who drives the car seems to be able to achieve those eye-popping numbers. Consumer Reports tried, running the C-Max (as well as the new "47-mpg" Ford Fusion hybrid) through its real-world tests. But CR didn't get anywhere close to 47 mpg. It got 37 mpg overall in the C-Max, with 35 in the city and 38 on the highway. The Fusion hybrid delivered 39 mpg overall -- the best of any family sedan Consumer Reports tests -- but still well short of the 47 mpg rating. Other reviewers, like the Wall Street Journal's Dan Neil, found similar results. Now Ford is facing a federal class action lawsuit in California, claiming its marketing campaign is "false and misleading" and that Ford used "misrepresentations and omissions" to promote the cars. (UPDATE: Ford says plenty of people are hitting the EPA number. C-Max owners are sharing their real-world mileage at this online forum. It's worth checking out.)
Even Raj Nair, Ford's group vice president of global product development, conceded "the way I drive" the C-Max falls short of the 47-mpg rating by 12 miles per gallon, or 25 percent.
But Nair says such variability is to be expected in a hybrid, where factors such as speed, temperature and even the age of the vehicle can dramatically impact one's fuel economy. You can get 47 miles per gallon -- and Nair says he has consistently done so -- by driving in EcoCruise mode, at 60 miles per hour, and using all the coaching tools Ford provides on the instrument panel to perfect your braking and acceleration behavior. The reward is a big cluster of green leaves that appears on the dashboard screen.
If you are really gentle with the accelerator, you can supposedly get up to highway speed (62 miles per hour) on pure electricity, without the gas engine ever kicking on. That'll boost your fuel economy, for sure. It might be doable on a dynamometer in a testing lab. But it's hard to drive that way in the real world, partly because the C-Max is just so much fun to drive.
I tried during a 104-mile round trip between Detroit and Ann Arbor, Mich., the other day. Ford had loaned me a C-Max Energi from its fleet of press review cars. The C-Max Energi is a plug-in derivative of the C-Max, which is supposed to be even more efficient because it can run longer in electric-only mode. Ford says the C-Max Energi delivers 100 MPGe in combined city/highway driving, but given the hubbub over its 47 mpg claims, I'm inclined to take that with a grain of salt.
The C-Max Energi can go up to 620 miles on a single tank of gas and a fully charged battery, according to Ford, which is 80 miles farther than Toyota's new Prius plug-in. And Ford says you can also drive up to 21 miles in electric mode only; the Prius plug-in goes just six miles on pure electricity. The top speed in EV mode is 85 miles per hour, which is 25 mph better than the Prius plug-in. As far as I'm concerned, all this seems purely hypothetical.
The C-Max Energi has an EV mode button on the center stack that lets the driver choose between three modes: electric-only driving, normal hybrid mode (which blends electric and gasoline engine power as appropriate) or EV-later mode, which reserves the battery pack power for later use. There's even a feature called EV+ that allows the vehicle to stay in electric-only mode for longer durations once it learns your frequent destinations.
Unfortunately, for reasons that are still unclear to me, the EV mode was "unavailable" when I was driving, so I was limited to automatic hybrid mode anyway. Even if I couldn't get the Energi's full 100 mpg-equivalent, I figured I ought to get close to the C-Max's 47 mpg. I was willing to cut a little slack because the C-Max Energi comes with a 7.6 kWh lithium-ion battery that is five times larger than the battery in the regular C-Max, adding 252 pounds to the car's overall weight (and by the way, dramatically cutting down on cargo space).
For the first leg of my trip, I tiptoed on the accelerator and brake pedal, gliding whenever possible, until I got to the freeway, where I set the cruise control at 62 mph and didn't touch the accelerator or the brake again until I exited the freeway 45 minutes later. The road was almost completely flat, the weather cooperated (for January in Michigan) and so did traffic.
When I stopped for lunch, the car's computer said I had gone 51 miles, and averaged 35.5 mpg. Hmm. For the trip back to Detroit, I decided to drive the way I normally do, slightly over the speed limit, at around 75 miles an hour. Back home, the car said I'd gone 49.6 miles, and averaged 36.7 mpg. That was a surprise! I didn't expect to do better driving more aggressively. Overall, during my 104.2-mile trip, I averaged 35.6 mpg, well short of the promised 47 mpg.
I don't know why I'm complaining. Our family minivan, a 2007 Chrysler Town & Country with a 3.8-liter V6, purportedly gets 16 mpg city/23 hwy. I think we were lucky to get 21 on a long road trip. To me, 36 miles per gallon is heaven!
But the federal government demands that carmakers achieve the equivalent of 35.5 mpg, on average, across their entire lineup by the 2016 model year. The bar is raised even higher by 2025, when vehicle fleets must average 54.5 mpg. With big trucks and SUVs in the mix, automakers need small cars like the C-Max to overachieve.
The consequences are huge, not just because the cost of fuel-saving technologies can be onerous. There's the marketing advantage, of course, for whichever company can claim best-in-class mileage. And those that don't hit the mark must pay a gas-guzzler tax. And let's not forget the potentially devastating brand damage that could result when a company fails to live up to customers' expectations. Hyundai Motor got caught overstating mileage numbers on a third of its cars -- it blames a mistake in testing procedures in Korea -- and is now trying to make good by reimbursing customers with gas debit cards.
Ford is not accused of cooking its fuel economy numbers. The company says it followed the Environmental Protection Agency's testing procedures to the T and the C-Max earned its EPA-certified 47 mpg rating. Ford executives also say, however, that they're working with the EPA to see if any changes are needed in its certification testing.
As Forbes contributor Jim Gorzelany explained recently, EPA mileage ratings are an elegant fiction. In fact, the EPA doesn't do the testing at all. Instead, automakers measure a vehicle's fuel economy under rigidly controlled circumstances in a laboratory using a standardized test that’s mandated by federal law. Then they submit the results to the EPA, which reviews the data and spot-checks about 15 percent of the ratings.
It seems to me the testing procedures, last revised in 2007, are ripe for review again, especially because it's gotten tougher to predict fuel-economy for so many emerging technologies, like hybrids, electric cars and natural gas vehicles. An EPA spokeswoman could not say whether the fuel economy protocols would be reviewed.
The funny thing is, I really, really like the C-Max and would strongly consider buying one. It's good-looking, has room for five and flexible cargo space. At a starting price of about $25,000, it's a great value. Add some nice features like Ford's unique hands-free liftgate and a premium audio and navigation system, and you'll probably pay $30,000.
The best thing is, it's zippy and responsive, and truly a hoot to drive. And at 36 mpg, what's there to complain about?
Gallery: Best Compact Crossover Utility Vehicles 11 images View gallery
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20c7f1f9ac49e17bca2c6b96ce9a9892 | https://www.forbes.com/sites/joannmuller/2013/01/25/will-google-kill-the-auto-industry/ | Will Google Kill The Auto Industry? No, And Here's Why. | Will Google Kill The Auto Industry? No, And Here's Why.
English: Google driverless car operating on a testing path (Photo credit: Wikipedia)
I’m amused, and mildly irritated, by all the credit Google gets for the advent of driverless cars, as if autonomous driving were an invention that America’s hapless automakers could never have envisioned.
In fact, the auto industry has been developing self-driving vehicles for decades, long before Google even existed, when Sergey Brin and Larry Page were just babies.
But there’s a growing consensus, mostly emanating from the left coast, that Google has somehow cracked the code to the future of mobility and will soon render traditional carmakers like General Motors, Ford Motor and Toyota Motor as nothing more than purveyors of ordinary appliances.
Baloney, I say. Self-driving cars are coming, but they won't have a Google badge glued to the hood.
And while it's exciting to think about all the possibilities of a futuristic world full of robotic cars providing safe, clean mobility for all, don't count on that Jetsons vision in your lifetime. There are still too many regulatory, technological and practical obstacles in the way.
Instead, look for the technology to roll out gradually, building on systems that are already available, like adaptive cruise control, active braking, lane-keeping systems and parking assist.
The 2014 Mercedes-Benz S-Class, due out in September, will be the first car on the market fully capable of driving itself (under certain circumstances; see video below). Its new steering assist feature will keep you in your lane up to 124 miles per hour, but you have to make turns manually. In stop-and-go traffic, the array of sensors and cameras keeps an eye on cars around you, knowing when to accelerate and when to brake. But you still have to remain alert, and you must keep your hands on the wheel at all times, or the system will shut off.
Forbes contributor Chunka Mui is exploring the whole notion of driverless cars in a multi-part series this week, calling it a $2 trillion business opportunity that dwarfs Google's current search-based business, and predicting ripple effects throughout society.
He's right about the potential fallout. If cars are smart enough to drive themselves, and avoid crashes, everything from the steel industry to hospitals would be affected. But I agree with Forbes contributor Haydn Shaughnessy that a $2 trillion market in the U.S. seems overblown. And I think Mui is perhaps getting swept up in the what-ifs of driverless cars. (He's an innovation consultant, after all.) Still, I commend him for diving into a sexy topic with thoughtful analysis.
An auto writer I respect a lot, Wards.com columnist Drew Winter, argues in a recent blog post that Google poses a serious threat to the auto industry. He says the tech giant and automakers are beginning to wage "an epic battle for the soul of the auto industry." I don't think so.
Instead of Google vs. Detroit, I see a new era of collaboration. Carmakers will necessarily team up with digital partners like Google, Microsoft, Intel (maybe even Apple) to produce talking vehicles that don't crash and get you to work on time. Companies like Ford and Microsoft already collaborate on technology that lets you bring your music and social media apps into your vehicle. Now these non-traditional partners will be working together to solve the difficult challenges of urban mobility on an overcrowded planet.
GM's Chief Technology Officer Jon Lauckner is already plotting a new approach to innovation that includes collaboration on autonomous driving. Many of the best ideas for cars of the future, he told me in a recent interview, won’t come from car companies at all, but rather from non-traditional auto suppliers, like Microsoft or Google, and from innovative start-ups. “We no longer rely solely on our in-house expertise, which is a big change from where we’ve been in the past,” he said.
But like GM, Google doesn't have all the answers either. It isn't capable of producing self-driving cars on its own. It will need the auto industry's expertise to turn its vision into reality.
One thing the tech and auto industries can agree on is that self-driving cars are doable. "This is not Star Wars technology," says Renault-Nissan chief executive Carlos Ghosn. With enough sensors, processors and cameras on board, any car can drive itself. But at what cost? The radar system mounted to the top of Google's self-driving Toyota Prius costs an estimated $70,000. Like Google, many carmakers already have prototypes on the road. The debatable question is when they'll get to market, and under what circumstances.
In August, the U.S. Department of Transportation launched the first real-world test of connected vehicle technology -- critical for self-driving cars to operate safely -- in and around Ann Arbor, Mich. One goal of the year-long project, involving 3,000 vehicles, is to come up with a realistic time frame for the technology.
Ghosn says autonomous cars will be ready by 2020. But there are practical limitations, he added. "We won’t see cars without a driver. No (carmaker) would accept the liability," he said. "But we will see drivers doing nothing."
Honda Motor Co. President Takanobu Ito agrees. "We have the hardware to make self-driving cars. But we feel the driver has to be ultimately responsible. We want technology that assists the driver, like when he is fatigued."
In other words, when driving is not fun anymore.
Gallery: 10 Things To Watch For In The 2013 Car Business 10 images View gallery
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c9732b09adf760b59340c6ecaa9711e9 | https://www.forbes.com/sites/joannmuller/2013/05/08/silicon-valley-vs-detroit-the-battle-for-the-car-of-the-future/ | Silicon Valley vs. Detroit: The Battle For The Car Of The Future | Silicon Valley vs. Detroit: The Battle For The Car Of The Future
The high-tech, superconnected car of the future is coming soon--but who will pay for it, and who will profit?
The Lexus SUV barreling down Silicon Valley's Highway 101 is much like any other, save the $65,000 laser sensor spinning on the roof like a nerdy propeller beanie. Capturing 1.3 million bits of data per second along with video feeds and radar pulses, the car's computers can "see" the vehicles around us and keep us clear of them. Which is a good thing. Because no one is driving.
Google's famed self-driving car is surprisingly easy to get used to, especially as it instantly responds to a car drifting toward us while its human operator fumbles for his hat. For the man sitting next to me, Christopher Urmson, the engineer who heads up Google's self-driving cars research, it's as boring as a bus ride. He and his team have logged some 500,000 miles in the Googlemobile since 2009. His feet are nowhere near the pedals, and his mind is anywhere but on the road. He's talking about the future.
"Our plans are to make driving better, so people can do what they want to do," he explains, gesturing excitedly with his hands. "The goal here is to make the technology disappear." Google cofounder Sergey Brin told him he wants to see driverless cars on the road in five years. Mainstream automakers have been busy, too, preparing to announce their own plans for autonomous or semi-autonomous cars within the next three years. In January Nissan's CEO, Carlos Ghosn, predicted driverless cars will hit showrooms by 2020. This is actually going to happen, regulators willing.
But they are just a part of an automotive revolution that may be the most transformative since Henry Ford's assembly line. The "connected vehicle," with vast amounts of data flowing in and out, promises endless new possibilities for safety, convenience, entertainment--and badly needed profit.
"Now is the time for us all to be looking at vehicles on the road the same way we look at smartphones, laptops and tablets," says Bill Ford Jr., executive chairman of Ford Motor Co., "as pieces of a much bigger, richer network."
But if Ford and other auto executives see the technology with a Jetsons like optimism, they have darker concerns, too. Fifty years ago Detroit misgauged consumer appetites and lost its way amid an invasion of fuel-efficient Japanese cars to U.S. soil, and it almost never recovered. With 100 million new cars expected to have some form of connectivity by 2025, the companies who build and sell them quietly fret that if they don't spend billions developing this new market, they may lose it to disruptive young rivals in a pattern painfully familiar to newspaper, music and television companies. Detroit versus Silicon Valley. The war is on.
It's a battle worth waging. The market for smart vehicle systems like lane-departure warnings and collision-avoidance will be around $22 billion by 2020, estimates Ian Riches, director of the global automotive practice at London-based Strategy Analytics. GSMA, a mobile-industry trade group, projects the revenue opportunities from embedded telematics--devices that transmit data from the car--will grow to $25 billion by 2025, up from about $2.5 billion today.
Despite all the venture-capital-fueled disruptive triumphs of the past two decades--and the myriad auto industry screwups over the same period--tech companies that think they can overlay their products and then skim the profits from the car of the future will encounter stiff resistance from auto companies and their traditional suppliers like Continental and Delphi, which are pouring billions into smart-car development. "A car is not a smartphone on wheels," says the Gartner Group's Thilo Koslowski.
Then again, the "car guys" that run the industry aren't Bill Gates. And while Detroit has successfully partnered with a number of tech companies, including Microsoft, to develop new products, "I think carmakers are very nervous?they won't get rich enough on this," says Jean-Francois Tremblay, senior manager with Ernst & Young's automotive practice. "They are afraid they can lose the game."
Detroit has already seen its traditional bread and butter--new car sales--threatened by gridlocked cities and rental systems like Zipcar, which offer consumers new alternatives to ownership. Surveys show that teenagers no longer reflexively equate wheels and freedom. These telematics offer the tantalizing possibility of again connecting a car and its owner in a way that produces new, continual revenue streams to boot.
In a beige, 1960s-era office building in Ann Arbor, Mich., Peter Sweatman, director of the University of Michigan's Transportation Research Institute, meets regularly with tech whizzes determined to reinvent the auto industry. His organization last year began the first real-world test of connected vehicles, partly funded by the U.S. Department of Transportation. Some 3,000 "talking" cars, trucks and buses are cruising local roadways to determine if the technology is ready to be deployed, in the hope of preventing some of the 1.2 million traffic deaths worldwide each year.
"It's got a safety purpose--which is how to avoid the majority of crashes," Sweatman says of vehicle-to-?vehicle communication. "But clearly it has much broader implications, too." Companies like Verizon, AT&T, Intel, Cisco Systems, Qualcomm and IBM have been beating a path to Ann Arbor to investigate. Smaller entrepreneurs are sniffing around as well. "They know we have a steady stream of data coming in," he says. "They want to know how they can monetize it. It's clear to me that they're looking to see where the value proposition will be for their companies."
It's a very good question. Cars are already loaded with technology, but profits haven't yet followed. The newly redesigned Ford Fusion, for instance, has more than 145 actuators, 4,716 signals and 74 sensors--including radar, sonar, cameras, accelerometers, temperature gauges and even rain sensors--that monitor the perimeter around the car and see into places invisible from the driver's seat.
All these premium features and mandated safety systems have driven the average price of a car in the U.S. up 10%, to $30,800, since 2008, according to Edmunds.com. Yet margins remain tight thanks to the rising costs of commodities, product development and marketing.
New fuel-economy laws don't help. The average Ford F-150, for example, sells for $38,500 and has a rough margin of $11,000. But those laws, plus higher gas prices, mean Ford is selling far fewer F-150s than in the past (645,000 in 2012 versus 940,000 in 2004). Increasingly growth will come from smaller, more fuel-efficient--and lower-profit--cars like the Fusion, which sells for an average $26,000 and clears around $7,000 for Ford.
More electronics are seen as the solution, a way of persuading shoppers to buy a fully loaded Fusion, with Ford pocketing as much of the gravy as possible. The $31,000 Ford Fusion Titanium with all-wheel-drive, for instance, is already loaded with premium features. But add the $1,200 driver-assist package (blind-spot detection, cross-traffic alert and lane-keeping system), plus the $795 voice-activated navigation system, the $995 adaptive cruise control and the $895 active park assist, and you're now paying over $35,000, padding Ford's profits substantially.
From BMW to Audi to GM, every major automaker is using the same, or similar, strategy. The redesigned Honda Accord is equipped with six wide-angle cameras to eliminate blind spots. What's wrong with glancing over your shoulder? Nothing. But the unique LaneWatch feature comes standard on midlevel Accords priced $25,000 and higher, versus $21,680 for the base model. Cadillac's CUE information and entertainment system was the first to employ tabletlike gesture controls. Infiniti's JX crossover automatically applies the brakes when rear sensors detect an obstacle behind the car.
The next phase, currently in research, involves sensor fusion, where engineers learn more about the environment by blending multiple signals and adding other information from the cloud. Ford is even researching biometric sensors, perhaps embedded in a car seat, to measure stress levels for a more personalized response from driver-assist technologies, because skill levels--and thus stress--can vary in certain situations.
"So far we've just scratched the surface of what is possible," said Paul Mascarenas, Ford's chief technical officer.
For the most part consumers have gone along with all this, shelling out blindly in much the same way they've added hundreds of dollars a month to their telephone bills thanks to the smartphone revolution. Yet they may be reaching saturation. J.D. Power & Associates surveyed almost 17,000 vehicle owners, asking them what they really wanted out of car technology. The desires were overwhelmingly pragmatic. Top on drivers' lists: They'd like their smartphone to work in their car as seamlessly, safely and affordably as it does elsewhere.
Google's self-driving car has famously logged more than 500,000 miles since 2009.
Yet companies like Honda Motor seem to be looking past that, convinced there are other ways they can make driving better. They're developing an augmented reality system to highlight points of interest. By circling speed-limit signs or layering text such as a street address or business name over the driver's field of vision in the windshield, augmented reality aims to help drivers focus on important information. The system can also detect the speed of approaching vehicles to coach elderly or inexperienced drivers about when it's safe to make a left turn in front of oncoming traffic.
When J.D. Power explained to vehicle owners how next-generation head-up displays like Honda's would work, 74% said it would be a nice feature to have. Yet once J.D. Power assigned a $1,300 price tag, interest dropped to 32%. "Many consumers view it as a redundant set of information," says Mike VanNieuw?kuyk, J.D Power's executive director of global automotive.
That's why the most revolutionary aspect of the car of the future may be finding a way to sell one. Until now most automakers have bundled the cost of infotainment systems like the Ford/Microsoft SYNC into the price of the car or, in the case of General Motors' telematics service Onstar, charged subscription fees for services after a free trial.
But today's consumers aren't yet willing to pay extra for services they already get on their smartphones (lack of demand is why you won't see more than a limited app store in your car anytime soon). The cost of making cars smart will likely need to be shared more broadly--by consumers, but also by automakers, mobile operators and others (such as insurance or energy companies) that stand to benefit from the data reaped from connected cars, says Anil Valsan, E&Y's lead automotive analyst. But how remains an open question.
Ideas range from selling data about vehicle movement patterns to traffic-or weather-monitoring companies or to insurers that want better data in exchange for lowering consumer rates. In Japan Honda provides free connectivity services if customers commit to periodic maintenance at a Honda dealer. And General Motors is offering OnStar customers a potential insurance discount if they share their car's data.
Advertising might be another way to subsidize connected services for car owners. Plenty of mobile phone users already allow their mobile providers to offer location-based services through their phones. But there are the usual privacy concerns as well as worries about adding to driver distraction.
Perhaps consumers would pay on a per-use basis or for individual applications they find valuable. In another scenario consumers could add their car as a "device" to their existing mobile service plan, but that would likely eat up their monthly data allowance in no time.
Or perhaps some small startup will come up with a way.
None of this has been figured out yet, even as the technology races forward. That's amplifying the anxiety for carmakers. Just as a big market for electric vehicles has proved elusive despite huge gains in technology, "carmakers see themselves being forced to go down this route," said Tremblay. "But they don't fully see where the market's coming from and how they will pay."
Out on the sunny West Coast, sailing along in his driverless Google car, Urmson isn't concerned. Watching the scenery flow by as we chat, he says Google is concentrating on one thing: "How do we make a car that's deliberate and can make the decisions for you?" As it was with search, mapping, mobile phones and a host of other products, his company, he says, is focused on engineering only. Making money? There will be plenty of time to figure that out later.
Besides, he says, "for there to be a gold rush, someone has to have found a nugget. We haven't done that yet."
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78bea4d40769b4aad2099ee0bbf62be8 | https://www.forbes.com/sites/joannmuller/2013/05/14/dave-bing-will-not-seek-another-term-as-detroit-mayor/ | Dave Bing Will Not Seek Another Term As Detroit Mayor | Dave Bing Will Not Seek Another Term As Detroit Mayor
Detroit Mayor Dave Bing
Detroit Mayor Dave Bing, the 69-year-old former NBA star, says he will not seek another term in office. Instead, he will explore a bid for Wayne County executive.
His decision not to seek re-election is not a huge surprise, given that the struggling city is currently being run by a state-appointed emergency financial manager who is considering a municipal bankruptcy. The announcement leaves former Detroit Medical Center chief Mike Duggan and Wayne County Sheriff Benny Napoleon as the two frontrunners for the four-year term. Five other candidates are in the running. The top two vote-getters on Aug. 5 advance to the Nov. 6 general election.
Bing was elected mayor in May 2009 to complete the remaining months of disgraced ex-mayor Kwame Kilpatrick's second term. Voters re-elected him to a full term that November. Bing had bold ideas for fixing the city, but proved to be ineffective as mayor, often clashing with city unions and the City Council.
Bing was featured in a Forbes cover story, "City of Hope", in June 2011, and talked candidly about the city's troubles. "Right now it's all about survival," he said at the time. "I believe this city has a future—otherwise I wouldn't be doing what I'm doing, because it's a thankless job."
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4d4771601624e219098b584fde85049a | https://www.forbes.com/sites/joannmuller/2013/06/14/a-price-war-on-plug-in-cars-still-an-uphill-battle/?utm_campaign=techtwittersf&utm_source=twitter&utm_medium=social | A Price War On Plug-In Cars: Still An Uphill Battle | A Price War On Plug-In Cars: Still An Uphill Battle
2013 Honda Fit EV is now cheaper
Prices on electric vehicles are falling, as automakers look for ways to boost sales of green cars mandated by the government but deemed out of reach for most consumers.
The price cuts are mostly in the form of subsidized leases. Honda Motor , for example, slashed the lease price on its plug-in Honda Fit from $389 to $259 a month with no down payment, unlimited mileage, routine maintenance, collision coverage and a free 240 volt EV home charging station. General Motors last week started offering $5,000 off 2012 Chevrolet Volts and $4,000 off 2013 models. Chevy is also offering a $199 per month lease on its newly launched Spark EV. The Fiat 500e EV, which goes on sale later this summer, also has a $199-per-month lease.
Nissan Motor , a leader in its commitment to electric vehicles, launched the price war back in January, when it cut the starting price on its slow-selling LEAF to $28,800 and offered a $199 monthly lease. Ford Motor has yet to announce any price cuts on its $245-per-month Focus electric (with $1,999 down) but a spokesman says "we are continuing to monitor the marketplace to ensure our products remain competitive."
The price adjustments seem to be working. Nissan says LEAF sales have grown more than three times to 2,138 units in May from a year ago (though that's still one-quarter the number of Sentras it sells in a month). Honda is promising to ship more Fit EVs to satisfy demand, and Fiat dealers say they've already got waiting lists for the upcoming 500e.
Development costs for EVs remain high, however, which means the discounts are only causing car makers to lose more money on them. Sergio Marchionne, chief executive of Chrysler Group and Fiat, has said in the past his company will lose about $10,000 on every EV it builds.
Now add low-cost leasing to the mix. To offer an attractive lease payment, manufacturers typically have to subsidize the vehicle's expected used-car value at the end of the lease period. Predicting the future value of a three-year-old electric car with untested technology is anyone's guess right now. So a low-cost lease program means they're just tacking the discount onto the back end of the transaction, instead of putting cash on the hood in the form of a rebate.
But carmakers feel compelled to build and sell EVs, even if they are too expensive for most buyers, because they help them meet new state and federal governments mandates. In California, for example, every automaker is required to offer zero emission vehicles. The U.S., meanwhile, is ratcheting up fuel-economy standards. Most automakers have concluded the only way to reach those tougher standards is by offering electric vehicles that get the equivalent of 100 miles per gallon or more, offsetting the sale of more popular, but less efficient vehicles in their lineups.
The industry is working hard to bring down the price of advanced battery-powered vehicles to make them more appealing to the mass market. GM chief executive Daniel F. Akerson said last month that the company intends to cut the cost of producing the Volt by up to $10,000 so that the next-generation Volt, due in a couple of years, can be both affordable and profitable.
In the meantime, the U.S. Department of Energy launched a new metric it calls “eGallon” which lets consumers compare the costs of running a vehicle on electricity with the cost of running a similar car on gasoline. According to DoE, the national average eGallon price is $1.14, compared to the national average gas price of $3.65 per gallon.
Still, there are other issues, like range anxiety, to overcome before the widespread adoption of EVs. Motorists still worry that an EV could leave them stranded on the side of the road with a drained battery. There were 6,048 charging stations in the U.S. as of May 28, according to the U.S. Department of Energy, but thousands more are needed to ease the public's so-called range anxiety.
Bottom line: mass adoption of electric vehicles is still a long way off.
Gallery: The Most Cost-Effective Hybrids 11 images View gallery
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d947730fe5554d1337da2ecb6b2ccbfe | https://www.forbes.com/sites/joannmuller/2013/07/18/bankruptcy-filing-begins-new-chapter-in-detroits-long-saga/ | Bankruptcy Filing Begins New Chapter In Detroit's Long Saga | Bankruptcy Filing Begins New Chapter In Detroit's Long Saga
The City of Detroit today filed for bankruptcy protection in federal court, an historic move by its state-appointed emergency manager to dig out of billions of dollars of debt after decades of mismanagement. It is the largest municipal bankruptcy in U.S. history.
The voluntary petition by Emergency Manager Kevyn Orr, which received the blessing of Michigan Gov. Rick Snyder, would seek protection from creditors and unions who are renegotiating $18.5 billion in debt and other liabilities.
"In many respects, this day has been six decades in the making," Snyder said in a statement, calling its debt levels "unsustainable." The governor said 38 cents of every city dollar goes toward debt repayment, legacy costs and other obligations. By 2017, that figure will go up to 65 cents per dollar. And while Detroiters already pay the highest taxes per capita in Michigan, the city's 700,000 residents don't receive the city services they deserve, he said.
For Michigan to be a great state, Detroit needs to be a great city. And the simple fact is, Detroit is broke. By filing for bankruptcy, Detroit can get back on the right path."
Last month, Orr presented a proposed restructuring plan to the city's creditors, including retired city workers, most of whom would received pennies on the dollars for what they are owed. He has been seeking to cut union contracts and pension benefits for city retirees in an effort to have the resources to provide basic services like police, fire and public lighting to the city's 700,000 residents. But has has been unable to reach an agreement with the city's pension boards, who sought to block a bankruptcy filing. A hearing on that lawsuit was scheduled for Monday.
By filing today, Orr appeared to be trying to head off that hearing. Orr had warned consistently that if negotiations hit an impasse, he would move quickly to seek bankruptcy protection.
More on Forbes:
Gallery: 10 Things To Know About Detroit 10 images View gallery
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4310fd4b2ca8c650ef9380b36cdee891 | https://www.forbes.com/sites/joannmuller/2014/01/13/audi-sees-nothing-but-blue-sky-in-u-s/ | Audi Sees Nothing But Blue Sky In U.S. | Audi Sees Nothing But Blue Sky In U.S.
Audi's A3 Sedan.
It took 40 years for German luxury carmaker Audi to break the sales threshold of 100,000 vehicles in the United States. That was in 2010. In the last three years, it's added another 58,000 units.
That kind of astronomical growth is more than enough to make Audi U.S. CEO Scott Keogh smile. But even more gratifying, he says, is that the average transaction price for Audi vehicles has has been steadily increasing from $43,000 in 2010 to $52,000 today.
The point is that Audi is selling a richer mix of vehicles -- more expensive models loaded with extra features -- and that customers are willing to pay a premium price. "We've closed the gap dramatically with other luxury brands," he said, even as competitors like BMW and Mercedes have squared off with increased incentives in a battle for market share.
There are other signs Audi is on a roll -- the equity value of its dealerships has risen to 7 times earnings, one of the highest in the industry, he said. Most of the sale growth has come without adding extra dealers. Audi now ranks second-highest for cross-shopping in the luxury segment, up from seventh a few years ago when few people gave its cars serious consideration.
Last year, Audi enjoyed a 13.5 percent sales increase -- outpacing the industry, which grew 8 percent -- even though there wasn't much new in its showrooms. This year, it's adding the subcompact A3 (along with the S3 performance version and A3 cabriolet) and the Q3 small SUV -- two entry-level segments enjoying strong growth.
"We've got the right product at the right time," he said. Audi already has a younger demographic than most luxury brands -- about 50 percent of its sales are to Gen X and Gen Y consumers. "That demographic gives us great hope," said Keogh.
And that's just the beginning. Globally, Audi plans to spend $30 billion between now and 2018 on research and development to grow beyond the 1.5 million vehicles it sold worldwide in 2013. "We have a business model that's working, and a strong brand," he said. "Audi is a restless company. The competition (BMW, Mercedes, and Lexus ) still sells twice as many vehicles as we do. That keeps us motivated. "
Gallery: Baby Boomers' Top 10 Dream Cars 20 images View gallery
Leading the Next Industrial Revolution | March 26-28, 2014 | J.W. Marriott | Chicago, Illinois
Forbes will host the Reinventing America Summit in Chicago from March 26-28, 2014, bringing together 300 top industrial executives, entrepreneurs, academics and elected officials leading the country’s next Industrial Revolution.
Please join us (information on how to apply is here).
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5cddc1ecfbead4dc6f121c96a515143e | https://www.forbes.com/sites/joannmuller/2015/01/04/video-unlocking-the-secrets-of-bmws-remarkable-car-of-the-future/ | Video: Unlocking the Secrets Of BMW's Remarkable Car Of The Future | Video: Unlocking the Secrets Of BMW's Remarkable Car Of The Future
Photo: BMW
In a nondescript industrial building in suburban Detroit, a $50,000 BMW is lying in pieces. The place looks like an illegal chop shop, where stolen vehicles are disassembled to be sold as parts. The body is on the floor, the chassis propped on a stand, the powertrain spread out in tiny bits on a table, the seats on somebody's desk.
But A. Sandy Munro is no car thief: he paid full price for the BMW i3 he subsequently tore apart. Nor is he selling it for parts. He is, however, selling information about this remarkable car to anyone who is interested. And rest assured, a lot of people in the auto industry want to know its secrets.
"This is, without a question of a doubt, the most advanced vehicle on the planet," said Munro, chief executive of Munro & Associates, whose firm specializes in reverse engineering for the auto industry among others. "It's as revolutionary as the Model T was when it came out."
The quirky-looking i3 is an urban electric car developed by BMW to cope with a confluence of troubling trends -- global congestion, pollution and, yes, high fuel costs -- that threaten the long-term viability of the automotive industry. "It’s entirely possible that we could see certain cities blocked for cars with internal combustion engines,” Ludwig Willisch, chief executive of BMW North America, told me a few years ago, when the i3 was still under development. It went on sale in the U.S. last May and BMW sold about 6,000 of them in 2014. Since then, of course, gasoline prices have fallen dramatically, making a massive shift toward electric cars unlikely any time soon.
Still, the i3 -- the first mass-market vehicle made of carbon fiber reinforced plastic for reduced weight and improved driving range – is full of innovative lessons for carmakers facing decisions about how to comply with tough new laws on emissions and fuel economy.
That's why Munro last August embarked on a deep-dive "tear-down" of the car at his company's benchmarking facility outside Detroit. The goal is to offer competitors an in-depth look at BMW's engineering secrets -- along with a detailed analysis of the costs and processes involved, right down to the individual nuts and bolts used. "This is Grandma's real cookbook," says Munro. "Everything is exposed; there is absolutely nothing left to the imagination with this kind of costing."
During a walk-around with Forbes, Munro demonstrated some of the i3's key innovations, including a carbon fiber "life module" with the crash protection of a Formula One race car that is glued and screwed to a rolling aluminum chassis module that includes the car's suspension, battery and drive system. The superior strength of the life module comes from the way the plastic fibers are aligned within the shell to resist crushing.
BMW's battery is also unique compared to other electric vehicles. The 360-volt battery consists of eight independently controlled modules, each containing 12 cells. The advantage of BMW's system is that when one cells goes bad, that module can be replaced, unlike in other EVs, like the Ford C-Max, which requires replacement of the entire battery pack, potentially costing thousands of dollars.
Munro is still crunching the numbers, but is convinced that despite the high cost of carbon fiber and lithium-ion batteries, BMW has designed the i3 to be profitable at a volume of about 20,000 vehicles a year. Given the regulatory challenges the industry faces, he said, "Other carmakers are going to be dragged up to the chalkboard and told, 'Do this'."
Carmakers frequently perform competitive tear-downs as part of their own internal benchmarking. (Often, in fact, they hire Munro's firm to do the proprietary work for them.) In this case, however, Munro decided to study the i3 at his own expense (about $1 million), and make his findings available for general distribution -- for a handsome price, of course (about $500,000 for carmakers). Customized reports on key vehicle systems, such as the body, rolling chassis, battery and heat exchange, powertrain and interior, will also be available to suppliers and others.
"We're not just selling this to car companies. Airplane companies, high-speed rail companies, even people making furniture are interested in this car because it's that revolutionary," said Munro. The most intense interest, though, is coming from Chinese carmakers, most of which have been dependent until now on technology from their joint venture partners. Munro says he's been talking to at least a dozen Chinese manufacturers concerned about future innovation when those partnerships run out.
A closer look at the teardown is here.
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a4e70926303b03ad4c6d7db4efc72865 | https://www.forbes.com/sites/joannmuller/2015/03/11/how-an-old-analysis-technique-could-strengthen-the-u-s-manufacturing-revival/ | How An Old Analysis Technique Could Strengthen The U.S. Manufacturing Revival | How An Old Analysis Technique Could Strengthen The U.S. Manufacturing Revival
This week, Forbes is hosting the Reinventing America Summit in Chicago, bringing together more than 300 industry leaders, entrepreneurs, investors and policy makers to discuss the rebirth of American manufacturing. This guest post, by Miles Parker, a 30-year communications veteran in the design and manufacturing industries, explains why the tide is turning.
U.S. manufacturing is at a major turning point. The quality and cost battles we waged to counter 1980s “Japan Inc.” are mostly behind us. The China offshoring paradigm is “equalizing” itself out: they are finding that success has its own inevitable costs.
Regardless of our oscillating data on jobs and GDP, industry is reinvesting in U.S. plants and equipment. Surveys continue to indicate that CEOs are planning to relocate more manufacturing stateside. As proof, U.S. machine-tool orders for 2014 closed in December up 3.1 percent over the previous year. Manufacturers are rebuilding and realigning themselves in order to more profitably serve the largest free market in the world. What is happening in our industry and technology sectors represents a long-awaited shift towards understanding where one builds and why.
There are many reasons why conditions here are more favorable than in the past. The economics of offshoring—only to return products—were always based on poor assumptions. For instance, it was assumed that assembly labor was the significant, intractable piece of the pie, one that could easily be transplanted to foreign shores at great savings. Actually, that category of labor averages closer to 4-5 percent of product cost. Finished materials consume roughly 70 percent and overhead another 24-25 percent.
Piece parts were the very tip of the iceberg that somehow went to bid and largely decided overseas deals. This left behind fixed assets in plants, the same management overhead, increased travel, new customs fees, and greater outlays for logistics. Insufficient quality and time-to-market penalties were the other giants hiding under the waterline of standard accounting. Rarely were these factors assessed and attached to the part or assembly of parts under bid.
This is one of the true tragedies of offshoring. Both product-level and corporate accounting were so off the mark. Today, Total Cost of Ownership (TCO) is re-emerging from management desk drawers to provide insight into the role that departments can play in creating or shedding costs. It’s a key tool for measuring the causality within interdependent operations—and generating solid shareholder profits.
Some U.S. companies are already doing this, but the secret going forward is to harness TCO alongside product simplification and the science of early costing. Product simplification spawns innovation, quality, and cost reduction by guiding engineering teams to combine separate, inefficient parts and functions into elegant, unified structures that do more for less. Approaches such as those pioneered by Hitachi in Japan and Drs. Boothroyd and Dewhurst in the U.S. are still, today, powerful systems for chopping labor and materials from—let me say it—old-fashioned and expensive design strategies.
Want to equalize the playing field so that international labor rates are less of a factor? Design out those costs, feature by feature. Want to find the best materials and processes for making the product? Let the analysis tools fight it out between plastic, steel and other choices. Then take those detailed readouts to your suppliers. Or, better yet, sit with them from the beginning and share the approach.
Way back in 2003, I worked on a client study about the hidden costs of offshoring. Two generous American companies, Maytag and Milwaukee Electric Tool, provided a product with cost sheets for analysis and redesign. Using very conservative numbers, both re-engineered products came in under the China bids. Yes, that was more than twelve years ago. And it was done without the supporting role TCO can play in outlining how product simplification gathers wealth downstream through to manufacturing, distribution, and lower warranty and service exposure.
Here are basic steps to ensure a revival of American manufacturing:
Pursue product simplification and early costing from day one. The literature supporting this is chest high. Begin constructing a digital path that can travel from design to end-of-life, but use only what suits you (keep it simple). Automate for quality and speed, yet don’t be afraid of manual labor if the real numbers favor it. Convince your management to undertake TCO and operational accounting; guessing belongs to the last century. Gather your suppliers, work regionally if you can, and start new partnerships based on transparency, assured margins, cost and value, and deep innovation. This last X-factor is the one item you’re least likely to offshore successfully, or have copied by a competitor or distant nation.
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35e056e2bdec7943efeacc5ac1ccb44b | https://www.forbes.com/sites/joannmuller/2015/03/20/how-to-get-your-idea-to-market-quickly-share-it-with-the-chinese/ | How To Get Your Idea To Market Quickly? Share It With The Chinese! | How To Get Your Idea To Market Quickly? Share It With The Chinese!
AutoHarvest is an online marketplace for intellectual property -- an eBay of sorts for ideas -- with the goal of helping to turn innovative technology into commercial success. Born out of the automotive industry, the Detroit-based non-profit serves as a neutral meeting place for corporations, engineers, scientists, investors and entrepreneurs to transfer intellectual property for new uses across many industries.
Now AutoHarvest is teaming up with a similar outfit in China to create a larger, global ecosystem where inventors can find partners willing to license their technology. AutoHarvest and China's WTOIP will collaborate, providing mutual access to their respective communities of product developers, manufacturers and patent holders.
I've been following the progress of AutoHarvest since its inception in 2011, and it seems like an ideal way to boost America's industrial innovation. But I have to say, the announcement that AutoHarvest will collaborate with the Chinese struck me as odd, given the long history of patent infringement in China. Automakers have long been battling the flood of counterfeit auto parts coming from China - everything from tires to brake pads. In some cases, the Chinese have copied entire vehicle models, right down to the logo. Why would an American engineer deliberately share his patented technology with China, I wondered?
I contacted Jayson Pankin, who co-founded AutoHarvest with David E. Cole, the former head of the Center for Automotive Research in Ann Arbor. Pankin suggested skeptics like me need to update our views on globalization.
"The Chinese are part of the fabric now," he said. "They're more capitalistic than we are. The biggest fear might be that they will beat us at our own game. It's probably better to partner with them," he said.
Many major Western companies have built lucrative businesses in China, said Pankin, who spent seven years helping the automotive supplier Delphi commercialize its intellectual property. "I want to help the little guys get that boost," he said. "Nine thousand miles and the language barrier -- they can't afford an army of people on the ground to figure it out."
WTOIP, whose intellectual property network in China includes 600,000 patents and 500,000 trademarks for sale, will allow AutoHarvest to showcase some of its members' capabilities -- as well as their technology needs -- to Chinese manufacturers and product developers. By pooling resources on intellectual property, Pankin said, the two organizations can help connect a company with a new welding technique in Iowa, for instance, with an appliance manufacturer in China. "Our goal is to get people together to help each other," he said.
"These are not nefarious people," he said of the community of Chinese product developers and manufacturers represented by WTOIP. "China 2.0 is very real."
And why not expand the innovation ecosystem by partnering with China? "It's better than a small company running out of steam and never coming to market."
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b4872607b786e175e5bd96936477427b | https://www.forbes.com/sites/joannmuller/2015/06/01/10-reasons-apple-should-get-into-the-car-business/?linkId=14645037 | 10 Reasons Apple Should Get Into The Car Business | 10 Reasons Apple Should Get Into The Car Business
It’s looking more likely than ever that Apple is getting into the car business. Rumors of “Project Titan ” have been swirling for months, including reports of a top-secret research lab staffed with hundreds of automotive engineers and even speculation that Apple is gearing up for automotive production in Ireland, where it already has a big presence.
Apple executive Jeff Williams dropped another strong hint last week at Re/Code’s influential Code Conference. "The car is the ultimate mobile device, isn't it?" Williams said in response to a question about what industries the company is looking at. "We explore all kinds of categories. We’ll certainly continue to look at those and evaluate where we can make a huge difference."
Does anyone doubt that Apple could make a huge difference in the auto industry? Not me. Imagine if Apple developed the Volkswagen Beetle for the 21st century -- a true people's car, not a pricey Tesla, one that’s simple and beautifully designed, priced within reach for most buyers and packed with stuff people want.
Gallery: Why Apple Should Build A Car 11 images View gallery
It’s not such a stretch. Apple has done it many times before with other products (Apple II, Mac, iPod, iPad, iPhone and now, maybe, the iWatch).
But building an entire vehicle is different, isn’t it? The car business has largely avoided the kind of technological disruption that has transformed other industries -- not because it isn't ripe for reinvention, but because the traditional barriers to entry are so high. It’s a heavily regulated and capital-intensive industry whose complexity is often underestimated by outsiders. The list of failures is long, including Preston Tucker, John DeLorean, Malcolm Bricklin and Henrik Fisker. The jury is still out on Elon Musk’s Tesla Motors , which has yet to turn a profit.
But if any outside challenger it to succeed, it is Apple. Here’s why:
1. Apple has the money. Next to the oil business, car-making is the most capital-intensive business in the world. The industry spent an astonishing $133 billion on capex and R&D last year. Mounting safety and emissions regulations, along with advances in technology, keep driving costs higher. GM alone spent $14.4 billion on new products, factories and technologies in 2014, and it will spend $2 billion more than that this year. That kind of money is no problem for Apple, which has the world's largest war chest at nearly $200 billion. It could easily match GM’s spending and hardly break a sweat.
2. Dealerships won't be an issue. Apple could probably sell its cars out of its existing retail network and avoid the decades-old franchise rules that have stymied other potential entrants. Tesla gets credit for chipping away at this problem. For two years, Tesla has been battling state legislatures for permission to bypass dealerships and sell its $100,000 electric cars direct to consumers. It succeeded in Georgia, Maryland, Nevada and New Jersey, but continues to face stiff opposition in Texas and other states, where wealthy car dealers have enormous political clout. Apple has the lobbying muscle if it wants to take up the fight. It’s only a matter of time before other states start knocking down their outdated laws. Imagine the result: You’d take a test drive from the mall parking lot, then sign the papers back at the Apple store, next to the guy buying an iPad. Or, as Navigant Research senior analyst Sam Abuelsamid suggested, maybe you’d slip on some virtual reality goggles to experience the car inside the store, then fill out the paperwork on an iPad and arrange for it to be delivered right to your driveway.
3. Apple wouldn’t have to build the car at all. Just as it outsources production of iPhones and computers to companies like Foxconn and Samsung, it would likely hire a contract manufacturer like Austria’s Magna Steyr or Finland’s Valmet Automotive to build the vehicles. Apple would handle the design, engineering and marketing – all things that it’s exceedingly good at. Supply chain management should be easy, too. Automotive suppliers that have been pushed to the brink by major carmakers would be more than happy to work with a flush new entrant.
4. Apple has no legacy issues. It doesn’t have old factories that need retooling. Nor does it have expensive unions, tired brands or stubborn management fiefdoms to support. Chief Executive Tim Cook doesn’t have to spend tens of thousands of hours turning around Apple’s culture because unlike General Motors, it’s not broken.
5. Tesla has shown the way. Granted, Tesla loses money on every car. But Musk has launched the first automotive brand in decades that has punctured the public consciousness. Just imagine what he could do with Apple’s resources.
6. With the name Apple comes credibility. Next to bending metal, branding and marketing remain incredibly expensive and important in the car business. But Apple's brand -- far and away the world's most valuable by Forbes accounting -- gives them extraordinary power over established automotive brands. GM and Ford Motor are spending tens of millions of dollars to prove they're cool. Apple already is cool. That’s why carmakers are racing to incorporate Apple’s CarPlay user experience in their future models.
7. People would stretch to buy a car from Apple. They already pay premium prices for Apple computers, iPhones and iPads. If they could replicate the Apple user experience in their car, they’d probably find a way to justify spending more on a vehicle, too.
8. Apple would win the Talent War. They can pick off whomever they want at will. The company has already been scooping up auto industry veterans and is even reportedly offering $250,000 signing bonuses to woo Tesla employees.
9. Apple only needs one great car. It doesn’t have to worry about selling to every market segment, protecting its flanks on pickups, rolling out unprofitable “compliance cars” or developing a luxury strategy. That focus would give them a huge advantage.
10. Apple can take risks others can’t. If Apple tries to make a car, and sinks, say, $20 billion into the effort, it would be the largest budget ever to develop a new vehicle. (By comparison, Cadillac plans to spend $12 billion to develop eight new models by 2020 and two more in the next decade.) Yet the experiment would be only about 10% of Apple’s total cash. So Apple can aim for a moonshot – a self-driving electric car, perhaps, that intuitively manages all of life’s details -- because failure is an option.
It’s entirely doable. The only question is whether Apple will commit to building and selling its own car.
My bet is no. The auto industry’s slim profit margins, typically under 10 percent, aren’t attractive enough to convince a tech giant like Apple, which is used to margins of 35 percent to 40 percent, to go all in.
But Apple knows that most of a car’s profit comes from the software and electronics, not from crunching metal. Apple probably is indeed developing a car, but not because it wants to sell cars on the mass market. Instead, it will show automakers what the car of the future should be like.
Then watch for the rest of the industry to line up at its door.
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c4ffc8dce6ce7f10879540b92d705d61 | https://www.forbes.com/sites/joannmuller/2015/10/29/history-points-to-a-light-at-the-end-of-the-tunnel-for-volkswagen/ | History Points To A Light At The End Of The Tunnel For Volkswagen | History Points To A Light At The End Of The Tunnel For Volkswagen
Volkswagen can recover if CEO Matthias Mueller heeds lessons from other automakers in crisis. (AP... [+] Photo/Michael Sohn)
Volkswagen's crisis sparked by "cheat devices" found on its diesel vehicles has many industry observers wondering if the brand is permanently damaged. Indeed, with every day that passes without a fix in place, VW's loyal customer base is left twisting in the wind. The uncertainty especially is having an impact on the resale values of affected vehicles. According to an analysis of dealer auction data by car shopping destination Edmunds.com, from September 1 to October 9, prices of VW diesel vehicles dropped 6.5% after the crisis broke on September 18.
But Volkswagen is not the first automotive brand to step into its own mess, and it undoubtedly won't be the last. Automakers in the past have successfully navigated themselves through ugly, high-profile safety recalls, bankruptcies, and other PR disasters, even when armies of talking heads spelled doom. There are lessons that VW can learn in each of those cases, and the company would be wise to study those lessons carefully to guarantee its own future.
Edmunds.com analyzed recent brand crises endured by Toyota, Hyundai, Chrysler and General Motors. By studying metrics such as market share, brand loyalty and shopper consideration on Edmunds, it's clear that there is a pathway for VW to weather the storm of lawsuits, fines and bad publicity, and to emerge humbled, but in a position to prosper in the U.S. market. The lessons from these survival stories reveal three critical elements that Volkswagen will want to consider as it digs out of its troubles: meaningful incentives, customer loyalty, and effective product evolution.
CASE STUDY #1
Brand: Toyota
The Crisis: In late 2009, reports first surfaced of accidents caused by unintended acceleration in vehicles made by Toyota. Over the next year the company endured waves of negative press with reports of more accidents and allegations that it did not do enough to address the issue. The company ultimately paid a fine of $1.2 billion for its role in covering up a major safety issue.
Immediate Impact: Toyota's crisis hit its low point in February 2010 when the brand's U.S. market share plummeted to 10.7 percent (compared to 13.5 percent the previous year) and trade-in loyalty fell to 44.8 percent (down from 52.4 percent in February 2009).
Recovery: Toyota responded by offering 0% financing on its vehicles in March 2010. The move boosted the company's market share and brand loyalty to 15.3 percent and 55 percent, respectively. While the company's market share did not sustain that high level, it was enough to stop the bleeding. Market share did not fall below 12.2 percent in any month the rest of the year. Toyota's market share has not recovered to pre-crisis levels (impact from the Japanese earthquake and tsunamis in 2011 stalled recovery efforts), but business has remained remarkably consistent with the overall industry over the last four years
Lesson: It helps to offer shoppers not only incentives, but meaningful incentives. Toyota was notorious for its discipline with incentives, so when they made zero percent offers available to shoppers, it truly resonated in the marketplace as a direct plea to make things right with car shoppers.
CASE STUDY #2
Brand: Hyundai and Kia
The Crisis: In November 2012, Hyundai and Kia admitted that they overstated the fuel economy of about one million 2011-2013 model year vehicles sold in the U.S. The companies ultimately paid over $300 million in settlements to the federal government.
Immediate Impact: Timing could not have been worse for Hyundai and Kia. The brands were already starting to see drops in market share and shopping consideration due to a "trough" in the product lifecycles of their vehicles. A wider availability of cheap credit across the auto industry also had started to dilute the Korean brands' well-known value proposition. It's difficult to tell exactly how much the crisis accelerated those declines, but it's safe to say that it caused even more harm to the hurting brands. In December 2012 - one month after the crisis broke - the brands' combined market share hit its lowest level in two years.
Recovery: Interestingly, Hyundai and Kia loyalty barely suffered in the months following the crisis' outbreak. In fact, loyalty increased slightly for both brands in December 2012. This likely stemmed from the companies' quick decision after the crisis broke to compensate owners of affected vehicles with debit cards to help offset the difference between the original and revised MPG estimates at the gas pump. Customer loyalty helped to sustain the brands as their combined market share rose steadily to pre-crisis levels by April 2013.
Lesson: Customer loyalty is the very foundation of sustaining business through a crisis. As much as market share and shopping consideration dropped in one month, it could have been much worse for Hyundai in Kia if trade-in loyalty had not remained steady. Whether it's through loyalty bonuses, or through direct, personal communication, a brand's owners need to know that they are valued, especially when times are tough.
CASE STUDY #3
Brand: Chrysler and General Motors
The Crisis: Hit hard by the Great Recession, Chrysler and General Motors were forced to file for bankruptcy in mid-2009. As the fate of both companies remained in flux, the U.S. government provided a financial rescue package worth tens of billions of dollars.
Immediate Impact: GM and Chrysler's shopping consideration and market shares remained relatively steady in the months during and after their bankruptcies. But the real sobering indictment of the companies' reputation among shoppers came during the "Cash for Clunkers" program in the summer of 2009, which gave shoppers government cash incentives to trade in their vehicles for more fuel efficient models. Chrysler, for example, saw its trade-in loyalty rate plummet from 49.8 percent in June 2009 to under 20 percent just two months later. GM's loyalty rate fell from 54 percent to 35 percent during the same period.
Recovery: "Cash for Clunkers" sent a clear message to both GM and Chrysler that they needed to build more depth into their product lineups. Both automakers had a strong footing with trucks and SUVs, but they needed more emphasis on smaller and fuel efficient vehicles, especially as gas prices started a dramatic climb in 2008. GM responded with new small car options like Chevrolet Cruze, Chevrolet Sonic and Chevrolet Spark. Chrysler similarly responded with a revived Dodge Dart and smaller SUVs like the Jeep Cherokee. Fiat's eventual acquisition of Chrysler also stretched the product portfolio into a competitive subcompact market. By expanding their product offerings, both GM and Chrysler (now FCA) now offer versatile and compelling options for a larger base of car shoppers. So even as today's car shoppers are re-engaging with GM and FCA's sweet spot of bigger trucks and SUVs, both companies are positioned better if and when shopping appetites swing back to smaller vehicles.
Lesson: It's easy to say that Chrysler and GM survived only because the government bailed them out. And while taxpayer dollars certainly helped them to live another day, both companies needed to overhaul their product lineups to survive long term. They placed more focus on smaller, more fuel efficient vehicles to meet the needs of shoppers faced with high gas prices. It's crucial for any company - whether it's in crisis or not - to understand and anticipate the needs in the marketplace and adjust their product and marketing strategies accordingly.
Let there be no mistake: Volkswagen certainly has a lot of work to do to regain the trust of its customers and America's car buying public. It might even feel like it's trapped in a dark tunnel with every exit sealed up. But other automakers have been trapped in that same tunnel before, and they clawed their way out. By applying some of the same tools and tactics that those other automotive brands used, VW's might actually be closer to daylight than it appears.
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1a335da23fad1619968e0b054ebcfdf5 | https://www.forbes.com/sites/joannmuller/2016/01/21/gm-the-lumbering-giant-suddenly-looks-fleet-footed-in-the-race-to-provide-future-mobility-services/ | GM, The Lumbering Giant, Suddenly Looks Fleet-Footed In The Race To Provide Future Mobility Services | GM, The Lumbering Giant, Suddenly Looks Fleet-Footed In The Race To Provide Future Mobility Services
General Motors’ new startup called Maven will provide customers access to highly personalized,... [+] on-demand mobility services. (Photo by John F. Martin for General Motors)
In just the first 21 days of 2016, General Motors has made a flurry of strategic moves that no carmaker could have imagined just a few years ago.
It invested $500 million in Lyft and said it will work with the ride-sharing company to develop a fleet of on-demand autonomous vehicles. It also announced a technology partnership with MobileEye to crowd-source advanced mapping data for self-driving cars. And it introduced the Chevrolet Bolt, the first long-range, electric car real people can afford to buy – which also happens to be the perfect car for the sharing economy.
The latest initiative, announced today, is Maven, a new global car-sharing service that will let customers use their smartphone to reserve a vehicle, unlock it and personalize their driving experience through apps like Apple CarPlay and Android Auto. Maven (which means expert) is rolling out in select cities including New York, Chicago and Ann Arbor, Mich. It combines and expands various GM car-sharing programs under one brand.
Taken together, the moves suggest an urgency within GM to avoid getting pushed aside by companies like Uber and Google in the race to redefine personal mobility.
“We’re seeing significant changes in the industry and we’re taking very assertive actions to put our company at the forefront,” said GM President Daniel Ammann. “We’re following and moving with our customers. We want to be able to serve them in whatever way they want their car-based transportation.”
In a guest post in Forbes this week, GM Chief Executive Mary Barra forecast a revolution in personal mobility, saying GM expects the auto industry to change more in the next five to 10 years than it has in the past 50 years.
“That’s something we really believe and something we’re acting upon,” said Ammann.
Today, approximately 5 million to 6 million people worldwide are using some form of shared mobility, Ammann said, and by 2020, GM expects that number to soar to more than 25 million.
Uber and Lyft are ride-sharing services – users are driven by someone else. Maven, on the other hand, is a car-sharing service – users drive themselves in a shared vehicle. Users can rent a small car like a Chevrolet Spark or Volt for $6 an hour or $42 a day. A mid-sized Chevy Malibu would be $8 an hour/$56 per day, and a full-size SUV like the Chevrolet Tahoe would be $12 an hour/$84 per day.
Maven is launching with a team of more than 40 employees, including people hired from Google, Zipcar and the now defunct Sidecar. The team is led by Julia Steyn, GM’s vice president of urban mobility programs. Customers will be able to give employees direct feedback through the messaging application WhatsApp to help shape the Maven service as it grows.
Steyn said Maven services will vary, depending on customer needs in each location, but will include several types of programs:
City: Starting in Ann Arbor, Maven will offer its car-sharing program to students and faculty at the University of Michigan, with GM vehicles available initially at 21 parking spots across the city. The program is expected to reach up to 100,000 people in Ann Arbor. Other city-based programs will launch in major U.S. metropolitan areas later this year.
Residential: Maven is partnering with major real estate companies to provide on-demand cars and preferred parking options to residents of about a dozen large apartment buildings in Chicago and New York. GM tested the idea in New York last year and found 70 percent of residents took advantage of the opportunity to share cars with their neighbors.
Peer-to-peer: Similar to Airbnb, car owners can rent their vehicles to other drivers. Pilot programs in Frankfurt and Berlin attracted nearly 10,000 users since mid-2015, GM said.
Campus: GM is testing various car-sharing programs on its engineering campuses near Detroit, and in Germany and China. In one test, for example, a fleet of autonomous Chevrolet Volts is shuttling engineers from one building to another on the campus of GM’s Warren, Mich., technical center.
Car-sharing services have popped up in many cities around the world, but GM thinks Maven is different because of the breadth of vehicles it will offer and the personalization that is possible by linking those cars with customers’ smartphones.
“I believe there is magic created when you can seamlessly integrate a smart phone with a vehicle,” said Steyn. “It makes it easy for the customer to use.”
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a0a29c038eca5e0faf484cb5d80aec9f | https://www.forbes.com/sites/joannmuller/2016/06/15/mobileye-is-the-auto-industrys-secret-weapon-against-google-in-the-race-for-self-driving-cars/ | Mobileye Is The Auto Industry's Secret Weapon Against Google In The Race For Self-Driving Cars | Mobileye Is The Auto Industry's Secret Weapon Against Google In The Race For Self-Driving Cars
Mobileye cofounder Amnon Shashua is betting that crowd-sourced, high-definition mapping technology... [+] will speed the introduction of autonomous vehicles. (Photo Credit: Ronen Goldman for Forbes)
It takes Amnon Shashua 20 minutes in city traffic to get to his Jerusalem office each morning--not a terrible commute, especially since his Audi A7 handles most of the chore. "I let go of the wheel and let the car drive," says Shashua, 56. "It's really fun." Fun, but not entirely worry-free. "I have to be alert," he adds.
As cofounder, along with Ziv Aviram, 57, of Mobileye, a leading provider of assisted-driving software, Shashua knows better than anyone that autonomous cars still need work. At highway speeds, under certain conditions, hands-free driving is already doable, as Tesla Motors has shown with its Autopilot system, which, like others from Audi and Cadillac, relies on Mobileye's camera-based software. Where it gets dicey is in complex situations that arise on city streets, like merging into a roundabout. Artificial intelligence, which is moving faster than anyone in the auto industry expected, is helping with those situations. But it's still likely to be another decade before cars are smart enough to drive themselves at all times without any human input.
Mobileye, two years after its $890 million IPO, has a clever plan to speed things along--one that's quite different from that of Alphabet , the parent company of Google and Mobileye's biggest rival in the race toward a self-driving future. Mobileye EyeQ software chips are used by more than 90% of the world's automakers, helping cars stay in their lanes and brake in emergencies. Now, working with three of the biggest carmakers, the company is rolling out new high-definition mapping technology that will use those chips to gather crowdsourced, real-time data from vehicles and pinpoint a car's location in relation to traffic signs, lane markers and other objects. Together with cameras and other sensors like radar, the continually updated maps will provide an additional source of information that should help Mobileye spread automated driving features to more cars more quickly.
"Mapping is a way to lower the bar" for driverless cars until artificial intelligence is ready, says Shashua. General Motors will get the technology first, through its OnStar connection, followed by Volkswagen and Renault-Nissan in 2018. Together the three automakers sell 30% of the world's cars, providing the large numbers Mobileye needs to make crowdsourced maps work. Other global automakers are lining up to add the technology, Shashua says.
Mobileye's route is different from and will likely be quicker than the one Google is taking with its moon-shot strategy. Google wants to leap directly into the self-driving era and has gone so far as to develop prototypes that have no steering wheel or pedals. These and other specially rigged cars have logged more than 1.5 million self-driving miles to perfect the technology.
But the tests are limited to roads Google has meticulously mapped and annotated near its Mountain View, Calif. headquarters and in three other cities. These maps are far more detailed than the GPS navigation maps in today's cars and smartphones. While GPS maps are accurate to within 10 meters or so, high-definition maps measure details within a few centimeters, recording everything from the height of a curb to the width of an intersection to the exact location of a stop sign, creating a 3-D portrait of the car's surroundings. Google cars navigate by comparing data collected from various sensors, including a spinning laser scanner mounted on the roof, with those recorded 3-D maps. These laser-based radar systems, called lidar, are bulky and expensive but are getting smaller and cheaper.
The bigger problem is that those detailed scans of streets chew up a lot of bandwidth. An hour's worth of 3-D data collection is equivalent to 20 years of individual smartphone usage, according to Rod Lache, an analyst at Deutsche Bank. While Google's mapping capability is "an amazing thing," Lache says, it's hard to scale. "There are 4 million miles of roadways in the United States, and one-third of them are not even paved," he says. "How will Google--or anyone that wants to do this--scan all of them?" Even then, there would be the additional challenge of keeping the maps up to date.
Google doesn't seem too worried. "We've mapped the world--twice," a spokeswoman says, referring to Google Maps and its Street View capabilities. All the data Google's test cars need to navigate are stored in an onboard computer, but that could change someday. Google's focus for the moment is making sure the technology works, she says.
Mobileye's breakthrough was finding a way to create 3-D maps using the camera-based chips already installed in millions of cars. Its Road Experience Management software can identify landmarks and other selected roadway information at extremely low bandwidths (approximately 10KB per kilometer of driving) because it doesn't record every grain of detail, as Google does. Though not quite as precise as Google's 3-D maps, Mobileye's software, when combined with camera images and other sensors, can determine a vehicle's location to within 10 centimeters, making automated driving possible.
Mobileye, founded in 1999, has two trends working in its favor. Virtually every car will have a front-facing camera within a few years because the auto industry, working with U.S. safety officials, has agreed to make automatic emergency-braking systems standard on all vehicles, and those commonly need cameras.
In addition, automakers want to provide over-the-air software updates for their cars, just like makers of computers and smartphones do. By 2022, 98% of new cars in the U.S. will be connected to the cloud, according to IHS Automotive, opening up the data pipe Mobileye needs to crowdsource its maps. "The beauty," Shashua says, "is there are other incentives for having communications and cameras in the car."
With an approximately 90% market share in assisted-driving systems and innovations like 3-D mapping, it would seem that Mobileye is well positioned for the driverless future. The company's IPO in July 2014 was the biggest ever for an Israeli company. In 2015 it had $241 million in revenue, up 68%, and net income was $68.5 million. Free cash flow nearly doubled to $96 million.
Yet its stock now trades near $40 a share after peaking at more than $64 last summer. Investors worry about increased competition from new rivals such as semiconductor maker Nvidia, which recently unveiled chips with artificial-intelligence features.
Lache thinks such skepticism is unfounded. "In the tech world people are used to competitors catching up very quickly," he says. "In autos it's a lot more challenging. I don't think people understand the complexity of what Mobileye has accomplished."
Ironically, the looming threat from Google might be just the thing that secures Mobileye's success as a partner to established automakers. Many are afraid Google wants to control people's digital lives, whether at home, on their phones or in their cars. Auto companies aren't willing to yield that relationship with their customers.
"We're at a point where automakers aren't looking for the lowest price. They're looking for the leader," Lache says. "Looks to me like Mobileye is part of their defense strategy." The best offense, after all, is a good defense.
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88f37acb8a792fb0eb78cb66fa7578f6 | https://www.forbes.com/sites/joannmuller/2017/03/10/google-seeks-court-order-to-stop-uber-from-using-stolen-tech-in-self-driving-car-race/ | Google Seeks Court Order To Stop Uber From Using 'Stolen' Tech In Self-Driving Car Race | Google Seeks Court Order To Stop Uber From Using 'Stolen' Tech In Self-Driving Car Race
A self-driving car traverses a parking lot at Google's headquarters in Mountain View, Calif. (NOAH... [+] BERGER/AFP/Getty Images)
Alphabet's Waymo, previously known as Google's self-driving car unit, is stepping up its legal attack on rival Uber Technologies, asking a court to block Uber from using Waymo technology against it in the race to develop self-driving cars.
The request for a temporary injunction, filed Friday in a federal court in San Francisco, is part of an amended complaint against Uber and its Otto autonomous driving unit, which is accused of stealing Waymo trade secrets related to a crucial technology that lets driverless cars "see" what's around them.
The Mountain View, California-based company’s claims center on actions by Anthony Levandowski, a long-time member of Google’s driverless car team who left to found Otto, a self-driving truck company, in 2016. Otto was acquired by Uber just a few months later for as much as $680 million. Waymo alleges that weeks before his departure from Waymo, Levandowski downloaded more than 14,000 proprietary files from a Waymo server. The files included details of a highly advanced LiDAR system that is considered critical for self-driving cars.
Waymo, which originally filed suit on Feb. 23, wants the court to move quickly, after learning that Uber had deployed, or is about deploy, self-driving cars in Nevada using LiDAR technology and know-how it believes was unfairly stolen from Waymo.
"It is not just Defendants’ acquisition of Waymo’s trade secrets that makes a preliminary injunction particularly warranted here; it is also Defendants’ use of those trade secrets in a system that is apparently now fully developed and being deployed (or about to be deployed) in self-driving vehicles," according to Waymo's new argument. "Thus, adopting this infringing architecture gives Defendants a huge unearned cost advantage in their efforts to win the race to launch a commercially-viable self-driving car."
A court hearing is scheduled for April 27.
An Uber spokesperson said the company was reviewing the new complaint, but reiterated its previous statement on the lawsuit: “We are incredibly proud of the progress that our team has made. We have reviewed Waymo's claims and determined them to be a baseless attempt to slow down a competitor and we look forward to vigorously defending against them in court. In the meantime, we will continue our hard work to bring self-driving benefits to the world."
In its revised complaint, Waymo bolstered its argument by citing a Feb. 28 Forbes story that quoted Levandowski from a 2016 interview:
"Since Waymo filed its Complaint in this action, Forbes published the following statement by Mr. Levandowski: 'How did we get to where we are? We understand what not to do and where not to waste time because we have experience from having tried it before and it didn’t work. And we have experience in trying things that do work, so we are just doing the things that do work and focus on that.' ...Defendants are now deploying technology that replicates “the things that do work” — i.e., Waymo’s intellectual property."
Forbes' Alan Ohnsman asked Lisa Larrimore Ouellette, a Stanford Law School professor who specializes in intellectual property law, whether Levandowski's comments could be problematic for Uber as it seeks to defend itself in court.
“There absolutely can be something wrong with that from a trade secrecy perspective. Some courts have recognized negative knowhow, knowing what things don’t work, as protected trade secrets," she said. "If while he was working at Google he developed some of these or recognized certain paths that were failures, then that could be a protected trade secret of theirs [Waymo's]." She added, however, that California tends to be more skeptical of trade secret claims "that prevent people from taking what’s already in their head."
In its request for expedited discovery, Waymo also said it "strongly suspects that this is only the tip of the proverbial iceberg" and that it will find out that Uber has misappropriated additional trade secrets and infringed additional Waymo patents.
The stakes are incredibly high in the race to commercialize self-driving cars. In its complaint, Waymo cited comments made by Uber's own chief executive, Travis Kalanick, in a 2016 Business Insider article: “If we are not tied for first, then the person who is in first, or the entity that’s in first, then rolls out a ride-sharing network that is far cheaper or far higher-quality than Uber’s, then Uber is no longer a thing.”
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15e022223e54664f2fecc9a67375e3a0 | https://www.forbes.com/sites/joannmuller/2017/10/04/fords-plan-for-more-smart-vehicles-and-services-wont-work-if-it-doesnt-fix-its-business-today/ | Ford's Plan For More Smart Vehicles And Services Won't Work If It Doesn't Fix Its Business Today | Ford's Plan For More Smart Vehicles And Services Won't Work If It Doesn't Fix Its Business Today
Ford Motor CEO Jim Hackett at Ford's City of Tomorrow Symposium in San Francisco. (Photo by Kelly... [+] Sullivan/Getty Images for Ford Motor Company)
Ford Motor’s Chief Executive Jim Hackett insists the 114-year-old car company has a bright future, despite sweeping technological changes and new competitors Henry Ford never imagined, offering a blueprint for a new portfolio of smart vehicles and transportation services that will help it thrive in a new $11 trillion "transportation operating system."
“But we can’t compete if we don’t get fit today,” the former University of Michigan football player told investors and analysts in New York on Tuesday, outlining a plan to slash $14 billion in costs over the next five years.
In his first strategic update since becoming CEO four months ago, Hackett tried to balance enthusiasm for the future with a sober assessment of the daunting challenges Ford faces today.
Though its revenues have grown since the Great Recession (mostly due to the success of its F-series pickup trucks) so have its costs, causing the Dearborn, Mich.-based automaker to miss its target of an 8 percent automotive operating margin.
“Over the past seven years, we’ve averaged a 6.1 percent margin and that’s simply not good enough,” Hackett said. “That performance gap of two points is worth billions in value.” Indeed, Ford stock is up just 1.7 percent this year, trailing rivals General Motors and FiatChrysler as well as the benchmark Standard & Poor’s 500 Index.
Now, with the automotive industry undergoing the most dramatic changes in more than 100 years, Ford must simultaneously improve its financial health while pivoting toward a new business model.
“Companies never choose to die and yet many, by not evolving, are enabling that kind of fate,” Hackett said. “It’s clear that as a company we must then raise our gaze just high enough to ensure we’re not disrupted as the world changes.”
Hackett’s predecessor, Mark Fields, also understood the need to straddle today’s reality with tomorrow’s promise, but ultimately he was unable to move quickly enough to put Ford in a position to win. That challenge is no less dicey for Hackett, the former head of furniture maker Steelcase.
“When you’re a long-lived company that has had success over multiple decades the decision to change is not easy – culturally or operationally,” Hackett said. “Ultimately, though, we must accept the virtues that brought us success over the past century are really no guarantee of future success.”
Barely 100 days into the job, Hackett and his new management team are beginning to paint a clearer picture of where Ford is going with its current product portfolio – more utilities, fewer cars – while preparing for the future with more investment in electric vehicles, connectivity and autonomous vehicles, said Michelle Krebs executive analyst for AutoTrade. "Straddling the now and the future will be tricky especially in terms of profitability," she said.
Ford’s plan is to shift $7 billion in capital investment away from sedans toward crossovers, utilities and trucks instead, like the Ranger and EcoSport in North America and the all-new Bronco globally. It also plans to cut spending on internal combustion engines by 32 percent, or about $500 million, over the next five years, putting that money instead into electric vehicles and hybrids.
Ford is behind companies like GM and Tesla when it comes to getting electric, autonomous vehicles on the road. In 2016, for instance, GM introduced the Chevrolet Bolt EV, the first affordable, long-range electric car. On Monday GM announced it plans to add two more battery-powered vehicles in the next 18 months and will have 20 electric cars on the road by 2023.
Ford is also investing in electrified vehicles, with previously announced plans to spend $4.5 billion to introduce 13 new electric or hybrid vehicles within the next five years, including an F-150 Hybrid, Mustang Hybrid and a fully electric small SUV. But on Tuesday, Hackett made clear Ford will favor more profitable hybrids until battery-powered vehicles make better economic sense. “I don’t think we should walk off a ledge where we destroy the earnings power of the company,” Hackett said.
Ford also plans to be more active pursuing partnerships with other companies to reduce costs and minimize risks. Since Hackett took over in May, for instance, Ford has partnered with companies on electric vehicles in China and India and with Lyft on self-driving car development.
Hackett also outlined plans to equip all of its U.S. models with mobile internet connections by 2019, and 90 percent of its global lineup by 2020. Such connections are critical to enable the services and software applications that it hopes will generate new revenue streams in the future. GM already has built-in 4G LTE mobile broadband connections in 7 million vehicles worldwide, but it, too, has yet to reap significant benefits from that opportunity.
The cost cuts Ford is planning to enable its strategy shift aren’t likely to show up on Ford’s bottom line until 2019 or 2020, said Ford’s chief financial officer, Robert Shanks, citing the industry’s long product development cycles. Of the $14 billion in promised cost reductions, $10 billion will come from material costs and $4 billion will come from reduced engineering costs, Hackett said.
That lag could hurt profits in the next few years. While reiterating its long-term goal of 8 percent operating margins, Ford said it will update its 2018 financial forecast in January.
“I get up every day feeling like time can be wasted here if we don’t get moving,” Hackett told investors. “I feel a real sense of urgency.”
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7aee3e71e428bed13e80b0993d297633 | https://www.forbes.com/sites/joannmuller/2018/03/15/ford-teases-new-hybrid-suv-lineup-as-it-looks-to-secure-future/ | Ford Teases New Green SUV Lineup, Aiming To Surpass Toyota As No. 1 In U.S. Hybrids | Ford Teases New Green SUV Lineup, Aiming To Surpass Toyota As No. 1 In U.S. Hybrids
A new off-road utility is one of several new SUVs coming to Ford's lineup Ford Motor
Any time an automaker’s future is in question, the company typically pulls back the curtain on shiny new products to reassure dealers, analysts and the media that it’s not lost in the wilderness.
That’s exactly what Ford Motor did Thursday after a wave of management turnover in recent months that has left the impression that Ford is behind competitors – auto industry rivals and tech newcomers, too -- when it comes to mapping the future of transportation.
Chief Executive Jim Hackett, in the job for just 10 months, has come under criticism for not laying out details of his plan to cut costs and improve profitability while simultaneously navigating the disruptive changes sweeping across the industry.
On Thursday, Hackett and his executive team put more meat on the bones of that transformation, outlining a broad revamp of its truck and SUV lineup over the next few years, including new hybrid powertrains for virtually every vehicle in its lineup.
By 2020, Ford said it will have the freshest lineup of vehicles in the industry, with an average age of 3.3 years, down from almost 6 years today. Among them will be four new SUV models, for a total of 8 utilities in Ford showrooms by 2020.
“Trucks and SUVs are going to fuel our growth and profitability,” accounting for almost 90 percent of Ford’s sales volume by 2020, said Jim Farley, president of global markets.
Ford’s F-series pickup trucks alone represent a $41 billion business – more than Coca-Cola or Nike – and its pickup business has grown steadily since introducing aluminum-bodied trucks in 2014.
Now the focus is on expanding Ford’s SUV lineup. Besides the compact EcoSport and revamped full-size Expedition that recently went on sale, Ford has a new Explorer and Escape in the pipeline, too. A high-performance Explorer ST is also coming. Beyond that, Ford is adding two new off-road utilities – the previously announced Bronco, which goes on sale in 2020, and a smaller off-road performance utility inspired by the success of Ford’s fun-to-drive Raptor off-road pickup.
The shape of the highly anticipated new Ford Bronco is unmistakable despite being cloaked in secrecy... [+] until it goes on sale in 2020. Ford Motor
Most intriguing is a new four-door, Mustang-inspired, electric performance utility with a 300-mile battery range.
Ford is adding hybrids across the entire lineup, including vehicles as diverse as the Mustang and F-150, both as a hedge against higher fuel prices and a way to meet stricter CO2 guidelines.
By 2021, Ford said it will sell more hybrids in the U.S. than Toyota, the current hybrid leader.
“We’re moving past hybrids as a science project,” said Farley. “It’s become an accepted, reliable technology and we’re going to make it as desirable as an EcoBoost engine,”
Consumers have fallen in love with the size and flexibility of SUVs, he said, “but someday, we expect fuel prices to go up.” By giving them the choice of hybrid SUVs, Ford hopes it won’t face a rapid shift back to small cars as it did during the last spike in fuel prices.
Ford also plans to build trust with consumers by making advanced driver-assist technologies standard on most of its cars, trucks and SUVs by the end of 2019. It announced a package of standard features called Ford Co-Pilot 360 that includes automatic emergency braking for vehicles and pedestrians, blind spot monitoring, lane-keeping assist, backup camera and auto high-beams.
Meanwhile, behind the scenes, Ford is working to improve profitability by overhauling its product development process and cutting $4 billion in waste within five years.
Joe Hinrichs, president of operations, provided more context to that effort. The company is streamlining its product development efforts to create all future vehicles off one of five new engineering architectures and reducing the time from sketch to showroom by about 20 percent.
In certain cases, where a global vehicle design doesn’t work across all markets, it will form partnerships or alliances. One example is its joint venture with China’s Zotye Auto, which will develop small electric vehicles for that market, allowing Ford to focus on larger EV architectures for the U.S. and Europe.
In its factories, Ford is using augmented and virtual reality to simulate new assembly processes, reducing plant changeover time by 25 percent, which adds an average $50 million per plant to the company’s bottom line, and reducing tooling cost by up to 20 percent on each new vehicle program.
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921b01e51e7edb8ab87749630b52f757 | https://www.forbes.com/sites/joannmuller/2018/05/01/no-way-to-run-a-factory-teslas-hiring-binge-is-a-sign-of-trouble-not-progress/ | No Way To Run A Factory: Tesla's Hiring Binge Is A Sign Of Trouble, Not Progress | No Way To Run A Factory: Tesla's Hiring Binge Is A Sign Of Trouble, Not Progress
Tesla CEO Elon Musk shares stress of Model 3 launch with CBS This Morning's Gayle King. CBS This Morning
In a push to deliver cars to waiting customers, Tesla is moving to 24-hour operations at its Fremont, California, assembly facility and plans to hire "400 people per week for several weeks" between Fremont and its battery Gigafactory in Sparks, Nevada.
Chief Executive Elon Musk would have us believe the hiring spree is a sign of confidence in Tesla's ability to boost production by the end of June to meet demand for Model 3, its entry-level electric car. But make no mistake: it's a sign of desperation. The Model 3 launch has been a disaster, and hiring a bunch of people in a hurry is only going to make things worse for Tesla, not better.
Financially, it could get ugly fast. Already, Wall Street is bracing for disappointing first-quarter results on Wednesday due to lower-than-expected Model 3 production. Now, after Musk admitted the company bet too heavily on automation, Tesla's second-quarter results will be under pressure, too. Not only will the company face higher labor costs, it will probably also have to write down millions of dollars' worth of automated machinery that is being ripped out of the factory on Musk's orders.
Humans are underrated, the billionaire boss now says, but throwing more people at the job won't necessarily make Tesla more efficient. The company tripled its headcount between 2014 and 2017, but since it's still not producing many cars, revenue per employee is stagnant, far below that of General Motors and Ford Motor, as noted in a Bloomberg story examining the risk that Tesla might soon run out of cash.
On Twitter, Musk confidently predicted that Tesla will be profitable and cash flow positive in the second half of this year and won't have to raise additional money from investors. But his marching orders to employees suggest money is tight: beginning immediately, any expenditures over $1 million must get Musk's prior approval. (That reminds me of the austerity measures that governed GM during its 2009 bankruptcy.)
Meanwhile, state and federal labor officials are scrutinizing Tesla's factory operations after reports of unsafe conditions. What could possibly go wrong by flooding the assembly line with 1,000 or more newbies in a matter of weeks?
"This is a recipe for disaster," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Michigan. "You don’t have a smooth running ship and then you add a bunch of new untrained people? That doesn’t right the ship."
It's reasonable to ask whether Tesla will even be able to hire 1,200 or more qualified workers in time to meet Musk's aggressive objectives. In a recent email, Musk told employees the goal is to achieve a "burst-build rate" of 6,000 vehicles per week, triple the current rate, by the end of June. (Notably, that includes a 20 percent margin for error to make sure it nets 5,000 cars per week, a failure rate no established automaker would tolerate. Tesla says Model 3 quality has improved dramatically in recent months. An independent benchmarking study of a model built in late 2017 found examples of both engineering brilliance and manufacturing incompetence.)
To meet that target, Tesla is adding another shift of workers in Fremont, which will now operate 24 hours a day, 7 days a week. But where will it find all those workers in a tight labor market? The unemployment rate in the East Bay counties of Alameda and Contra Costa is 3 percent, lower than the state and national rates. And the cost of living in the region is prohibitive for many manufacturing workers. Union organizers say many Tesla employees live an hour or two away from the factory or share housing with fellow workers to make ends meet on their $19-an-hour paycheck. Tesla recruits at job fairs as far away as Fresno or Modesto, which are farming communities.
Then there's the question of training. I asked other automakers how long it takes to get new hires ready for the job when they're preparing to add an extra shift at a factory. (Tesla declined to provide details on its hiring process.)
In the old days (1984 to 2009), GM, Ford and Chrysler had thousands of laid-off union workers getting paid for doing nothing. The Jobs Bank, as it was called at GM, was where automakers found able, trained workers during periods of expansion.
Now, it's harder to identify, screen and train new workers for assembly work, even in the industrial heartland. "The fastest we would hire 400 people would be 12-13 weeks," a Ford spokeswoman told me. (Tesla plans to hire 400 people per week.)
Why so long at Ford? The company said it takes about two weeks to collect enough résumés from state employment agencies, minority and veterans groups and employee referrals. Then each job candidate must pass a basic reading comprehension and problem-solving test. That preliminary screening takes at least a week, likely longer, Ford said. Those who pass the written test must then be cleared by a doctor for physical activity and pass a drug test. To get 400 drug-free employees, Ford said it probably has to test 600 or 700 job candidates, a process that takes another two weeks.
Those who are hired must then go through a weeklong orientation. The session is in-depth, so Ford schedules 100 people at a time, meaning it would take four weeks to get 400 people through orientation. After orientation, new hires are finally ready to begin job-specific training, which typically takes another two weeks.
When you spell it out like that, it begins to make sense. Or perhaps more succinctly, Tesla's timeline makes less sense.
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be3522a7b08829a81d41e70f1ad34a3f | https://www.forbes.com/sites/joanoleck/2020/06/13/marijuana-excise-tax-revenues-look-seductive-but-the-devil-can-be-in-the-details-a-tax-expert-warns/ | Marijuana Excise Tax Revenues Look Seductive. But The Devil Can Be In The Details, A Tax Expert Warns | Marijuana Excise Tax Revenues Look Seductive. But The Devil Can Be In The Details, A Tax Expert Warns
A report, entitled "A Road Map to Recreational Marijuana Taxation" cautions lawmakers to move ... [+] slowly on their expectations for this new revenue. Europa Press via Getty Images
Given the nation’s current economic woes, lawmakers are likely salivating at the prospect of those marijuana/THC excise tax revenues to come. With good reason: A new report from the Tax Foundation shows that FY 2019 excise revenues for the top legal states included:
· Washington State, $390 million
· California, $390 million
· Colorado, $251.8 million
Nor were returns for other states legal for recreational use shoddy, either. A sampling: Alaska, $19.2 million; Oregon, $102.1 million; and Illinois, $110 million — for just Q1 and Q2, 2020, alone (since sales in The Land of Lincoln only began last year).
With nine states (out of the 11 that are legal for recreational cannabis) now active in sales, and with as many as five more states working to get the issue onto their own ballots this fall, things out there sure seem to be hopping.
But hold on, lawmakers, cautions the report’s writer, Ulrik Boesen: “It’s a very complicated process to get this right, and it’s going to take time to develop,” Boesen, a Tax Foundation senior policy analyst, said in an interview this week. “My first caution is always, ‘Don’t expect it to be a huge moneymaker in year one.’
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“Then there’s the question of, how do you tackle the illicit market?” the analyst continued. “The legal dispensaries aren’t going to be competing with each other as much as they’re competing with the illicit trade in the early days.”
A case in point is California, the world’s largest market for recreational marijuana, with legal sales totaling approximately $3.1 billion in 2019. According to the report, “Legalization has not yet overcome the well-established illicit market, which is estimated to still control 74 percent ($8.7 billion) of the total market for marijuana,” the report pointed out.
The very year after recreational marijuana was legalized in California, the illicit market grew 29 percent, likely due to high tax rates in the state (above 40 percent of the retail selling price) and a lack of enforcement against illicit sellers.
The inability to out-compete the illicit market means that excise revenue is not nearly as high as many policymakers and analysts expected, the report says. Those groups had anticipated that the state could collect $1 billion each year in excise taxes, it says. Governor Gavin Newsom himself estimated a take of $355 million for FY 2019.
But these prognosticators came up far short. The actual revenue collected was less than $310 million (going by the fiscal year figures Newsome et al. used in their assumptions, meaning tax collections for Q3 and Q4 in 2018, plus Q1 and Q2 in 2019, adding up to $308 million).
That’s the point, Boesen said in the interview. THC-based products may look like the Wild West in terms of their potential tax revenues, but several factors are putting the brakes on state and municipal tax collectors’ starry-eyed expectations, as Boesen outlined:
1. It’s smart to devote excise taxes to “externality,” not general revenues: “Excise tax” refers to taxes imposed on the value of the marijuana product itself – not on other products sold in the dispensary, nor transportation or storage. It’s separate and distinct from property tax, corporate income tax and employee income tax. “Externality” refers to uses for tax revenues directly related to the consumption of the marijuana itself. This might mean actual harm — medical costs for lung damage, for instance. More positively, it might mean research about the long-term impact of marijuana.
Boesen’s strong advice is to use 100 percent of excise tax on externality, since sales tax and other taxes can bolster general revenues.
Lawmakers, however, don’t share his view about devoting excise taxes to externality only; that’s why most states spend just 20 percent to 25 percent on externality factors, Boesen says.
Another problem with relying on excise taxes for general revenue purposes? To date, excise revenues have been unstable, which could threaten any state programs reliant on them.
2. Tax uncertainty surrounds the future of Sec. 280E of the IRS Code: 280E prohibits dispensaries and other cannabis businesses from deducting many of the expenses businesses typically deduct; the reason is cannabis’s illegality at the federal level. But 280E may not last long-term: It’s being challenged in federal court as unconstitutional.
And if the dispensary appellant prevails, that precedent would mean that dispensaries nationwide would eventually see an effective tax cut, Boesen says. But on the other hand, these are cash businesses with sketchy tax compliance. So the impact on tax revenues, should 280E disappear ,would be a giant question mark, Boesen says.
3. States must carefully decide exactly how to tax: by price, weight or potency? Each has its pros and cons. Taxing by price can be unstable. Weight can increase the potency of products. And taxing potency can complicate tax collection and add costs, though there’s already progress on the potency end: Businesses want to tell consumers how much THC is in a product, for marketing purposes. In addition, there already exist other pricing models for “sin” products – like alcohol.
Boesen’s advice? He advocates a hybrid taxing design, combining potency and weight-based criteria. “My analysis is that that will get you closest to externality,” the analyst says.
4. Washington State’s surprising data might offer a lesson: The surprise, Boesen says he found, was that this Northwestern state has a high tax rate, so the excise tax was fully 37 percent of the value.
“That’s among the highest in the country,” Boesen points out. “On top of that, they also have local sales taxes, but even still, they’ve been very successful in developing a market that consumers prefer.
“They’re closing on $400 million a year in excise tax revenue, which is pretty impressive ... it turns out, on the regulatory side, that if you make [your state’s tax design] less expensive and easier to operate, you can have higher taxes. So, my point is that taxes are important ,but they’re not all important.”
What’s also clear is that the recreational side of the industry (Boesen plans a subsequent study of CBD tax revenues) is growing, and fast. Recreational use already takes in 27 percent of the U.S. population, the report says (citing federal statistics), and if medical marijuana is added to the mix, that statistic jumps to 69 percent of the population.
According to the Substance Abuse and Mental Health Services Administration, in 2018, 10.5 percent of adult Americans (25.2 million) had used marijuana products in the previous 30 days.
So tax revenues look good, as long as the designs lawmakers put together for them are wise and not overly optimistic, especially because marijuana is still technically illegal, Boesen says.
Meanwhile, he enthuses about the road ahead when it comes to legal cannabis taxation. “It’s just a fun and interesting experience for a tax person like myself to get involved early in the process,” he says.
“I’m fairly sure that more and more states will look to marijuana as a way to raise revenue and will be more than happy to support lawmakers interested in developing a sustainable system.”
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fd193caee47cbfc8416c00071e73ae17 | https://www.forbes.com/sites/joanoleck/2021/01/29/lets-talk-about-a-cbd-remedy-for-fido-veterinarians-in-two-states-may-now-legally-say-to-pet-parents/?sh=19ebb4864419 | ‘Let’s Talk About A CBD Remedy For Fido,’ Veterinarians In Two States May Now Legally Say To Pet Parents | ‘Let’s Talk About A CBD Remedy For Fido,’ Veterinarians In Two States May Now Legally Say To Pet Parents
Veterinarians in California and Michigan may now openly discuss CBDs with pet owners. getty
Earlier this month, Michigan governor Gretchen Whitmer signed legislation making her state the second in the nation (after California, in 2019) to legalize veterinarian consultations with pet owners “on the use of marihuana or industrial hemp” in medications.
That green light to discuss (though not recommend) CBD medications is a big deal, says Dr. Trina Hazzah, a Los Angeles veterinary oncologist and medical-cannabis activist. Reason: Until now, veterinarians have had to watch their step when talking to pet owners because THC, the psychoactive compound in the cannabis plant, is illegal at the federal level. Even pet medications containing CBDs (cannabidiol) and other compounds derived from now-legal hemp, pose a risk. That’s because the FDA has yet to issue guidelines on drugs made from them
Vets, therefore, are understandably on edge. “I think that the majority of veterinarians are terrified,” Hazzah said in an interview this week. “They’re so afraid of disciplinary action from [their local] veterinary board. They’re so afraid they don’t even discuss it with their clients; and unfortunately pet parents are seriously looking to a vet for assistance. And shouldn’t they?”
According to a 2018 academic study of 2,208 veterinarians who treat dogs, only 45.5 percent of them said they felt comfortable discussing CBDs with pet owners. Some 68 percent said they were not knowledgeable enough; 59 percent said the field needed more research; and 48 percent attributed their reluctance to the fact that medication containing THC cannabis is illegal at the federal level (though 17 states and the District of Columbia have fully legalized adult use cannabis, and 37 (plus D.C.) have done the same for all medical cannabis).
The survey reflects the need for vet education, advocacy and especially safety standards for medications: Marijuana Moment reported on one incident last July in which the FDA recalled a Florida company’s pet and human hemp products due to lead contamination. Even well-meaning pet owners need to be warned against dosing their dogs CBDs, Hazzah says, because medications meant for humans may include substances like chocolate or raisins, harmful to canines.
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Because of this need for awareness and safety measures, Hazzah and several colleagues last year formed the Veterinary Cannabis Society, which will eventually reach out to vets, pet owners and cannabis producers through separate portals. VCS will also team up with third-party labs to test veterinary cannabis medications and issue what Hazzah terms a veterinary “Good Housekeeping Seal of Approval.”
The need for such measures is obvious. Human isolation brought on by the pandemic has greatly increased the number of U.S. pet owners. That may partially account for a July 2020 Brightfield Group study estimating that pet CBD sales would amount to $426 million last year.
Los Angeles veterinarian Trina Hazzah is working to spread the word on CBDs' efficacy for pets now ... [+] that California has allowed vets to speak about these medications to pet owners. Dr. Trina Hazzah
Infused pet products are also predicted to constitute 3 percent to 5 percent of all U.S. CBD hemp sales by 2025.
At the same time, previously “minor cannabinoids” (aside from CBD) are playing an increasing role in both human and animal medications. “CBDa, which is an acid form of CBD, can be effective or more effective even than CBD for inflammation and what they call antiemetic or anti-nausea [remedies],” Hazzah said. “Also, I would say THCa, the acid form of Delta-9 [THC], has been shown effective for seizures.
“And then CBG is the new player; everyone’s talking about CBG … it seems to have a fairly significant anti-inflammatory [effect] for certain cancers, prostrate cancer being a big one.”
(Then there is the huge number of anecdotal pet owner endorsements out there: Infinite CBD CEO John Ramsay, for example, described a snake owner he knows who reported astronishing success treating the serious burns her ball python suffered after it curled up inside a gas clothes dryer, which was unintentionally turned on.)
Though Hazzah specializes in dogs and cats, she’s a consultant for the LA Zoo and says she’s has seen everything from turtles to llamas to a chicken come through the VCA West Los Angeles Animal Hospital where she practices. As an oncologis,t she is bullish on cannabis for virtually all pets – especially CBDs, which she calls “ultra-safe.” (She discusses this in a recent veterinary medicine journal article.) On the other hand, any animal medication containing THC has to be carefully dosed to avoid a psychoactive experience.
Speaking from her home state of California, Hazzah is obviously thrilled that she can now openly discuss cannabis solutions with pet owners. At the same time, she cannot make any cannabis claim – an FDA offense that she’s heard has prompted cease-and-desist letters to other veterinarians in the state dispensing even hemp/CBD products. “It’s tough because how many products do we dispense from a hospital that are not FDA approved?” Hazzah pointed out.
“I can tell you that as an integrative oncologist, half of the remedies that my patients are on are not even FDA approved. I use traditional Chinese herbs. I use medicinal mushrooms and Western herbs,” the veterinarian said.
To date, no one is arguing against her use of those medications, she pointed out. But cannabis? “Cannabis as a whole is put on a totally different level.”
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3d006b1bb158a1d82f326889b4dff24f | https://www.forbes.com/sites/joansiefertrose/2016/02/07/how-emerging-entrepreneurial-hubs-are-becoming-americas-new-boomtowns/ | How Emerging Entrepreneurial Hubs Are Becoming America's New Boomtowns | How Emerging Entrepreneurial Hubs Are Becoming America's New Boomtowns
ATandT building towers over historic buildings of lower Broadway, Nashville, Tennessee, USA (Credit:... [+] Danita Delimont/Getty Images)
Two studies released last week indicate that at least a handful of smaller cities in the US, including the Raleigh-Durham area of North Carolina, Salt Lake City, Jacksonville, Florida and Nashville are emerging as places that investors and entrepreneurs are increasingly making bets.
Richard Florida, the director of the Martin Prosperity Institute at the University of Toronto and a professor of global research at New York University, writes in “The Rise of Global Startup Cities,” that while venture capital has “gone global” by spreading to places like China and India, the dominant centers remain US cities that combine density, great universities, and an open-minded culture to attract the best talent. In sheer numbers, the San Francisco Bay region and the northeast US continue to account for the most dollars. However, Florida also finds that on a per capita basis for the years of the study, places like Durham, Austin, Seattle, and Jacksonville make the top ten for attracting venture capital – presumably, because these are places that smart, ambitious people want to live and work.
At the same time, Jason Rowley writes in an editorial in Mattermark that Raleigh, Nashville, Salt Lake City, and Washington, DC, get the stamp of approval as places where refugees from the high cost of living in the Bay area may want to set up shop. His rationale for these “promising alternatives” is that they are showing general upward momentum in deal making over the past few years while attracting a significant amount of capital, joining the ranks of other popular startup hubs like Austin, Seattle, and Denver/Boulder.
The fact that a select number of mid-sized American cities are making these lists is no accident. Each one has a relatively stable economy, and emerged more quickly than most regions from the Great Recession thanks to their role as government and academic centers. For the past decade, these cities have been magnets for highly educated workers, spurring investments in downtowns, green space, schools and cultural attractions. If Richard Florida is right – that the key ingredients are density, talent, and tolerance – then it’s no surprise that innovation is flourishing in these communities, and capital follows.
That was the case for Phononic, a company that is revolutionizing refrigeration and heating by using semiconductors to replace compressors. Founded by two of Silicon Valley’s most respected venture capitalists the company was virtual for the first year after its launch. During that time CEO Tony Atti considered an array of locations to headquarter the company: “As an advanced semiconductor manufacturer we considered places all around the country, but ultimately chose the Triangle region of North Carolina because it had a combination of entrepreneurial workforce, business climate and quality of life that I knew would give us the best chances for success.” Now based in Durham, the decision turned out to be a good one as Phononic has raised an impressive amount of venture and growth equity funding and begun to release successful products.
It’s important to note that regions that are enjoying success as startup hubs all are struggling with growing pains that potentially could limit their continued role as centers of innovation. Top among the concerns is affordable housing, especially within walking distance of the thriving downtown centers. Office vacancies, once a driver of the inexpensive large, open floor plans in re-purposed industrial space, are becoming more limited, with rents increasing. Transportation is a headache as more people move in. And every community is interested in making sure that entrepreneurship is inclusive of women and people of color, with few roadmaps on how to arrive at that destination.
Still, there’s much to be learned about what seems to be important in supporting entrepreneurship in emerging communities, and it may have as much to do with creating an attractive living environment than with implementing specific tax policies or real estate developments. These two studies provide more evidence that attracting venture capital is largely the result of having highly educated people, who can choose to live anywhere in the world, decide to live in your town, and in sufficient numbers to make a difference.
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358e67911cc3711c0f68568de97315c6 | https://www.forbes.com/sites/joanverdon/2019/06/14/dont-bet-against-pets-retail-lessons-from-the-chewy-ipo/ | Don't Bet Against Pets: Retail Lessons From The Chewy IPO | Don't Bet Against Pets: Retail Lessons From The Chewy IPO
Local dog Frankie poses for photos outside the New York Stock Exchange, decorated for the Chewy IPO, ... [+] Friday, June 14, 2019. Chewy, the online seller of pet food and squeaky toys, went public Friday and its shares soared 71%. (AP Photo/Richard Drew) ASSOCIATED PRESS
The first rule of show business is don’t work with kids or animals. The new rule of retail, based on the success of the Chewy IPO Friday, should be don’t bet against businesses based on dogs and cats.
Chewy’s triumph, however, contains lessons for all retailers, not just those that cater to pets and doting pet parents.
PetSmart, which bought Chewy in 2017 for $3.35 billion, and has a 70% stake, raised over $900 million in the IPO. Chewy is now valued at four times what PetSmart paid for it. But this good news could spell the beginning of the end of PetSmart as we now know it.
The online pet supplies retailer impressed Wall Street in its first day as a public company. The stock was priced at $22, opened at $36, soared to over $41 during the day, and closed at $34.99.
The Chewy enthusiasm showed investors have recovered from being burned badly by Pets.com, the online retailer that liquidated nine months after its IPO in 2000, becoming the poster child for the dot.com bubble.
Chewy founder Ryan Cohen, who exited the company a year after selling it to PetSmart, has said from the beginning that the Pets.com debacle created space for him to grow Chewy, by scaring off others who might have entered the online pet supplies category.
Chewy was launched in 2011, and its sales have exploded from $200 million in 2014 to $3.5 billion in 2018.
It still has not shown a profit, but the company says that is because it has been investing in growth, and that the underlying business is profitable. It had net losses of $268 million in 2018 and $338 million in 2017, according to the S.E.C. filing for the IPO.
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To grow its sales it has ridden a wave of lifestyle and shopping trends that weren’t as strong when Pets.com was born in 1998.
First, customers are more comfortable buying virtually everything online, and pet supplies is a category where the shift to online has been most dramatic.
Chewy capitalized on that by adding convenience to the mix, helping customers set up instant reorders of pet foods, medicines or supplies that they use on a regular basis. Those subscription reorders now account for two-thirds of Chewy’s sales.
Second, Chewy’s rise coincided with the humanization of pets. Pets are family members, and treated more like beloved children by consumers who refer to themselves as pet parents, not owners. And those pet parents spend lavishly, and are opting for more and more higher-end and specialty products.
Americans love their dogs and cats and last year spent $72.56 billion to show that love. Getty
Americans spent $72.56 billion on pets in 2018 and that is expected to grow by 4 percent this year to over $75 billion, according to the American Pet Products Association.
In 2018, that spending included $30 billion on food, $18 billion on veterinary care, and $16 billion on supplies.
Chewy took those two trends and combined them with a customer-service intense model designed to make online shoppers feel like they are dealing with a neighborhood pet store owner who knows their names, and all the names, and favorite foods, of their pets.
Chewy uses technology to keep track of pet names and preferences, sends handwritten notes and cards on holidays and special occasions, and flowers and condolences when a pet dies.
It invested heavily in customer service employees, and offers shoppers 24-hour service, with the ability to speak directly to live employees – not chatbots – at any time of the day or night.
It wows customers by randomly selecting them to receive painted portraits of their pets, a gesture that usually prompts customers to post the portraits on the Chewy Facebook page along with comments like “You have made me a customer for life.”
That kind of customer service sets Chewy apart from Amazon, its main competition in the online pet category.
Chewy founder Cohen has said his inspiration for picking the pet category for his startup came from his experience of shopping for his poodle Tylee at a pet store where he felt like he was being helped by a trusted pet parent. He felt that didn’t exist online in the pet category, and that he could create it.
Now that Chewy is a public company it is likely to explore opening stores in the future, as other online brands such as Warby Parker and Casper have done. Those stores could replace the PetSmart stores of today.
With 30-lb bags of kibble or kitty litter being auto-shipped to shoppers homes, 25,000 square foot superstores are no longer necessary. Chewy could lead the way for the pet stores of the future becoming more like Lululemon, but with doggie play groups, or grooming stations, instead of yoga classes.
As the Chewy stock was soaring Friday morning, Cohen, who is not longer involved with the company, was asked on CNBC about the company’s success.
Customer service, and delighting customers, not American’s love for pets, was the key, he said.
“I think we would have been successful in any category.”
The Chewy lesson for the rest of retail? Make online customers feel they are walking into a neighborhood store that has known them for years and always has what they need. Oh, and be sure and tell them their babies, human or the furry kind, are beautiful.
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5d3f70b162de8344cc44e3f14c574c98 | https://www.forbes.com/sites/joanverdon/2019/07/29/a-bed-that-can-outsmart-snoring-tempur-sealy-unveils-new-smart-bed/ | A Bed That Can Outsmart Snoring? Tempur Sealy Unveils New Smart Bed | A Bed That Can Outsmart Snoring? Tempur Sealy Unveils New Smart Bed
The Tempur-Pedic mattress brand is rolling out a mattress that is says is smart enough to ... [+] automatically adjust to stop snoring, and that can monitor how well you sleep and suggest improvements. Courtesy of Tempur-Pedic
Who is the smartest bed in the room? Tempur Sealy International thinks it has a winning candidate in the smart bed competition.
The mattress manufacturer today is introducing a bed it says is smart enough to sense when someone starts snoring and can automatically adjust the position of the mattress to stop it.
It is pairing sensor technology with its mattresses and linking it to its adjustable bases to create a bed it promises will act on its own to stop snoring, without anyone in the bed having to be awake or to press a remote.
Sensors installed under the mattress and connected to adjustable bases will also give owners a report each morning, sent to an app on their phones, detailing how well they slept, along with personalized advice on how to improve their sleep.
Tempur Sealy is presenting its version of a smart bed, along with other product innovations, at the Las Vegas Market home furnishings show, which runs through Thursday.
Tempur Sealy Chairman and CEO Scott Thompson, in the company’s second quarter earnings call Thursday, said the sleep-tracking smart bed is one of three innovations he expects to drive sales and profits next year. The company also is rolling out a Tempur-Pedic mattress-in-a-box, and an enhanced version of its Tempur-Pedic Breeze mattress, with the added cooling feature of a fan underneath the mattress.
Tempur Sealy has been on a hot streak this year. Its stock is up over 100% from a year ago and second-quarter earnings were up 39%, with the company gaining market share in the luxury category, thanks to strong growth in its higher-end Tempur-Pedic lines.
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Now, it is going after the smart-bed market.
Sleep-tracking is a growing trend in the bedding industry, and it is being offered by Tempur Sealy’s top competitor, Simmons Serta, as well as some of the newer entrants in the mattress space. Consumers are using sensors attached to mattresses, or on their nightstands, or worn on their wrists, to measure the quality of their sleep and the length of time they were in a maximum state of rest.
Tempur Sealy is using the Sleeptracker technology created by Fullpower Technologies to make its beds smarter. Serta Simmons Bedding offers Sleeptracker sensors that can be placed under its Beautyrest and Simmons mattresses to provide customers with sleep monitoring reports.
Online retailer Eight Sleep sells a smart mattress with embedded sensors that track movements and sleep levels, then uses artificial intelligence to help you sleep better by adjusting the temperature of the bed.
Tempur Sealy is taking the smart bed a step further by employing sensors that can sense vibrations that indicate someone is snoring.
The sensors use motion detection, not microphones, to identify snoring, Allen Platek, vice president of new product development for Tempur Sealy, explained in a interview. “They sense the slightest vibration under a 15-16 inch mattress,” Platek said.
The sensor then triggers the adjustable base of the bed, elevating the head of the bed 11-13 degrees, Platek said. That clears the snorer’s passageways and stops the snoring.
"Sleep maximizers" - consumers who are willing to invest in a good night's sleep - are expected to ... [+] be the prime audience for smart beds. Courtesy of Tempur-Pedic
Tom Murray, Tempur Sealy’s senior vice president and marketing officer, said the smarter beds and sleep trackers appeal to consumers the company calls “sleep maximizers.”
“They tend to be people who are in a particular life stage – maybe they have a demanding job, they’ve got children they need to take care of, they want to be their best every day, and they understand that sleep is core to their ability to that,” Murray said.
“There are people who understand that technology can help them achieve their goal, who are the sweet spot for a product like this,” Murray said.
Sleep maximizers also are willing to spend thousands of dollars for a good night’s sleep. One of the Tempur-Pedic premium adjustable bases, paired with its most deluxe mattress, can cost about $7,000 for a queen-sized bed.
While the Sleep Number brand sells a mattress where one side of the bed can be elevated by remote control to stop snoring, Tempur Sealy believes it is the first company to create a bed that will do that automatically.
“That one word, automatically, is probably the key differentiator from what has already been out there,” said Michael Magnuson, founder of GoodBed.com, an independent mattress shopping website.
Demand for sleep-tracking is still in the early stages, Magnuson said, but demand for adjustable bases has escalated in recent years.
Tempur Sealy and the Tempur-Pedic brand are going after the smart bed and sleep-tracking market because selling a better night’s sleep now involves more than just selling a mattress, Magnuson said. “You’ll see more and more of this, particularly for those brands that consider innovation to be important to their brand, and sleep to be important to their brand.”
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db5c727a7d37495e79dd3f9694a7fb24 | https://www.forbes.com/sites/joanverdon/2019/07/31/the-container-store-needs-to-do-a-better-job-of-thinking-outside-the-box/ | The Container Store Needs To Do A Better Job Of Thinking Outside The Box | The Container Store Needs To Do A Better Job Of Thinking Outside The Box
The Container Store says it is thinking outside of the box and is trying to position itself as a ... [+] service provider. Joan Verdon
The Container Store has been trying hard recently to think outside the box, but it could be a case of too little, too late.
The retailer that wowed Wall Street as one of the hottest IPO’s of 2013 hasn’t lived up to its promise to investors to be the category killer of storage containers and home organization.
Part of the problem was The Container Store’s stock was on the rise just as the changes in retail were starting to kill off the category killers.
The stock, which closed Tuesday at $6.54, is about 80% below the $35 price it debuted at on November 1, 2013. The stock has been climbing this year, and for someone who bought the stock at $4.72 on January 2, Tuesday’s price looks pretty good. But anyone who remembers the post-IPO enthusiasm, when the stock peaked in the high $40s, looks at the Container Store and says “What happened?”
The company had good news to report Tuesday, releasing its first quarter earnings after the market closed. Net sales were up 7%, at $209.5 million, same-store sales rose 7.8% and the net loss narrowed to $4.1 million, or 8 cents a share, down from a loss of $6.8 million or 14 cents a share in the first quarter of fiscal 2018.
CEO Melissa Reiff showed in her conference call with investors that she understands what the Container Store needs to become. She noted that sales in the custom closets category rose 11.1%, and accounted for the lion's share of the 7.8% same-store growth.
The Container Store, she said, needs to be a place that sells solutions, not just products.
The Container Store built its business on having a box for every storage need, and by promoting home ... [+] organization solutions. Joan Verdon
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Reiff outlined the following reasons to be optimistic about the shape of the company’s future:
It is opening Custom Closet stores – stores that are focused entirely on closet solutions, with none of the thousands of boxes, gadgets, and drawer dividers found in a full-size store. Customers will be able to get Container Store orders delivered to the stores, or order anything online there, but the focus will be on closet design, not filling a shopping cart. The first Custom Closet store, in Los Angeles, has been well received, Reiff said, and two others, in Memphis and Dallas will open in the fall. The company is emphasizing getting new products on the sales floor more quickly. “We are more agile today,” she said. It is leveraging social media influencers to drive sales, and has a new partnership with the Instagram stars (and organizers of the pantries of Hollywood stars) Clea Shearer and Joanna Taplin of Home Edit. The stores now carry a line of Home Edit-endorsed products. Reiff sees an opportunity to boost gross margins through more private label products. Finally, with only 92 Container Stores currently, Reiff sees a “very long, and attractive runway” for future store expansion.
At 92 stores, the Container Store is a far cry from the 300 store potential investors were promised in the IPO. The company has added only 30 stores since 2013, or about five per year.
That however, could be The Container Store’s saving grace. It avoided opening hundreds of big box stores that now would have to be down-sized or closed, as the shift to online shopping means retailers don’t need as many stores as they used to, and certainly not as many big ones.
But the company has hurt itself by being too slow to think beyond the store since its IPO. It has let competitors outpace it in terms of online offerings, and free shipping, and it should have moved more rapidly to position itself as a services provider, instead of clinging to the belief that its plastic boxes, and storage containers were cooler than everyone else’s, and special enough to make someone shop there instead of at Target, Walmart, or Amazon
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16824708cf5bb0524cd7fd19fbec5d86 | https://www.forbes.com/sites/joanverdon/2019/11/27/the-new-toys-r-us-store-opens-analog-play-with-a-digital-overlay-and-lots-of-geoffrey/?sh=480bef0e126a | Inside The New Toys R Us Store, Which Combines Tech With Old-Fashioned Play | Inside The New Toys R Us Store, Which Combines Tech With Old-Fashioned Play
The new Toys R Us store, which opens today in Paramus, N.J. is a mix of old-fashioned play with a ... [+] digital overlay. Toys R Us
When Toys R Us announced it was partnering with retail-tech firm b8ta to create an experiential toy store, the big question was would this collaboration even be a store, or a showroom filled with interactive screens designed to prompt online orders.
Now, with the opening of the first next-generation Toys R Us store in Paramus, New Jersey, the answer is clear. It’s a store.
The Toys R Us at Westfield Garden State Plaza, which opens today, is packed with lots of experiences, but it is also filled with shelves stacked with toys, just not as many in the old-style Toys R Us stores.
The re-imagined Toys R Us store in Paramus resembles a larger version of an independent, specialty toy store, the kind of place with lots of toys out in the open that kids can play with, and spaces for story-telling or arts and crafts.
But the b8ta partnership makes this a very different toy store. In the b8ta business model, vendors – in this case major toy manufacturers – lease display space. There are four “anchor” brands that have taken the largest amounts of space: Spin Master (with a Paw Patrol shop); Lego; Nintendo; and Hasbro (with a Nerf shop); four “featured” brands, and about three dozen other toy brands with smaller presences in the store.
B8ta provides the tech assistance that powers the touch screens next to every toy display that allow parents to look for toys not sold in the store and order them on the spot, or download information about them. B8ta also gathers the store analytics that vendors get when they lease space – information about how many shoppers entered their space, how much time they spent there, and how they interacted with the products.
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A second Toys R Us and b8ta partnership store is scheduled to open in Houston on December 7, at The Galleria mall.
Toys R Us is banking on the nostalgia of grown-up Toys R Us kids who are now parents to help revive their brand. In creating the store they leaned more toward traditional play experiences than high-tech ones.
There’s a treehouse in the center of the store that kids can climb; a sandbox filled with Kinetic Sand, (a less messy version of sand, sold by Spin Master); Lego building stations; and a large plush version of Toys R Us mascot Geoffrey the Giraffe that kids can cuddle and sit on. Parents and kids can also expect to see a costumed Geoffrey walking around the store and posing for photos and selfies.
“There’s tons of digital in here, which is great and a lot of fun, but nothing’s going to beat that analog play,” said Jamie Uitdenhowen, president of Toy Retail Showrooms, LLC, the joint venture between TRU Kids Brands, the parent company of the Toys R Us brand, and b8ta.
Uitdenhowen said he expects to see the store littered with toys and piece of toys on busy days, and that will be ok. “That’s what the store is going to be about. Play,” he said.
Jamie Uitdenhowen, president of Toy Retail Showrooms, LLC, the joint venture of Toys R Us and b8ta, ... [+] at the new Toys R Us store in Paramus, N.J. on the day before it opened. Joan Verdon
Toys R Us hopes to open at least eight more of the new-model stores next year, primarily in mall locations.
The b8ta-partnership stores are part of a three-pronged plan to revive the Toys R Us brand. The company has also collaborated with Candytopia, a company that creates pop-up entertainment experiences, to open Toys R Us Adventure experiences in Chicago and Atlanta. The Adventure locations are primarily experiential, with small gift shops attached to them.
The third partnership is a deal with Target to fulfill online orders placed through the Toys R Us website, and at the new Toys R Us stores.
Each of the brand areas in the store will have a “play pro” on duty to interact with kids and help them experience the toys. In the Nerf section, there is a space where kids can fired Nerf blasters at targets. In the Nintendo area, kids can play video games.
The store will have 12 to 14 staffers on duty on a typical day, and it is opening with approximately 40 full, part-time and seasonal employees, Uitdenhowen said.
Store employees designated as “play pros” will demonstrate toys and supervise the play areas and assist customers who want to place online orders. They can also provide instant checkout for customers who want to purchase toys in stock in the store.
The store has a circular room in the back with a large screen for movies or cartoons, or live-streaming events such as toy demonstrations. The room can be closed off for birthday parties or classes.
Toys R Us mascot Geoffrey plays with the Juno interactive toy at the new Toys R Us store in Paramus, ... [+] N.J>. Joan Verdon
There is a “demo table” in the front of the store that will be used to display the more complicated interactive electronic toys, such as this year’s hot toy, Juno My Baby Elephant.
The 6,000 square-foot store is about one-seventh the size of a former Toys R Us superstore. It is stocked with roughly 1,500 different items, a small fraction of the number of offerings at a Toys R Us store in the pre-bankruptcy days.
Uitdenhowen and Richard Barry, CEO of TRU Brands are Toys R Us veterans known for having good relationships with toy manufacturers, and they have succeeded in convincing the top toy companies to lease space in this new form of toy retail. Mattel, MGA Entertainment, LeapFrog, and Melissa and Doug are among the other brands represented at the store.
“We want customers to love this store,” Barry said, the day before the store opened. “Success for me is that people leave the store and they say ‘That’s a different Toys R Us to the one that I knew, but isn’t it awesome?’,” he said.
Now that Toys R Us has answered the first question about its newest incarnation – Is it a store? – it faces the questions that will determine its future.
Will the Toys R Us name, and nostalgia, draw shoppers?
Will the families who come to play also buy?
Will parents use the store as a showroom to discover and explore toys, and then head to Amazon or Walmart to buy them?
Toys R Us employees at the new store in Paramus, N.J., the day before it opened. Joan Verdon
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a07fa2f9cd263cce88c854dab5b21e0f | https://www.forbes.com/sites/joanverdon/2020/10/20/new-e-commerce-platform-fabric-targets-retail-brands-that-have-outgrown-shopify/ | Startup Fabric Emerges Out Of Stealth With $9.5 Million In Funding To ‘Take The Burden Of Engineering Away From Retailers’ | Startup Fabric Emerges Out Of Stealth With $9.5 Million In Funding To ‘Take The Burden Of Engineering Away From Retailers’
E-commerce platform Fabric aims to give mid-market retailers websites that can be updated and ... [+] expanded without an army of code-writing engineers. getty
Retailers, Faisal Masud feels your e-commerce pain. He says he has a solution, a new e-commerce platform called Fabric.
Masud, who earned his e-commerce credits at Amazon AMZN , eBay, Groupon, Staples and Google, recently became CEO of Fabric, a startup that is targeting the sweet spot of online sellers who have outgrown Shopify, but don’t want the expense and size of something like Salesforce CRM or its subsidiaries.
Fabric, which is based in Bellevue, Washington, emerged from stealth mode today, and announced that it is backed by $9.5 million in seed funding. Fabric has been quietly onboarding retail brands since the beginning of this year, and is now ready to talk about what it is doing.
Its target clientele, Masud said, is “mid-market to small enterprise customers ready to accelerate their growth online.” He defines mid-market to small enterprise as companies with between $5 million to $1 billion in sales.
Among the first brands using the Fabric platform are ABC Carpet and Home, GNC, and BuildDirect.
Fabric, Masud said, was developed to give retailers and B2B businesses an e-commerce platform that is easy to update and customize, without requiring an in-house army of engineers or costly consultants.
“Essentially Fabric is a platform that’s built to take the burden of engineering away from retailers,” Masud said. “Their technology platforms are the single biggest limiting factor that stifles the growth of these retailers.”
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Retailers, Masud said, are in effect paying an “e-commerce tax” in the form of licenses, infrastructure, hardware, software fees, and all the employees and contractors writing custom code every time they need to make a change. “Our goal is to unburden them from that.”
One of Fabric’s top selling points, Masud said, is that the company’s leaders know e-commerce and retail, and thus can better understand what retailers need in an e-commerce platform.
Faisal Masud is CEO of Fabric Fabric
“I’ve been a merchant, I’ve been an inventory planner, I’ve been a marketer, I’ve done supply chain forward logistics, reverse logistics, and inventory planning,” he said. Ryan Bartley, a Fabric cofounder, and its chief revenue officer, and Luke Shardlow, chief product officer, also have strong e-commerce backgrounds. “It puts us in a unique position” to think like a retailer while creating a technology solution, Masud said.
Another asset, he said, is that Fabric is a modular platform. Retailers looking to upgrade their existing websites can add the components they need, and the modules are built to work with existing platforms.
Fabric operates on a software-as-a-service, monthly fee basis, and unlike other platform providers doesn’t charge a percentage of sales.
“One of the big challenges retailers have today is when you get to a significant size with some of these platforms, you’re paying an arm and a leg in rev share,” Masud said.
Retailers signing on with Fabric typically come to the platform from Magento, Shopify, BigCommerce, or their own home-grown platform, he said.
ABC Carpet and Home, the landmark New York City retailer, was running its website on an outdated version of Magento before switching to Fabric in February. Aaron Rose, who joined ABC as CEO 17 months ago, said improving the brand’s digital competencies and website were among his top priorities when he took the job.
“What I recognized is when you think about the ABC experience in store, that magic didn’t translate historically online,” Rose said.
“We were faced with a choice, do we proceed with a more modern version of Magento, or go with a new platform,” he said.
He reviewed a number of platform options, and chose Fabric. “Their product designers and developers and engineers building the product are coming from some of the best builders and developers of big tech companies, and they’re bringing a lot of capability that historically was only offered in those big business enterprise solutions into the mid-market,” Rose said.
He also liked the flexibility of the platform, and that it will be easy to add components and personalization as ABC expands its digital capabilities. “I’m going to be able to have an abchome.com experience that is truly unique and tailored—over time—to what we know about the visitor, the site user,” he said.
The platform is easy for non-engineers to update, Rose said. “It’s a very intuitive series of interfaces. It doesn’t require the ability to do custom coding,” he said.
With Fabric, abchome.com’s site speed and online engagement increased, and conversion and revenue run rates grew nearly threefold, Rose said.
Fabric’s $9.5 million seed funding round was led by Redpoint Ventures, with participation from Sierra Ventures and Expa. Alex Bard, partner and managing director at Redpoint Ventures, and Tim Guleri, managing partner at Sierra Ventures, have joined Fabric’s board of directors.
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f83cc7d0858a3b1537058ff39625f9ad | https://www.forbes.com/sites/joanverdon/2020/11/09/neiman-marcus-presents-a-fantasy-wish-list-for-a-pandemic-year/?sh=6c91b3a82be6 | Neiman Marcus Presents A Fantasy Wish List For A Pandemic Year | Neiman Marcus Presents A Fantasy Wish List For A Pandemic Year
Need an escape? Neiman Marcus is offering a stay at the Sheldon Chalet, 10 miles from the summit of ... [+] Denali, in Alaska, as one of its holiday fantasy gifts. Neiman Marcus
Neiman Marcus didn’t let a global pandemic or its own bankruptcy filing this year get in the way of its favorite holiday tradition – the annual list of fantasy Christmas gifts.
Pulling off the right combination of over-the-top and outrageously expensive gifts can be tricky even in the best of times. In bad times the retailer risks being seen as tone deaf, with items like a $200,000 diamond-encrusted teddy bear.
This year, Neiman Marcus has built its wish list around things a lot of people are fantasizing about right now – travel, wellness and physical fitness, home improvements for sheltering in place - and selected ways for the super-rich to fulfill those fantasies. One of the most expensive gifts on the list is the ultimate socially distant experience – a stay at a chalet near the top of Denali, the tallest mountain in North America.
The nine fantasy items this year include a custom-created game room by designer Jonathan Adler, a custom travel library by luxury publishing house Assouline, a Bowlus luxury recreational vehicle trailer with personalized interior, and trips, via private jet and helicopter, to a wellness retreat, vineyard resort, cattle ranch, or the Denali chalet.
The most extravagant items on this year’s list are both priced at $345,000, far less than past items like the $35 million custom Boeing BA jet, or the $6.7 million Bell helicopter.
The top-priced gifts are the trip to the Denali chalet, and a year’s worth of wellness advice and treatments at a Canyon Ranch resort.
The Denali experience includes accommodations for up to six people at the Sheldon chalet, located 10 miles from the summit of Denali, transportation, glacier explorations, Denali guides, and a private chef.
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The Canyon Ranch “year of wellness” includes four weeklong stays at a Canyon Ranch resort over the course of a year, tailored fitness and wellness plans, monthly consultations, and unlimited resort services during visits.
For $185,000 you can buy a stay at the Perini Ranch in Texas, and a year's supply of beef ... [+] tenderloin. Neiman Marcus
Neiman Marcus has been offering its fantasy gifts as part of its Christmas catalog since 1959. Stanley Marcus saw the gifts as a way to get free national publicity for Neiman’s, which at the time only had stores in Texas.
He got the idea for the gifts because reporters were always asking him for examples of extravagant holiday spending by the super-rich of Texas. Why not, Marcus thought, create our own list each year of wacky and one-of-a-kind gifts for the wealthy.
The first fantasy gift was a Black Angus steer and a silver-plated cooker. Buyers had the choice of getting the steer delivered “on the hoof” for $1,925 or in the form of ready to eat frozen steaks and roasts, for $2,230.
Over the years, Neiman’s has gotten the most attention for its “his and hers” gifts, which have included everything from a pair of camels, to “husband and wife” robots to his and her mummy cases. None of the gifts on this year’s fantasy list have a his and her component.
Neiman’s, in its video presentation of the 2020 list, made several references to the pandemic-changed world.
“After months of staring at screens and limited activity, Neiman Marcus knows customers are ready to take charge of their recharge,” it said in describing the Canyon Ranch package.
The Assouline custom library ($295,000) was described as perfect for “armchair jetsetters”, and the Jonathan Adler game room ($145,000) was called a way “to make your home the ultimate entertainment venue,” and a way to “spend time with friends and family.”
A custom Bowlus premium trailer is being offered in the Neiman Marcus catalog for $255,000. Neiman Marcus
Neiman Marcus began preparing this year’s list, as it does every year, more than a year in advance, long before the pandemic struck. David Goubert, President and Chief Customer Officer, said the list was reviewed to see if any changes needed to be made due to the pandemic.
“We have strived to adapt our fantasy assortment this year by offering gifts that meet the evolved needs of our customers and by prioritizing health and safety in all the experiences we offered,” Goubert said.
Neiman Marcus is also continuing its holiday tradition of including charitable donations in the price of each gift. Most gifts include a $10,000 donation to Neiman’s favorite charity, the Boys and Girls Clubs of America, with additional donations to specific causes included in some of the gifts. For the Denali experience, the Sheldon Chalet will also donate $5,000 to the Denali Education Center.
The other gifts on the fantasy list this year are:
Six rings featuring exotic gems from the Oscar Heyman collection. The rings can be purchased separately for between $100,000 to $190,000, or all six for $870,000. Custom-made Keith & James hats designed in collaboration with celebrities and artists including Run DMC, Paul Gerben, PixelPancho and others. $95,000. A five-night stay for six people at the Montage Healdsburg resort in California’s Sonoma County, a personal session with vinter Jesse Katz, and a year’s worth of wine selections curated by Katz. ($215,000) A three-day stay at the Perini Ranch in Texas, and a year’s supply of beef tenderloin. ($185,000) A Bowlus Endless Highways Bespoke Performance edition trailer with a state of the art electrical system and custom interior. ($255,000)
Neiman Marcus doesn’t expect to sell all of its fantasy gifts, and it doesn’t matter if it doesn’t sell any of them. (And they never reveal which gifts didn’t draw any buyers.)
The gifts are included in this year’s Christmas catalog, just as they are every year, to generate excitement for the other 400 items featured as holiday gifts.
Those are the items Neiman Marcus, which emerged from bankruptcy protection in September, needs to sell a lot of in order to have a merry Christmas this year.
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329703d048f04574d6c3b2bd7f0540d3 | https://www.forbes.com/sites/joanverdon/2021/01/11/can-ryan-cohen-work-his-chewy-magic-at-gamestop-heres-a-possible-game-plan/?sh=6fedaa3a472a | Can Ryan Cohen Work His Chewy Magic At GameStop? Here’s A Possible Game Plan | Can Ryan Cohen Work His Chewy Magic At GameStop? Here’s A Possible Game Plan
Ryan Cohen, founder of online pet retailer Chewy, is now tackling game retailing, wiht a a seat on ... [+] the GameStop board as an activist investor. Courtesy of Ryan Cohen
Ryan Cohen, the Chewy founder who showed Wall Street skeptics that he could take on Amazon AMZN in the pet category, now has a new quest that could also be viewed as mission impossible: Creating a future for the GameStop chain.
GameStop announced today that it has appointed Cohen, and two associates from his time at Chewy, Alan Attal and Jim Grube, to its board. Cohen’s investment firm, RC Ventures, has been building up a position in GameStop, and now holds a 13% stake, according to Reuters.
Investors apparently already are thinking of Cohen as a savior. The stock shot up in response to the news, as it has other times when Cohen increased his stake. GameStop was up almost 13% at Monday’s close, and at $19.94 a share the stock is five times higher than the below $4 lows it hit over the summer.
Cohen sold Chewy to PetSmart for $3.35 billion in 2017, and exited the company a year later. Wall Street didn’t fully appreciate his e-commerce genius until Chewy’s successful IPO in June 2019, which valued the company at four times what PetSmart paid for it, and Chewy’s ongoing success in proving it has a path to profitability.
With Chewy, Cohen created a powerful alternative to Amazon by focusing on customer service, and connecting with “pet parents” who think of their cats and dogs as beloved family members, and are more obsessed with what is best for them, than which retailer has the best price.
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GameStop presents a tougher challenge - a retailer many consider as outdated as Blockbuster, a business built on sales of gaming consoles and game discs and cartridges in an new age when content can be downloaded rather than bought in a store.
Cohen today wasn’t commenting on his plans for GameStop, other than releasing a statement with GameStop saying he hopes to bring “our customer-obsessed mindset and technology experience to GameStop” and that he believes it “can enhance stockholder value by expanding the ways in which it delights customers and by becoming the ultimate destination for gamers.”
But Forbes.com interviews with Cohen over the past year, as well as insights about his e-commerce philosophy shared by RC Ventures representatives in recent months hold clues as to what his likely playbook will look like:
Spot the trend before anyone else sees it coming.
With Chewy, Cohen’s brilliant idea was realizing that pet owners, especially younger, millennial, first-time pet owners, obsessively love their pets, and that they wanted a retailer that didn’t just talk to them about price (a trap the pet superstores fell into to compete with Amazon) but that showed it loved pets as much as they did.
Chewy still was vigilant about matching Amazon and other competitors’ prices, but the difference was it didn’t treat its customers as if all they cared about was price.
Cohen got the idea for Chewy when he saw how enthusiastic Zappos customers were and he thought “Wow, if customers can go bananas for shoes online, imagine if we could do it when it came to pet customers who are fanatical and are obsessed with their pets like I am,” he said in an interview a year ago.
Now, with every pet retailer and startup pet brand talking about “pet parents” and how pets are family members, it.s easy to forget that back when Chewy was born most pet retail marketing still was viewing pets more like farm animals than family members.
It’s hard to know at this point what visionary insight Cohen has into the world of gaming retail, but one thing that is certain is that gamers, in their own way, are as obsessed as pet parents. Tapping into that passion could be a winning formula.
Fix GameStop’s e-commerce
GameStop has been working to become a better omnichannel retailer, but it still has a lot of catching up to do, and Cohen, along with Attal, who was chief operating officer and chief marketing officer at Chewy, and Grube, who was chief financial officer, can speed that up.
A line of shoppers outside the GameStop store on Black Friday 2020 at the Westfield Garden State ... [+] shopping center in Paramus. Joan Verdon
The pandemic helped boost GameStop’s e-commerce sales by 257% during the third quarter but its website could benefit from the kind of digital makeover Cohen can help direct.
A cleaner, easier to navigate website would help GameStop expand its product offerings into new game categories, and potentially broaden its customer base.
Out-do Amazon using Jeff Bezos’ playbook
Cohen has said that when he built Chewy he studied Jeff Bezos’ 1997 letter to shareholders. In that letter, Bezos talks about the importance of relentlessly obsessing on customers, and keeping the focus on the long term.
“It connected with me intuitively to such a large degree, when you think about the strategy of establishing yourself as the market leader in a specific category, and the willingness to make bold bets in exchange for scale and market leadership,” Cohen said last year. He followed that guidance at Chewy, moving aggressively to scale quickly and become the dominant online altenative to Amazon in the pet category.
Amazon, in recent years, has lost some of that customer focus, with the growth of its ad business for its search engine results, and its other businesses. Cohen could be looking at GameStop as a new opportunity to build an Amazon alternative in the games and gaming category.
“Amazon feels more like an online flea market where just the amount of product is so overwhelming that being able to provide a more focused, first party experience,” is an advantage, Cohen said last year. “I still like buying product first party, and knowing it’s coming from the retailer.”
What could go wrong?
A lot. Gamers, and parents and others looking to buy any kind of game, have plenty of other options where they can buy physical copies of video games, or other toys - Walmart WMT , Best Buy BBY , and Amazon being the top competitors.
While gamers still like having physical copies of games for trade-in value, the downloadable and streaming universe could eventually wipe out that demand, just as Netflix NFLX eliminated the need for Blockbuster.
Finally, it is easier to build a brilliant company from scratch than to fix a bad one. GameStop has succeeded in narrowing its losses recently, but it ended fiscal 2019 with a net loss of $470.9 million, and a drop in comparable store sales down 19.4%.
With Chewy, Cohen set out to be the one-stop shopping site for pet parents. If he can do that with gaming, and move beyond video games to broader games offerings, plus throw in some e-commerce magic, he just might be able to pull off mission impossible.
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41e1d76294f19a313dc9d86bd81bbc74 | https://www.forbes.com/sites/joanverdon/2021/01/27/the-race-to-outsmart-the-competion-adobe-unveils-new-ai-tools-for-retailers/?sh=528cae432121 | The Race To Outsmart The Competition: Adobe Unveils New AI Tools For Retailers | The Race To Outsmart The Competition: Adobe Unveils New AI Tools For Retailers
Among the new e-commerce tools unveiled by Adobe at the National Retail Federation expo was "Offer ... [+] Decisioning" technology that matches discount offers and content to consumers. getty
More people are shopping online than ever before, and consumers are demanding much more from their online experiences.
That has created a race by retailers and their tech partners to build smarter, more seamless, more personalized, digitally-enhanced shopping experiences.
At the National Retail Federation’s annual expo, (held virtually this year, from January 12 to 21) tech giant Adobe ADBE unveiled its newest entries in that race, with tools designed to use artificial intelligence and data to alert retailers when something goes wrong in the digital experience, and to offer personalized experiences and promotions to the right customers.
One of the tools, Customer Journey Analytics, adds new AI capabilities to “help retail businesses manage and navigate in this incredibly complex environment they have to operate in,” said John Bates, director of product management for Adobe Analytics.
Customer Journey Analytics, Bates said, is designed to work with the new realities of retail, where a consumer might browse on a website, make the purchase on a mobile phone, and pick up the merchandise in person in the curbside lane at the store.
This holiday season, one out of every four online orders, or 25%, were picked up at curbside, or in-store, in November and December, according to Adobe Analytics data culled from 80 of the top 100 U.S. online retailers.
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Adobe also measured massive growth in mobile purchases. On Christmas Day, the mobile share of revenue exceeded desktop for the first time, at 52%.
While earlier Adobe customer experience tools focused heavily on website interactions, Customer Journey Analytics “goes well beyond the website and it brings together the mobile app, the offline interactions, such as curbside delivery—so brands can better understand the holistic experiences their consumers are having with their brand,” Bates said.
The Customer Journey Analytics tool can alert retailers if problems on their website or mobile app are causing cart abandonment or shopper navigation problems, but also if lines and wait times are becoming a problem at curbside.
For example, Bates said, if the AI detects a sudden increase in average wait times curbside, “it will immediately identify that, alert the brand, and auto-analyze all of their data across devices and channels to then help them understand why that’s occurring.”
The Customer Journey tool works with the Adobe Experience Platform, which Adobe launched previously to help brands manage digital customer experiences and digital content.
Another new tool for the platform, also unveiled at the NRF expo, is “Offer Decisioning,” which analyzes data to create personalized offers for customers.
Personalization can mean anything from content or products tailored to a customer, or discounts or other special offers said Kevin Lindsay, director of product marketing at Adobe. The tool serves as a decision engine, Lindsay said, that can analyze different data inputs “then deliver the offer that seems most appropriate in this moment for this consumer.”
It also can create an “offering library,” with a list of possible promotions or discounts the decision engine can choose for a customer.
While retailers and tech companies have been talking about personalization for a long time, “the bar continually gets raised in terms of consumer expectations for that personalization,” Lindsay said.
“You probably won’t hear a single consumer say ‘I want that retailer to do this kind of personalization for me.’ They just want a great experience,” he said.
Consumers are shopping in all of the different channels—physical stores, mobile, website—and they expect that their experience is going to be stellar, no matter how they are shopping, Lindsay said.
The expectations of today’s digital shoppers “are just as high as if they were walking into a store - into Nordstrom JWN and dealing with an associate who gave them great service and had helped them before,” he said.
While Adobe began working on these tools before the pandemic hit, the events of 2020, and the rapid acceleration in online shopping, have caused retailers to become much more aggressive about seeking out and adopting new digital technologies, Lindsay and Bates said.
Many of the tech companies at the NRF expo this year were pitching AI, machine learning, and analytics advances in their sales talks with retail clients. Microsoft MSFT , Oracle ORCL , and SAS also announced upgrades to their e-commerce support platforms.
For the past decade the e-commerce race that got the most attention was who had the fastest delivery. Now that same-day delivery and in-store pickup are becoming standard, the next race to watch may be which e-commerce AI gets the smartest, the fastest.
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6bf5f683c048e634c718104a88ae033a | https://www.forbes.com/sites/joanverdon/2021/02/28/why-amazon-should-be-worried-about-walmarts-micro-fulfillment-centers/?sh=77707a585870 | Why Amazon Should Be Worried About Walmart’s Micro-Fulfillment Centers | Why Amazon Should Be Worried About Walmart’s Micro-Fulfillment Centers
A worker preparing a grocery order at a Fabric micro-fulfillment center in Tel Aviv. Fabric
In a parking garage beneath a skyscraper in the heart of Tel Aviv, robotic fulfillment firm Fabric is demonstrating the kind of technology that should make Amazon executives anxious.
While Amazon’s logistics strength is viewed as an unbeatable advantage, the mini, automated fulfillment centers Fabric and other tech providers are installing in Walmart stores and in U.S. supermarkets could be the Trojan horses that get past the e-commerce empire’s defenses.
In the 15,000-square-foot Tel Aviv space, six employees, aided by dozens of robotics-powered totes scuttling from station to station, fill grocery orders for one of Israel’s largest supermarket chains. The site typically fills 300 orders a day, with each order averaging 50 items, and has the capacity to fill many more than that.
At the Tel Aviv site, Fabric is showing retailers that it can put a micro-fulfillment center almost anywhere—even in an underground parking garage—and make it work.
Now, Walmart is preparing to use that technology to turn its stores into even more of a competitive advantage against Amazon.
Amazon doesn’t just have to worry about Walmart. Leading U.S. supermarket operators also are moving quickly to add automated, in-store fulfillment centers. Other big-box retailers are expected to follow Walmart’s lead.
“This is a trend that is not going to go away,” said Randy Mercer, global product manager at 1WorldSync, a product content provider for e-commerce brands and retailers. The pandemic has caused retailers to turn their stores into mini-fulfillment centers, using manual picking. Now Walmart is taking the lead in adding technology, he said,
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“I guarantee you the others are close behind—the Targets, the Krogers,” Mercer said. Retailers have begun automating their warehouses and distribution centers, so it is inevitable they are thinking about how to do the same thing in their stores, on a smaller scale, he said.
Fabric is one of three robotics firms that Walmart is partnering with to build automated fulfillment centers in its stores. Walmart, when it announced the deals in a blog post last month, said dozens of local fulfillment centers are in the works, with many more to come.
John Furner, Walmart U.S. President and CEO, in Walmart’s earnings call Feb. 18, said the retailer expects to have over 100 local fulfillment centers in operation “within the next couple of years.”
In addition to Fabric, Walmart is also partnering with tech firms Dematic and Alert Innovation to build these fulfillment centers.
Alert Innovation created the Alphabot automated picking system Walmart began testing at the end of 2019 at a supercenter in Salem, New Hampshire. That trial site put Walmart ahead of competitors when the pandemic hit, and enabled it to fill online grocery orders in the Salem area, while other online grocery services had weeks-long backlogs.
Walmart and its three tech partners aren’t revealing how many centers each robotics firm will build, or where they will be located. But videos Walmart has released of the Alphabot system in Salem and a virtual tour of the Fabric site in Tel Aviv show why rapid growth of in-store fulfillment centers should worry Amazon executives.
Fabric’s model uses two kinds of robots: rack robots that can fetch from among the thousands of products stacked in the fulfillment center, and floor, or tote, robots that can move freely around the center to deliver goods to employee-manned packing stations.
At the Tel Aviv site, all of the grocery orders are prepared for delivery, and delivery drivers collect the completed orders. But the model could also be used for click-and-collect orders in store, or at curbside, or placed in vending machine-like storage lockers for customer pickup.
Steve Hornyak, Chief Commercial Officer at Fabric, declined to comment on the Walmart project, but talked about the potential Fabric is seeing for automated, in-store fulfillment to transform e-commerce.
With manual picking, Hornyak said, grocery stores typically are limited to about 100 orders a day. Fabric robotics can increase that capacity by five to 10 times, up to 1,000 orders a day, in a space that can be as small as 10,000 square feet, carved out of existing store space.
Fabric recently activated a non-grocery, general merchandise micro-fulfillment center in Brooklyn, New York, that is currently being used by two brands, one health and beauty and one apparel. Fabric expects to have three to four brands using the center soon.
The general merchandise centers give brands a way to place fulfillment near their customers, without having to use Amazon warehouses.
“If you want to maintain control of your brand and be as close to your customers as possible, then Fabric is an option to get your products there same day or next day,” without having to share customer information or data with Amazon or other marketplaces, Hornyak said. “A lot of brands are looking for that,” he said.
Fabric has fulfillment sites in the works in New York, Dallas, Washington D.C. and Los Angeles that it expects to be operational this year, as well as additional sites in Israel.
Fabric, which previously was named CommonSense Robotics, will either sell the robots and the hardware and software to a retailer, or operate the center for the retailer for a fee, in a robots-as-a-service model.
Grocers increasingly are leaning toward the robots-as-a-service model. Hornyak said. “That model gives them a constant known operating expense.”
At Fabric micro-fulfillment centers, workers can fill up to 1,000 grocery orders a day. Fabric
Furner and Walmart, Inc. CEO Doug McMillon spent significant time during the fourth quarter earning call 10 days ago talking about automation and the new fulfillment centers.
“If we find that it’s working really well and we can go faster, I’m going to be in the camp of wanting to go faster, because this looks like it’s going to be really great for our supply chain, great for customers, great for the company,” McMillon said.
An automated micro-fulfillment center set up in a Walmart store can be stocked with the most popular grocery items and general merchandise orders for online orders. The robots can quickly pick those items, and store employees can add anything else sold in the store to an order—a TV, a toaster, a sweatshirt—for pickup along with the groceries.
McMillon talked about how Walmart made a deliberate choice years ago to focus, in the U.S. market, on in-store pickup for online orders rather than delivery. That choice has paid off during the pandemic as Walmart’s investments helped it handle the surge in online orders.
“In the U.S., we thought, based on how large the country is and how people like to drive their cars—they do drive-throughs for food and banks and everything else—that we had the opportunity to really focus on pickup for a few years, which was obviously economically advantageous for us.”
The store fulfillment centers being built by Fabric and other other tech providers give Walmart the ability to use existing store and parking lot space create drive-through pickup stations for online orders that can be filled same-hour, not just same day. And that has to make Amazon worried.
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b103a0072e01d81055c0f48148ad28b8 | https://www.forbes.com/sites/jodiecook/2018/11/29/how-to-be-happy-nearly-all-the-time/?sh=2b67f1a74eb2 | How To Be Happy (Nearly) All The Time | How To Be Happy (Nearly) All The Time
"How to be happy (nearly) all the time." - @Forbes & @cookiewhirls
In the illustrated book, Brave Girls Club: Choose Happy, Melody Ross describes happiness as, quite simply, “a choice that we make every minute of every day”. Happiness is a much researched and sought-after state of being that philosophers and great thinkers alike have tried to explain. As they see it - happiness is simple and achievable.
When you’re faced with transition, change and disruption, happiness can feel unobtainable. I believe it’s there to be found, but not in the way you might believe it can be. Here’s my take on happiness: reimagined, with 6 somewhat unconventional ways to be happy (nearly) all the time.
Love people; use things.
The 2015 documentary The Minimalists follows the journey of Joshua Fields Millburn and Ryan Nicodemus defining the actual important aspects of life. Their mantra? “Love people, use things. The opposite never works.” Got an urge for something shiny? Keep asking why. Why do I want to buy that car? Because it will make me look successful. Why do I care about looking successful? Because of what [insert name of person] will think. Why do I care what [person] thinks? Well? Hang out with people who don’t care what car you drive, because it really doesn’t matter.
If we don’t find the way to happiness ourselves, other people will tell us how to get there. Marketing teaches you what not to be happy with; our relationships, job or appearance. Advertising guides us towards specific goods and services on the premise that they’ll make us happy. In reality, people often find that the things that they think will make them happy actually don’t. Money. Fame. Possessions. It’s well documented that lottery winners often regret having ever won the money.
Day-to-day this means focusing on the time you can spend with people you love and not on the objects you can purchase. Gifting your presence instead buying presents. Avoid those who make you feel rubbish and go see those who you enjoy spending time with.
Get some perspective.
In the 2002 Flaming Lips song, Do You Realize, they sing the line: “do you realize that everyone you know someday will die”. In the Derren Brown book Happy: Why More or Less Everything is Absolutely Fine, Brown says “everything worthwhile in your life draws its meaning from the fact you will die.” The Stoics use the Latin phrase “memento mori” as their reminder of mortality.
Get comfortable with the idea that one day you and everyone you know won’t be here. Let that dictate your every moment. Find happiness in the absurdity that we’re all taking ourselves so seriously when really it doesn’t even matter. The hit musical Wicked describes it best in their song Dancing Through Life, with the lyrics “nothing matters, but knowing nothing matters”. That person who slagged you off behind your back? Who cares?! That competitor who copies everything you do. So what?! Good luck to them all. You hope they make it. It’s not a zero sum game and thinking it is ignores the real heart of the matter - you’re not going to live forever.
How to be happy (nearly) all the time Pixabay
Find freedom in the fact that whatever happens, one day you’ll be gone, so you might as well be happy today while you are alive. Your problems really aren’t that big.
Control the controllables.
Herbert Bayard Swope once said “I can't give you a sure-fire formula for success, but I can give you a formula for failure: try to please everybody all the time.” Now I’m not promising I can give you a formula for happiness, but a definite formula for unhappiness is to worry and stress about things that are completely out of your control.
In season 5 episode 18 of US sitcom Friends, Monica is throwing a party and wants to control everything: the food, the guest list and the entertainment. Phoebe tries to help and Monica, to keep her away, puts her in charge of two things that she deems insignificant: cups and ice. Phoebe is now clear that most of the party is out of her control, but she goes to town on what she can control: cups and ice. She makes cup bunting, cup towers, ice sculptures, snow cones, dry ice, crushed, cubed, and so on. She promises that Monica will “rue the day she put me in charge of cups and ice”. The cups and ice become the centrepiece and the talking points of the entire gathering, much to Monica’s annoyance.
Friends Warner Bros
The first step is to work out what is in your control and what is out of your control. Other people’s actions? Out of your control. The football score? Out of your control. What people think? Out of your control. In your control: your attitude, your actions, your words, your thoughts, your choices. Make a list. Focus on what you can control and give it everything you have. Forget everything else.
Avoid labels.
When something happens it’s human nature to want to define it. It’s ‘awesome’, it’s ‘bad’, it’s ‘unfair’. Actually, it’s none of those things; it’s just something that has happened. The label given to it is purely one person’s perspective, not necessarily the truth.
When I was on my graduate scheme, my manager Glyn was from Sheffield and spoke in idioms. One day he used the line: “at the end of the day, it is what it is and that’s that.” At the time I thought that phrase was a convoluted way of saying absolutely nothing. Now I realise it was deeply profound. At the end of the day it is what it is and that’s that. I have since found that training my brain to see things as they are, and avoiding the perceptions and labels that can surround them, has avoided drama and headaches like nothing else. Go one step further by avoiding the need to hear other people’s opinions. Opinion pieces on [insert current political happenings], what [outspoken celebrity] thinks about [what another celebrity has said or done]. Who cares, right? Avoid forming opinions, because opinions don’t make you happy.
Start avoiding opinions day-to-day and you will realise how often they are aired. Opinions are just that; they are not the truth so never treat them as such. Like a ball being thrown at you; you choose whether to catch it or dodge it. You don’t need to disagree (that would be an opinion too), just be mindful of what you choose to let enter your inner being. Your thoughts become your words and your words become your actions, and, by extension, your reputation and success.
“We are, each of us, a product of the stories we tell ourselves”
― Derren Brown
Opinions are just that; they are not the truth. Pixabay
It’s all a game.
In his bestselling book, Key Person of Influence, Daniel Priestly says “the minute you begin to feel yourself “working hard” as opposed to “playing a challenging game, it’s time to take a break.” I believe that given everything in point (3), happiness comes from viewing everything as playing a challenging game. Not just work but life too.
Accept that things out of your control will happen and they won’t all be favourable. You must be ready for them. Taking a break in the short term might help, but in the long term, train yourself to deal with anything that comes at you. Because it will keep coming at you and it won’t stop, so you might as well get good at it.
Whilst you might crave picturesque scenery, rolling hills and nothing but the sound of birds singing, real happiness comes from calmness in the middle of a crowd, in the middle of a tense conversation or on the battlefield. Happiness is riding the waves and not being pulled about with each occurrence like an emotional rollercoaster.
A technique I learned about in the Tim Ferriss book, Tools of Titans, is saying the word “good” after anything that happens. Anything. My work got deleted? Good. A chance to do it again, better. The internet is down? Good. A chance to read a book. My food is taking ages to arrive? Good. A chance to practice patience. I feel overwhelmed? Good. A chance to make a change. Doing this conditions your brain to see opportunities rather than problems in every set of circumstances.
Don’t take it personally
In Confessions of a Conjuror, Derren Brown writes: "Each of us is leading a difficult life, and when we meet people we are seeing only a tiny part of the thinnest veneer of their complex, troubled existences. To practise anything other than kindness towards them, to treat them in any way save generously, is to quietly deny their humanity."
It would be easy to let the actions of others dictate your happiness, but what would this achieve? If you receive an email you perceive to be unfriendly, or someone cuts you up, or doesn’t let you out, it’s not personal. That person might have just lost a family member, they might be dealing with problems far worse than ours. They probably didn’t mean it to upset you. Seeing other people and their actions as being out to get you is the sure fire route to unhappiness, because in reality it’s probably nothing to do with you.
There’s a bias that can happen when individuals assess their own and others’ behaviour: attribution bias. According to Wikipedia, when judging others we tend to assume their actions are the result of internal factors such as their personality, whereas we tend to assume our own actions arise because of the necessity of external circumstances. So when someone turns up late to a meeting with you, you might label them as lazy or inconsiderate, but they will explain their lateness by pointing to the traffic jam or train timetable. Happiness is being able to understand the actions of others, not label their character.
True happiness comes from knowing what is in your control and out of your control and acting accordingly, whilst being careful what you let into your inner sphere. It comes from watching your thoughts for those that are unhelpful or untrue, showing kindness wherever possible and, above everything else, remembering it’s all a game and we’re not going to live forever.
[Edit 13.12.2018 - after receiving many wonderful messages about this article I wrote How To Be Happy (Nearly) All The Time - Part Two.]
You're not going to live forever. Pixabay
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6ead785d1397d2ddf338cf7661038bb8 | https://www.forbes.com/sites/jodiecook/2019/05/15/theres-only-one-way-to-succeed/ | There's Only One Way To Succeed | There's Only One Way To Succeed
There's only one way to succeed Shutterstock
After eight years of running my own agency, working with many clients, colleagues and suppliers, it’s now clear to me what separates those individuals who are remarkable, impressive and – ultimately – successful from those who are replaceable and forgettable.
I've designed this article to be a toolkit by which to assess the choices you make and the actions you carry out.
You're either remarkable or invisible. Make a choice. ~ Seth Godin.
I’ve written before about the difference between doing what is right and what is easy, and the importance of committing to excellence no matter what. Having researched and been fascinated by the 'right versus easy' concept, and taken inspiration from authors in this field, I now believe it’s more fundamental to success than we realise. The right thing to do is often the hardest. The one most avoided. The one that’s put off to next week or deemed too tricky to tackle head-on. But it’s the most important by a long way.
Ben Horowitz commits a whole book to describing and defining the Hard Thing About Hard Things. Cal Newport wrote Digital Minimalism and Deep Work to distinguish between the easy distractions that technology offers versus the, sometimes seemingly unattainable, deep and focused effort that makes the real difference. The 48 Laws of Power by Robert Greene includes rules on outworking, outsmarting and outlasting rivals, albeit whilst making it look easy.
I'm always choosing the hard things, the things that aren't easy. - Dee Rees
This isn’t about arbitrarily seeking difficulty. This isn’t about being abrasive or argumentative when there’s just no need to (and rarely is there a need to!). This is about knowing what to let slide and when to take action; differentiating between a short cut that’s genuinely beneficial and a move that only defers a problem. This is about making a conscious decision to do what's right; for you, your team, your business or your career, despite there being discomfort in doing it.
There's only one way to succeed Shutterstock
Let’s start with the easy things. When running a business, the easy things are great and include the following: hiring great people who get off to flying starts and are eager to please. Giving praise, giving pay rises, sharing good vibes. It’s easy to share exciting news before it’s finalised, to paint a rosy picture of the future and sell it to your board, shareholders or team. It’s easy to take your clients for a drink, make small talk and get to know them well. It’s easy to talk to people about your ambitious growth plans. In any role, it’s easy to talk – to give away more information than required, to gossip about co-workers, to criticise the actions of others and think you know best. It’s easy to read a headline and jump to a conclusion, or fly off the handle at a snippet of information.
However, without the hard things that accompany all of these easy things, you’ll build a business with little substance. It will be superficial, shallow, and won’t stand up to stress tests, like a house of cards ready to collapse. Be wary of hiring managers who are great at doing the easy things but don’t have the experience, commercial awareness or authority to do the hard things when they're required, and don’t fall into the trap yourself.
There's only one way to succeed Shutterstock
The necessary hard things, and those that I believe are prioritised, executed and even enjoyed by those entrepreneurs and business leaders who really are exceptional at what they do, include the following: working out their own weaknesses and addressing them without relying on others. Having the difficult yet imperative conversations to give the constructive criticism that someone needs to hear in order to improve and progress. Always doing the most important thing on their task list first. Picking up the phone instead of hiding behind email or assistants. Revisiting a strategy for the third, fourth and fifth time to ensure the best results possible. Knowing when enough is enough and having the strength to admit they're wrong, cut their losses or say goodbye.
Compared to papering over the cracks, it’s not easy to pull the wall down and rebuild it. It takes courage to refuse to participate in gossip, rumour or biased opinions. It requires practice to withhold judgment until you have heard both sides of the story, or verify information before taking someone's word. No one enjoys empathising with someone they don’t like, or showing kindness when there is no chance of reciprocation. Do it anyway.
The only way to succeed is to be truly committed to doing what is right, even when it’s difficult.
A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well. - Jeff Bezos
Shying away from impactful yet difficult actions in favour of exchanging shallow niceties and doing the fluffy stuff is harming your career and stunting your business. I’m certain that, deep down, everyone knows when they are working towards their goals and when they are taking the path of least resistance to little avail. Let this be the sign that it’s time to choose the former.
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5f1387d049e4e901abe504004f8ea67a | https://www.forbes.com/sites/jodiecook/2019/07/23/how-to-run-a-business-without-it-running-you/?sh=42519d001290 | How To Run A Business Without It Running You | How To Run A Business Without It Running You
If done right, running a successful business is the best thing in the world. You choose who you work with, you deliver great work you believe in. You set your working times, your values and ethos and you have a career on your own terms. You pre-empt problems and you create a great place to be for everyone involved. Life is a dream.
How To Run A Business Without It Running You Shutterstock
If done wrong, it’s the worst way to operate. You’re at the mercy of clients, team members, shareholders and your emails. Instead of being wonderfully on top of processes, you’re left fighting fires and backtracking, feeling like you’re frantically spinning multiple plates. You’ve created yourself a prison and are being held hostage inside it.
The two scenarios described aren’t that far apart. Here are the elements that can mean you always experience the former.
Set the rules
You cannot scale a business if you’re taking everything case by case. Offering too many options, every decision needing a multi-person discussion and making concessions and exceptions every day are all recipes for a slow-moving and clunky establishment. It also means you’ll be pulled into every scenario when you might not be needed because people need guidance in grey areas.
Commit to communicating the right information, to the right people, at the right time. Make it OK for your team to do the same. Don’t answer the same question twice. Nearly all those you answer will have been answered before. Update an FAQ document every time you answer a question and ask your team to as well. Soon you’ll have every process mapped out for easy reference and your team will be empowered to use their own reasoned choice.
Know the vision
Do you know what you stand for and what your business is there to do? Do you know not only your long-term goals, but also what you’re going to do in the short term to make sure you achieve them?
If you and your team know the overriding purpose of your existence, short-term decisions should be simple. If you’re flitting between multiple visions and agendas then you’ll be left confused and so will those you’re working with.
Leave no room for misunderstanding. Define and communicate your purpose at every opportunity, and use it as a framework from which everyone operates.
Hire the right people
If you have a niggling feeling that something’s not right, it probably isn’t. If you’re not 100% convinced about someone in your team, do something about it. When everyone is carrying out their own role in a competent and conscientious way, teams thrive. When there’s mistrust, dishonesty or a simply a lack of commercial awareness, everyone loses, especially you as the owner.
The best leaders highlight the work of their team and play down their individual contribution because they know they couldn’t operate without them. If you’ve hired the right people this will be easy to do. If you’ve hired the wrong people you’ll find yourself distancing yourself from them. The latter doesn’t lead anywhere good.
Work with people you trust implicitly, who are aligned in their values and operate in a conscientious way. It’s the only way everyone can take complete ownership of their own role. As Marcus Aurelius wrote: “What is not good for the beehive, cannot be good for the bees.” Everything everyone does needs to be good for the beehive; there can be no selfish agendas.
How To Run A Business Without It Running You Shutterstock
Processes in place
For everything that happens in your business, there is a process that follows. Organizations that run beautifully have action plans mapped out and "if this then that” documents, all supported by reliable technology that helps founders focus on growing their business and supporting their team. Think of it like Maslow’s Hierarchy of Needs, whereby efficient automation and documented processes are the base level that enables the higher stage of creativity and excellence to be accessed.
The default should be that processes run, not that bottlenecks are formed in every department. Sooner or later those bottlenecks will require fire fighting, and that’s when you’ll be pulled back in. Zoom out, right out, and look at where the breakdowns are happening. Maybe it’s hiring or quality control, or just overflowing inboxes. Practical solutions might involve a task management system, an invoice automation tool or even just better email filters.
Processes should work by default and break only occasionally, not the other way around. However small it might seem, if it’s causing a breakdown, it’s costing time and attention and must be solved and eliminated.
Address your mindset
The difference between you running your business and your business running you might be the boundaries you set for yourself. When’s the last time you didn’t check your email until 10 a.m.? Or left a colleague to deliver without micromanaging? How much do you take things personally?
Remind yourself that you have made the choice to run a business. No one forced you to do it. If you’re running a successful and growing company with happy clients and a dream team of colleagues, but you still feel like your business runs your life, the problem might exist solely in your mind. Develop other interests, give yourself space and don’t be so hard on yourself. If you’re actually in a cushy situation but you’re telling yourself it’s a chore, recognize that you could, instead, choose to chill out and be grateful.
Incorporate balance into your week. If you spend Saturday morning responding to emails, spend Wednesday afternoon taking a walk.
The reason you started a business in the first place was to operate on your own terms, right? So don’t take the worst parts of self-employment without allowing yourself the perks. Businesses that run like clockwork without the owner being frazzled do exist, and yours can be one of them.
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0c40cfffb2e9139c6ae6ac3a14ec8ae8 | https://www.forbes.com/sites/jodiecook/2019/09/03/8-ways-to-have-better-relationships-with-your-clients/?sh=ee2e86239929 | 8 Ways To Have Better Relationships With Your Clients | 8 Ways To Have Better Relationships With Your Clients
If you’re providing a service of any sort, you will have clients. Your client relationships; the presence, happiness and retention of them; are the foundation of your business. Your company exists to serve its clients and their needs and without them you don’t have a business.
Develop better client relationships StartupStockPhotos for Pixabay
When you’re faced with a looming deadline or an unreasonable request, it’s easy to wish for a simpler role without such demands. Many business owners I know have confided that they are sure there are easier ways of making a living than having clients to answer to.
That’s completely the wrong way to think about it. The truth is, learning to be exceptional at understanding and looking after your clients means you can have the best of all worlds. It means you get to work with people you admire, who look forward to hearing from you, with whom you work in partnership, for mutual benefit. Being paid to do work you love is how you win at life.
From 15 years of experience in client relations and customer service, here’s what I’ve learned on how to do it best.
Make a great first impression
From the moment your client commits to working with you, you have a small window of opportunity in which to make a great impression and set the relationship up for success. Loyalty and trust have to be earned, they don’t come automatically. Assume you are starting at zero and be hungry to prove your value and make them confident they made the right decision.
Ask your client how they want to communicate, operate based on their version of success and always be exceptional.
Be on the same team
Working in partnership with your client means being on the same team, working for the success of their business, at all times. In The 4-Hour Work Week Tim Ferriss said "I recommend looking at the customer as an equal trading partner and not as an infallible blessing of a human being to be pleased at all costs."
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There is no “us” and “them”, there’s no competition here. As Roman Emperor Marcus Aurelius said, “That which isn’t good for the beehive isn’t good for the bee.” This means sharing problems and solutions without being precious about whose idea was whose because in the bigger picture it doesn’t matter.
The more you immerse yourself in your client's business the more value you can add. The more your vision and ethos is shared the better (and more equal) your client relationships will be.
Be on the same team chrisreadingfoto for Pixabay
Become an ideas machine
Operating from the ethos that you are on the same team and working towards shared goals, your client’s company is now your own company, so treat it as such. Think about its problems and come up with ideas on how to solve them. At my social media agency, some of the ideas we give our clients have nothing to do with social media. The account manager just understands their business so much that they can give an alternative, yet very relevant, perspective. This can be invaluable to our clients, not to mention a valid reason for continuing to work with us.
Practice coming up with ideas and share all of them with your client. If they want to present these ideas as their own, be flattered, not offended!
Take an interest
Always be pleased to hear from your client. Don’t do this because you feel like you have to, do it because you genuinely care. Take an active interest in their life, work, hopes and dreams and understand how they think about things and make decisions. When they tell you something, write it down and make a note to follow up about it.
The more you understand and get to know your clients the more you can see the world from their point of view, which in turn helps you do your best work for them.
Take pride in your work
No amount of client relationship building will make up for shoddy workmanship. The first focus should be committing to excellence in the work that your client has commissioned you for. If it’s not good enough, don’t submit it. If you could do better, keep working until you’re proud.
Representing your client’s company as if it was your very own means only presenting work that meets your high standards. Make it so good that you’re excited to show them. Improve continuously and don't allow yourself to plateau.
Make it easy for your client to work with you RawPixel for Pixabay
Make life easy for them
Look for opportunities to take any burden off your client. Send them the video call link, prepare the meeting agenda, explain the next steps and take the notes. Follow up your follow-ups and have a calm, proactive and organised influence on any situation in which they involve you.
If you’re a nuisance to deal with and you don’t do what you say you will, at some point they’ll just opt out of working with you. Build a reputation for being a solid and reliable person; one that your client is proud to have on their team.
Over-communicate
Everyone loves to receive a good status update and your client is no different. Regularly send clear outlines of the work you’ve completed, what you will be working on next, as well as any blockers or action required of your client. The more they understand what you’re doing, the more you can work together as a successful team. Exude control and ownership and don’t scrimp on sending status updates, even as small FYI or “no response required” memos.
If someone knows that you’re beavering away at the tasks in hand, it heightens the sense of camaraderie that you’re trying to develop.
Take them seriously
If your client thinks there’s a problem, it’s up to you to find the solution and communicate it to them. You have two choices here, you can play it down and tell them nothing is wrong, or you can take it seriously and cover all bases in putting it right. Whichever option you choose, your client will choose the other one. “What do you mean this isn’t a problem! I need you to look at this urgently!” or “Don’t worry so much, I’m probably overreacting, I’m sure it’s nothing.” Take their concerns seriously and do everything in your power to alleviate them.
Your clients and their satisfaction is the reason your business exists and it’s not something to gloss over. Learning to get really good at looking after them will set you both up for success and prosperity.
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191ada4c0adeb4c5c1746a2bb218916a | https://www.forbes.com/sites/jodiecook/2019/11/13/consumption-is-killing-your-success/ | Consumption Is Killing Your Success | Consumption Is Killing Your Success
Spending hours each week watching the news, scrolling social media and reading opinion pieces is stopping you from creating masterpieces of your own.
The internet has us glued and yearning for new information and fast entertainment. And we are never satiated.
Consumption is killing your success Shutterstock
What would happen if for every hundred tweets you read, you wrote one? For every five articles you read you published one of your own? Every hour spent watching YouTube was spent creating tutorials and webinars? Or for every few books you finished reading, you finished writing another of yours?
What if you spent that last hour creating a great article rather than consuming the news or social media? What if rather than being influenced by the things you saw, you were influencing others? Crafting compelling content and making an impact on people is a skill and an art. It has to be practiced and you will get better at it.
What you consume ends up consuming you. What started off as some light entertainment or a guilty pleasure has led to something more. Now you’re bought into the storyline and the characters of that new Netflix series. You’re sharing your opinions with others who watch it. You’re in too deep. Now they know you as someone who watches that show, it’s the first thing they ask about when they see you. It replaces other conversations. It’s part of your identity and has started to define you. All you wanted was a bit of harmless TV.
Consumption is killing your success Shutterstock
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The only way you can Netflix your way to success is if you own Netflix. Consumption is more than just box sets. It’s stopping you fulfilling your potential. Silicon Valley professionals with Harvard MBAs are working continuously on creating apps and websites that deliberately get us hooked. You’re scrolling social media feeds, consuming everything everyone is posting. Now you know everything about their lives, to what end? You feel worse about your own because you’re comparing yourself. You want that trip, that life, that body. Your thoughts and conversations become about what others are doing and experiencing. You’re less focused on your own game because you’re watching others play theirs.
It’s in your power to control what you consume and what you ignore. No one is forcing you to scroll, you could make other plans. You could produce. Produce good vibes, produce positivity, produce books, articles, videos, anything that gives to the world and others. As Neil Gaiman said, “make good art.” Keep making it. Keep producing your art and putting it out there and have others consume it for the good of their lives and yours. Draw up the plans and make them happen. Writer Brianna Wiest, who has published thousands of articles, asserts, “Everybody has ideas for books and songs and companies and businesses. They remain ideas unless they are married to purpose and productivity.” Author and entrepreneur Daniel Priestley said, “the book that changes your life isn’t one you read, it’s the one you write.” Find your purpose and get producing.
What you consume can consume you. What you produce can feed you forever. Years later, someone could be inspired by something you put out there in the world. Your art can transcend language, time and distance barriers. It will exist long after you are gone. Years later you won’t even remember who won that reality TV show.
Look at your producing versus consuming balance and tip the scales in favour of creating, producing and publishing over scrolling, checking and clicking. Produce more than you consume.
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92bd0d6ca1a5313ab2d91c2efd04b301 | https://www.forbes.com/sites/jodiecook/2020/06/17/want-more-influence-online-heres-how/ | Want More Influence Online? Here’s How. | Want More Influence Online? Here’s How.
Want more influence online? Do this. Shutterstock
Online influence is a valuable commodity, sought after by many. The real magic is that this value can be created without monetary expense. Instead, it requires hard work and smart thinking, consistently, over time. The simple rule is this: influence follows output.
How much output could you generate if you really put your mind to it? What if the first hour of every day was spent firmly in output-mode? Could you create a video per week, an article per day, a podcast episode per fortnight and a book every month? There are people who can, and they get ahead because they’re building a network of superfans; people who know, like and trust them without having ever met them in person. Their output is exceptional, consistent, and results in making them look superhuman.
Quit quitting too soon
I often visit company websites only to click on the blog and see one post, from back when the site was launched. I see grandiose plans on YouTube, promising “new videos every week,” or podcasts committing to a 30-episode series that ground to a halt six months ago. Perhaps the creators didn’t see the traction they wanted straight away, so they gave up. Perhaps they thought a public commitment would be enough accountability to keep them going. It wasn’t.
Ramping up output is about cloning yourself, and transcending time and space with your message. That article you spent 60 minutes writing, that was read over 40,000 times, gives you a worthwhile output to influence ratio. It’s the same with videos, newsletters, books and podcast episodes. Some creatives or business leaders refuse to give talks to live audiences unless they are filmed. They spend so long preparing for the talk, they want to deliver it so that it can be viewed long after the event.
Want more influence online? Do this. Pixabay
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Creativity + commercial awareness
Output is maximised when creativity meets commercial awareness. Bestselling authors do this well, often so well that it’s impossible to differentiate which came first, their bestselling book or their sizable influence. Those that publish with clockwork frequency include James Clear, author of Atomic Habits, who writes to his email list every Friday. Mark Manson hits send every Monday and Seth Godin sends a daily email, each introducing a different idea.
Within any industry there’s a chance to add consistent, prolific value to an audience, to build influence over time. My accountants email their client list with an interpretation of the government’s daily briefing. My hairdresser posts daily with new style ideas. It’s this omnipresence that leads to influence that means their clients keep coming back and bringing their friends.
Gary Vaynerchuk has mastered the art of output that leads to influence. His content team generate 80-100 pieces of content every day. Each day starts with a piece of “pillar content,” in the form of a high-quality daily vlog, keynote, Q&A show, or another video. That content is repurposed into dozens of smaller pieces of content, distributed across every platform, including micro content that drives traffic back to the larger content. Gary has the same number of hours in the day as everyone else, but his output means he appears to be everywhere.
Stefi Cohen, a strength athlete and gym owner, doesn’t have 825,000 Instagram followers because she spent time following and unfollowing, learning audience growth hacks and sharing fluffy messaging. There are no shortcuts. She focused on output: getting as strong as possible and securing world records, whilst ensuring her personal brand and content game was at the same level of excellence and using her knowledge to teach others. It’s a brand of substance.
Ask “what can I do for my audience?” not the other way around
How many websites have you seen that ask you to “sign up to our mailing list,” but give no compelling reason for you to do so? Rarely will someone part with their email address without a strong indication of what’s in it with them. Smart brands give the people what they want. They are relentless in adding value and being remarkable, in whatever form that takes. It could be a free download, a discount code, heaps more amazing content, or a life-changing article. Figure out what that looks like for you, and put it into action.
Increase your output by cutting out the non-essential. Produce in favour of consuming. Focus your attention on what feels effortless, and out-produce everyone else. Look for ways of multiplying your input so you can do more. Transcribe your podcast episodes using AI software, create mini, shareable videos from your webinars, create tweets from your articles. Look to repurpose wherever you can.
Influence follows output, and output doesn’t happen by accident. Make your plan and get to work.
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fd0575faa6ed9e95d6d375a8fd8a6044 | https://www.forbes.com/sites/jodiecook/2020/10/05/6-signs-someone-is-all-talk/ | 6 Signs Someone Is All Talk | 6 Signs Someone Is All Talk
You might have been there. I have. You’re sitting opposite someone and they’re promising you the world. What’s more, they say the world can come to you quickly, or impressively, with seemingly little effort, as long as you follow their lead. This could be a partnership, a supplier-relationship or a friend. Perhaps someone you’re interviewing. As you’re listening to them, you can’t help but notice a niggling feeling of doubt creeping in. Should you ignore it, or is it trying to tell you something?
How to tell if someone is all talk Unsplash - Brooke Cagle
How do you differentiate the inflated stories from the substance? The embellishment from the real traction? Here’s how to tell if someone is all talk.
They play down the effort involved
Anyone who has reached a high level of success knows what they put in to get there. It wasn’t overnight. It was likely years of consistent actions in the right direction that built up over time. These people can take inspiration from the wins of others because they can understand the huge effort that went into achieving them.
If you’re hearing a narrative of winning really big for barely any effort, or time outlay, or commitment, it’s probably not a serious opportunity. It’s probably not grounded in reality. Get out of there pronto.
Their stories don’t match
Perhaps someone is trying to get you on board with their idea and seeking a commitment. They namedrop others who have already signed up. But when you bump into those others it’s a very different story. Who is telling the truth?
Someone who is all talk will name drop in an attempt to convince you to be part of their scheme. They’ll exaggerate the buy-in they’ve had and spin you a yarn without keeping track of it. The story will have probably changed the next time you ask.
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They’re naïve
Ignorance can be bliss. Before someone is hardened and turned sceptical by rejection or failure, barrelling forward with relentless optimism will come easily. It’s a great quality to have and should be encouraged, but going along with it without questioning can leave you blindsided.
There’s a difference between an ambitious vision for the way forward and an unresearched pipe dream. Can you spot the difference?
How to tell if someone is all talk Unsplash
How others talk about them
People talk and the world is a small place. When you mention this person to mutual friends, listen carefully to their response. Quiz them. Should I join forces with this person? Their reputation will likely become yours, so be absolutely sure before going any further.
People with whom you want to partner are those whose praises are sung behind their back. Those who have been admired and liked wherever they walk. Whose work precedes them and whose reputation is solid.
They’ve let you down before
Humans are largely consistent, and if someone has let you down before, not only will they let you down again, but they will have let others down too. If they’re late for you they’re late for their friends, customers and colleagues. If they cut corners, they’ll have been doing it for a lifetime.
Freak occurrences happen, but there’s a difference between one genuine mistake and consistent let-downs. If someone has let you down before, give them a wide berth. Remember how you felt last time and what it cost you. Why would it be different now?
No real track record
True success is humble and quiet. Hot air is loud and brash. Being talked to as an equal, presented with reasonable arguments and confidently told about the opportunity is a start, but look past that to someone’s track record. If someone has not managed to turn any of their hare-brained schemes into a roaring success, they might have just been unlucky or there might be something fundamentally wrong with their approach.
People are far more likely to succeed in business if they have done so previously. Stack the odds in your favour. Decide if you want to be part of this opportunity or if you’ll sit it out. You can help without getting too involved. You can offer guidance without signing a contract.
If you get a niggling feeling that something isn’t right, find out why. Go through the points to assess whether someone is all talk, with ambitious goals unlikely to transpire. This isn’t about dismissing anyone or being unkind, this is about focusing on your plans and mission first. Partnerships with the real deal can transform your business, but make sure that’s what this is. Put your own life jacket on before helping others and remember you can always say no.
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71988edcc3bd4c57a9d7a0f6fbee3c82 | https://www.forbes.com/sites/jodiecook/2020/10/28/how-successful-entrepreneurs-use-the-law-of-attraction/?sh=723c22502332 | How Successful Entrepreneurs Use The Law Of Attraction | How Successful Entrepreneurs Use The Law Of Attraction
Whether or not you believe in the law of attraction is irrelevant. For now, put aside all your preconceptions, withhold your judgment, and maintain an open mind.
How successful entrepreneurs use the law of attraction Unsplash: Christina @ wocintechchat.com
There is rarely any harm in entertaining an idea that has worked for others. In finding the truth in their experience or the unexplained magic in their reality. Perhaps it won’t lead anywhere or perhaps you’ll discover some benefits.
Here’s how successful entrepreneurs use the law of attraction, and ten ways you can too.
1. Define what you want and ask for it
This is the simplest premise of the law of attraction. Ask. Even answering the question “what do you want?” focuses your mind and forces it to gain clarity. The law advises that you ask clearly, and you don’t give mixed signals. If you are asking for something you don’t really want, or you don’t fully believe is achievable, it’s not going to happen. If your requests say one thing but your actions tell a different story, the messages lack the congruency required for success.
How often do most people fail to ask for what they want? Instead, they passively see what happens or they expect that someone else will know what is required. Practice clearly asking for what you want, of yourself, your team or clients. As soon as you ask the question, the request is far more likely to come into fruition.
2. Be the hero of your day, not the victim
Expect the things you want, not the things you don’t want. If you expect to face difficult challenges and rude people and “sod’s law”, you are training your mind to notice those adverse things. You are, in effect, attracting them to you. Decide that, instead, you’re going to have a great day. Or a productive day. Or a revealing day. That you will bring your best self and you will rise to every challenge and your work will make a difference.
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Each day when you wake up, choose whether you “have” to do something or you “get” to do something. One makes you the victim, the other makes you the hero. Decide that you will use the day to get closer to your goals, and that is exactly what will happen. Make this process a habit. As Winston Churchill said, “You create your own universe as you go along.”
3. Be aware that like attracts like
According to the law of attraction, like attracts like. If you complain and moan you will likely attract conversations of complaint and moaning. You’re operating on that frequency, so complainers and moaners find you.
Positive conversations attract positive people. Success attracts success. You can see it working on a basic level. If you tell someone about your running injuries, they will tell you about theirs. If you share stories of your best ever race, they are the ones you will hear in return. If you are difficult to deal with you will find yourself with clients who are too. You set the tone and that decides the tone you hear back.
How successful entrepreneurs use the law of attraction Unsplash: Disruptivo
4. Believe success is inevitable
The law of attraction instructs that you decide what you want but leave the how you’ll get it to the universe, or higher power, or whatever title you use for that which is out of your control. It uses the example of ordering from a catalogue. You would place your order and then trust that the mechanism was in place for it to be delivered. Apply the same logic here. Most people who achieved amazing feats didn’t know exactly how they were going to do it, they just knew that somehow they would. A Course in Miracles says, “Only infinite patience brings immediate results.”
Believing also involves acting like something is already yours. Acting like you have the multimillion company of your dreams or acting like the expert you want to become. If you knew for sure that in the end everything would work out, it would change how you approached each day. Create a clear vision of your business goals and then step into the version of yourself that has reached them.
5. Focus on feeling good
Shifts in thought patterns are powerful and can instantaneously change your trajectory. If you’re thinking about how hopeless your situation is, soon your mind will bring you other examples of hopeless situations. You’ll start to believe that every situation is hopeless and soon that’s all you will see. These thought patterns can spiral.
Practitioners of the law of attraction, specifically Rhonda Byrne, advise to write a list of specific songs, mantras or videos that you can see or watch that will shift your mindset straight away. The longer you hang about in misery the harder it is to escape it. The more you practice shifting to a higher energy, happier mindset, the easier it will be to stay there indefinitely.
6. Take inspired action
According to the law of attraction there is a difference between “work” and “taking inspired action”. Taking inspired action towards goals does not feel like work, it feels natural and effortless and there is a clear purpose behind everything you are doing. Contrast this with “work”, where your labour and exertion feel like you’re slogging away doing something that doesn’t align with your ideal future.
Are you taking inspired action or working hard?
7. Practice gratitude
The more you practice being grateful for specific elements of your life, the more you will have to be grateful for. It’s the same with the people around you. I am grateful for my agency’s team leader because she prides herself on self-sufficiency which means I can work on my business rather than in my business. I am grateful for my agency’s account managers because they are resourceful and conscientious which means our clients are happy.
Think of why you are grateful for the people in your business. Being specific and telling those people will lead to more of the same behaviour which will lead to having more to be grateful for. The ways in which people are valued forms part of their identify which aligns their actions even more strongly.
How successful entrepreneurs use the law of attraction Unsplash
8. Reframe time
Believing that you never have enough time to do anything will mean that you never have enough time to do anything. Subconsciously, your actions will match that belief. Things will crop up and you’ll allow yourself to be distracted. You’ll look for ways to be proven right. The law of attraction asserts that negative affirmations, such as “I can’t do this” are highly damaging.
Try, instead, telling yourself that you have more than enough time to do everything you want to do. That you are more than capable. Tell yourself there is no rush, and that you are an expert at managing your time. Watch how your mindset shifts and how your actions align to make your belief a reality.
9. Believe in abundance
Some entrepreneurs are obsessed with the competition. They see everything as a zero-sum game with a winner and a loser. Your gain has to be someone else’s loss, and vice versa. In reality, it doesn’t need to be like that.
Even if your closest rival is winning big, it doesn’t mean you can’t too. Perhaps they have gone down a different route, perhaps they have validated a market and made your path easier. Perhaps they will end up acquiring you, and their success will become yours by definition. Focusing on someone else is attention that could be far better spent focused on your own game.
10. Dream big
Picture receiving a cheque for a million dollars. If you believe that a million dollars is unattainable, or a lot of money, or unrealistic, you will treat it accordingly. If you believe it’s an amount you could never have, or aren’t worthy of, your actions will match that belief and your future will be consistent with it too.
Instead, value yourself higher. Choose to believe that what you say and do has value and that your actions have the power to create money and profound impact. Confidently state your price and wholeheartedly believe that it’s worth every cent. Put forward more impressive and ambitious plans because you have belief in your capability to deliver them.
The law of attraction presents some methods that undeniably lead to entrepreneurs thriving. Take the challenge. Set aside any preconceptions and see if they work for you.
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9e76eebe08d935784030a0370a4a5dee | https://www.forbes.com/sites/jodiecook/2020/11/08/persistence-is-everything-just-ask-joe-biden/?sh=427dd371319b | Persistence Is Everything, Just Ask Joe Biden | Persistence Is Everything, Just Ask Joe Biden
The United States’ President-Elect, Joe Biden, has not exactly been an overnight success. From a political career spanning nearly fifty years and a life spanning seventy-seven comes some extraordinary examples of grit and persistence.
WILMINGTON, DELAWARE - NOVEMBER 06: Democratic presidential nominee Joe Biden addresses the nation ... [+] at the Chase Center November 06, 2020 in Wilmington, Delaware. The winner of the 2020 presidential election has yet to be declared, as vote counting continues in the key states of Pennsylvania, Georgia, Nevada, Arizona, and North Carolina. (Photo by Drew Angerer/Getty Images) Getty Images
Perseverance is a consistent theme in Biden’s life and career. Here are five highlights, along with how we can incorporate their lessons for our journeys.
Presidential campaigns
Biden has been applying for the same job for 32 years. He first ran for President of the United States in 1988, then again in 2008 before serving as Vice President under President Obama and then successfully defeating President Trump for the main seat in 2020. Third time lucky. Furthermore, when he’s sworn in, Biden will be the oldest USA president of all time.
In business and in politics, we won’t always get the gig we want right away. It takes time to establish a brand, build a network, not to mention resonate with and be trusted by an audience. It takes courage to try again. If you truly believe that something will, someday, be yours, does it matter how far in the future that day is? If every day you take baby steps towards a goal, at some point you will get there. Keep your eyes on the prize and your day will come.
Overcoming weaknesses
Biden grew up with a speech impediment, which he has reduced since his twenties. When asked how, he said by reciting poetry in the mirror. In a letter that he wrote to the chairman of the National Stuttering Association in 2009, Biden said, “I still remember the painful experiences and tough lessons of growing up with a stutter, but these experiences taught me this: when you commit yourself to a sustained effort, when you persevere in the face of struggle, and when you find comfort and support from others, you will discover new strengths and skills to overcome the challenge before you.” He then thanked the chairman for including him in their national conference.
Weaknesses can turn into strengths if they are identified and worked on. At the very least, you can make sure they don’t set you back. Whether it’s reciting poetry in a mirror, practising speeches or becoming a better leader, persistence pays off and improvements compound over time. As Founding Father Benjamin Franklin said, “Energy and persistence conquer all things.”
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Relationships
Biden credited his second wife, Jill Jacobs, now Dr. Jill Biden, with the renewal of his interest in politics and life when they met on a blind date in 1975. According to Insider, Biden had to propose five times before she said yes. Before that, she said “Not yet. Not yet. Not yet.” But Biden was not deterred, and he kept asking until they were married in June of 1977.
Nearly one hundred years ago, Republican President Calvin Coolidge asserted that “Nothing in this world can take the place of persistence.” Many of the best things are worth waiting for, including the most life-changing of opportunities, clients and partners. “Not yet” does not mean never. It means reassess, regroup, and come back stronger to hear that affirmative.
Commuting every day
After a car accident in 1972 that tragically killed Biden’s first wife and daughter, his two sons were hospitalised with fractures and broken bones. Biden thought about giving up his Senate seat but instead, he took the oath of office whilst in hospital and began the daily 250-mile roundtrip only after his sons were well enough to be left. During Biden’s 36 years in the Senate he commuted daily between Delaware and Washington D.C, a total of three hours’ travel every week day, so he could be present in their lives.
Commitment to one cause does not have to mean neglect of another. If your will is strong and your purpose clear, you can make even the most stretching of circumstances work out. Having limited time available can lead to enhanced productivity and laser focus as you eliminate the nonessential in favour of your main and most important goals.
Childhood struggles
During Biden’s childhood, Scranton, his childhood town, was suffering an economic downturn and his father was struggling to find work. Before Biden was born, Joe Biden Sr. had suffered numerous financial setbacks and for several years, the family lived with Biden’s maternal grandparents. Later, Biden’s father became a successful used car salesman and the family was able to maintain a middle-class lifestyle.
Seeing examples of adversity turning into prosperity can give someone the confidence that changing their situation is in their hands. Inspiration for this can come from anywhere, and it’s an especially valuable lesson if learned from a young age. Being dealt a bad hand does not mean that your future is certain. It doesn’t matter where you start; it’s where you finish.
How many people would give up long before overcoming adversity, working on their weaknesses or being rejected multiple times? Practising persistence in one aspect of life has benefits elsewhere. It turns you into a resilient, gritty person who will only continue to get stronger. Hammer down those doors until they all start to open.
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7d40247a56e268e0e8aca85426757053 | https://www.forbes.com/sites/jodiecook/2021/01/18/4-things-that-keep-entrepreneurs-up-at-night/?sh=7090a02f701e | 4 Things That Keep Entrepreneurs Up At Night | 4 Things That Keep Entrepreneurs Up At Night
I’m not going to waste your precious time explaining why sleep is important. I’m not going to quote studies and tell stories to convince you to rest well. You know all that.
There are any number of reasons why someone can’t get to sleep, and physical ones are worth a mention. The temperature of the room, the darkness of the room, the comfort of the pillow or mattress and the noise from outside. They’re the basics. I’ll assume that you’ve sorted them as best as you can.
Habitat aside, here are some other reasons why entrepreneurs might not be able to get to sleep.
4 things that keep entrepreneurs up at night Shutterstock
Worrying about the past or future
You’re anxious about the future or dwelling on the past. You’re caught in unhelpful thought patterns about what has been or what might be and can’t seem to shake them. You’ve come to associate being in bed with lying awake worrying and each night it happens the link is reinforced.
At best, your brain is working overtime trying to find the answers. At worst, you’re replaying situations that have happened and cannot be changed. You’re scared to shut off in case you miss something else.
Whatever is going wrong, the minutes before bedtime are not the right time to put it right. Willpower runs on a reserve of mental energy that diminishes throughout the day, like your personal battery pack. Forgive your fear-based thoughts and chalk it up to the late hour rather than a sign of anything more sinister.
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Excitement
You’re really onto something and you can’t wait to work on it every single day. You can see so much potential that it has consumed you. You’re aware that making it happen involves masses of your input and you don’t want to let that slip for a second.
After you finally managed to get a night’s sleep, you’re waking up raring to go. You’ll talk about it to anyone who will listen, and you’ll type away at record speed. It’s going to change the world and it’s going to be big.
The best version of you operates on rest. Even when adrenaline levels are high and you’re on a mission to act, the happiest and most productive person you can be has slept. Write a list, meditate or practice patience. Switch off earlier. It’s a great problem to have but a cranky, knackered leader isn’t what your grandiose plans require.
4 things that keep entrepreneurs up at night Unsplash: Toa Heftiba
Unfulfilled potential
Perhaps you’ve reached the end of the day and had a sudden realisation that you didn’t achieve what you wanted to. Perhaps you spent it hurrying around fulfilling pointless obligations, or being distracted, or helping others towards their goals whilst ignoring your own. Maybe you’re questioning if your entire week, month or even year has been misspent.
In the book Turning Pro, Steven Pressfield introduces the concept of a shadow life: a life someone lives that is different to their true purpose and serves only to distract from it. Perhaps you really have settled for less than what you’re capable of, and your realisation becomes lucid after another day of avoiding your calling.
Going to sleep with satisfaction requires waking up with determination and then seeing it through into action. There’s no other way. The only way to find out what you’re truly capable of is to get started. Look ahead. The only way to see if something is worth the risk is to take the leap. Sleep soundly whilst living your dream life or stay awake thinking about what it might look like.
A niggling feeling
The subconscious is a wonderful and powerful thing. It’s processing millions of fragments of information each second and it’s storing data about everything we see, feel and hear. It’s why gut feelings are so important. We aren’t sure why we feel uneasy about that person or that situation, but something is telling us we should steer clear.
Our subconscious knows things we don’t. It’s clocked the sarcastic undertones or the cracks the paper is hiding. Ignore it at your peril. Perhaps that niggling feeling is keeping you awake but you can’t quite pin down what it’s about. You’re convinced you’re missing something, but what?
A niggling feeling is either a sign something is slowly going wrong, or that something amazing is around the corner. Consider an artist whose work has been exhibited, for all to see, for the first time. Will people like it? Will they hate it? Enter niggling feelings. Perhaps you’ve experienced them when interviewing candidates or signing up a new client. Your choice involves learning to live with them; accepting them as by-products of putting yourself out there, or exploring what they are hiding to eliminate them. Neither involves missing sleep.
Locate the cause of your inability to drift off and cure it head-on. Live your true calling and give every day your all to sleep soundly, safe in the knowledge that you’re exactly where you need to be.
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bdbb11163d887855c2ac3994786927ce | https://www.forbes.com/sites/jodiecook/2021/02/01/the-real-reason-you-get-annoyed-at-work/ | The Real Reason You Get Annoyed At Work | The Real Reason You Get Annoyed At Work
When you get annoyed at work, or in any situation, the root cause is nearly always the same. Are colleagues asking you things they should already know? Clients disturbing you during deep work or after hours? Perhaps you’re not seeing the quality you expect. It might feel like, unknowingly or otherwise, those around you are constantly overstepping a mark.
They might well be. But the issue is that you haven’t defined that mark clearly enough. Your frustrations and annoyance come from a lack of boundaries.
The real reason you get annoyed at work Unsplash Eli Defaria
Knock knock
If someone texts me at 3am, I won’t wake up. Why? Because my phone will be off. It’s a boundary. I understand that I own a buzzing device with the power to disturb my sleep, but I’ve decided that whatever my friends have to say at 3am is not as important as resting. Similarly, if I text someone at 3am, I’ll assume that they will read it whenever they wake up because they have set their own boundaries.
But that’s an obvious example. In practice that’s not always that simple. If you’ve ever experienced a “can I call you back, I’m in the middle of something?” response or someone talking to you whilst they’re distracted, you’ll be well aware that boundaries aren’t always put in place effectively. Herein lies the problem.
The right level of available
Great leaders want to be exactly the right level of available. Not so little that someone is left wondering what to do but not so available that they are asked about every small detail and their team becomes overly reliant.
Some leaders have what they call “office hours”; dedicated time each week or fortnight where they make themselves available to their team. However, one CEO I know is distracted within his self-defined office hours. He calls people whilst driving instead of giving his full attention. He turns up late to appointments and isn’t present when his team bring ideas or blockers forward. He’s frequently annoyed that they continue with their plans without explicit approval, not realising that he had the chance to comment. He’s annoyed when they bug him out of office hours, not realising that it’s because they’ve lost their meaning.
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At one of the big four accounting firms, new recruits are taken on a year-long graduate scheme that’s the business equivalent of a Navy SEAL’s “hell week”. Both have the same goal: to break you. The accountancy firm has taken on far too many graduates than it needs long term, so it becomes a survival of the fittest. Cases are piled up onto their schedule and workload mounts. It’s no longer a 9-5. Or is it? In Navy SEAL training, budding SEALs have to put their minds and bodies through daily endurance challenges involving physical heavy lifting, endurance, and cold exposure. It’s impossible. Or is it?
In each scenario, those that win are those that set the best boundaries. The exceptional graduate limits the time she spends talking to colleagues, or being distracted, or doing anything other than her best work. She opts out of lengthy meetings and doesn’t email through the evening. She does the most important thing on her list first, with no exceptions. She turns her internet off whilst she’s concentrating. She cultivates positive working relationships with her juniors and seniors and becomes known as excellent. She expects that others will overstep the mark constantly, but she’s planned for it, so it can’t shock her.
The real reason you get annoyed at work Unsplash Usman Yousaf
The Navy SEAL trainee decides what will deter him and what won’t. From former Navy SEAL David Goggins, who went through Hell Week three times, “You can will yourself to do almost anything you want.” Those that overcome hell week have set boundaries on what will and won’t get to them. The shouting instructors? Not a problem. The cold sea? Bring it on. Ten miles of running followed by drills? Sure. As long as they have control over their own mind they won’t quit, and nothing can annoy them or provoke a reaction.
Use work boundaries effectively
In a work scenario, it’s similar. Productive teams know who is working on what and why. They understand where the responsibility of every puzzle piece lies. They take ownership over their sections and see each facet through to completion. They respect the boundaries of others but more importantly they create their own.
The next time you’re annoyed at an email or a request, work out why. Are you being asked to do something that you have since delegated? Are you answering a question you have answered before? Are you making yourself too available and training helplessness?
Perhaps you haven’t defined your mission and how you’re working towards it, so others assume you have free time. Perhaps you haven’t let go of projects, so the client assumes you’re the lead. Perhaps the responsibilities of each party have not been clearly defined so you feel like you’re picking up the pieces.
A lack of boundaries is the reason that anyone becomes annoyed at work. Find and define yours for productive relationships and a flourishing business.
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ae5691b971559c50f8c4c83893d23615 | https://www.forbes.com/sites/jodiecook/2021/02/03/the-surprising-sign-of-a-successful-working-relationship/ | The Surprising Sign Of A Successful Working Relationship | The Surprising Sign Of A Successful Working Relationship
There are many studies on romantic relationships but only a few longitudinal assessments; those that go back after a long period of time to see which of the couples are still together. The most significant of these found one common factor in relationships that stood the test of time. This study and its findings have implications for business, too.
The secret to long and happy relationships is the same at work and home. Here’s what the research says.
The surprising sign of a successful working relationship Unsplash Disruptivo
The study
John Gottman began his research in 1986 when he set up the “Love Lab”. There, he invited couples in and hooked them up to electrodes whilst asking them a series of questions whilst they were sitting next to each other. After questioning, he secretly labelled them masters or disasters. He found that the masters were still happily together after six years. The disasters had either broken up or were very unhappy in the same relationship.
When the data was analysed, it was clear: physiology. The way that humans function at a biological level. Those couples that stayed together, the masters, were relaxed around each other. Their cortisol levels when interacting were low, which translated into feelings of connectedness, comfort and trust; the foundation of their relationship. The study found that even when these couples were arguing, they showed warm and affectionate behaviour.
The disasters told a different story. Their electrodes’ data showed that even though they might look composed, that they were regularly in fight or flight mode. They felt on edge. They, perhaps subconsciously, felt they would be attacked at any moment and they attacked in return. They could not relax around each other because they might suddenly have to defend themselves or think quickly for an answer. It meant their cortisol levels and resting heart rates were elevated throughout the day and caused further anger.
Two people regularly putting each other in fight or flight mode is not sustainable for any relationship: romantic or otherwise. I imagine when those couples broke up, they felt a wave of relief; like they were free. Think of the couples you know and those that seem to always be getting at each other. Gottman would label them disasters.
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What does this mean for work?
The study can translate into a work context. As a leader, cultivating long and happy work relationships does not involve putting people on edge and causing them to remain in fight or flight mode throughout their day. A leader’s job is to put people at ease to enable their best work to happen, not darken the room with their stormy demeanour.
If you’re working in an open-plan office and continuously being disturbed, you’ll be poised and ready for the next disturbance. If your company has meetings labelled “urgent” or irate emails sent around internally, you’ll likely have higher cortisol levels. If you’re around erratic behaviour or someone utilising shock tactics, it could put you in a different state of mind and cause you to become angrier.
The surprising sign of a successful working relationship Unsplash Amy Hirschi
Maybe at first it’s exciting. Crushing lows and thrilling highs. Urgent calls. Shouting orders. High stakes. But constantly being on guard, worried about making mistakes or being ridiculed takes away from passion and creativity. It’s unsustainable over the long term and there’s a way of operating without it.
What can you do?
Aim to put people at ease, not on edge. Set your boundaries and respect the boundaries of others. Have some perspective: is it really urgent? All-caps, the word “urgent”, the phrase “ASAP” and frantic conversations might be doing the opposite of their intention. Give constructive criticism in private, not in front of a room full of peers.
When teams are on the same page, they thrive. When individuals know what is expected and the part they play in it, they are equipped to do their best work and it’s in their hands if they do. Fictional character Mary Poppins was “kind, but extremely firm” but The Simpsons’ Mr Burns “employs relentless and ruthless tactics to get whatever he wants.” Who would you rather work for? Which demeanour would bring out your best self?
Cortisol levels and resting heart rate when spending time in each other’s company is the difference between relationships that thrive and those that don’t survive. Applying the study to work relationships can lengthen their duration and set them up for success.
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7024236e5e635c3edc0912883c848f1d | https://www.forbes.com/sites/jodiecook/2021/03/01/let-go-of-the-five-things-holding-back-your-success/ | Let Go Of The Five Things Holding Back Your Success | Let Go Of The Five Things Holding Back Your Success
As you evolve from the person you once were to the person you want to be, you cannot take everything with you. A necessary stage of progression is letting go of old possessions, beliefs and ties. It doesn’t have to be a bad thing. This is a vital stage in your growth. You are unwrapping layers of baggage as the real you emerges.
Let go of the five things holding back your success getty
Here are the five things to let go of, that might be holding back your success:
Personal grudges
Every time you felt wronged or that you were a victim was a chance for you to become stronger. So let it go. Let go of everyone who was unkind or didn’t consider your needs. Stop revisiting the stories and remove them from your headspace and life. Fill the space with happy conversations instead.
Some people think of doubters and haters when striving to do better, but the healthiest state is indifference. Where you can wish them well because you really don’t care. They don’t enter your mind and there’s no backstory to tell. If someone else mentions them, you smile and nod along. There’s no past, there’s no bad blood, there’s no narrative around any encounter that needs mentioning now.
Reach the stage where you are so confident with your life and your path that you wish everyone well, no matter how much trauma they may have once caused you.
Principles of the past
I must not fail. I must be respected. I must not be hard done by. I must be compensated for my time. Which principles are serving your future, and which are just holding you back?
Consider a joint venture that didn’t work out. Your principles say you must recoup everything you can, which should be at least what the other founders get. It was their fault it didn’t work out and you can’t stand the thought of them earning a penny more from it than you. But that viewpoint is unlikely to serve the best version of you. It might be far better for you to walk away, leaving them with everything and wishing them well. But will you refuse, “on principle”?
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The best version of you is prepared to forgo your principles in favour of doing the right thing and moving forward. Even if you’ve sunk big bucks, even if you’ve poured your heart and soul into something. If you keep falling back on outdated principles, you’ll keep holding onto projects and people and places that you should just let go of. What beliefs are you living by that you haven’t questioned?
You’ve only been hard done by if you tell yourself you have been. It’s only failure if you learn nothing. You could drag it out on principle, or you could skip away happily.
Identities
Behavioural habits are strongest when they are linked to your identity. You’re more likely to go to the gym every day if you identify as a health-conscious person than if you just think you should or because your doctor said you really ought to. Identity drives action.
Which identities are you holding that aren’t serving your future? Do you believe so strongly in veganism that you alienate those who don’t? Do you identify so strongly as Republican or Democrat that you’ll defend whoever is leading the party at any time? Being led only by identity is a form of tunnel vision. It impairs your ability to make great decisions because you are influenced by what someone like you “should” do. It can close your mind to new ideas and opportunities.
Fixating on identity can be limiting to growth. Seek changes of perspective to learn and adapt for the better.
Let go of the five things holding back your success getty
Ego and self-importance
How often does self-importance set you back? Whether it’s athletes who ensure anyone they meet knows their personal bests, or the business owner who wants everyone to know he started from nothing; self-importance is not endearing. Staying humble is the goal.
It doesn’t matter what awards you have won or titles you have amassed, or your career longevity or number of YouTube subscribers. Let go of the need for someone to know how much of a big deal you are. It’s not important. Instead, connect on a personal level. If someone wants to know your credentials, they will ask. Or google you. Let them find out from someone else, don’t tell them in your opener. Resist the urge for instant gratification. Release the need for others to know your prominence.
Let your amazing personality and your winning conversation be what connects you to others because everything else is secondary.
Expectations
Happiness is proportionate to the difference between your expectations and your reality. If you expect amazing things and get average ones; you won’t be happy. Having high standards is fine unless it’s limiting your happiness when it turns out they are unreachable. You can have just as good a time at a fried chicken stand as you can at a Michelin star restaurant, as long as you don’t expect the same from both evenings.
Let go of having inflated expectations for things you cannot control. Experiences, results, other people. Release judgment whenever you can; let things just be. Retain high expectations of yourself and the energy you put into your work and health and friendships. You can meet your own expectations through commitment and intention.
Be proud to be laid back or a perfectionist when each is appropriate.
In order for the real you to be uncovered, the old you must drift away. Identify those things that are linked with the person you once were and not the person you dream of becoming. Let them go with gratitude and ease.
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38ddae0ca4324a7e663e1908350092a4 | https://www.forbes.com/sites/jodiecook/2021/03/29/the-entrepreneurs-feeling-pandemic-success-guilt/?sh=498eca753b1f | The Entrepreneurs Feeling Pandemic Success Guilt | The Entrepreneurs Feeling Pandemic Success Guilt
The past year has been tough for many. Life changed and work did too. Everything once taken for granted was up in the air; seeing friends and family wasn’t possible and redundancies soared with many businesses forced to close. A global pandemic put pressure on health services as entrepreneurs worried about their families, tried to keep their businesses afloat and avoided being ill themselves.
The entrepreneurs feeling pandemic success guilt getty
Without digging deeper, it would be easy to assume that everyone was in the same boat. That everyone had a tough time, was feeling down on their luck and couldn’t wait for it to be over. Actually, that’s not the case. Wherever there is change there is opportunity. Wherever there is despair there is hope. When the only option is to adapt, some not only survive, but thrive.
I recently spoke to some entrepreneurs who did exceptionally well during the past twelve months, but admitted to feeling guilty about having success during a period when so many others had a rough time. This feeling, and the feeling of being unable to share their stories of success is something I’m calling pandemic success guilt.
Those who came out of the last twelve months stronger were split into two camps. The first were those whose businesses benefited from lockdown life. They changed nothing, but their business flourished with an increase in demand, akin to the success of Zoom, supermarkets and streaming services. In the second camp were those who had been hit, some quite hard, but had worked their socks off to turn a bad situation around in a spectacular way.
Right place, right time
Office blocks saw little footfall but home workspaces were paramount. Suits and ties weren’t required but activewear was worn daily. Meals in rather than meals out. Celebrating with friends from afar and spending more time at home, for work and school. As habits changed, so did purchases, changing the fate of those that supplied them. For some, the pandemic itself grew their business.
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Jatinder Spall of JS Tutoring found himself in an advantageous position. “Our tutoring business literally doubled in enquiries and turnover, but we didn’t really feel comfortable shouting about our increased business due to the pandemic and lockdowns.” Whilst normally their level of success would be worthy of press and company updates, Spall only felt comfortable sharing in closed Facebook groups of business owners who supported each other.
Ioana Hardy’s company Impacters Group offers online coaching programmes that, similar to Spall, took off when March 2020 hit. “In the early days of the pandemic, I did play down my success. It felt insensitive to do it otherwise. There were lots of business owners around me who lost a lot... There were others who lost their jobs or were in complete limbo. There were a few crazy, shocking weeks.”
Hardy would play down her accomplishments, justifying them by saying that “the current situation caught [her] on the right side of the fence.” Hardy knew she had worked incredibly hard during what was the first year of her business, having moved to a new country, launched with no personal network and focused on a narrow niche with an unfamiliar way of working. “I hustled, tried and failed, made mistakes, struggled and felt alone way too many times. But a year on, I have amazing clients.” Despite this, she didn’t feel right talking about it. Then something changed.
“I had a moment of truth; playing down my success will not help [other business owners] get better and will certainly not help me. It was the difference between feeling sorry for them and inspiring them. I started talking less about the success I had and more about what works for me and what doesn’t, the resources I use, the questions I ask, offering to help for free and so on.” Hardy used her story to inspire those around her to make the best of the rollercoaster year. “An entrepreneurial journey is never a smooth ride, there is a lot of failure, learning, repeat, struggles, doubts and the like… sharing the sweat and not just the awesomeness has worked really well for me.”
Giving back
Business owners thriving in 2020 found ways of giving back. Of redressing the balance and distributing the fortune. Cycle and car parts retailer Halfords gave back £10.7million of furlough support to the British government after its sales jumped 47% during the United Kingdom’s lockdown. In December 2020 supermarket chain Sainsburys pledged to hand back £440million of business rates relief, among other supermarkets.
It’s not just big brands. Chaya Gutnick, CEO of Chaos Control was poised to capitalise on the chaos that had ensued, “doubling my business and growing to multiple six figures” during 2020. But she felt the success guilt when seeing so many people in her community suffering, so she chose to give back. “My profits increased and my giving did too. I tell myself that by making more money I can help more people and give back more. The more I think that way, the easier it becomes not to feel guilty. In fact, it becomes something to be proud of.”
The entrepreneurs feeling pandemic success guilt getty
Chris Brain of Chris Brain Associates, providing property consultancy to the UK public sector, has “had a great 2020, with it showing no sign of letting up,” but says when “so many other businesses are struggling, it makes it difficult to enjoy the success as much as I should.” Brain’s coping mechanism is to “play down success to avoid feeling discomfort in myself. At the same time, I avoid being seen as bragging, which is not a good trait.” During a time when many of Brain’s public sector clients have suffered, Brain has been lending his expertise pro bono, “to local charities as a volunteer management consultant, via The Cranfield Trust. I have also offered free products and services to some in my sector that I know are particularly struggling financially.”
Pivot and prosper
Founder of GetFocused, Austin Nicholas, said 2020 made his business pivot in a big way. “Previously we were creating a phone stacking fruit bowl called iSTAQ, for meeting rooms. It was evident that in-person meetings were not going to be happening for quite some time hence we took a big step back. We created a software solution to run effective virtual meetings and changed the name of the company.” Nicholas says he is a great believer that positives emerge from all negatives, “You just have to spend time exploring to find them.”
Pamela Aiko Tironi’s pizza shop brand, The Pizza Room, thrived during the pandemic, although she admits “not without pain and stress, that’s for sure.” She remembers seeing others “struggling, shops going down and many small business owners being on the verge of depression for not being able to feed their families,” including some who “couldn't get the government support just for tiny technicalities. It was heart-breaking.” Tironi felt torn. “I wanted to disappear sometimes, and I was proud some other times” as well as feeling both sorry and compassionate. “I wanted to hide my success to them and thought many times about what I could do to support.”
Fred Copestake, founder at sales training consultancy Brindis, had a role that previously involved a lot of international travel, so big changes were required. “I worked out how to adapt and have been successful as a result, indeed building a better business model.” Copestake experienced pandemic success guilt as he “saw many friends and colleagues having a difficult time while I was doing OK.” But he also experienced another emotion, frustration. “Frustration at them, not for them” when he saw examples of “people who played helpless despite being offered help.” Success guilt and failure frustration combine in a confusing example of cognitive dissonance, but Copestake’s experience led to a breakthrough technique for his work. “I have come to understand the change curve better and pay more attention to equipping salespeople to use it better when planning customer interactions.”
Inspiration not comparison
Is it possible to find inspiration from businesses doing well even when yours is suffering? Tom Camilleri, owner of Access China UK, thinks so. “We have had it super rough over the last 14 months, but I still love a success story. I love seeing people kicking ass!” It doesn’t have to be a zero-sum game with winners and losers. We can help each other be winners.
Cara Louise Cunniff’s company, Thrive In Midlife, helps its clients to move “from survive to thrive.” Cunniff believes “there is no failure, only feedback. It's all about realising that it's OK to stand out from the crowd, as when you thrive, others thrive around you.” Being able to let the success of others remind you that it’s possible for yourself can mean even the most desperate of situations have glimmers of hope. According to Cunniff, “personal transformation is so needed,” especially now. When there is only doom and gloom around you, you can be the light that shines through and shows the path.
Dream big, pivot, adapt and grow. Be the inspiration that helps others do the same. Take pride in where you are and the struggles you have overcome to get there, because playing it down helps no one. Give back and share the expertise instead of excusing and explaining your success away.
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70f3195b2d769472084390e1dfd97b7b | https://www.forbes.com/sites/jodygastfriend/2018/10/22/hidden-costs-of-alzheimers-dementia/ | The Hidden Costs Of Alzheimer's Disease | The Hidden Costs Of Alzheimer's Disease
When Rick could not remember where he kept his trusted toolbox, and then forgot his computer passwords, Sandy—Rick’s wife of 40 years—initially wasn’t alarmed. Sandy misplaced stuff all the time and who can remember all those passwords anyway? But over time the signs became more ominous. Rick, a 69-year old retired truck driver with a GPS-like sense of direction, got lost driving home from the grocery store one day. Concerned, Sandy took Rick for a medical evaluation to figure out what was going on. Then they got the grim news: Rick had Alzheimer’s disease.
Currently an estimated 5.7 million Americans have Alzheimer’s disease and 47 million people worldwide suffer from it. By 2050 these estimates are projected to triple and the direct cost to American society may exceed a trillion dollars—a price we will all pay in one way or another. Although the disease does not discriminate, it disproportionately impacts women. Women are twice as likely to suffer from Alzheimer’s and more than twice as likely to care for someone with the disease.
At the time of Rick’s diagnosis, Sandy had just retired from a long and rewarding career as a nurse. She was looking forward to relaxed days playing golf, spending time with grandchildren, and traveling to places she and Rick had never seen. At 62, Sandy thought her caregiving days were behind her. Then suddenly and unexpectedly, she joined the ranks of the roughly 16 million family members in the U.S. caring for someone with dementia.
Close to half of all family caregivers who help older adults are caring for someone with Alzheimer’s or some other form of dementia and they shoulder both a heavy emotional and financial burden. These devoted spouses, daughters, sons, and grandchildren provide over 18 billion hours of unpaid care for people with dementia at an estimated economic value of $232 billion.
What do they do? They help with activities of daily living their loved ones can no longer manage on their own such as getting dressed, eating, bathing and going to the bathroom. In addition, families manage medications, prepare meals, pay bills and provide one of the most vital functions foundational to human existence: connection.
Don’t Count On Medicare
As Rick’s disease progressed, Sandy took on an increasing amount of caregiving duties and the hours and costs started piling up. Over time, the financial picture was bleak. While Sandy and Rick had a small amount stocked away for retirement, they did not have long-term care insurance or much in the way of savings. As a nurse, Sandy was aware that long-term care is costly. The type of care most often needed for those with dementia is considered “custodial” and not typically covered by Medicare.
In Massachusetts, where the couple lived, the average annual cost of a nursing home is over $140,000 and the median hourly rate for in-home care is $25. That was much more than Rick and Sandy could afford. And that’s not atypical. People with dementia who need institutional or home-based care can incur enormous expenses that are often borne by family members, most often spouses. If someone needs round-the-clock care, which Rick eventually did, the cost can actually exceed the rate of a nursing home. In some cases, a solution for someone in Rick’s position would be Medicaid, the primary payer of nursing home care. (Now, through state waiver programs, Medicaid is shifting long-term care payments from institutional care to home and community based programs.) But Rick didn’t have Medicaid, either. He was considered ineligible because his total assets exceeded the $2,000 limit allowed by MassHealth (which is what Medicaid is called in Massachusetts).
Wanting to keep Rick at home, Sandy hired a paid caregiver to help, but was only able to afford a few hours of care a week. Sandy and Rick’s 32-year-old daughter, Grace, stepped in to help keep an eye on her dad and give her mother a much needed break. Reducing her hours at work was difficult and costly, but Grace felt she had no choice.
Like Grace, the majority of caregivers are in the workforce, and 60% report experiencing problems related to financial pressures caused by not being able to work or having to reduce their hours. This pressure is particularly intense for millennial caregivers, who have less earning capacity and savings, yet spend a larger proportion of their wages on caregiving expenses.
Family caregivers for adults with dementia spend over $10,000 annually on out-of-pocket caregiving expenses such as medicine, personal care items, transportation, co-pays and paid caregivers. That’s nearly twice the amount of out-of-pocket costs incurred by those caring for adults without dementia.
Prepare For The Unexpected Costs Of Care
Harry Margolis, an elder law attorney and founder of Elder Law Answers, urges families to plan in advance for long-term care. To be eligible for Medicaid, many people will need to transfer assets years ahead of time. There are also ways to “spend down” your assets toward “medically necessary” expenses that can qualify your family member for Medicaid. These may include medical bills not otherwise covered by insurance, medication costs, and even pre-paid funeral arrangements. Part of planning ahead is finding out whether your parent has funds stocked away to pay for care. As crude as it may seem, having financial resources—or not—may determine the type of long-term care your parent will ultimately receive.
As Rick’s condition deteriorated, Sandy had greater difficulty handling his day-to-day care, even though she was a nurse. Her old back injury flared up and she was no longer able to lift Rick at all. Sandy understood that family caregivers are at greater risk for injuring themselves and are more prone to depression and chronic illness. She recognized the tell-tale signs of burnout and knew that the current situation wasn’t working for her—or Rick either.
Through the help of an elder law attorney, Sandy was eventually able to get Rick on Medicaid by spending-down their savings toward medically necessary expenses. Sandy was also worried that she would lose her house in the process. The elder law attorney reassured Sandy that her home was not considered a “countable asset” as long as Sandy was still living there. That was an enormous relief. While the elder law attorney was an unexpected cost, it probably saved Sandy boatloads of money in the long run and enabled her to ultimately find the right care for Rick.
Eventually, Sandy made the difficult decision to move Rick to a memory disorder facility nearby. Without Medicaid, Sandy could not have afforded the six figure price-tag. She knew that Rick would receive the 24-hour care he needed and she visited him every day. Sadly, because of Rick’s disease, part of him was forever lost. But Sandy was no longer preoccupied with figuring out how she was going to pay for Rick’s care. She could now focus on what really mattered—spending time with the man she loved and finding ways to connect with the person who was still very much there.
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720be2035adc3dc5ecd32b8ed860ed5c | https://www.forbes.com/sites/jodywestby/2012/02/27/cyber-legislation-will-cost-businesses-and-hurt-economy/ | Cyber Legislation Will Cost Businesses and Hurt Economy | Cyber Legislation Will Cost Businesses and Hurt Economy
Most businesses have paid little attention to the sweeping cybersecurity legislation introduced on Valentine’s Day by Senators Lieberman, Collins, Rockefeller, and Feinstein, even though it could be one of the most expensive and intrusive pieces of legislation proposed since Sarbanes-Oxley. Intended to help protect the nation against a major cyber attack by improving the security and resiliency of the computer systems of critical infrastructure companies, the Cybersecurity Act of 2012 (S. 2105) actually would put a federal agent inside most of these businesses’ data centers and require assessments and reporting that could make Sarbanes-Oxley seem inexpensive.
Since 1998, the number of critical infrastructure sectors, now designated by Homeland Security Presidential Directive-7, has grown from six to eighteen, encompassing a huge number of U.S. businesses. Each designated sector is aligned with a federal agency (referred to as a Sector-Specific Agency) that is tasked with identifying key risks and vulnerabilities associated with systems and assets within the sector. For example, the banking and financial sector is assigned to the Treasury Department, electricity grids are assigned to the Energy Department, and transportation systems are assigned to the Department of Transportation and Coast Guard. This coupled and stove-piped approach has not been emulated globally because it is not sustainable and, for the most part, cyber attacks are not sector-specific – they involve civilians and rapidly spread across sectors.
The Department of Homeland Security (DHS) has spent a decade trying to devise plans for critical infrastructure protection, encourage public-private information sharing, and coax and cajole the private sector into paying attention to their cybersecurity programs. After ten years of little progress, its frustration point matched that of many in the security and auditing industries who had decided that congressional mandates were the only way to get companies to spend money on the security of their systems. Their wish lists were ready: government authority to conduct risk assessments, annual reviews, mandated requirements, and continuing oversight.
The Senate bill more than fulfills their hearts’ desire. Within 90 days after enactment, the legislation requires the DHS Secretary to conduct sector-by-sector risk assessments of cyber threats, vulnerabilities, risks, and the probability of catastrophic incidents. Beginning with the highest priority sectors, DHS – not the company – must conduct ongoing cyber risk assessments using state-of-the-art modeling, simulation, and analysis and consider:
the actual or assessed threat, including adversary capabilities; the extent and likelihood of death, injury, or serious adverse effects to human health and safety caused by damage or unauthorized access to the infrastructure; the extent to which the damage will disrupt other infrastructure; the harm to the economy that may result; the risk of national or regional catastrophic damage in the U.S. caused by unauthorized access outside the U.S.; and the overall preparedness and resilience of the sector.
Whew. Businesses, for their part, may “provide input" to the risk assessments and must provide “reasonable access” to the assessor. The frequency of the assessments is open-ended, as the bill gives DHS the authority to conduct these assessments any time based upon “reliable intelligence or other information indicating a cyber risk” or “actual knowledge or reasonable suspicion.”
The DHS Secretary must submit these risk assessments “in a classified or unclassified form” to the President, appropriate federal agencies, and Congressional committees. Whoa. That is a lot of company data that could have a significant impact on stock price, market share, and competitiveness – and reveal vulnerabilities – if shared inappropriately or inadvertently disclosed, especially if it is unclassified. Is there a Chairman or CEO on the Forbes Global 2000 list who would want this type of assessment undertaken on their company by the federal government and distributed by DHS at their discretion?
In designating whether a company’s systems are within a “covered critical infrastructure” category, the Secretary must take into account, “to the extent practicable,” the input of the owners of the infrastructure. Such designations, however, are not just at the sector and company level; they are at the system or asset level. Companies unhappy with the designations are allowed to appeal to federal court.
The designation as a covered critical infrastructure is only the beginning. The DHS Secretary also must develop:
cyber security performance requirements for each sector that require system owners to remediate or mitigate any identified risks or consequences; and promulgate regulations to enhance the security of the infrastructure against cyber risks.
With overtones of Sarbanes-Oxley, the bill also requires the owners of these systems to either certify annually to DHS and their sector agency whether they have implemented security measures to satisfy the performance requirements or submit a third-party assessment. Even if a company subject to the provisions of the bill can obtain an exemption by demonstrating that it is sufficiently secured or in compliance with the risk-based performance requirements, it must undergo this process every three years.
Third party assessors also do not escape regulation: they must be certified by the Secretary and meet regulatory requirements for conducting such assessments. Moreover, the third-party assessors must provide their findings not only to the company, but to DHS and any federal agency responsible for regulating the security of the company’s infrastructure, increasing the distribution of this sensitive information.
All of this is required by page 32 of a 205 page bill. The problem, of course, is that the entire approach is flawed. It is foolish to believe that DHS performance requirements and regulations for security can keep pace with the rapid evolution of cyber threats. Moreover, numerous international technical working groups, standards setting bodies, and researchers are working continuously on solutions, protocols, and approaches to the multidimensional problem of cyber threats. Their work is published, incorporated into global standards and best practices, and adopted and deployed by organizations around the world. It is extremely unlikely that DHS regulations will keep pace with this work. Almost certainly, cybercriminals will develop exploits around these mandates, and U.S. companies will be more vulnerable because they will be meeting compliance requirements instead of deploying the latest technologies or approaches that will best help them to detect, deter, and combat current threats. Precious corporate security budgets will be spent on assessments and compliance instead of on better technologies or advancements to enterprise security programs.
Most importantly, no one knows what this bill will cost the government or the businesses it impacts. One thing is certain: it will be expensive. If enacted, this legislation could have a detrimental impact on the U.S. economy because the cost of compliance will swallow the funds desperately needed by businesses to create jobs and boost economic growth. As businesses are trying to recover from the recession, they will be forced to absorb the costs associated with the assessments, such as interference of business operations, system down time, staff support to assessors, deficiency mitigation, and compliance with performance requirements. The legislation also carries a huge price tag for taxpayers who will foot the cost of the assessments, which surely will number at least in the tens of thousands.
Pursuant to the 2004 DHS Appropriations Conference Report, DHS was required to submit a cost benefit analysis report to Congress on whether the private sector should be required to provide information to DHS on security measures and vulnerabilities associated with their critical infrastructure. A 2009 Government Accountability Office (GAO) report on DHS's efforts to generate the required report is insightful: DHS paid two contractors about $3.4 million to produce a report, which only discussed possible costs and benefits but did not set forth any qualitative analysis, distinguish between costs and benefits, or indicate those that were most important, all of which are required by the Office of Management and Budget (OMB) Circular A-4. According to GAO, DHS claimed the cost-benefit analysis was not performed because they did not have quantifiable data and now the Department considers the report to be out-of-date. "As far as we are aware, DHS has never provided the required cost-benefit report to Congress," noted Stephen Caldwell, author of the GAO report.
Of course, any cost analysis will vary depending upon the approach used for the assessments. The appropriate methodology for conducting such assessments, however, is far from settled. Not only does the methodology used impact the cost, but it also impacts the company, both in the findings of an assessment and the operational disruption. Eric Solano, a prominent researcher with RTI International, noted that, "Although many in my field have been studying assessment methodologies for critical infrastructure, there is no agreement on any particular method, and I have not seen any study on how to quantify the costs of these assessments, both from the side of the entity being assessed and the cost of the assessments themselves."
Cybersecurity is a huge problem. The bad guys are winning, but just because the U.S. invented the Internet does not mean that the problem can be solved through congressional mandates on corporate systems. Today, according to Internet World Stats, there are 257 countries and territories connected to the Internet and 2.3 billion online users. The U.S. represents only about 11 percent of that online population. American companies need help with cybercrime and cyber espionage, and they need to better understand how to respond in a catastrophic cyber situation, but they do not need the U.S. government inside their data centers or mandating costly security requirements that may be out-of-date or ineffective.
Instead of mandates, U.S. companies need incentives, such as those advocated by the Internet Security Alliance (ISA) and included in the Recommendations of the House Republican Cybersecurity Task Force, led by Congressman Thornberry (R-TX). “Companies would be able to justify improvements to their security programs if there were a menu of market incentives, such as procurement mechanisms and insurance, that would help justify costs that go beyond their commercial security needs and protect larger interests, such as economic and national security,” said Larry Clinton, president of ISA. For years, some of us in the security industry have advocated requiring public companies to indicate in their SEC filings whether their security program was tied to an internationally accepted best practice and whether key activities within their program had been undertaken and had oversight. The concept is based on similar requirements for Y2K, could be done without revealing any corporate confidential information, and steep penalties would apply if the information was falsified. As with Y2K, we believe non-public companies would follow suit and momentum toward focusing on security programs would quickly grow.
After years of cybersecurity bills in various forms and hearings, it is disappointing that the sponsoring senators, Lieberman, Collins, Rockefeller, and Feinstein) did not listen to such practical ideas and instead adopted a costly, regulatory approach that will increase the size of government and benefit many of the companies who testified (repeatedly). Seven Republican senators already joined in a letter to Senate Majority and Minority Leaders Reid and McConnell, seeking delay of floor consideration of the bill so the various committees of jurisdiction could consider it. Such a course of action is not only wise, it is necessary. It also would allow time for businesses to sit up, pay attention, and get engaged.
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d376c521f731b7d7b7a76a82326c998a | https://www.forbes.com/sites/jodywestby/2012/06/04/u-s-administrations-reckless-cyber-policy-puts-nation-at-risk/ | U.S. Administration's Reckless Cyber Policy Puts Nation at Risk | U.S. Administration's Reckless Cyber Policy Puts Nation at Risk
The Russian security company, Kaspersky Lab, recently contacted IMPACT, the global cybersecurity coordinating center run by the UN's International Telecommunication Union (ITU), and reported that new variations of a malicious software known as Flame were capable of stealing large amounts of data from government and critical infrastructure systems. IMPACT (an acronym for the International Multilateral Partnership Against Cyber Threats), began working closely with Kaspersky and issued an alert to its 142 member countries. The United States, however, did not receive the alert because it is not a member of the global cyber center. In fact, the U.S. State Department has rebuffed the organization's overtures to join and has blocked other U.S. government agencies that have tried to develop working relationships with IMPACT.[1]
When pressed for reasons why, the Administration has offered diplomatic excuses, such as blacklisted countries Iran and Syria are members of IMPACT and interact with the cyber center. This reasoning is nonsensical since (1) the Internet is a global resource connected to 253 countries and territories, including Iran and Syria, (2) tracking and tracing Internet communications requires country-to-country cooperation, and (3) being a member of a center that has points of contact and relationships with these countries would allow the U.S. to benefit from the information while maintaining diplomatic distance with the countries themselves.
Other explanations, including the Administration's belief that the ITU should not undertake "operational" activities, such as those performed by the cyber center, are equally vacuous. The ITU’s mandate for its activities, including IMPACT, was authorized pursuant to Resolutions from multilateral conferences in which the U.S. participated.[2] The U.S.’s “our way or the highway” attitude in the important area of cybersecurity appears petulant instead of accepting of the fact that its viewpoint did not prevail in a multilateral vote. Moreover, as the Flame investigation shows, the Administration’s position potentially jeopardizes national and economic security interests, including the stability of the critical infrastructure businesses that are dependent upon critical cyber coordination when seconds matter.
A bit of background is helpful here. In 2008, Mohd Noor Amin, a Malaysian who is a British barrister and holds a legal degree from the U.K., recognized that national Computer Emergency Response Teams (CERTs) were inadequate to counter the growing sophistication of cyber threats. He obtained a grant of USD 13 million from the Malaysian government and established the first global coordination center. When John Grimes, then Assistant Secretary and CIO of DoD, learned of IMPACT in 2009 -- even before it became a UN entity -- he remarked, "This is something that is sorely needed and Dr. Amin has brilliantly filled an important international gap in cyber response and cooperation." The organization's initial advisory board included John Thompson, former chairman of Symantec, and Howard Schmidt, the former U.S. cyber czar.
In 2011, IMPACT became the operational arm of the ITU's Global Cybersecurity Agenda. IMPACT established partner relationships with leading antivirus and security research companies, such as Kaspersky, Trend Micro, Symantec, F-Secure, and Microsoft, and receives daily feeds of threat information from around the globe, which can be correlated to obtain a broader threat picture. IMPACT also developed the largest global point-of-contact network for cyber coordination and established an alert system to simultaneously disseminate warnings and response information to its member countries. Within one year, 142 of the 193 member countries of the ITU joined IMPACT to take advantage of its cyber coordination assistance.
No country is an island on the Internet, and the U.S. cannot expect to be able to adequately respond to cyber attacks or malware infiltrations without the input and involvement of others around the globe. International cooperation and information sharing is critical when investigating cybercriminal activities and responding to malware. The U.S. Administration’s stonewalling of IMPACT has left the U.S. out in the cold at a time when the rest of the world has a laser focus on the Flame malware and the Kaspersky and IMPACT teams are working around the clock with global participants to corral the software and provide updated information.
In a conversation held yesterday with Dr. Amin, he noted that, “No one from the U.S. Government has contacted IMPACT about Flame.” Although the U.S. certainly can contact Kaspersky directly, that type of isolated input about an evolving cyber event has its limitations. Most importantly, it forces the U.S. to assemble data from various companies and governments outside the loop of coordinated activity. Dr. Amin observed that the Iranian CERT has been very actively interacting with IMPACT and antivirus companies, and this information would surely be useful to the Government. “We wish the U.S. would join IMPACT today,” Amin noted.
The U.S. is further disadvantaged by being perceived by some as not being a team player at the very time that it is being accused of developing and launching the Flame malware against Iranian nuclear facilities. The accusation carries more weight following David Sanger’s June 1, 2012 report in The New York Times that Presidents George W. Bush and Obama knew of and approved a joint U.S.-Israeli plot from 2007-2010 to attack and disrupt Iranian nuclear facilities using the Stuxnet malware.
Perhaps more important than being out of the cyber coordination loop, is the how the U.S.’s attitude is being perceived by others in the international community. If the U.S. were a member of IMPACT and taking an active role in the investigation, it would be upholding its role as a global cybersecurity power. Instead, the U.S. appears as the shirking nation state quietly standing on the sidelines while being accused of engaging in cyberwarfare tactics. “People look to the U.S., Russia, and China for leadership and when the U.S. is absent, they will turn to the other two,” observes Dr. Amin.
The U.S. Administration’s failure to develop a strong foreign policy with respect to cybersecurity reveals a gross lack of attention at the highest levels of the U.S. Government to one of the country's most vulnerable areas -- the IT systems that underpin the functioning of our society and economy. This failure begins at basic strategy levels and extends to reckless disregard for the consequences of the risky covert Stuxnet operation and failure to secure classified information about the program. For example, in May 2011, government delegations from around the world gathered in Geneva for the World Summit on the Information Society (WSIS), one of the most important communications and technology conferences globally. Noticeably, the U.S. did not have a delegation present. Yet, it was during the WSIS event that the U.S. Administration chose to release its International Strategy for Cyberspace – from Washington, D.C. rather than Geneva. WSIS participants were dumbstruck. For the few private sector Americans who were present, including myself, it was embarrassing.
If in fact the Administration did authorize targeting Iranian nuclear systems with Stuxnet and/or Flame, it was a dangerous and reckless decision, especially since the U.S. Government has no idea how many computers in America may be infected with malware capable of being activated by Iran or one of its allies in retaliation. Such "backdoor" malware is capable of having enormous consequences to life and property. A similar CIA covert operation successfully destroyed a Soviet pipeline. In 1982, President Reagan approved a plan to transfer software used to run pipeline pumps, turbines, and valves to the Soviet Union that had embedded features designed to cause pump speeds and valve settings to malfunction. The plot was revealed in a 2004 Washington Post article by David Hoffman in advance of its discussion in former Air Force Secretary Thomas C. Reed's book, At the Abyss: An Insider's History of the Cold War. Reed recalled to Hoffman that, “The result was the most monumental non-nuclear explosion and fire ever seen from space.” Unlike Stuxnet, however, the program remained classified for 22 years until the CIA authorized Reed to discuss it in his book. Sanger's information came from loose-lipped persons involved with the Stuxnet operation.
Before pulling a trigger (or launching malware) a nation should assess its strengths and resources and its correlation of vulnerabilities, which, in 2012, includes understanding what an adversary can do when firing back using cyber capabilities. In addition, before launching covert operations, such as Stuxnet, a nation also should ensure that the secrecy of the intelligence operations can be maintained.
Conversations with Hill staffers indicate that Congress believes the State Department’s 2011 appointment of Coordinator for Cyber Issues has sufficiently addressed concerns about the lack of U.S. involvement in international cybersecurity matters. Clearly, this is narrow, wishful thinking. Congress needs to stop focusing on what it believes it should force businesses to do about cybersecurity and instead focus on what it should demand that the U.S. Government do to protect our critical infrastructure businesses and avoid retaliatory cyber attacks. The kind of reckless cyber diplomacy and foreign policy now at work has put our nation at risk and demonstrates cyber irresponsiblity, not cyber leadership.
[1] Disclosure: IMPACT briefly was a client of my firm, Global Cyber Risk LLC, in early 2011. Dr. Mohd Noor Amin, founder and chairman of IMPACT, asked me to set up unofficial meetings for him and senior IMPACT personnel with various U.S. Government agencies so they could open a dialogue and begin building relationships with these entities. The U.S. State Department contacted some of the Government personnel and told them not to meet with IMPACT, resulting in some meetings being cancelled. [2] See, e.g., Resolutions from the 2010 World Telecommunication Development Conference held in Hyderabad, India in 2010: Resolution 45 (Rev. Hyderabad 2010), “Mechanisms for enhancing cooperation on cybersecurity, including countering and combating spam;” Resolution 69 (Hyderabad, 2010), “Creation of national computer incident response teams, particularly for developing countries, and cooperation between them;” and Resolution 130 (Rev. Guadalajara, 2010) “Strengthening the role of the ITU in building confidence and security in the use of information and communication technologies” from the 2010 Plenipotentiary Conference of the International Telecommunication Union held in Guadalajara, Mexico.
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4a3d007ea2d84a6eb0320b134b950b2d | https://www.forbes.com/sites/jodywestby/2012/07/27/urgent-businesess-must-act-to-stop-congress-on-cyber-legislation/ | URGENT: Businesses Must Act to Stop Congress on Cyber Legislation | URGENT: Businesses Must Act to Stop Congress on Cyber Legislation
Stop what you are doing. Businesses must pick up their phones now and call Congress to stop cyber legislation that is poised to saddle them with intrusive government-mandated risk assessments, costly security requirements, and required disclosures regarding security incidents. Most businesses are complacent about cybersecurity legislation because so many bills have floated around for so many years that everyone is yawning. Stop Yawning. As Ann Landers used to say, "Wake up and smell the coffee."
In a rush to show that Congress can do something...anything, the Senate is poised to vote as early as today to enact legislation (S. 3414) that would have a greater financial and operational impact on businesses than Sarbanes-Oxley because it would apply to 18 industry sectors (nearly everyone), regardless of whether they are a public company or not. The irony is that the legislation is based on fear, uncertainty, and doubt (FUD) versus facts, and it will do little to solve the security problems facing computer systems. In fact, this legislation may well make the U.S. less secure.
The Administration, in its usual posture of believing that the government must solve every problem through regulation and oversight, is firmly behind this legislation. Last week, President Obama boldly argued in an editorial piece in The Wall Street Journal that, "The American people deserve to know that companies running our critical infrastructure meet basic commonsense cybersecurity standards, just as they already meet other security requirements," such as those for nuclear power plants, water treatment plants, and airplane cockpits. He also noted how "Cybersecurity standards would be developed in partnership between government and industry." The FUD began when he stated, "It doesn't take much to imagine the consequences of a successful cyber attack," and went on to mention imaginary attacks on financial systems, water treatment facilities, and disabled hospitals.
Never mind that much earlier in his piece -- before he started his slippery slope toward regulation -- he admitted that, "So far, no one has managed to seriously damage or disrupt our critical infrastructure networks." Precisely. That is because private sector companies actually try very hard to have good security programs. It is because they have effectively stopped attacks and responded to them. It is because they have a responsibility to investors and shareholders to protect their digital assets. to manage risks, and limit liabilities. It is not because of dumb luck in the absence of government regulation.
The fact of the matter is that neither the U.S. Government nor Congress really knows the security posture of most U.S. companies. Researchers, federal law enforcement agencies, and NSA have access to some communications traffic data that may reveal whether botnets have infiltrated a company's network or whether the network unknowingly may have been involved in some sort of cybercriminal activity. This information, however, does not reveal much about the state of an organization's enterprise security program. It certainly does not provide a factual foundation for federal legislation, such as that proposed in the Cybersecurity Act of 2012 ( S. 3414), which would:
Establish an interagency National Cybersecurity Council "with responsibilities for regulating the security of covered critical infrastructure." (Quotes from the official summary of the bill) Authorize this Council to conduct risk assessments to identify the critical infrastructure sectors that have the greatest and most immediate cyber risk (because they don't know this now) Require some critical infrastructure owners to report "significant cybersecurity incidents" Have an "industry-led group" develop and propose voluntary cybersecurity practices that the Council could adopt, modify, or supplement, as necessary.
The voluntary "practices" part is the camel's nose under the tent. The Senate summary notes that: "The bill creates no new regulators, and provides no new authority for an agency to establish standards that are not otherwise authorized by law." (emphasis added) This bill, combined with existing authorities, likely would provide enough authorization to turn these voluntary practices into standards. Even the White House's new cybersecurity coordinator admitted to the Washington Post's Ellen Nakashima that mandatory standards were "legislatively almost impossible," but "that's the ultimate goal."
The bill's sponsors and supporters also point to provisions that would improve information sharing and authorize the government to provide security clearances to companies that have a need to receive classified information to protect their networks. This is fuzzy "feel good" language that is not rooted in need. There is no law or regulation in force today that stops a company from sharing cyber incident information with the government or with other companies. In fact, the Department of Homeland Security has promulgated regulations pursuant to the Homeland Security Act of 2002 that protect cyber incident information shared with the government. Legal issues that were identified over a decade ago as possible barriers to information sharing between companies, such as antitrust laws, also have been examined and addressed. Additionally, the government already has the ability to provide clearances to companies that need them to protect their networks. It has done so throughout the operation of the National Coordinating Center, a public-private operation between the U.S. Government and communications companies that operates to ensure national security and emergency preparedness during times of national disaster and armed conflict.
In a recent letter to Congress, former military and intelligence officials called for the passage of legislation that required critical infrastructure companies "to meet appropriate cyber security standards." They also urged Congress to allow the public and private sectors to "harness the capabilities of NSA to protect our critical infrastructure from malicious actors." They are right about enabling NSA to assist the private sector, but they are wrong about the standards. They apparently have forgotten that there are internationally-accepted best practices and standards for cybersecurity that are widely adopted around the world. The U.S. should be playing a more active role in these standards-setting activities instead of passing legislation that would spend taxpayer money developing cybersecurity practices unique to the U.S. Reality: with over 250 countries and territories connected to the Internet, the U.S. now comprises less than 12% of the online population. We only invented the Internet; our "practices" must fit in with those of the other 88% of Internet users, lest we have the most vulnerable systems.
Some of the most fatal flaws in the pending cybersecurity legislation are the provisions that entice companies to join the "voluntary program" by affording them:
Liability protections if they are in "substantial compliance with the cybersecurity practices at the time of the incident" Expedited security clearances to appropriate personnel Priority technical assistance on cyber issues Receipt of relevant real-time threat information.
First of all, this is legislative blackmail. Responsible governments provide expedited clearances and priority assistance based on need rather than participation in a government program, and relevant real-time threat information should be available to all companies. Second, liability protections actually will make U.S. systems less secure because companies only must adhere to the minimum security "practices" to receive legal protections, thereby eliminating their incentive to improve their security posture to counter the newest threat.
So....what should Congress do? It should begin focusing on measures that actually will help solve the problem. Cybersecurity is a problem because cybercrime is so rampant. Cybercrime is so rampant because it is almost impossible to catch the criminal. Thus, there is no deterrence. Cybercrime has become the perfect crime. We must be able to track and trace cybercriminal activity, locate and arrest these bad actors, and prosecute them if we ever hope to improve cybersecurity. This requires a proactive, global approach instead of domestic mandates on business.
If Congress wants to protect U.S. national and economic security it should:
Allocate funding to promote the harmonization of cybercrime laws around the world (many countries have no laws or weak laws and are havens to cybercriminals) Establish programs to train law enforcement officers in the U.S. and abroad on conducting cyber investigations, including the search and seizure of digital evidence (many U.S. cities and foreign police agencies have no cyber capability) Create programs to promote speedy international cooperation and collaboration on cyber investigations (almost all cyber investigations involve some international assistance due to the nature of packet switching technology) Provide capacity building assistance to train judicial and legal personnel in the prosecution of cybercrimes Authorize federal agencies and departments to assist critical infrastructure companies in defending against cyber threats Provide grants to centers that assist citizens and small businesses in responding to cyber threats Order the Departments of State and Justice to report on their involvement in standards-setting and multinational organizations to advance these goals.
In addition, Congress should (1) offer a tax credit to U.S. companies that invest in their cybersecurity programs, and (2) require public companies to indicate in their SEC filings whether they have undertaken the key activities of an enterprise security program (not what specific actions they have taken). These Congressional actions would incentivize companies and launch a national culture of cybersecurity that would be emulated by non-publicly traded companies and smaller businesses.
The implementation of these suggested Congressional mandates also would revive U.S. leadership in cybersecurity on the global stage and help counter the cybercriminals. In addition, they would create a much more secure and competitive business environment for U.S. companies, avoid costly compliance burdens, and advance cybersecurity. In all, this would be a much better outcome than requiring businesses to spend money that they need for jobs and economic growth on fabricated cybersecurity requirements that will not stop the cybercriminal.
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c5c345f2c1c082c0c5a1362f802f2994 | https://www.forbes.com/sites/jodywestby/2012/08/13/congress-needs-to-go-back-to-school-on-cyber-legislation/ | Congress Needs to Go Back To School on Cyber Legislation | Congress Needs to Go Back To School on Cyber Legislation
It is somewhat amazing that Congress has wrestled with cybersecurity issues for years, yet remains largely clueless about what to do about it. Although the Senate tried to push through the Lieberman/Collins cybersecurity legislation (S. 3414) prior to the August recess, cooler heads prevailed. Now, Congress has the chance to step back and re-evaluate what it really should be doing about cybersecurity.
New Approach Needed
First, Congress should stop wondering how to tweak what failed. It should set aside prior bills – including S. 3414 – and open a new dialogue with the business community and cybersecurity researchers and legal experts who deal with the realities of cybercrime. A broader perspective is needed. For too long, Congress has been listening to parties with vested interests, such as IT and security companies that want to sell businesses more products and services and advisory services firms that hope for the cyber version of Sarbanes-Oxley so they can rack up another round of historic revenues. Congress has been told, and now believes, that companies will not adequately secure their systems, so Congress must require them to do so and specify what actions to take. This is wrong.
Instead of wondering how it can fix a flawed approach, Congress needs to:
Understand the views of business and what it can do to incentivize companies to invest more in security; Learn how it can help create a culture of cybersecurity in our society; and Determine what measures are needed to help deter cybercrime.
Deception by Legislators Must Stop
Second, Congress must tell the truth about what they are really trying to do. The Lieberman/Collins bill was a masterful piece of deception that was intended to bamboozle businesses into believing that the legislation was not a massive extension of regulatory authority. The sponsors of the bill sent a letter to their Senate colleagues and issued a summary of S. 3414 that tried to paint the bill as voluntary and narrowly written. After the bill failed to garner enough votes for passage, the sponsors are reportedly disappointed and blaming industry instead of looking in the mirror.
Here is the truth (bold text is my emphasis). First, the reach of the bill. It authorizes government intrusions into a huge swath of business operations – all those deemed to be critical infrastructure – via cyber risk assessments.
S. 3414 uses the USA PATRIOT Act's definition of "critical infrastructure," which means “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security, national economic security, national public health or safety, or any combination of those matters.”
The DHS website lists the following 18 critical infrastructure sectors:
1. Food and Agriculture
2. Banking and Finance
3. Chemical
4. Commercial Facilities
5. Communications
6. Critical Manufacturing
7. Dams
8. Defense Industrial Base
9. Emergency Services
10. Energy
11. Government Facilities
12. Healthcare and Public Health
13. Information Technology
14. National Monuments and Icons
15. Nuclear Reactors, Materials, and Waste
16. Postal and Shipping
17. Transportation Systems
18. Water
The bill defines "cyber risk" as "any risk to information infrastructure, including physical or personnel risks and security vulnerabilities, that, if exploited or not mitigated, could pose a significant risk of disruption to the operation of information infrastructure essential to the reliable operation of critical infrastructure."
Section 102(a)(2)(A) provides that a designated government agency shall "conduct a top-level assessment of the cybersecurity threats, vulnerabilities, and consequences and the probability of a catastrophic incident and associated risk across all critical infrastructure sectors to determine which sectors pose the greatest immediate risk, in order to guide the allocation of resources for the implementation of this Act; and (B) ...conduct on an ongoing, sector-by-sector basis, cyber risk assessments of the threats to, vulnerabilities of, and consequences of a cyber attack on critical infrastructure."
So. The bill requires the identification of the risks and consequences of an attack across all of the 18 sectors. Contrary to assertions from Senate staffers, that is not one sliver of critical infrastructure. The bill further requires the National Cybersecurity Council (the new bureaucracy established by the legislation) to use the risk assessments to adopt "cybersecurity practices necessary to ensure the adequate remediation or mitigation of cyber risks identified through an assessment."
Despite the Senate sponsors' repeated insistence that S. 3414 is all about a voluntary cyber program and voluntary cyber practices, section 103(g)(1)(A) provides that, "A Federal agency with responsibilities for regulating the security of critical infrastructure may adopt the cybersecurity practices as mandatory requirements." The “may” in this provision might as well be “shall” because if, within one year of enactment, the agency has not adopted the cybersecurity practices as mandatory, they must report to Congress on why they did not do so.
In a letter to colleagues, the bill's sponsors stated, "The bill creates no new regulators, and provides no new authority for an agency to establish standards that is not otherwise already authorized by law." This is masterful. Note that the sentence refers to regulators, not regulations. Note also that the sentence applies to "standards," not "cybersecurity practices" and that the standards part is linked to "not already authorized by law." Since section 103(g)(1)(A) provides federal agencies with the authority to adopt "cybersecurity practices" as mandated requirements, it provides all the authority that is needed to turn voluntary cybersecurity practices into costly compliance requirements for critical infrastructure companies.
When one considers the regulatory authority already vested in federal agencies, coupled with that in the Homeland Security Act of 2002 and in Homeland Security Presidential Directive-7 (HSPD-7), this bill fills the gaps to allow government authority over business operations. But just in case it is not enough, the annual report due to Congress on the effectiveness of the Act requires an analysis of whether any additional legislative authority is needed.
Where the bill narrows, is in the designation of categories of “critical cyber infrastructure.”
Section 2(5) of the bill states: "The term "critical cyber infrastructure" means critical infrastructure identified by the National Cybersecurity Council. Section 102(b)(3)(A) provides that the Council "shall identify categories of critical cyber infrastructure within each sector of critical infrastructure."
The Council can "identify a category of critical infrastructure as critical cyber infrastructure if damage to or unauthorized access to such critical infrastructure could reasonably result in (i) the interruption of life-sustaining services, including energy, water, transportation, emergency services, or food, sufficient to cause a mass casualty event or mass evacuations, (ii) catastrophic economic damage to the U.S., or (iii) severe degradation of national security or national security capabilities, including intelligence and defense functions. Pursuant to this section of the bill, these critical cyber infrastructure companies will be required to report "significant cyber incidents affecting critical cyber infrastructure."
Unlike the narrower group of companies that will be required to report incidents, the risk assessments and mandatory cybersecurity practices will apply to companies in all 18 sectors of critical infrastructure.
Cyber Scare Tactics Have Got To Stop
The cyber scare tactics have got to stop. It is not a legitimate strategy for passing legislation. All systems are vulnerable, and many types of attacks are possible. A recitation of security incidents at various companies (or government agencies) does not equate to a cyber meltdown.
In a June 6 letter to Senator leaders Reid and McConnell, former government officials Chertoff, McConnell, Wolfowitz, Hayden, Cartwright, and Lynn stated, "Where market forces and existing regulations have failed to drive appropriate security, we believe that our government must do what it can to ensure the protection of our critical infrastructure." I greatly respect these men but strongly disagree with them.
Market forces have not failed; they are working. When breach notification laws were enacted, companies started to pay more attention to security, not because there was a compliance requirement, but because there was the threat of a headline. When customers shift to a competitor following a breach of their personal data, the marketplace notices. When public companies have suffered serious security incidents, their stock price has fallen. When insurance companies beefed up their requirements for cyber insurance coverage, companies stepped up the security of their programs. When courts have found damages or negligence in security cases, other companies and courts have taken notice.
Publicity about incidents involving weak security, lawsuits from investors and victims, insurance requirements for enterprise security programs, pressure for improved cyber governance, and awards for exemplary programs are all market forces that will drive appropriate security far better and much faster than regulations ever will.
Corporate attention to cybersecurity has increased significantly, and it will continue to do so simply because this topic has caught the attention of the press and the public and CEOs hate negative headlines and events that risk market share, impact stock prices, damage brands, and create legal liabilities. The market will create change much faster -- and cheaper -- than piles of assessments and government regulations. (Doesn’t it bother anyone that no economic analysis has been done on the cost of implementing legislation such as S. 3414?)
We must move from scare tactics to facts. Here are the facts.
The U.S. invented the Internet, but it no longer controls it. The Internet is now an interconnected, global network of things: computers, devices, sensors, applications, etc., that present new risks Company networks are vulnerable. So are government networks. So are individual's computers. Companies are very aware of compliance requirements, risks to their data, and how much security incidents and the loss of proprietary data costs them. Everyone needs to do more to counter the sophisticated nature of botnet attacks and exfiltration of data. Traditional security measures are no longer enough protection. Critical networks can be disrupted to cause catastrophic incidents. This has always been so and will continue to be so even if S. 3414 is enacted. The operating platforms and applications they use are vulnerable. Cyber threats have been escalating at exponential rates for over a decade. The bad guys are winning, their methods of attack are ingenious and change quickly when detected, and it is hard to catch them. Cybercrime laws are not harmonized around the globe, in fact, many countries do not have a cybercrime law. Cyber investigations usually require international cooperation, however, it is difficult to obtain. Any cooperation that is obtained is usually informal and based upon the luck of relationships. The two avenues for official assistance -- Mutual Legal Assistance Treaties (MLATs) and the Letters Rogatory process – usually take months when seconds matter. Of the 250-plus countries and territories connected to the Internet, few of them have trained law enforcement who can adequately assist with cyber investigations and conduct digital search and seizure, especially on a 24/7 basis. Many U.S. police departments do not have trained cyber forces, including the Washington, D.C.’s Metropolitan Police Department (I can’t even get anyone on the phone). Companies and individuals that seek assistance often are advised that the law enforcement agencies do not have the resources to help them. There are no publicly available procedures on how a U.S. company that wants assistance from the U.S. government in countering an attack (such as from NSA) could request it, and there is scant legal statutory authority for the government to provide such assistance. (National Security Directive 42 provides a narrow ability for NSA assistance to government contractors). If the U.S. Government approached a company and said it needed to take over its network or access it for national security reasons, the CEO would be caught between his/her fiduciary duty to the shareholders of the company and a sense of obligation to some law enforcement or military personnel claiming authority.
You get the picture. It is a mess. This problem will not be solved by Congress passing laws mandating cyber requirements that DHS or some other government agency comes up with. First of all, there is an array of cyber standards and best practices that are developed by international standards-setting bodies. For example, there are 189 ISO standards for information security, our National Institute of Standards and Technology (NIST) has produced a full set of world-class materials on information security, and the Information Systems Audit and Control Association (ISACA) has developed its best practices, the Control Objectives for Information Technology (CobiT). The good news is that these security best practices are all harmonized and can be mapped to one another.
In 2010, a Government Accountability Office (GAO) report listed 19 organizations with ongoing initiatives that influence cybersecurity and governance, including the International Telecommunication Union, the European Union, the Council of Europe, the Asia-Pacific Economic Cooperation forum, the International Organization for Standardization, and the Internet Engineering Task Force. The GAO noted:
A multitude of organizations are actively involved in developing international agreements and standards related to the security and governance of cyberspace, and U.S. government and private sector involvement in these organizations and efforts is essential to promoting our national and economic security to the rest of the world.
Bottom line: U.S. Government-developed cybersecurity mandates are wrong-headed and cannot can hope to keep pace with these organizations or stay abreast of the threat.
Any legislative mandate on U.S. companies will surely render them less secure because they will be focused on meeting a compliance requirement instead of countering a threat with the best technologies and security practices. The Leiberman/Collins bill provides that, "Where regulations or compulsory standards regulate the security of critical infrastructure, a cybersecurity practice shall, to the greatest extent possible, complement or otherwise improve the regulation or compulsory standards." So, we will have regulations, compulsory standards, and mandatory cybersecurity practices?
We all know the glacial speed at which laws and regulations get revised. This will be an incomprehensible mess in no time. The standards-setting and best practices bodies will be continuing to develop and modify their work to keep pace with current threats, and U.S. companies will be continually chafing under out-dated or ineffective regulations, compulsory standards, and mandatory cybersecurity practices.
Addressing National Security Issues
Third, Congress needs to understand that the real national security issues with respect to cyber remain unaddressed.
In a recent blog piece, Richard Clarke, former Advisor to the President on Cyber Security, noted that the U.S. Chamber of Commerce’s opposition to S. 3414 "killed a bill that could have addressed the most significant current threat to America's ability to compete with China economically and to defend ourselves against potentially devastating cyber war in the future." Oh, please. Never mind that he then proceeds to say the bill was not needed anyway. He explains that, "By the powers invested in him by the Constitution, the Homeland Security Act, and other laws, the president can by executive order achieve most of what was contemplated in the cyber security bill that has run aground in the monied morass of Capital Hill." This leaves one to wonder why Mr. Clarke did not get these measures pushed through under any of the three presidents that he worked for [George H.W. Bush, Bill Clinton, and George Bush]. As the Father of Cyber Scare Tactics, he has warned of the digital pearl harbor since 2000, when he uttered it on the 59th anniversary of the famous attack.
In 2007, I presented a paper on the gaps between homeland security and homeland defense, in which I listed numerous legal issues that needed to be addressed in the national security context. Five years later, they still have not been resolved.
Numerous legal and policy questions arise in the context of cyber warfare. Consider how the U.S. might launch an offensive attack on China through communications infrastructure. DoD systems are not connected to China, so any attack would necessarily involve private sector networks. Who on the public and private sector sides would have authority to approve military use of private sector networks? What international cooperation would be required? Would the attack have to traverse more than one provider’s network? Would allowing the use of the private network for military purposes interfere with the fiduciary duty owed to the company’s shareholders by the board of directors and officers to protect company assets and its market value? Who is responsible for damage that could occur to the private sector network as a consequence of the attack or as the result of a counterattack? Can the U.S. Government order a private sector company to let it take over its network for national security interests? What third party liability may arise as a result of such an attack?
Believing that mandated cybersecurity requirements will solve cyber national security issues is like believing that a very high wall will keep out enemies, forgetting that they have airplanes. We will not become safer by telling companies what they have to do about cybersecurity. We will, however, start to be better prepared when we begin to address the above questions and when Congress takes proactive measures that will help counter cybercrime. When criminals can be caught, when their caches can be seized, when cybercrime is no longer the perfect crime, we will begin to be safer. When companies are willingly to spend money on cybersecurity because they will get some of it back as a tax credit, cyber issues will then be on the radar of CFOs and risk officers as a priority and security will improve. When investors know through SEC filings that companies have implemented key activities of enterprise security programs, these companies will be rewarded in the marketplace and cyber governance will improve. All of these things will advance our national and economic security, and targeted action by Congress could help make them happen faster and at a reasonable price.
Another critical point that Congress should take into consideration before imposing private sector cybersecurity requirements in the name of economic and national security: Even if there was a major cyber disaster, it is likely that any response to it would be hindered by the U.S. Government's failure to resolve first responder cross-band communication problems and inadequate priority access to communication systems. The 10th anniversary of 9/11 brought criticism of DHS's failure to implement important recommendations of the 9/11 Commission, particularly with respect to a common wireless network for public responders. The lack of interoperability between the various communication systems used by responders was one of the key response faults of 9/11, which was experienced again during Katrina in 2005. Although DHS has doled out around $2 billion in interoperability grants, they did not require interoperability as a grant requirement! So, many of the funds went to improve existing systems that are not interoperable with other responders. Duh….
Brent Greene, former head of the National Communications System at DOD and DHS, recently noted that, "The ability to respond to a major cyber incident will require a broader population of responders than police, fire, and medical rescue. A broader population would include critical infrastructure owners and operators, state and municipal leadership, National Guard, and key federal decision makers, and each would require priority access to communications. Today, this capability is lacking. DHS seems to not grasp a vision of what kinds of strategic programs require assured communications for the breadth of response scenarios, including cyber. Their approach is underfunded, divergent, and does not drive adequate interoperability among the programs they currently pursue." From 2001-2004, Mr. Greene was responsible for operations, policy, technical, and program oversight of national security and emergency preparedness (NS/EP) communications, and a broad range of critical infrastructure protection and cyber security initiatives.
In sum, Congress needs to go back to school on cybersecurity to gain a broader vision of the cybersecurity problem if it hopes to enact legislation that will make our companies and nation safer. Previous approaches only would have created a false sense of security and cost U.S. taxpayers a fortune.
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459fed74cd4c26fde5f6dd676daa06df | https://www.forbes.com/sites/jodywestby/2012/09/07/businesses-beware-heavy-handed-tactics-planned-for-cybersecurity/ | Businesses Beware: Heavy-Handed Tactics Planned for Cybersecurity | Businesses Beware: Heavy-Handed Tactics Planned for Cybersecurity
Businesses need to be on the alert. After the Senate's Cybersecurity Act of 2012 failed to garner enough votes for passage, the Obama Administration and key members of Congress are now thinking about using executive action to impose cybersecurity mandates on critical infrastructure companies. Most telling is the 2012 Democratic National Platform that was released on September 4. A section devoted to cybersecurity on page 60 notes President Obama's support for comprehensive cybersecurity legislation, but it also states that, "going forward, the President will continue to take executive action to strengthen and update our cyber defenses." (emphasis added)
This echoes Richard Clarke's comments in a recent Huffington Post blog, urging the President to use his executive powers to bypass Congress and push out an Executive Order that requires government information sharing about threats, creates voluntary standards for critical infrastructure industries, beefs-up oversight of cybersecurity by regulatory agencies, and uses federal procurement as a means of forcing companies to have better security. The Hill reported yesterday that the White House is already circulating a draft Executive Order on cybersecurity among relevant federal agencies.
Senator Dianne Feinstein, one of the co-sponsors of the Cybersecurity Act of 2012, sent a letter to the White House on August 28, and directly urged the president to "issue an Executive Order, or take other appropriate action, to advance the cybersecurity of our Nation's critical infrastructure" because she feared Congress would not be able to pass a cyber bill this year. She also stated: "The threats to national and economic security are simply too great to wait for legislation." Her colleague, Sen. Jay Rockefeller, sent his own, similar letter. Wow. If Democratic Senators cannot get a bill passed in the legislative chamber that they control, they will see if the executive branch can do their work for them. Gee, that even saves them having to wrangle through a conference with the House.
Businesses need to speak up and let the White House and Congress know that they do not support unilateral cybersecurity requirements (even if they are couched as "voluntary") via an Executive Order, because the issue goes to the very core of their business operations and has the potential to be extremely burdensome and costly. This is a legislative issue that should proceed through the normal process of both chambers, a conference, and a White House signature or veto, not quietly addressed in the White House without full and open debate.
This kind of heavy-handed tactic satisfies a few but hurts the constituents that vote for these legislators and everyone else because it circumvents one of the most important functions of our government -- the legislative process. The votes were against the Cybersecurity Act of 2012. That is why it was not brought up for a vote before recess. It was a badly flawed bill (see my previous blog on August 13 detailing its problems) that surely would have cost the taxpayers and businesses a fortune to implement, without any real security gains. (Also see my blog on Feb. 27 about the economic impact of such legislation and DHS's failed efforts to provide Congress with cost analysis information).
It would be unwise for President Obama to issue such an order before the November elections, and it would be even more unwise for him to do so during the lame duck period between the election and a new Congress convening in January, 2013. The new Congress needs to step back, open a new conversation with business to better understand the cybersecurity problem from their perspective, and examine measures that it could take to help deter, prevent, and respond to cybercrime. Cybersecurity will never get better until we put the brakes on cybercrime.
The 2012 Republican Party Platform seems to understand this. Under its National Security Strategy for the Future, it says the party "will pursue an effective cybersecurity strategy" and goes on to state:
Whether it is a nation-state actively probing our national security networks, a terror organization seeking to obtain destructive cyber capabilities, or a criminal network’s theft of intellectual property, more must be done to deter, defeat, and respond to cyberthreats. The costly and heavy-handed regulatory approach by the current Administration will increase the size and cost of the federal bureaucracy and harm innovation in cybersecurity.
Hopefully, the Republican Representatives and Senators that take office in January will read that page and remember it when cybersecurity discussions begin again.
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cd4ac0e6a6d08b1609e48c59c335ec4e | https://www.forbes.com/sites/jodywestby/2012/09/20/the-sheep-stop-here-another-church-committee-or-full-review-of-privacy-laws-needed/ | The Sheep Stop Here: Another Church Committee or Full Review of Privacy Laws Needed? | The Sheep Stop Here: Another Church Committee or Full Review of Privacy Laws Needed?
During the early 1970s, the infamous Church Committee investigated abuses of power by the CIA and FBI, including their spying on U.S. citizens for political purposes and intercepting, opening, and photographing more than 215,000 pieces of mail. Mark Benjamin, in a 2007 Salon article reported that, "CIA agents moved mail to a private room to do the dirty work or in some cases opened envelopes at night after stuffing them in briefcases or even coat pockets to deceive postal officials."
After 9/11, some blamed the U.S.'s lack of human intelligence capabilities to counter terrorist activities on the reforms enacted following the Church Committee's reports. Perhaps, but over-correction is often the outcome in Washington. Congress may have gone too far in reining in intelligence activities, but the abuses of power detailed in the fourteen Church Committee reports were chilling. The reports gave the American public its first in-depth look at U.S. intelligence gathering activities through more than 50,000 unclassified pages. It offered the lesson that power exercised in secrecy is bound to be abused.
Now, nearly 40 years later, it may be time for another Congressional Committee's review of U.S. law enforcement and intelligence activities against the limits of the rule of law. At a bare minimum, when the 113th Congress convenes in January, 2013, it needs to conduct a full review of privacy laws and protections for civil liberties against the government collection of and access to communications data.
Some legal basics here are helpful. Some laws restrict government access to information. Title 50 of the U.S. legal code prohibits the U.S. government from conducting intelligence activities against domestic persons. The Foreign Intelligence Surveillance Act (FISA) sets forth procedures for the surveillance and collection of foreign intelligence information. The Electronic Communications Privacy Act (ECPA) strictly prohibits the interception of content and traffic data and limits access to stored communications (such as emails). ECPA is intended to protect the privacy of communications and strictly limits what intercepted communications data may be obtained by or disclosed to a "governmental entity" by a "provider to the public," such as AT&T, Verizon, AOL, or Comcast, and requires a court order. Other laws allow government access to information. The USA PATRIOT Act expanded the purpose of National Security Letters (NSL) to allow government agencies to use them to request any data relevant to an investigation of terrorism or an intelligence activity without court oversight. Recipients of a NSL are prohibited from notifying the person whose information is being requested. NSLs reportedly have been used by the FBI, DHS, DoD, and CIA.
Since 9/11, the U.S. Congress repeatedly has cowed to demands from law enforcement, the intelligence community, and the executive branch to strengthen its powers to fight terrorism. Lawmakers have eschewed limits on authority out of fear that they would be blamed if another attack occurred. The USA PATRIOT Act's provisions, which originally were intended to sunset in 2005, were extended in 2006 and again in 2011 with little regard for civil liberties or privacy. It is time to recognize that the raw power of government that was unleashed after 9/11 to protect our people and national security interests may be getting out of hand. As former NSA employee William Binney put it, we seem to be headed "toward an Orwellian state."
At the heart of Mr. Binney's statement is his belief that the NSA is engaged in a massive collection program of domestic communications traffic in violation of the Constitution and U.S. law. He is specifically referencing the allegations revealed in a New York Times story in 2005 about NSA collecting large amounts of domestic communications data without the required court orders. Later press articles reported that the NSA obtained the data from phone companies, including AT&T, Verizon and Bell South. The collection of this data would have violated numerous laws. The New York Times reported that more than 40 lawsuits were filed against the phone companies alleging privacy violations through these unauthorized wiretaps. The credibility of the allegations was so great that Congress amended FISA and granted immunity to the phone companies that provided the records. The Electronic Frontier Foundation (EFF) is challenging the constitutionality of the law granting immunity in a suit against AT&T, Hepting v. AT&T.
EFF also filed a suit against the NSA, Jewel v. NSA, challenging this domestic spying program, which was created by a secret presidential order issued by President George W. Bush in October 2001. The program allegedly engages in a warrantless and illegal collection of Americans' telephone and Internet communications from AT&T. EFF claims that the NSA suit is "aimed at ending the NSA’s dragnet surveillance of millions of ordinary Americans and holding accountable the government officials who illegally authorized it." The suit names as defendants current and former government officials, including former President George W. Bush, former Vice President Dick Cheney and his chief of staff David Addington, NSA Director Keith Alexander, and former NSA and CIA Director Michael Hayden.
EFF's legal actions now are being bolstered by Mr. Binney and two former NSA collegues and an AT&T technician. On July 2, 2012, Declarations by the three former NSA employees, William Binney, Thomas Drake, and Kirk Wiebe, were filed in federal court in support of the EFF lawsuit. These men had long, respectable careers at NSA or within the intelligence community, and each described in their Declaration how the atmosphere at NSA after 9/11 changed from one that protected domestic persons and targeted foreigners to one that disregarded the Constitution and considered domestic data within its authority. Mr. Drake, states in his Declaration that:
Prior to September 11, 2001, the NSA managed the task of gathering foreign intelligence while instilling a respect for the Foreign Intelligence Surveillance Act ("FISA") among its employees. It was a prime directive. Everything changed after the attacks on September 11. The NSA's new approach was that the President had the authority to override FISA and the Bill of Rights, and the NSA worked under the authority of the President. The new mantra to intercepting intelligence was "just get it" regardless of the law.
Mr. Binney states in his Declaration that:
The advent of the September attacks brought a complete change in the approach of the NSA toward doing its job. FISA ceased to be an operative concern, and the individual liberties preserved in the U.S. Constitution were no longer a consideration. It was at that time that the NSA began to implement the group of intelligence activities now known as the President's Surveillance Program ("PSP")....I resigned from the NSA in late 2001. I could not stay after the NSA began purposefully violating the Constitution.
The existence of the PSP was acknowledged in an Unclassified Report on the President's Surveillance Program prepared by the Offices of Inspectors General of DoD, DOJ, CIA, NSA, and the Office of the Director of National Intelligence. The Unclassified Report reveals that Attorney General Ashcroft approved the "form and legality" of the PSP, and the first legal opinion regarding its legality was issued a month later solely by Deputy AG, John Yoo. The OIG report notes that the presidential order creating the program expired on February 1, 2007, and "certain program activities" were authorized to continue under orders issued by the Foreign Intelligence Surveillance Court , while other surveillance activities were authorized by amendments to FISA in 2007 and 2008.
Mr. Binney developed a program for NSA called Thin Thread that was designed to capture international communications and had built-in features to protect the privacy of any domestic persons. He stated in his Declaration that he was told by various NSA colleagues on the PSP team that Thin Thread was being used without the privacy protections to collect domestic electronic communications traffic. Mr. Drake also stated in his Declaration that "various NSA employees who were implementing various aspects of the PSP confided in me and told me that the PSP involved the collection of domestic electronic communications traffic without any privacy protections or judicial oversight."
In addition, a former AT&T technician, Mark Klein filed a Declaration detailing how NSA agents came to AT&T's Folsom Street facility in San Francisco and set up a private Secure Room that was accessed only by NSA personnel. The Secure Room was configured with equipment that enabled it to obtain a duplicate stream of all of the communications that came through the AT&T location. In an interview, he noted that the data included every form of electronic communication. "It's your email, your web surfing, your financial transactions, your video and pictures, your voice over Internet, everything goes through these pipes," he said. Other technical experts confirmed that the AT&T drawings produced by Klein would indeed allow NSA to collect all communications coming through the site.
One cannot help but note the similarity of this program to the FBI and CIA program that read letters of domestic persons in a private room. The only differences appear to be snail mail versus electronic mail and the fact that the NSA could have collected trillions of communications by now. Thomas Drake and Kirk Wiebe state in their Declaration that they agree with Mr. Binney's conclusion that the NSA has decided to seize and save all personal communications. This notion is supported by Mr. Wiebe's statement that "it is the existence, timing, and frequency of communications between person that are informative and not just the content." In other words, there is a lot more value in the correlation of this data than the words in one communication. Thus, the value of storing all of it.
This is a bipartisan issue. The program was launched by President George W. Bush, but The New York Times reports that the extension of the program under FISA received favorable votes from then Senator Obama and other leading Democrats. In a recent story by Paul Harris in The Guardian, Mr. Binney notes that "Obama has renewed the Patriot Act, tried to broaden the powers for detention of American citizens for national security reasons, and deployed the anti-spy Espionage Act more times than all other presidents combined."
The NSA is now building an enormous data collection facility in Utah, which Binney calculates in his Declaration has the capability to store all the personal electronic communications that are being collected. The project is classified. Mr. Binney believes it is going to serve as the repository for the communications.
The Unclassifed OIG report states:
Finally, the collection activities pursued under the PSP, and under FISA following the PSP's transition to that authority, involved unprecedented collection activities. We believe the retention and use by IC [intelligence community] organizations of information collected under the PSP and FISA should be carefully monitored.
The problem is that no one appears to be performing such monitoring, at least not in any manner that is transparent to the citizens who would be the victims of overreaching. I have read each of these men's Declarations and listened to numerous interviews available online. Their claims are very credible and made with great personal risk (all three of the former NSA employees were targets of an FBI criminal investigation of the leaks leading to the New York Times 2005 story, but they were later cleared). In their Declarations, Thomas Drake and Kirk Wiebe state that they believe they were targeted because they reported waste on another NSA collection program called "Trailblazer" to the DoD Inspector General. Ultimately, Mr. Drake was indicted for retaining classified NSA documents, but the charges were eventually dropped.
Senator Ron Wyden has stood with the wind in his face on this issue. He persistently has questioned the government's surveillance of domestic persons. In late July 2012, he received a letter from the Office of the Director of National Intelligence (ODNI) that agreed "some collection carried out ... by the government was unreasonable under the Fourth Amendment" and "the government's implementation of Section 702 of FISA has sometimes circumvented the spirit of the law, and on at least one occasion the FISA Court has reached this same conclusion." The ODNI noted, however, that "The government has remedied these concerns and the FISC has continued to approve the collection as consistent with the statute and reasonable under the Fourth Amendment.' Whatever that means. The FISA Court opinions are classified.
In late July, Gen. Keith Alexander, director of NSA and head of Cyber Command, appeared at the DefCon conference in Las Vegas and denied that the NSA was spying on Americans or keeping files on them. Wired reportedthat Mr. Binney was at the same conference and, during a later panel, accused Gen. Alexander of playing "word games." He may be right. Consider the following plausible approaches:
NSA may be collecting domestic communications, but not reviewing them. Upon request, it may have a computer program seek matches for activity believed to be associated with a foreign agent or terrorist, and it is only when a match is found that the data is reviewed. NSA may be legally collecting data on foreigners (UK citizens, for example) and then swapping this data with foreign intelligence agencies for their data that they have collected about Americans. (Mr. Wiebe notes the close collaboration between UK and US intelligence agencies and the similarity of programs in his Declaration) NSA may be only collecting traffic header information, which is afforded fewer legal protections under U.S. law than content, and then running algorithms against the data to pull through common threads of information to provide the basis for further spying NSA may be collecting communications data on Americans offshore and then transmitting it to the U.S. for storage and processing.
There are reasons to believe Gen. Alexander. After all, he has served our country well and is a respected military official and public servant. Another factor to consider is that a lot of time has passed since the former NSA employees departed from NSA and had direct knowledge of NSA activities. Mr. Binney left the NSA in late 2001, Mr. Wiebe left in 2004, and Mr. Drake left NSA in 2006 (he is currently Professor and NSA Chair at the Industrial College of the Armed Forces at the National Defense University). Many of the statements in their Declarations are their assumptions and beliefs based on the knowledge they have about the NSA and its operations. Mr. Klein left AT&T in 2004 and did not have a clearance.
There are also reasons to believe the former NSA and AT&T employees who have stepped forward. These men offer compelling and credible testimony that should not be cavalierly dismissed. After all, courage is a core national value. The American people need to know who is right and whether their intelligence community has run amok.
We must stop behaving like sheep and blindly following anyone who is ready to instill fear in Congress or the American people that such collection and government power is necessary to prevent future terrorist attacks. Think about it. Instilling fear is the precise goal of terrorists. If we continue to think like sheep, they win. Our inability to stand firm with our Constitutional principles has jeopardized the very values the founders of this country fought for. Wholesale eavesdropping on U.S. persons is the beginning of a totalitarian state.
A full Congressional review of privacy laws and intelligence community practices is needed so informed decisions can be made going forward and any violations of rights or laws can be addressed. Steven Aftergood, head of the Federation of American Scientists' Project on Government Secrecy notes that, "Mr. Binney and his colleagues raise compelling questions that deserve an answer; it is up to Congress to assert itself and represent the public interest in getting to the bottom of these tough questions. This is what we have oversight for." Of course, the process by which such a review is conducted -- whether by Congressional Committee or another less formal means of review -- is critical. Lee Tien, Senior Staff Attorney for EFF, noted that, "Such a review could not be a whitewash; it cannot be conducted by puppets or so redacted that it is meaningless."
Those who protest against such a review have a hard climb. If all is proceeding according to law, then there is nothing to hide and prior justifications will be vindicated. And we will not need to count sheep to get to sleep.
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82705825f0917a729968181d954a97a3 | https://www.forbes.com/sites/jodywestby/2012/12/04/googles-media-campaign-against-the-un-slapped-down/ | Google's Media Campaign Against the UN Slapped Down | Google's Media Campaign Against the UN Slapped Down
Google has been a forerunner and one of the most outspoken companies in protecting the right to freedom of information and expression. That is laudable and earned the company respect around the globe. What is less admirable is the hyperbole that it has been spewing about the freedom and future of the Internet being in jeopardy at United Nations' (UN) meetings being held in Dubai December 3-14. Not only did Google’s position turn out to be ill-informed, it appears to be self-serving.
A bit of background here is helpful. The International Telecommunication Union (ITU) was formed in 1865 to facilitate international agreements on the interconnectivity of communications providers. It allocates radio spectrum and satellite orbits, develops technical standards, and tries to advance connectivity globally, especially to deprived regions. Founded nearly a century before the birth of the UN, the ITU is the oldest member of the UN community. In addition to its 193 member countries, the ITU has more than 700 members representing private sector companies, academic institutions, and non-governmental organizations (NGOs). These members also may be included in their countries' national delegations to ITU meetings.
(Disclosure: I have never been a consultant to ITU. I have never had a contract with ITU directly or as a subcontractor to ITU through another organization. As noted in my bio, I was asked to serve on the ITU Secretary General’s High Level Experts Group (HLEG) in 2007.)
The purpose of the Dubai meeting, called the World Conference on International Telecommunications (WCIT), is to renegotiate the International Telecommunication Regulations (ITR) that were agreed upon in 1988 to promote global interconnectivity and and interoperability of telecommunication facilities and availability of services to the public. Reviewing the ITR seems like a reasonable thing to do, considering that they were negotiated before the Internet was turned over to the private sector in 1995 and, since then, telephony, cable, satellite, and broadband networks have converged to link the planet, In fact, a review of the ITR probably should have been undertaken sooner.
Google has been the ringleader of a conspiracy theory that the ITU intends to use the ITR process to take over governance of the Internet and cater to nation states that want to censor and filter content. It has pulled out all stops to get its message out. Last Monday (11/26/12), an opinion piece by Gordon Crovitz ran in The Wall Street Journal that claimed that “China, Russia, Iran, and Arab countries are trying to hijack a U.N. agency that has nothing to do with the Internet.” Good grief. If the multilateral organization that has been in charge of global agreements on interconnectivity, interoperability, and availability of networks and communications for 147 years has nothing to do with the Internet, who does? He also stated that, “The self-regulating Internet means no one has to ask for permission to launch a website and no government can tell network operators how to do their jobs.” Actually, numerous countries tell their network operators how to do their jobs, including the United States. Other governments, such as China, require accurate registration information for websites. While this practice is frowned upon and development organizations try to move these countries away from such controls, they do exist.
A couple of days later, a commentary ran in the Financial Times (11/30/12) authored by John Kampfner that warned the future of the Internet was at stake. He declared that, “The issue at stake is will the Internet continue to be run by a series of semi-formal groups that meet to assign domain names and to debate free expression, or will it be handed over to governments, most of which have pushed hard to assert control over cyber space?” He goes on to claim that the meetings have been shrouded in secrecy and the “netizens” who have controlled the Internet have been shut out. He also declared that Russia is the ringleader, followed by Iran, China, and Uzbekistan. Mr. Kampfner is an advisor to Google.
These theories have been bolstered by accusations that ITU Secretary General Hamadoun Touré is catering to the Russians because he spent six years studying there. To put it politely, this is a cheap ad hominem attack. Dr. Touré did study in Russia for six years, but he also lived in the United States for twelve years, his children were educated in the U.S., and he still owns a home in the Washington, DC metropolitan area. He is also a strong proponent of democracy and freedom of expression.
He also has no authority to cater to any member state. The ITU operates by consensus, and ITU staff do not control the agenda or proposals considered Proposals are put forth, posted, commented upon, and discussed. Only those upon which consensus is reached are adopted. Meetings of country delegations include all 193 member states and their entire delegations. The U.S. delegation consists of approximately 125-150 people selected as a multistakeholder group. In all, about 2,000 people are participating in the WCIT country meetings. Google is in the U.S. delegation and has attended these meetings. Google also could have joined ITU as a private sector member and participated in its own right in the WCIT meetings. It has not chosen to do so, even though the maximum amount charged for full participation in ITU activities is only $30,000 – a fee more than affordable for a company with a market cap of $228 billion.
The claim that the ITU could bow to authoritarian regimes to enable censorship of the Internet is false on its face. The ITU, as a body of the UN, must respect international law. In his remarks yesterday at the opening session of WCIT, Dr. Touré specifically rebutted the “myths" that have surrounded the WCIT meeting. He first addressed the concern that the new treaty might help legitimize government censorship. He unequivocally stated that, “I fully agree that this should not happen,” and reaffirmed the ITU’s obligation to adhere to Article 19 of the Universal Declaration of Human Rights, which provides:
"Everyone has the right to freedom of opinion and expression; this right includes freedom to hold opinions without interference and to seek, receive, and impart information and ideas through any media and regardless of frontiers.”
He also noted that Article 33 of ITU’s Constitution “recognizes the right of the public to correspond by means of the international service of public correspondence,” and that the WCIT negotiations and ITR cannot violate that Article or any other provision of the ITU Constitution. He specifically stated that “we are not going to be challenging Article 19, or indeed any other article in the Universal Declaration of Human Rights.”
Secretary General Touré drew attention to a proposal from the government of Tunisia requiring all provisions of the ITRs to be implemented in accordance with Article 19 of the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, and Article 33 of the ITU Constitution. It is interesting that this clearly worded proposal came from an Arab country that used to engage in extensive censorship and content filtering. I call that progress and something to celebrate. Dr. Touré noted that, “This conference will not stand in the way of the right to protect the freedom of expression, the right to communicate, and the right to privacy.”
With respect to Internet governance, Dr. Touré directly stated that, “we should note quite clearly that ITU has no wish or desire to play a role in critical Internet resources such as domain names – and that ITU does not have any mandate to challenge ICANN’s role and competency.” He welcomed the new CEO of ICANN, Fadi Chehadé, and ICANN board chairman, Steve Crocker.
After reviewing numerous articles and news posts regarding the “Google Campaign," one has to wonder: What is going on here? What is the real reason behind these tactics that have ensnared the U.S. delegation? One plausible answer is a common one for Google: money. Jean-Christophe Nothias set forth a compelling analysis in the Huffington Post in which he argues that Google’s real motivation behind its WCIT smear campaign revolves around proposals that could upset the payment structure for providing service. Today, the requesting operator pays the sending operator for requested content. Proposals put forth by the European Telecommunications Network Operators’ Association (ETNO) call for a shared system that would require sending and receiving entities to negotiate commercial agreements based around the principle that the sending network pays. Mr. Nothias concludes that, under such a system, Google “would be unable to continue using freely the worldwide infrastructure network for which it did not spend a penny.”
And where is the U.S. Government on this issue? In line with Google. The simple three-page text of the U.S. submission to the WCIT states that "the Internet has evolved to operate in a separate and distinct environment that is beyond the scope or mandate of the ITRs or the International Telecommunication Union….” It goes on to declare that the groups that have long played an important role in the development of the Internet, such as the Internet Society, the Internet Engineering Task Force (IETF), the World Wide Web Consortium (W3C), the Regional Internet Registries (RIRs), and the Internet Corporation for Assigned Names and Numbers (ICANN), “are most capable of addressing issues with the speed and flexibility required in this rapidly changing Internet environment.” One is left to wonder how these groups are going to be able to do this without interacting with all of the communications providers that actually deliver content. Without the interconnectivity and interoperability of networks, content will sit on servers. The U.S.’s WCIT proposal ends by declaring that, “the United States opposes adding provisions to the ITRs that can be interpreted to restrict the choices available to governments in regulating their national telecommunications regimes.” Oh, good. That will make Russia and China happy.
The U.S. Government simply can no longer go to ITU meetings with a big NO on its shoulder and try to push everyone into accepting our position. The U.S. has said that the ITU should not be involved with cybercrime, it should not be involved in helping countries establish CERTs or cyber response capabilities, it should not engage in cybersecurity activities beyond policy, and now it should not be involved in the very function it was established for. This is getting us nowhere but at the back of the room. The U.S. represents only about 11% of the total online population and is only one country out of about 250 countries and territories connected to the Internet. The U.S. needs to realize that other countries increasingly do not care what the U.S. thinks about Internet matters. Moreover, its current position is likely to result in content pulled out of the U.S. The U.S. Government needs to tack and change course and show some global leadership that will help protect national and economic security interests while recognizing legitimate issues associated with the converged networks and the need to serve 2.5 billion people online now and 4.5 billion more in line.
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c8fd169c5962e0db0532a061cc50fb9c | https://www.forbes.com/sites/jodywestby/2013/02/01/cyber-attacks-on-press-reveal-gap-in-us-diplomacy/ | Cyber Attacks on Press Reveal Gap in US Diplomacy | Cyber Attacks on Press Reveal Gap in US Diplomacy
On January 30, The New York Times reported that it had been under sustained cyber attacks from Chinese hackers who had infiltrated their system to steal login credentials and information from its reporters and employees. The Times noted that the attacks coincided with its coverage concerning the massive financial holdings of relatives of China's prime minister, Wen Jiabao, and continued for months. Using tactics similar to those previously attributed by security experts to the Chinese military, the attackers weaved their communications through U.S. university systems in an attempt to mask their origin. One day later, The Wall Street Journal reported that its computer systems also have been subjected to ""wide-ranging electronic surveillance" by Chinese attackers in an attempt to gain intelligence on the publication's coverage of Chinese issues. The articles revealed that Bloomberg LP and Thomson Reuters PLC have acknowledged that they, too, have suffered attacks, but they have not indicated who may have been behind them.
Frankly, none of this is shocking. Reports of Chinese cyber hackers targeting American critical infrastructure facilities, research and development organizations, major corporations, and the U.S. government have filled the media for the past few years. The most interesting aspect to the Times story is how the NYT let the perpetrators lurk inside their systems for months to enable them to identify the hackers' access methods, while simultaneously replacing compromised machines and building up defenses. The company revealed sophistication and patience in its approach and a management commitment to conduct a serious forensic investigation. Kudos to them. I hope other companies take notice.
Beyond the news of the attacks, what these stories really do is shine a glaring spotlight on the inadequacies of U.S. diplomacy in addressing cyber threats. Where is the Secretary of State in these stories? Where is the President? Why on earth does our government remain silent while our companies keep getting attacked from hackers in foreign countries? The silence becomes deafening as increasingly state sponsorship is suspected. We can track and trace events to a country and often know more precisely who or what organization originated the attack. Why aren't our government officials publicly denouncing these attacks, even if it means ruffling some feathers? Why aren't they making these attacks a major focus of diplomatic discussions? Or headlines? The State Department has been more than happy to make a fuss with China regarding its Internet censorship and curbs on freedom of expression. Is the security of our intellectual property, high-value data, and media operations any less important?
There is a void in U.S. leadership in countering cybercrime, and a good starting point would be some strong diplomacy that began holding countries accountable for cyber attacks emanating from their shores. If countries want to be connected to the Internet and be part of the global society, they have an obligation to investigate cybercriminal events and cooperate in bringing hackers to justice. Simply denying the allegations and acting offended that anyone would accuse them is not acceptable. China's attitude of "see no evil, hear no evil, speak no evil" just enables the cyber attackers to flourish....especially if they are state sponsored. Likewise, Russia's refusal to cooperate in cyber investigations has allowed one of the world's largest cybercriminal rings to continue unabated.
The U.S. Government has been very noisy of late telling businesses what they should be doing about cybersecurity and asking Congress to pass laws forcing companies to take certain security steps. It would more beneficial if some of that noise was directed at foreign governments whose countries have become havens for cybercriminal activities. They are threatening our national and economic security. Diplomatic leadership that called on countries to root out the cybercriminals within their shores and prosecute them, to cooperate in investigations, and to help create a global code of conduct in responding to cyber attacks would be a fine first step.
Related:
Gallery: Recent Cyber Attacks 9 images View gallery
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3f40cd082c71c1ca09368fcc36978bab | https://www.forbes.com/sites/jodywestby/2013/06/08/convenient-surveillance-is-at-the-expense-of-constitution-and-taxpayers/ | Convenient Surveillance Is At The Expense of Constitution and Taxpayers | Convenient Surveillance Is At The Expense of Constitution and Taxpayers
President Obama has referred to himself as a "constitutional law professor," but he seems to have lost the lesson. Rather than expressing concern about whether his Administration was upholding the Constitution and rights of the American people, he responded to the furor over the recently revealed FBI/NSA surveillance by strongly defending the programs as legal and stating that Americans "can't have 100 percent security and then also have 100 percent privacy and zero inconvenience." That is how cavalierly he handles the loss of Fourth Amendment rights? As an inconvenience?
Would a full police state help catch terrorists? Yes. Undoubtedly, the FBI/NSA wiretap data helps stop terrorists too, but the price is too high. The reality of how our society works is that crimes get committed, investigations are conducted, and criminals get sentenced to prison. If our government monitored everybody's movements and conversations, could they step in and prevent some of those crimes? Yes, probably a lot of them. Police investigations are hard work and, in part, this is due to legal restrictions. For example, law enforcement used to beat confessions out of suspects and question them before allowing them access to an attorney until the Supreme Court prohibited such tactics.
Those decisions made investigations harder for law enforcement, but the limitations were necessary to uphold our Constitution and civil liberties. Recently the Court held that "the Government’s installation of a GPS device on a target’s vehicle, and its use of that device to monitor the vehicle’s movements, constituted a 'search'" under the Fourth Amendment, which requires a court order based on probable cause. This causes one to wonder why the president seems to believe it is all right to capture data on the communications of millions of Americans without a warrant supported by probable cause. Just because big data makes terrorist investigations easier or convenient does not make them right, and just because a FISA judge issued a order allowing vast amounts of data to be collected does not make it constitutional.
The NSA is building giant data warehouses and collecting and using elaborate software and computing technology to mine data. It is one thing for the FBI to build databases of fingerprints and criminals; it is quite another for them to build databases comprised of private communications traffic and personal activity simply because they may be useful to search. Even the suggestion that there should be national identification cards has been fiercely resisted by the American people out of fear of encroachments on civil liberties.
While some people may shrug and claim they have nothing to hide, they may not understand the full capabilities of data mining and how easily and quickly profiles of a life can be developed and intricate details of personal activities revealed. I have given presentations to the NSA and researchers on legal issues associated with data mining and the collection of communications and personal data and, at the agency's request, prepared a white paper on how to include legal/policy reviews in the design and deployment of intelligence programs to ensure they were within the rule of law. The agency seemed interested, but not enough to put money behind it, and I concluded they would rather not know. My work with the research community also has exposed me to various "privacy preserving" approaches that -- in very simple terms -- use computer programs and algorithms to examine large amounts of data against key search terms. Only if there is a hit, does the data get reviewed.
Former NSA general counsel Stewart Baker argues that such an approach is just fine so long as "the government gets possession of the data but is prohibited by the court and the minimization rules from searching it until it has enough evidence to identify terror suspects based on their patterns of behavior." Realistically, if a court is to impose such a restriction, it would have to be part of the collection order, otherwise the data would be untethered from any legal constraints on use. The disclosed Verizon court order had no such restriction; it only focused on restrictions to ensure the order itself was kept secret.
Other lawyers will argue that allowing the FBI/NSA to collect vast amounts of communications data to mine and develop probable cause is analogous to allowing police officers to enter every home in the city, inventory the contents of the homes, go back to the office and put it into a computer, search to see if any stolen goods show up in the inventory, and then go the the court requesting an order to seize them and arrest the person. It stands the process -- and the Fourth Amendment -- on its head because law enforcement is supposed to have probable cause to believe the stolen goods are there before any search is conducted.
Big Brother is all about the government knowing everything so it can search, sort, and scrutinize to electronically identify suspects without probable cause. The secret orders issued pursuant to the PATRIOT Act by courts established under the Foreign Intelligence Advisory Act are not based upon probable cause. Additionally, there is no incentive for the providers to be restrictive in providing the data because, in 2008, Congress gave them immunity from liability after AT&T and other providers got sued for handing over vast amounts of data to NSA in violation of wiretap laws.
There is ample evidence from NSA's own people that the programs are Orwellian. The PRISM program became public after a career intelligence officer provided The Washington Post with top secret documents because he was "horrified" by the NSA's encroachment on personal liberties. Former NSA employees and an AT&T technician also have provided ample evidence regarding NSA's expansive surveillance programs (see my previous blog on this). Moreover, the original purpose for the data collection may be quickly disregarded. "There is a high risk that the data will not be used solely for the purpose originally intended; the temptation will be too strong to mine the data when another need arises," notes Gregory Nojeim, senior counsel with the Center for Democracy & Technology.
It is an odd twist of affairs when a liberal Democrat, such as Obama, is defending encroachments on civil liberties, while a Republican senator, Rand Paul, has already introduced a bill to limit such activities and require probable cause for these orders. The president's immediate defense of the revealed surveillance and his condescending tone in suggesting that he would welcome a "debate" on the classified programs instead of an investigation is mind-boggling. His self-interest in defending his own Administration instead of the Constitution and the rights of the American people is telling.
The American public must push for full consideration of legal and privacy issues in counter terrorism and intelligence programs to ensure their civil liberties are protected and their tax money is not wasted on programs that get shut down for privacy flaws. To even think that it is all right for NSA to use computer programs to obtain and store massive amounts of your data, my data, and everyone else's data so it can have it handy to fish for hits on terms or images and then use the hit results as justification to look at that data indicates that America is headed in a dangerous direction that deserves more than a debate. We do not know, however, that even this approach is the one being used; the FBI and NSA may be conducting real-time analysis or sifting through the data as desired without a requirement for blind searches. Indeed, the intelligence officer who gave the top secret documents on the PRISM program to The Washington Post said, "They quite literally can watch your ideas form as you type."
The waste of taxpayer money for programs that violate privacy is another reason for scrutiny. The Government has a poor track record in understanding privacy and the pesky legal/policy barriers that get in the way of intelligence gathering. In 2006, a journalism initiative of the Knight and Carnegie Foundations found that, "The Government spent at least $500 million on now-shuttered security programs intended to uncover terrorist threats by sifting through personal data – programs that privacy and security experts say were shut down due to inattention to Americans’ privacy concerns."
Remember John Poindexter's Terrorist Information Awareness (TIA) initiative? Or the Transportation Security Administration’s Computer Assisted Passenger Prescreening System (CAPPS II) program intended to use commercial and intelligence data to identify terrorists? Or the Department of Homeland Security's data mining project called ADVISE (Analysis, Dissemination, Visualization, Insight and Semantic Enhancement), which had a similar goal? Each of these programs would have benefited from a better understanding of (a) the intersection of legal/policy issues with technology, (b) the power of privacy advocates, and (c) American citizens’ concerns that the Government will overstep perceived Constitutional boundaries.
Consider this: the strongest privacy protections are found in countries that previously had strict authoritarian governments that kept records on everyone and everything, while the country that has always stood as a beacon of freedom is now building vast data warehouses and edging toward a police state. The American public fully expects the Government to use state-of-the-art technology to protect them; however, this must be undertaken by ensuring that legal and Constitutional boundaries are integrated into technologies and programs and taxpayer money is not wasted.
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46b5c6d56b6f52d1337cb3a0a7069f36 | https://www.forbes.com/sites/jodywestby/2013/06/08/june-6-2013-the-day-america-found-big-brother-in-big-data/ | June 6, 2013: The Day America Found Big Brother in Big Data | June 6, 2013: The Day America Found Big Brother in Big Data
Sadly, June 6, 2013, will go down as a watershed moment in American history: the day that Americans realized they have lost their privacy and Fourth Amendment protections to terrorism. Hopefully, it will also be the day they begin demanding them back.
Americans awakened the morning of June 6 to the news that Verizon had been providing virtually all communications traffic data, known as pen register/trap trace data, from its Verizon Business unit to the National Security Agency, pursuant to a top secret court order obtained under the Foreign Intelligence Surveillance Act (FISA). The order directed Verizon to produce “on an ongoing daily basis…all call detail records…(i) between the United States and abroad; or (ii) wholly within the United States, including local telephone calls.” Wow. That is every record, every day, domestic and foreign, including local calls.
Later that day, The Washington Post broke the story that the FBI and NSA have a top secret program called PRISM that has been operating for six years and directly connecting to nine private sector company servers and sucking out video chats, emails, documents, phone calls over the Internet, photographs, stored data, and social networking data. The nine companies specifically named in top secret documents given to the Post were labeled as “government service providers” and included Microsoft , Yahoo , Google, Facebook, PalTalk, AOL, Skype, YouTube, and Apple.
What in the world is going on here? First of all, federal law prohibits the U.S. government from conducting intelligence activities against domestic persons. Secondly, the FBI is a law enforcement agency within the Department of Justice. It requested the secret orders but the production/collection of the data was directed to the NSA, a government agency funded in part by the Department of Defense and the Intelligence Community. A former NSA attorney speculated that perhaps DOJ was relying on provisions in the Economy Act that enable one government agency to obtain the services of another. Ok...but for years??
The obviously incestuous relationship that has existed for some time between the nation's leading law enforcement agency and one of its largest intelligence agencies is troublesome to say the least. The inquiry should not stop with FBI and NSA activities, however; it also should extend to an examination of NSA's relationship with the Department of Homeland Security, particularly its EINSTEIN program that always has been somewhat secret and uses private sector data feeds. DHS refers to the program as an "intrusion detection system," which has caused winks even within the Department. In 2009, Jesselyn Radack noted in an article in The Los Angeles Times that "Einstein 3 focuses on collecting, processing, and analyzing all person-to-person communications content rather than looking for hacker and malicious software attack patterns directed at government sites and installations -- which should raise eyebrows."
The Fourth Amendment's "right to be secure in their houses, papers, and effects against unreasonable searches and seizures" and its requirement that any court order issued for these items be "based upon probable cause" has been decimated by the Bush and Obama Administrations' zeal to track terrorists at any cost and Congress's willingness to go along with it. It is time for America to send a message that the price is too high. Our society is based on the premise that we are granted certain unalienable rights and that sometimes criminal acts will be committed, but our laws, police forces, courts, and jails work to deter that. It is a balance of freedom and deterrence. That balance is lost when the government believes it has to hear, see, and read everything in our digital lives in order to stop a terrorist.
Last September, I posted a blog expressing concern about credible reports on massive NSA surveillance and data collection and pondered whether it was time for another Church Committee to investigate intelligence surveillance. I noted that, “At a bare minimum, when the 113th Congress convenes in January, 2013, it needs to conduct a full review of privacy laws and protections for civil liberties against the government collection of and access to communications data.” Today, that action is inadequate. Congress needs to reinstitute the Independent Counsel Reauthorization Act that expired on June 30, 1999, and present it to the president for signature. Unlike the U.S. Office of Special Counsel within the Department of Justice, which investigates prohibited personnel practices, an Independent Counsel is an independent prosecutor that reports to Congress.
Despite claims by James Clapper, the Director of National Intelligence, and the president that the exposed top secret programs are perfectly legal, the sheer scope of them makes an independent review a responsible course of action. "In 1978, the Church Committee hearings discovered widespread abuse of FBI and NSA surveillance for 2 years. That is why we have FISA. It was an attempt to put judicial oversight in a process that we know can be abused," observed Lee Tien, senior attorney for the Electronic Frontier Foundation. "June 6 could be a day known for the reclamation of democracy if we seize this opportunity to protect our democratic principles," he added.
There must be no delay, no long, drawn-out investigations, or measures contrived for political advantage: an Independent Counsel must be authorized and appointed to investigate surveillance programs, bring secret processes to scrutiny, and reset the balance of rights v. risk.
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a4e746718804a9484bd16ce51a575e9f | https://www.forbes.com/sites/jodywestby/2013/06/10/americans-must-call-for-independent-counsel-and-ouster-of-clapper/ | Americans Must Call for Independent Counsel and Ouster of Clapper | Americans Must Call for Independent Counsel and Ouster of Clapper
Americans find your voice. The public must take the lead on the NSA/FBI surveillance issue because it is clear that our leaders are ducking. Since President Obama and his Director of National Intelligence, James Clapper, see nothing wrong with the dragnet surveillance that has been exposed by Edward Snowden, a contractor who spent years at NSA watching the system develop and work, the American people must direct the course of action through their voices. The seriousness of this matter cannot be understated. American freedoms and values are at stake.
Step One: The American people must call for Clapper's resignation so a full investigation can proceed uninhibited. Clapper's vigorous defense of what has been taking place within the NSA -- under a FBI court order -- indicates that he is extremely familiar with how the programs operate. Yet, when Senator Ron. Wyden (D-Ore) asked Mr. Clapper in a Senate Intelligence Committee hearing on March 12, 2013, "Does the NSA collect any type of data at all on millions or hundreds of millions of Americans?" Mr. Clapper replied, "No, sir." In an official statement from his office on June 6, Mr. Clapper stated, "The only type of information acquired under the Court’s order is telephony metadata, such as telephone numbers dialed and length of calls." Not only did Mr. Clapper give false testimony to Congress, even his June 6 statement was false. We now know -- since the companies identified by the Washington Post have started fessing up -- that lots more than telephony metadata has been collected and searched.
Beyond false statements to Congress and misleading statements to the American people, his claims regarding the legality of the programs are defensive rather than reasoned. Americans can understand that just because a judge of a secret court issues an order (that also must be kept secret) that requires every foreign, domestic, and local call made through Verizon Business to be funneled to the NSA on an ongoing, daily basis, it does not mean that the order is constitutional or within the parameters of the Foreign Intelligence Act or Supreme Court decisions. Court orders and decisions are invalidated or reversed every day.
Instead of reassuring the American people that his office believes in the Constitution and the rights afforded under law, Mr. Clapper has been acting like the Wizard of Oz, hiding behind his green curtain (in this case, the Green Door of the NSA) and making dramatic, noisy pronouncements intended to convince all Americans that the programs are perfectly legal and scare them into believing that terrorists will strike if the programs are disrupted. He is claiming that the disclosures have harmed our national security and tipped off our enemies and terrorists as to methods and sources. Bah. We have met the enemy; it is our own government and its secrecy. There is no enemy greater than an internal force determined to abuse the cherished freedoms set forth in our Constitution and deceive Congress and the public. Mr. Clapper needs to go.
Step Two: President Reagan advocated "Trust, but verify." Since 9/11, we have been trusting. Now it is time to verify. The American people must push Congress to immediately enact legislation establishing an Independent Counsel (see earlier blog) to fully investigate the roles of the FBI, NSA, and private sector companies in these programs. It also is time to start asking some serious questions of FBI director Robert Mueller. It is very interesting that he has said very little regarding the FBI's role -- or reason for -- the Verizon court order. It was, after all, an order requested by the FBI and, according to the Post report, the data from Verizon and these companies are stored on FBI servers at Quantico, Virginia. Likewise, we need facts from General Keith Alexander, director of NSA since 2005 and head of Cyber Command. It is his shop that is in the headlights.
We need to know how these programs are operating. The private company data appears to be collected in a manner similar to what AT&T technician, Mark Klein, and former NSA employee, William Binney, exposed a few years ago (see my September 20 blog for details), except it is reportedly going to FBI servers instead of NSA servers. The Washington Post's accounting of how the data is queried is similar to what I covered in my blog yesterday. Basically, for stored data, the FBI collects the data, NSA analysts query the data through an FBI middle person who supposedly assures the target is not a U.S. citizen, and the system passes hits on the search terms back to the NSA. How the programs process real-time data is unknown, although the whistleblower told The Washington Post that under the PRISM program, the NSA "can watch your ideas form as you type." As I noted in yesterday's blog, the process of querying large amounts of data collected without probable cause in order to identify suspects or gather additional data to establish probable cause is highly questionable, and it certainly has not been subject to the scrutiny of lawyers, courts, Congress, and the public.
We need an Independent Counsel to ferret out the full facts about what data the FBI and NSA have been collecting from private sector companies and how it has been used. The court orders to all of the companies that have been providing data need to be reviewed and the public needs to understand what their intelligence community has been up to. Clapper has claimed that "the U.S. does not unilaterally obtain information from the servers of U.S. electronic communications providers." Messrs. Binney and Klein say they do. (See Andy Greenberg's article and collection of videos of previous statements by intelligence officials denying the collection of data that has been exposed). Such qualified talk masks the facts that the American people need to know.
Step Three: The only bright spot in this national crisis is the president's reported plans to nominate James Comey to succeed Robert Mueller as director of the FBI. (Mr. Mueller leaves office at the beginning of September.) Americans need to push for James Comey's formal nomination and urge Congress to swiftly confirm him. Garrett Graff recently wrote an inspring piece on Comey, in which he recounts how the former deputy attorney general stood up to Dick Cheney and his pit bull attorney, David Addington, and refused to sign off on terrorist surveillance techniques that he believed were not lawful and within the Constitution. The intelligence community was furious, but Comey stood up to them as well when he noted in a speech to them:
“It can be very, very hard to be a conscientious attorney working in the intelligence community,” he said. “Hard because we are likely to hear the words, ‘If we don’t do this, people will die.’ You can all supply your own ‘this.’ ‘If we don’t collect this type of information,’ or ‘If we don’t use this technique,’ or ‘If we don’t extend this authority.’ It is extraordinarily difficult to be the attorney standing in front of the freight train.” ***“We know that our actions, and those of the agencies we support, will be held up in a quiet, dignified, well-lit room, where they can be viewed with the perfect, and brutally unfair, vision of hindsight. We know they will be reviewed in hearing rooms or courtrooms where it is impossible to capture even a piece of the urgency and exigency felt during a crisis,” he said. “ ‘No’ must be spoken into a storm of crisis, with loud voices all around, with lives hanging in the balance.... It takes an understanding that, in the long run, intelligence under the law is the only sustainable intelligence in this country.”
Well put, Mr. Comey. He is the kind of leader this country needs in these times.
So, Americans. Clear your thoughts. It is time to show this Administration -- and the rest of the world -- that keeping our values and fighting terrorism are not mutually exclusive. When Watergate Special Prosecutor Archibald Cox was dismissed by Robert Bork, he stated, "whether ours shall be a government of laws and not of men is now for Congress and ultimately the American people to decide."
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c3933ef1f3403a6e805a1deb31991f97 | https://www.forbes.com/sites/jodywestby/2014/01/20/dont-be-a-cyber-target-a-primer-for-boards-and-senior-management/ | Don't Be a Cyber Target: A Primer for Boards and Senior Management | Don't Be a Cyber Target: A Primer for Boards and Senior Management
Before 2014, companies had become somewhat complacent about breaches. The media had too; it had to be a big breach before it became headline material. Then came Target. Now every board and CEO must be sitting on the edge of their chair...fearing that maybe their systems are not as "bullet proof" as they have boasted, or hoped. The 2008, 2010, and 2012 Carnegie Mellon CyLab Governance Reports (which I authored) clearly show that directors and officers (D&Os) do not understand how serious cyber risks are or how to manage them. They are beginning to realize, however, that there are best practices for cyber governance, and this involves more than asking interesting questions now and then or accommodating an annual ten-minute IT report on the board agenda.
Since Brian Krebs broke the news on December 18 about Target's data breach, Target's board and senior management have been trying to contain and mitigate the breach, but it appears that the company's reveal-as-little-as-possible strategy has only irritated customers, shareholders, regulators, Congress, state attorneys general, and a good part of the cybersecurity community. Every other company has the opportunity to avoid this fate by preparing for a major breach and developing an incident response plan that can save billions. The estimated cost of the TJ Maxx breach in 2007 was $4.5 billion. The Ponemon Institute's 2013 Cost of Data Breach Study estimates the cost in for the U.S. at $188 per record; that puts the cost of the Target breach of 110 million records at somewhere around $20 billion. Their market cap is $38 billion. Serious stuff.
To help start the year right, here is a D&O primer for managing a major cyber incident:
1. Retain outside counsel experienced in managing cybersecurity incidents and ensure the forensic investigation is conducted through counsel as attorney work product. The firm's general counsel should remain actively involved and response actions proposed to be taken by the forensic team should be explained in layman's terms and approved by counsel. Caution: some forensic teams are advocating aggressive response actions that may be illegal under U.S. or foreign laws or subject the company to serious liability. "Each cyber investigation is its own puzzle and requires varying levels of expertise," notes Anthony Reyes, founder of The Arc Group of New York, a premier forensic investigation firm specializing in the financial sector. "Selecting the right counsel and forensic team, especially those experienced in interactions with law enforcement -- can be the difference between success and failure."
2. Hire a trusted advisor to provide independent advice to D&Os regarding the security incident. Why: The reflexive reaction (even if implicit) from senior management and directors to their IT and security teams is: "Why did you let this happen?" That sort of pressure often causes chief information security officers to hunker down and report only what is necessary or certain. A trusted advisor will know how to query the forensic investigators, interact with internal personnel, analyze the findings, and provide a perspective to the board and senior management that can be valuable input to decision making.
3. Notify your insurance broker and determine what existing policies (corporate general liability, property, D&O, or cyber coverage) may cover the incident. Note: think carefully before engaging a forensic firm that works for or is beholden to the insurance company (it may be possible to finesse this by presenting the credentials of the desired firm or agreeing to use a firm offered by your insurance broker).
4. Hire a crisis communications expert. Your company's PR firm knows a lot about the company, but it may not be an expert in managing cyber breach communications and, quite possibly, may not be covered under the attorney work product privilege since their mandate is not specific to the specific incident. Resist the impulse to close ranks, cover up, and spin. Carefully wordsmithed statements usually come off as self-serving and show little regard for the people who have been put at risk. Tell the truth. As painful as it may be, provide information as it is known to the public, shareholders, regulators, and employees. Do not force them to rely on news reports to find out what you are not telling them, as this only makes them angry, damages the company brand, and whips up negative Twitter comments and social media posts. Subpoenas will be sure to follow. Do not delay. Several state breach laws require notification upon discovery or without unreasonable delay; for example, Connecticut requires notification within five days of detection. “The stakes for immediate and effective crisis communications across all aspects of data breaches have never been higher. When corporate reputation and multi-billion dollar payments hang in the balance, board directors and senior management must take care to turn to experts with a proven track record in managing bet-the-company crisis communications," notes Michael W. Robinson, partner at Chlopak, Leonard, Schechter & Associates.
5. Establish a situation room and schedule daily (perhaps more initially) meetings with leads from the executive team, legal, forensic, internal IT and security teams, communications, relevant corporate units, and the trusted advisor. Establish an agenda for each meeting and have a response checklist to guide decision making. Control internal communications; do not email about the breach (unless with outside counsel and messages are labeled as attorney-client privilege and encrypted), as they will likely be discoverable. Keep the board informed, initially at least daily.
6. Notify law enforcement and seek their assistance. Determining who to call requires some analysis. At the federal level, the Secret Service and FBI have excellent skills but limited resources. Municipal law enforcement (a) may not have a cyber unit, (b) may not be adequately trained to conduct a cyber investigation, or (c) may not have adequate resources and are already overloaded. If there is any indication that the investigation may have an international aspect (and many do simply due to the nature of packet switching), federal law enforcement may be able to expedite the investigation. Note: Be careful about not revealing information just because law enforcement is involved. There are instances where companies can work with law enforcement to disclose information. It is important to remember that the board's and officers' fiduciary duty is to the shareholders, not law enforcement. Even if law enforcement believed a public announcement would tip off the criminals that they were "on to them," it may be better to stop the activity and protect their customers and shareholders than let it continue simply to try to catch a criminal -- which rarely happens in cyber investigations anyway. Lastly, "Companies have to be careful about how much of a role they play with law enforcement so they do not become an agent of law enforcement or taint the investigation," cautions Mr. Reyes, a former law enforcement official.
7. Communicate with regulators, customers, and investors. If the company is publicly traded, carefully consider whether the breach is a material event that requires disclosure pursuant to SEC guidance and, if so, file the appropriate disclosure as soon as possible. Do not wait until the press and angry customers and regulators are berating you for failing to do so or, worse, the SEC investigates and determines the breach was a reportable event.
8. Communicate with state attorneys general, consumer protection agencies, and credit bureaus as required -- and as prudent -- to keep them informed. Everyone understands that bad stuff can happen, even to good companies. Good intentions and timely information can build goodwill and avoid regulator recrimination.
9. Communicate with employees. The water cooler lives. Do not risk a loss of morale or allow a sense of corporate uncertainty to undermine operations. Employees are the first line of defense. Designate employees to interact with customers, the media, regulators, and shareholders and ensure that each has a Frequently Asked Questions sheet and a point of contact for unanticipated questions.
10. Develop a remediation plan. Malware detection and eradication can be an expensive and time-consuming process. There is no alternative option. Security gaps must be closed, new processes and policies may need to be implemented, new services and technologies may need to be deployed, and improved information flows to the board and senior management may be required. Just do it. Malware can lie dormant in a system for months and then activate again. If a facility is damaged in a storm, it must be repaired. Computer systems are no exception.
11. Do not try to divert attention by focusing on unrelated problems. For example, Target's announcement that it was going to invest $5 million in a multi-year campaign to educate the public on the dangers of cyber scams fell flat with many customers and cybersecurity professionals because the company's breach was not caused by an uninformed public falling prey to cyber scams. Keep the focus on fixing the problem. Once you have done that, then – and only then – can you take a leadership role moving forward.
12. Share information with others who could benefit, such as other companies within the industry sector, the U.S. Computer Emergency Response Team, and cybersecurity researchers who may be able to assist. Many companies with point of sale systems are frustrated that Target has provided so little information to help them protect against a similar attack.
Let us hope that the lessons learned from the Target breach benefit thousands of companies and promote better cyber governance practices around the world. If the company that learns the lesson can teach a planet, then the experience can still be a positive one for Target.
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ab2b1185680e08b0bc8ad569a1435f62 | https://www.forbes.com/sites/jodywestby/2014/01/30/it-is-a-scandal-that-no-one-is-investigating-the-nsa/ | It Is A Scandal That No One is Investigating the NSA | It Is A Scandal That No One is Investigating the NSA
I am simply stunned that others have not been calling for a full investigation of the NSA surveillance program (see earlier blog). It has been nearly eight months since The Guardian's first report on June 5, 2013, began the drip, drip, drip of continuing revelations made possible by Edward Snowden about a massive surveillance program operated by the U. S. National Security Agency (NSA). Media, such as The Washington Post, NBC News, and German television station NDR, also have published documents and conducted interviews with Mr. Snowden. Just two days ago another batch of documents published by The Guardian, The New York Times, and ProPublica revealed that the NSA is capturing information by exploiting mobile phones and gaming, social media, and mapping applications. A Top Secret powerpoint deck indicated the NSA can obtain a treasure trove of information from a smart phone, including location, phone settings, websites visited, networks connected, documents downloaded, and buddy lists.
The government has stated that it knows Mr. Snowden may have more to reveal. During Senate Intelligence Committee hearing yesterday, James Clapper, Director of National Security, called on Snowden "to facilitate the return of the remaining stolen documents that have not yet been exposed to prevent even more damage to U.S. security.”
The only thing that is certain about Snowden v. the NSA is that the full picture of what the NSA has been up to is not known. Prior to June 5, 2013, Americans generally believed their government was working hard to detect and prevent terrorist activities and attacks within the U.S. They also generally believed that whatever spying the U.S. intelligence community was up to was targeted at foreigners, not the American public. They now know that those general assumptions were not accurate. Through the many disclosures made since then, the people of the U.S. now know that:
The NSA has been collecting data about every telephone call they have made, the number that was called, and the duration of the call. (Snowden revealed the Verizon court order, and it is now widely believed that other providers have received similar orders).
According to NSA PRISM program documents, the NSA has been collecting every form of electronic communication conceivable directly from Microsoft (2007), Yahoo! (2008), PalTalk (2009), Google (2009), Facebook (2009), YouTube (2010), Skype (2011), AOL (2011), and Apple (2012). The documents indicate that the data is collected in a bulk manner, and it includes the content of Internet phone calls, chat, photos, emails, stored data, video conferencing, and text messages.
The NSA has been intercepting communications at the backbone of major communications providers.
The NSA reportedly has worked with various vendors to get them to use technologies that the NSA has secretly figured out a back door to); this includes an important NIST encryption standard, Dual Elliptic Curve Deterministic Random Bit Generation (EC DRBG). NSA reportedly paid RSA $10 million to make it the default encryption in its random number generation product, Bsafe.
The companies that have been ordered to participate in NSA surveillance programs by a Foreign Intelligence Surveillance Court order are forbidden by law from disclosing any information about the order. Many of the technology companies have pressured the Administration to let them provide information to the public about their participation. The Administration relented two days ago, with a narrow permission allowing them to disclose limited information about what the companies have provided to the government under court order, which would not include data that the government may be collecting directly from the providers. (Risk: The disclosed data may be so high-level and limited as to skew data or create confusion about the scope of the program.)
The NSA can keep and use communications on U.S. residents without a warrant for five years.
Intelligence officials have not been truthful about their surveillance programs. The Director of National Intelligence, James Clapper, lied to Congress about what communications it was collecting on Americans when he answered Sen. Ron Wyden's question, "Does the NSA collect any type of data at all on millions or hundreds of millions of Americans?" Mr. Clapper answered, "No sir."
The leaked intelligence budget revealed that the NSA is spending billions of taxpayer dollars on these programs.
Many members of Congress were not aware of the full extent of the programs and their reach into American's daily lives and communications.
A majority (3-2 vote) of the Privacy and CIvil Liberties Oversight Board (PCLOB), an independent bipartisan agency within the executive branch, determined that the NSA's phone collection program was illegal. Five of the most respected legal and privacy experts in the country serve on the PCLOB. They were nominated by President Obama and confirmed by the Senate.
The President's Review Group on Intelligence and Communications Technologies recommended in its report "a series of significant reforms" to the bulk telephone collection program, including, "Congress should end such storage and transition to a system in which such metadata is held privately for the government to query when necessary for national security purposes."
No written opinion regarding the legality of the NSA program that collected all domestic telephone records on a daily basis was issued by the Foreign Intelligence Surveillance Court until 2013 -- seven years after it began.
The necessity of the data for national security purposes is questionable. No terrorist attack has been stopped due to data collected by the program. The government has not named any individual person who was identified as a terrorist and charged as a result of the program (although a New America report concludes that out of 225 cases brought against persons recruited by terrorist organizations, the data assisted in initiating only 1.8 percent of the cases). The government has not even stated how many Presidential Daily Briefings contained important findings from the data.
Knowing this much, however, raises more questions than answers, and it is a far cry from a full picture. Moreover, there is no party in this mess that is pure. Not the NSA, the Administration, Congress, or Snowden. The NSA has denied, back-pedaled, used scare tactics, exaggerated, and apologized. They are masters at deception and loathe to admit overreaching. The Administration has defended, retreated, offered concessions, proposed reforms, and rejected the findings of it PCLOB report (238-pages) on the day it was issued. Congress has shrugged, justified, back-stepped, held hearings, changed its tune, and introduced numerous bills aimed to reform intelligence gathering, protect privacy, or tinker with procedures. They are afraid if they vote to strike down a program and something happens, they will be blamed, and they hate to backtrack on earlier votes.
Snowden has not been careful to release only information that impacted Americans' civil liberties. Within the first ten days of his disclosure campaign, the South China Morning Post reported that Snowden had provided documents indicating that the NSA was spying on computers in China and Hong Kong, hacking into Chinese backbone providers to steal mobile text messages, and attacking the network of one of China's top universities, Tsinghua University. He then revealed information about NSA's spying on Angela Merkel and other allied leaders and collaborative intelligence sharing programs between the U.S. and the "Five Eyes" (U.S., U.K., Canada, Australia, and New Zealand). He also disclosed a Top Secret document regarding a program called Boundless Informant that analyzes and reports on telephone metadata collected around the world. These revelations revealed legitimate intelligence activities and involved national security information that harmed our national interests.
This post is a call for the facts to be found out and the truth to be determined. The privacy and civil liberties advocates and many in the media have railed about the scope of the programs and the intrusiveness of them. Some have filed legal actions. None of them, however, has called for an independent counsel to be appointed, a Congressional Committee to be established, or a special counsel to be appointed with full authority to seek and obtain information on exactly what the NSA has been up to, what authorizations or orders were given to establish these programs, how the collected data has been used and who has used it, and what private sector entities have cooperated and under what terms. (The Ethics in Government Act, which established the Office of the Independent Counsel, expired in 1999, but Congress could enact a new law for independent counsel or establish a Congressional Committee. The President also can order investigations. He announced in his State of the Union address that he was going to do all he could via his presidential powers. Here is an opportunity.)
It would be a mistake for Congress to enact legislation on intelligence reforms without having the full picture of what has been going on. In similar times, an earlier Congress established the Church Committee and dug deep. Their corrective measures may not have been perfect and some were probably flawed, but at least they were made on the basis of full information. (See my blog prior to Snowden asking whether we needed another Church Committee.)
This call for the truth is not all about what is legal or illegal. It is about providing the full set of facts for debate and discussion and making informed decisions about how this country should be operating and the values it should be upholding in the digital age -- before it turns into a full police state.
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83fe9d04b1bcbde2d9ab5cd3d6b16b39 | https://www.forbes.com/sites/jodywestby/2014/10/14/police-departments-do-not-get-it-on-racial-profiling/ | Encounter With Washington, D.C. Police Shows Cops Don't Get It On Racial Profiling | Encounter With Washington, D.C. Police Shows Cops Don't Get It On Racial Profiling
On October 1, 2014, I helped an African American man named Dennis who was close to being arrested by DC police officers in a case of pure racial profiling. Two black police officers were responding to a home alarm that had gone off. The female officer spotted Dennis sitting on a low retaining wall by my driveway, detained him, forced him to sit on the curb, and was preparing to search him when I intervened.
The video of this encounter has gone viral, and the calls, cards, and letters coming in from people of every walk of life, age, and race clearly indicate the video is resonating. The most telling response to the video, however, has been from the Washington Metropolitan Police Department, who has repeatedly stated to the press that, "There is no misconduct by the officer in the video."
Really? Some basic facts at this point are helpful:
The officers should have known they were in the wrong neighborhood.
There is only one road in/out of my neighborhood, and both sides of the entryway has the range of house numbers clearly noted. The address the police were seeking was outside the range of house numbers on the entryway. Each house has its number clearly carved into the stone beside the front door.
The address of the alarm going off was about a mile and 3 right turns away.
The male officer knocked on the door across the street from my home. My housekeeper was there working that day. She told the male officer he was at the wrong address.
The police had no description of a suspect.
Dennis was sitting on a small retaining wall (approximately 20" high) by my driveway, with his lunch bag and a small black zipper bag beside him on the grass, He often sits there. That day, he was talking to a gardener across the street when the female officer approached him. She demanded to know what he was doing there, what was in his bags, ordered him off the wall, and told him to sit on the curb.
No one looking at Dennis would think he was breaking into houses.
Dennis was hit by a car while crossing an intersection ten years ago, spent a year in the hospital, had a stroke, has limited use of his right arm and hand, and has a noticeable limp. He moves slowly.
My housekeeper saw the black female officer with Dennis on the curb, and came into my home and called for me, explaining that the police had Dennis. When I stepped outside, the police woman had detained Dennis, refused to let him move, would not let me near him, and kept telling him to "Stay" with the command one gives a dog. She was putting on blue latex gloves to search him.
From the first instant, it was obvious this was racial profiling. Moreover, it was obviously an illegal "investigation." The female police officer had no probable cause to detain Dennis, and she certainly did not have a warrant to conduct a search, which is required by the Fourth Amendment to the Constitution. Yet, the Washington Police spokesperson has repeatedly stated there was no officer misconduct. Amazing. It is a bedrock principle of this country that people are innocent until proven guilty. Washington Metropolitan Police apparently feel that people are guilty until they determine they are innocent...and there is no misconduct in that.
The video is jarring because a white woman intervenes to defend a black man against two black cops, but it also strikes a nerve because it starkly reveals the institutional racism that pulses through police departments across the nation.
The messages I have been receiving since this incident indicate that it is not a black/white issue. In fact, I am told that black cops often treat black suspects worse than white cops. It is a police department issue, and it is not one that is going to be miraculously cured by officers wearing their own video cameras. The beating of Rodney King was videotaped 22 years ago. Sadly, not much has changed. We have collected 22 years worth of videos of police brutality, hostility, and demeaning treatment of African Americans and minorities, and the tension in Ferguson, Missouri is as high as it was during other critical moments in the history of civil rights in America. It is time to take another step forward. If we can elect an African American as president, we can stop profiling and prejudicial treatment and begin treating people equally. Another bedrock principle.
I work closely with many members of law enforcement and have high regard for our police departments, but they are not perfect. We give men and women a badge and a gun and authority, and some people abuse that authority. It does not help that after 9/11, Congress enacted laws that have empowered the police, expanded legal authorities, and diminished protections for civil liberties.
This is a hard problem that is going to take a long time to solve. Congress needs to take a step in the other direction and pass legislation that provides for clear civil and criminal consequences for racial profiling and police brutality. Police departments across the country need to lead with tone from the top and zero tolerance coupled with independent investigations, community outreach, and improved training.
Perhaps Washington D.C's Police Chief, Cathy Lanier -- another white woman -- would like to step forward as a national leader by admitting that the female officer in the video was out of line, apologizing to Dennis, and establishing an intensive training program against racial profiling and promoting police behavior within the law.
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828dbf379b8b6c1ac5d3d80065e000f7 | https://www.forbes.com/sites/jodywestby/2015/06/15/the-government-shouldnt-be-lecturing-the-private-sector-on-cybersecurity/ | The Government Shouldn't Be Lecturing Private Sector On Cybersecurity | The Government Shouldn't Be Lecturing Private Sector On Cybersecurity
It is time that business leaders begin publicly rejecting the notion that the U.S. government should be leading the private sector on good cybersecurity practices. Or to put it in more crass terms, companies need to cast a suspicious eye on cybersecurity legislation and flatly reject any attempt to impose government regulation on private sector cybersecurity programs. Why? Because the U.S. government has some of the worst security programs and, based on what has been reported, the U.S. government has had the worst cybersecurity breaches on the planet. Three at the top of the list are:
Bradley (now Chelsea) Manning's 2010 theft of around 750,000 classified and unclassified but sensitive military and diplomatic cables that were given to Wikileaks and disclosed. The documents embarrassed U.S. government officials and played a role in igniting the Arab Spring. Edward Snowden's 2013 theft of what appears to be the NSA's shared drive. Edward Snowden downloaded so many files that in May, 2014, Gen. Keith Alexander, former head of NSA and Cyber Command, admitted in an interview that the government really doesn't know how many documents he obtained, but they know it was more than a million. The 2015 breach of the Office of Personnel Management's (OPM) files on government employees and security clearance background files.
History of Government Cyber Incidents
David Inserra and Paul Rosenzweig of the Heritage Foundation produced a good (but admittedly not complete) listing of more than 20 federal government cybersecurity breaches in 2013 and 2014. The U.S. General Accountability Office (GAO) released a report in April 2014 that found that 24 major federal agencies did not consistently demonstrate that they are effectively responding to cyber incidents. In addition, they were not adequately determining the impact of the incident or appropriately documenting it in accordance with NIST guidance. The GAO notes that in 2013, the 24 major U.S. agencies reported 43,391 incidents to US-CERT. That is an average of 1,808 incidents per agency that year.
The GAO's findings are in line with what happened at OPM. The breach first occurred in December 2014. Now -- nearly six months later -- OPM is disclosing that it discovered 4.1 million records on current and former government employees was breached and that the investigation revealed a separate intrusion into the background check database. To me, this indicates OPM is riddled with gaps and deficiencies in its security program and its incident response capabilities are lacking. Likewise, the Manning and Snowden breaches were not detected internally, but revealed by third parties.
The U.S. government needs to get its own house in order before it begins to tell the private sector how to manage cyber threats. NIST has developed world-class information security materials that are free, well written, and aligned with internationally accepted best practices and standards. The Federal Information Security Management Act (FISMA), enacted in 2002, is one of the best pieces of legislation on the books. It requires an enterprise security program and incorporates NIST guidance.
Best Practices That Would Have Prevented Manning, Snowden and OPM Breaches
The problem? The government doesn't follow its own laws and guidance. Let's examine these three major breaches that should not have happened if good security program practices had been in place.
1. The Manning Cable Breach: Security best practices call for disabling removable media on computers that handle sensitive data. The Department of Defense banned the use of removable media in 2008 after other intrusions were tracked back to thumb drives, and then lifted it in 2010, claiming that it had developed "capabilities and processes that allow safe use of these devices." After Bradley Manning downloaded the diplomatic cables onto a Lady Gaga CD, DoD banned the use of removable media again. This all-or-nothing approach seldom works, which is why ISO information security practices link the use of removable media to data classification. Bradley Manning was accessing the cable database on SIPRNET, the DoD network that carries classified data, yet DoD had not disabled all removable media capabilities his computer or banned the software he used to download the data. Additionally, there also should have been monitoring technologies deployed to detect data leakage in a timely manner. The cable theft was revealed by an online confidante of Manning; it was not initially detected by DoD.
2. Edward Snowden: Security best practices require privileged access rights to be restricted and controlled. Snowden apparently had unfettered administrative access and his admin privileges were not reviewed or vetted by another person as a check-and-balance oversight measure, also known as the "two man rule." The NSA has admitted that it failed to implement normal security measures that would have restricted his administrative access. Additionally, another security program best practice is that administrators and IT staff should not have access to production data unless specifically approved. Snowden not only had access to a treasure trove of NSA documents, the data appears not to have been encrypted, since he would have had to have the keys to the vast number of documents that have been released.
3. OPM: Security best practices call for the encryption of sensitive data during transmission and at rest. The sensitivity of the data access at OPM -- especially the SF-86 background check information for clearances -- should have been an encryption no-brainer. Additionally, data that sensitive should not be accessible online unless absolutely necessary. This data could enable a foreign government to identify our covert operatives, fill out relationship maps between the person seeking the clearance and foreign nationals, determine who would be good candidates for blackmail or recruitment as a spy, trace every country a person has visited and every place they have lived, and identify family members, references, employers, etc. It is simply so valuable for intelligence purposes that it should have had highly restricted access and been encrypted.
The Myth that Cyber Legislation is Needed
Every time there has been a major private sector cybersecurity incident, we have heard various government officials call for Congress to pass a law that would solve the cybercrime problem. Public officials, military generals, and even the President, generally pounce on private sector breaches as proof that the private sector needs a federal nudge to get its cybersecurity in order. This has been couched in various terms, but these statements generally have followed a path that (1) risks to critical infrastructure companies present a risk to national and economic security, and (2) a federal law is needed to enable public-private sector information sharing.
In 2012, we beat back legislation aimed at these two goals that also would have imposed enormous compliance burdens on most companies. Since then, legislative efforts have been aimed at improving public-private information sharing. I always have believed that the federal government plays on the "feel good" sound of information sharing as an acceptable reason for enacting legislation that would enable it to get hooks into every company's data center.
Information sharing is possible today and we do not need a law to enable public-private information sharing. Here is why:
The U.S. Department of Justice has repeatedly assured industry that it would not launch antitrust cases against companies for sharing cyber threat information with each other. The sharing of cyber incident data involves highly technical log and communications traffic data and rarely involves disclosing personally identifiable information (PII) or other information that might lead to compliance issues. In April, some of the country's top engineers sent a letter to House and Senate backers stating that, "We do not need new legal authorities to share information that helps us protect our systems from future attacks." An additional problem is that the bills include language providing companies with broad protections against liability. This is a particularly dangerous concept because such protections actually will discourage companies from funding and continually improving their security programs. The federal government can share any information it wants. All it has to do is declassify it (if it is classified) or put it in a format that is unclassified. It does not need a law from Congress to do this. It already has this authority. I launched a company that was funded and founded by the CIA to find unclassified solutions to the intelligence community's most pressing technology problems -- In-Q-Tel. The CIA gave me their three most pressing technology problems in an unclassified format so we could present them to the research community. If the CIA can do that, I fail to understand why DHS or any other federal agency thinks it is so hard to put cyber threat data in an unclassified format or why they need Congress to pass a law to enable them to share information that could be critical to national or economic security. DHS has taken the bizarre approach of requiring companies to enlist in its Cybersecurity Enhanced Services program in order to obtain cyber threat information to enable them to better protect their systems. Has it not occurred to them that cyber threats spread to all systems? Limiting their threat information to a handful of "approved" companies simply puts everyone else who is not vetted at greater risk.
So, set aside the argument that legislation is needed for information sharing. And set aside the notion that the private sector needs the federal government's assistance in managing cyber threats. What the private sector does need is:
Adequately trained cybercrime investigators in police departments around the country to help them track and trace cyber incidents; and Better use of their tax money in developing and maintaining cybersecurity programs in federal agencies and departments.
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ce692f72b559ddec4a101bf88289923c | https://www.forbes.com/sites/jodywestby/2020/12/16/solarwinds-cyber-attacks-raise-questions-about-the-companys-security-practices-and-liability/?sh=3839aac3711d | SolarWinds Cyber Attacks Raise Questions About The Company’s Security Practices And Liability | SolarWinds Cyber Attacks Raise Questions About The Company’s Security Practices And Liability
ST PETERSBURG, RUSSIA - FEBRUARY 6, 2017: A silhouette of a man in a balaclava mask sitting at a ... [+] laptop computer, with computer code in the background. Sergei Konkov/TASS (Photo by Sergei Konkov\TASS via Getty Images) TASS via Getty Images
The recently discovered cyber attacks against numerous U.S. government departments and thousands of public and private sector entities around the world, via a compromise of SolarWinds software, underscore the risks associated with third party vendors and raise questions about liability. The attacks were allegedly perpetrated by Russia and were highly sophisticated.
The SolarWinds Attack
The attackers compromised the software “signature” of SolarWinds’s Orion network monitoring software and distributed malware as a software update. Public and private encryption keys are used to “sign” software. A software update is “signed” using an encryption algorithm and the developer’s private key, which creates a hash “signature.” This “signature” is validated by the receiver of the software update by using the sender’s public key. The signature process assures the integrity of the update and instills trust in users of the software.
In a December 14 SEC filing, SolarWinds said that of its more than 300,000 customers, they believed that less than 18,000 entities may have downloaded the Orion update during the March-June 2020 timeframe, which likely included the malware. The malware operated stealthily and exfiltrated valuable intellectual property, confidential and proprietary data, emails, and other valuable information from victims’ systems. It was unknown until prominent cybersecurity firm FireEye, also a victim of the attacks, discovered the malware and reported on the attacks on December 13, 2020.
According to FireEye, once installed in a system, the malware remained quiet for a couple of weeks and then masqueraded as the Orion Improvement Program protocol. It stored data from its internal activities within actual SolarWinds files on the system, thereby making its detection all the more difficult. The malware had highly credentialed access to the system and could disable system services, reboot machines, exfiltrate data, execute files, change system configurations, and perform actions usually taken by a highly privileged system administrator.
The biggest problem for SolarWinds is the compromise of its software signature process because that is its “trust point” with its customers. Chet Hosmer, Assistant Professor of Practice for the University of Arizona, who has developed numerous cryptographic products, noted that, “Encryption key management requires very strict procedures and controls to ensure that the keys are not compromised or exposed.” He explained further that, “If an attacker gains access to the private key of the software vendor, he can use it to sign updates and the user will think the update is legitimate because the public and private keys will match.”
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A best practice for signing with a private key is to use a cryptographic token, which serves as a container to store the private key. The token is used to generate the signature for the software update, but it does not expose the key or let anyone access the key. If a key is stored on a server, it may be encrypted, but a user can access it and when it is used to create a signature, the key is exposed in the computer’s memory. “People want convenience and encryption key management is difficult, but exposure of the private key during a signing activity is a serious security issue,” Hosmer said.
There is also the question of controls around the software updates. Professor Hosmer related that his former company required at least three people sign off on a software update before it could be disseminated to users. “Insiders can be a problem in the software updating process, and we wanted to ensure there was no single point of failure,” he added.
SolarWinds’ Security Procedures In Question
On December 14, Brian Krebs reported that Vinoth Kuman, a well known cybersecurity “bug hunter,” notified SolarWinds over a year ago that he had discovered a Github repository with SolarWinds file transfer protocol credentials and an easy password published in clear text. Kuman stated “via this, any hacker could upload malicious exe [code] and update it with release SolarWinds product.” Krebs also noted that Andrew Morris of GreyNoise Intelligence reported online that he had been able to download the infected installer from SolarWinds website and “found that the backdoor’d DLL [Dynamic Linked Library] is definitely still contained in the installer on the website literally right now.” My God.
At this time, it is not known how SolarWinds signed their software or what internal procedures were in place, but the foregoing information seems to indicate that less than strict controls were required when the breach occurred. These are certainly issues that will be probed by regulators, users, investors….and attorneys.
Regulators and Lawyers Will Be Calling
Kevin Thompson, chief executive officer of Solarwinds Inc., center, cheers while ringing the opening ... [+] bell during the company's initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Friday, Oct. 19, 2018. The rebound in U.S. stocks lost steam as investors assessed the latest batch of corporate earnings and simmering geopolitical tensions ahead of the weekend. Photographer: Victor J. Blue/Bloomberg © 2018 Bloomberg Finance LP
The Washington Post reported that on December 7, two of SolarWinds’s top investors, Silver Lake and private equity firm Thoma Bravo, sold $280 million worth of stock. FireEye first discovered the theft of some of their most valuable forensic tools on December 8, and by December 11, it discovered the SolarWinds software update with malware and contacted the company.
Following the Equifax breach, the SEC issued Guidance in 2018 that enhanced the obligations of boards and executives to manage cyber risks, inform investors of major cyber incidents and risks, and prevent insider trading following a cyber incident. An SEC investigation is all but certain under these circumstances. The company’s stock has already dropped 22%, so securities class action lawsuits will surely be filed soon.
The plaintiffs’ bar is going to love this. If it turns out that SolarWinds had sloppy software signing procedures, poor controls in its software dissemination, and weak monitoring/testing to detect malware in their software upgrades, this incident may revive the argument that software vendors should be held liable for bugs and failures in their software.
This was a serious supply chain attack of unknown dimensions at this point, but it certainly appears to be the most serious cyber attack in history, and it raises the question of whether SolarWinds should be liable for the theft of intellectual property, research, confidential and proprietary data, internal strategies and communications, confidential government data, etc. It is a question that is not to be taken lightly because of the ramifications of such liability on the U.S. software industry and economy, but it may be time to have a fuller discussion on the issue.
This is also a wake-up call for all companies to finally step up and spend the money that is needed to ensure they have a strong cybersecurity program with detection capabilities and tested incident response plans. This attack was surreptitious enough that, as far as we know, it was not detected by any government, SolarWinds itself, or any victim organization other than FireEye.
The malware is highly sophisticated, and companies will have a difficult time ensuring that it has been fully eradicated from systems that downloaded it. The thousands of public and private sector entities that were impacted by this attack will only be able to determine what data was exfiltrated or compromised and assess what collateral damage may occur as a result if they have maintained and secured system logs at least back to March 2020.
And then after they assess the damage, they wait… to see whether competing products or services show up around the globe using their intellectual property or business strategies, whether business relationships have been compromised or undercut, whether they lose market share or opportunities. Governments will wait to see whether intelligence sources have been compromised, whether diplomatic strategies crumble, whether strategic interests have been harmed, and so on. And we will probably never know all the Russians stole and gained from this attack.
We have waited long enough for companies to devote adequate attention and resources to cybersecurity programs. This is the consequence. We must do better...or the bad guys will win. It really is that simple.
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47cc6ee5fe661153675870d7cca7d9cf | https://www.forbes.com/sites/joebarnathan/2019/10/02/with-his-new-deal-could-kyle-kuzma-become-the-face-of-puma/ | With His New Deal, Could Kyle Kuzma Become The Face Of Puma? | With His New Deal, Could Kyle Kuzma Become The Face Of Puma?
He’s the last remaining piece of the Lakers’ youth movement. A remnant of a bygone and forgettable era in the Purple and Gold’s illustrious history, Kyle Kuzma is somehow one of the longest-tenured Lakers despite entering just his third NBA season. LeBron James and Anthony Davis are now the foundational pieces as opposed to names like Lonzo Ball and Brandon Ingram. And yet, Kuzma has remained. Rumored to be one of the sticking points in the eventual Anthony Davis deal, he is clearly coveted by the Lakers organization. And now he is just as coveted by Puma, who signed him to a five-year endorsement deal this week.
LAS VEGAS, NEVADA - JULY 06: (L-R) Kyle Kuzma, Anthony Davis and LeBron James of the Los Angeles ... [+] Lakers talk before a game between the Lakers and the LA Clippers during the 2019 NBA Summer League at the Thomas & Mack Center on July 6, 2019 in Las Vegas, Nevada. NOTE TO USER: User expressly acknowledges and agrees that, by downloading and or using this photograph, User is consenting to the terms and conditions of the Getty Images License Agreement. (Photo by Ethan Miller/Getty Images) Getty Images
Kuzma isn’t the only young prospect Puma has invested in. Last year’s top draft pick DeAndre Ayton signed with the brand as well as Knicks’ rookie R.J. Barrett and the Kings’ young big man Marvin Bagley. The brand is clearly betting on the future as opposed to trying to lure away established stars from their fellow competitors. However, big men historically don’t sell shoes as well, and R.J. Barrett isn’t a sure thing, despite being in a giant market. That’s what makes Kuzma perhaps the most likely candidate to rise to the top.
Kuzma already has a large social media presence, is a fan favorite, and is now on the first promising Lakers squad in nearly a decade. All eyes will be on this team, and if Kuzma can thrive as the third star, his brand could take off. While much of the pressure will be on LeBron and Davis, Kuzma is known for his flashy play and occasional scoring outbursts. If he can continue to grow as a player and help the team achieve its lofty goals, Puma’s bet will have paid off spectacularly.
Puma may also be looking ahead to next summer, when Kuzma could potentially make the 2020 Olympic team. Despite bowing out after an injury during this year’s World Cup, Kuzma will be back on the short list of talent that USA Basketball will look at as they build out the roster. While he is no guarantee to earn a spot, if he does end up on the team, it could be a massive boost to his international brand. There are few global basketball events like the Olympics, which carries not just prestige, but viewership around the world. If people across the globe see Kuzma in a Team USA jersey, Puma will certainly be able to capitalize.
While, it’s not quite as ambitious as starting your own shoe brand, Kuzma’s move is not without risk. Puma has long been out of the basketball shoe game and it very well could find itself struggling to chip away at the market share of brands like Nike and Adidas, not to mention Under Armour. And yet, with risk can come reward as Kuzma could become the face of Puma if things break the right way. No matter what heights he reaches, he could never be that for a brand like Nike. Often known for going against the grain, Kuzma clearly understands the opportunity in front of him.
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The marketing for Kuzma and Puma has already begun. Hype surrounding the young player is certainly going to increase among sneaker heads. Whether or not he will meet those lofty expectations remains to be seen. But the potential is certainly there. And that unquestionably makes this partnership a worthwhile venture for both sides.
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d30447df53eb1cd5009b851ccbf1dbf8 | https://www.forbes.com/sites/joebarnathan/2020/01/07/panthers-hire-matt-rhule-in-teppers-first-big-move-as-owner/ | Panthers Hire Matt Rhule In Tepper’s First Big Move As Owner | Panthers Hire Matt Rhule In Tepper’s First Big Move As Owner
FORT WORTH, TEXAS - NOVEMBER 09: Head coach Matt Rhule of the Baylor Bears leads the Bears against ... [+] the TCU Horned Frogs in the first quarter at Amon G. Carter Stadium on November 09, 2019 in Fort Worth, Texas. (Photo by Tom Pennington/Getty Images) Getty Images
It appears David Tepper got his guy. According to reports, the Panthers have hired Baylor’s Matt Rhule to lead their organization as the next head coach. Rhule, who has made waves in the college ranks due to the success he’s had turning around a tumultuous Baylor program, will now see if his talents will translate to the pros. Tepper and the Panthers were set to meet with multiple candidates, but after speaking with Rhule, Tepper decided he’d found the right man. The deal is reported to be as much as $70 million with incentives over seven years. That is a major investment in someone who has no experience as an NFL head coach.
Of course, there are a handful of coaches in recent memory that have been able to make the leap from college to the pros, notably Pete Carroll and Jim Harbaugh. Last year, the big name to make a splash in the league was Kliff Kingsbury who led the Arizona Cardinals to a 5-11 season. Whether or not that experiment works remains to be seen, but there was clearly a lack of instant success.
However, Tepper doesn’t appear to be looking for a quick fix. Rhule seems to specialize in rebuilding. Taking a team and reshaping it– which is a longer process than a single season. In Rhule’s first year as Baylor’s head coach, he went 1-11. Of course, the next season the team improved to a 7-6 record before this season’s excellent 11-3 record and trip to the Sugar Bowl. A three-year plan may be similarly implemented in Carolina. The Panthers are clearly comfortable with this timeline, though it may spell trouble for franchise quarterback Cam Newton. Newton will turn 31 in May and there are obvious questions about his durability and long-term future with the team.
While superstar running back Christian McCaffrey can fit into virtually any system, the rest of the team may in be flux. Rhule will certainly build around his star young player and may spend the next season tinkering with what works best, perhaps at the cost of a few wins. Having the 7th pick in the draft this year may open up an opportunity for Rhule to draft Tua Tagavailoa– a player that was initially considered the top talent in his class until suffering a season-ending hip injury in November.
The next few months will reveal exactly how far away Rhule and Tepper think the team is from competing for a playoff spot. For now, Rhule must get to work as there will be many difficult decisions to make that could shape the next few years of football in Carolina.
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What is clear is that David Tepper believes he found the perfect person to lead this franchise into the new decade. He was so adamant that he didn’t even wait to meet with Patriots Offensive Coordinator Josh McDaniels, who had long been rumored as a strong candidate for the job. Whether or not that was a wise decision remains to be seen, but either way Tepper is taking this franchise in a new and potentially exciting direction.
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57088be204a0b6f551217827f47514fb | https://www.forbes.com/sites/joebarnathan/2020/12/21/with-marty-hurney-gone-tepper-looks-to-the-future/ | With GM Marty Hurney Gone, Carolina Panthers Owner David Tepper Looks To The Future | With GM Marty Hurney Gone, Carolina Panthers Owner David Tepper Looks To The Future
CHARLOTTE, NORTH CAROLINA - NOVEMBER 03: (L-R) Team owner, David Tepper of the Carolina Panthers ... [+] talks to Panthers General Manager, Marty Hurney, before their game against the Tennessee Titans at Bank of America Stadium on November 03, 2019 in Charlotte, North Carolina. (Photo by Streeter Lecka/Getty Images) Getty Images
If it wasn’t clear before, it is now: David Tepper wants his people in charge. This morning it was announced that GM Marty Hurney has been fired by the Carolina Panthers.
“I think sometimes you just need a restart, a refresh," Tepper said. "We did it last year on the coaching side. Maybe you could say it should have been done before on the GM side. Maybe it should have been. I'm sure people may say that, or otherwise, on both sides.”
This shouldn’t come as a huge surprise to anyone at this point. The Panthers, despite low expectations coming into the season, have limped to a disappointing 4-10 record with two games left in the year. Of course, injuries have played a role in the team’s lack of success, most importantly the lingering issues of franchise cornerstone Christian McCaffrey.
And yet, it is clear that Tepper has been intending to make a change for some time now, citing major philosophical differences between he and Hurney. Tepper sees himself and head coach Matt Rhule as analytically driven, with Hurney as more, “traditional.”
"You look at successful organizations, and there's a certain alignment between the head coach and the GM," Tepper said. "To think that you can do that without some sort of alignment is nuts. So to not have a head coach with some input into that is stupid. I don't want to be stupid, OK?"
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Of course the real question isn’t why Hurney was let go, it is who will be replacing him. The challenge of the next GM will be significant– as was cited in last year’s draft preview, the team has issues all over the field, but should strongly consider selecting a young quarterback to truly begin the rebuilding process. While Teddy Bridgewater has been serviceable at times this season, he does not appear to be a franchise star– though it is unclear if the organization ever considered him as such.
Perhaps it is that lack of clear vision that has brought Tepper to this decision. He made it evident that Ron Rivera was not his guy last season and now he is finishing the job of clearing house.
Of course, Ron Rivera is now leading the Washington Football Team to a potential playoff berth after winning four of their last five games. He’s doing so on the back of a stellar defense led by rookie sensation Chase Young. Any follower of the Panthers knows that Rivera’s teams tend to peak towards the end of the season and this year will be no different. Certainly the strength of the NFC East must be put into consideration, but as Rivera has stated in the past, a division title counts just the same no matter the record.
It might be tough for Tepper to watch his former coach making the most out of a team that nearly the entire league had written off, showing his strengths as a leader and defensive guru. However, he remains committed to coach Matt Rhule, believing he is the right man for the job.
"Matt, as advertised, is a very good developer of talent. You're starting to see it here, and we get to this point in the season in how the defense has developed. There's been progress. It was a really interesting game, interesting in how coaches do things with process. The Packers had a great first half, but they didn't do too much in the second half. We had four or five sacks and look at who got those sacks. There's first-year players, and [Brian] Burns was in there. It was all young guys. We have all young guys, and we're developing these guys and making progress.”
While it remains to be seen how this grand experiment works out with Tepper, it is evident that he has strong convictions on how a team ought to be run. And after another disappointing season, it was time to make a significant change in order to get one step closer to that vision.
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eecff91b54f588fd5c670f3bde872df8 | https://www.forbes.com/sites/joecornell/2014/12/11/kimberly-clark-kmb-spins-off-halyard-health-hyh/ | An Analysis Of Kimberly Clark's Spin-Off Of Halyard Health | An Analysis Of Kimberly Clark's Spin-Off Of Halyard Health
On October 31, 2014, Kimberly-Clark Corp. (NYSE: KMB; Market Capitalization: $41.5 billion) completed the tax-free spin-off of Halyard Health Inc. (NYSE: HYH; Market Capitalization: $1.8 billion). Through the spin-off, shareholders of KMB received one share of HYH common stock for every eight shares of KMB common stock held. On November 3, 2014, shares of HYH began trading ‘regular-way’ on NYSE under the symbol “HYH”.
On the first day of ‘regular-way’ trading, shares of HYH opened at $37.52 and closed at $38.45 after trading between $37.51 and $38.89. Halyard is currently trading at $39.50 (12/11/2014). Similarly, KMB, which excludes health care business, opened at $109.44 and closed at $111.36, after trading between $109.07 and $111.38. Kimberly-Clark is now trading at $114.32 a share.
As a result of spin-off, HYH is now an independent, publicly traded company, focusing on preventing infection, eliminating pain and speeding recovery for healthcare providers and their patients. The company reported net sales of $1.7 billion across its Surgical & Infection Prevention (S&IP) products and Medical Devices business.
KMB will now focus on manufacturing and marketing of a wide range of products mostly made from synthetic fibers using advanced technologies in fibers, nonwovens and absorbency. The company organizes its operating segments based on product groupings. The three reportable segments are: Personal Care, Consumer Tissue, and K-C Professional.
Valuation and Recommendation
We value HYH at $2.3 billion or $48.00 per share using 11.3x FY15 EBITDA multiple. This suggests Halyard is has about 20% upside to our estimated value.
We value KMB, which excludes HYH, at $40.9 billion or $110.00 per share using 11.1x FY15 EBITDA multiple.
Deal Overview
On November 14, 2013, Kimberly-Clark Corp. (NYSE: KMB; Market Capitalization: $41.5 billion) announced that its board of directors authorized the management to pursue the spin-off of its health care business, Halyard Health, Inc. (NYSE: HYH; Market Capitalization: $1.8 billion). On May 6, 2014, HYH filed its initial Form-10 with the U.S. Securities and Exchange Commission (SEC) providing details of its business and subsequently, on October 7, 2014, the company filed amended form 10-12B/A with timeline details of the spin-off.
On October 7, 2014, Kimberly Clark Corp. announced that its board of directors approved the spin-off of its healthcare business into a separate company. And on October 31, 2014, KMB completed the tax-free spin-off of HYH. Through the spin-off, shareholders of KMB received one share of HYH common stock for every eight shares of KMB common stock held as of the close of the business on October 23, 2014, the record date. On November 3, 2014, shares of HYH began trading ‘regular-way’ on NYSE under the symbol “HYH”.
Valuation
KMB believes that macroeconomic environment will continue to remain volatile. The company expects that weakened currencies relative to U.S. dollar will be a headwind to its earnings in the near term. The company is seeing slight positive signals in North American birth rates, which we expect will support demand for diapers. The company expects per capita income of middle class to increase in China, Russia, and Brazil, which would increase demand for company’s product in the region.
The company has strengthened its distribution in the wake of Procter & Gamble Co. (NYSE:PG) re-entry into adult incontinence market. In the diaper segment, super-premium segment grew at double-digits, which was more than offset by Huggies, whereas Luvs picked up a decent amount of market share. KMB intends to work on improving product performance to deliver better performance.
We continue to believe in the growth potential offered by strong demographics, rising incomes, increasing awareness on health and hygiene in the Asia-Pacific markets. However, currency headwinds in the international markets are expected to partially offset these positive impacts. In the consumer tissue segment, KMB was able to increase prices in its international market to counter adverse currency movements and cost inflation. K-C professional segment is expected to increase occurrence of economic development and industrialization.
As part of KMB’s planned organizational restructuring total after-tax costs are expected to be $130 million to $160 million. These charges will begin in Q414 and will end by FY16. Savings from the restructuring are expected to be around $120 million to $140 million pre-tax by FY17. KMB expects the savings to start accruing in the next year. Further clarity on the restructuring charges is expected to be provided during Q414 earnings release in January, 2015. Based on KMB’s cost saving plans and our estimates, we expect KMB’s FY15 EBITDA to be around $4.1 billion. Using 11.1x FY15 EBITDA estimate, we now value KMB at $40.9 billion or $110.00 per share. We are reiterating our ‘Neutral’ rating.
Post spin-off, HYH expects that it will incur $40 million annual cash expense for services related to IT, finance, and HR. As a result of separation, HYH will incur around $29 million of net expenses on an annual basis related to decline of purchase scale, stranded facility costs and reduction in related party sales. Additionally, HYH is expected to incur transitional service cost in the range of $60 million to $75 million through FY16, with 80% expected in FY15. Based on our revenue expectation and expected cost trajectory of HYH post-separation, we believe HYH’s FY15 revenue and EBITDA to be around $2.1 billion and $261 million, respectively.
Using 11.3x FY15 EBITDA estimate, we reiterate our valuation on HYH at $2.3 billion or $48.00 per share. we are reiterating our ‘Buy’ rating.
Company Description
Kimberly-Clark Corp. (Parent)
Kimberly-Clark is one of the world's largest makers of personal paper products, The company now operates through three business segments: personal care, consumer tissue, K-C Professional. Kimberly-Clark's largest unit, personal care, makes products such as diapers (Huggies, Pull-Ups), feminine care items (Kotex), and incontinence care products (Poise, Depend). Through its consumer tissue segment, the manufacturer offers facial and bathroom tissues, paper towels, and other household items under the names Cottonelle, Kleenex, Viva, and Scott (plus the Scott Naturals line). Kimberly-Clark's professional unit makes WypAll commercial wipes, among other items.
Halyard Health Inc. (Spin-Off)
Halyard Health Inc. (HYH) is an independent, publicly traded company, focusing on preventing infection, eliminating pain and speeding recovery for healthcare providers and their patients. The company reported net sales of $1.7 billion across its Surgical & Infection Prevention (S&IP) products and Medical Devices business.
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ce6add61fc2c58e152bff131649d3331 | https://www.forbes.com/sites/joecornell/2017/04/04/hewlett-packard-enterprise-completes-spin-merger-to-form-dxc-technology/?sh=6814bf470580 | Hewlett Packard Enterprise Completes Spin-Merger To Form DXC Technology | Hewlett Packard Enterprise Completes Spin-Merger To Form DXC Technology
Mike Lawrie, chief executive officer of DXC Technology Co. on Monday, April 3, 2017. Michael... [+] Nagle/Bloomberg
DXC Begin RW Trading
On April 1, 2017, Hewlett Packard Enterprise (NYSE: HPE; $17.57; Market Capitalization: $29.1 billion) completed the spin-merger of its Enterprise Service segment to form DXC Technology (NYSE: DXC; $67.95; Market Capitalization: $19.3 billion).
March 16: When-issued trading commenced. March 20: Record date for the spin-merger. April 1: Consummation of distribution and merger. April 3: Regular-way trading for HPE and DXC commenced.
Distribution and Ownership
Shareholders of CSC as of record received one share of DXC for each share of CSC. HPE shareholders received 0.086 shares of DXC for each share of HPE held as of March 20, 2017, the record date. Post merger, legacy shareholders of CSC own 49.9% stake in DXC and shareholders of HPE own 50.1% stake in DXC.
Our Take
We believe that HPE is fairly valued at current level. Focus on hardware and long term improvements in cloud offerings will be key catalysts for HPE. DXC’s market capitalization implies 8.54x forward EV/EBITDA. The implied multiple is nearly 12% lower than DXC’s peer group median. Strong leadership and merger benefi ts suggest potential upside from current price. We reiterate ‘Buy’ rating on DXC.
Valuation and Recommendation
We value DXC at $22.6 billion or $80.00 per share using 9.7x FY17 EBITDA Multiple. We are reiterating ‘Buy’ rating on DXC.
We value HPE at $30.1 billion or $18.00 per share using 10.0x FY17 EBITDA Multiple. We are reiterating ‘Neutral’ rating on HPE.
HPE and DXC Market Cap Split at Regular-Way Spin-Off Research
Deal Overview
On May 24 2016, HPE announced the spin-off of its Enterprise Services business, and its subsequent merger with CSC. The deal created a company with the requisite scale, expertise and leadership to catapult it amongst the world’s largest pure-play IT services companies. HPE distributed shares of DXC to shareholders of HPE as of record on March 20, 2017. When-issued trading for HPE and DXC commenced on March 16, 2017. The distribution and merger was completed on April 1, 2017, the transaction is tax-free to shareholders of both companies.
HPE shareholders retain stake in HPE as well as hold approximately 50.1% interest in DXC. CSC shareholders hold the remaining 49.9% ownership. DXC assumed additional debt and liabilities from HPE’s Enterprise Services segment in conjunction with the spin-off and is headed by Mike Lawrie, the former chairman, president and CEO of CSC.
Deal Consideration Spin-Off Research
Deal Rationale
The strategic combination of HPE and CSC proffer benefits to both IT giants, with DXC gaining from scale, technological proficiency, versatility, and skilled management. DXC is anticipated to have annual revenues of $26.0 billion, 85 delivery centers and 95 data centers servicing over 5,000 clients speckled across 70 countries globally, and cost-synergies of about $1.0 billion in the very first year. Given only 15% overlap in client accounts of both companies despite substantial similarities in operation, the deal will expand customer footprint and room to innovate.
The sleeker HPE, on the other hand, will benefit from a more tapered focus on hardware sales and equity stake in the new company, valued at over $9.5 billion in a combination of 50% ownership stake, cash dividend of $1.5 billion, and $2.5 billion of debt and other liabilities.
Organization Chart Spin-Off Research
Valuation
Following the transaction, HPE announced its revised financial outlook, adjusting for partial year contribution by the ES segment. The company now expects its FY17 non-GAAP EPS to be $1.46-$1.56, compared to its earlier estimate of $1.88-$1.98. HPE will now streamline its focus on emerging technologies such as cloud computing, hybrid IT, big data and analytics, and IoT.
Contributions from the Xchanging and UXC acquisitions have resulted in positive YoY revenue growth and also brought about cost synergies for CSC. In the most recent quarter, GBS revenue growth continued its positive streak, while GIS revenue growth was almost fl at YoY at 0.8%. The GIS segment has been facing a slowdown in revenues, due to headwinds confronting the traditional infrastructure outsourcing business. The segment is gradually shifting toward next-gen solutions in order to alleviate revenue pressure. Further, the investments made in the GBS division’s BPS platform are expected to offset margin improvements in the near term, until the benefits of the investment are realized. Over the short term, we believe CSC garners a lower value on a stand-alone basis, and stands to gain more post the CSC-HPE ES merger due to the magnitude of earnings power potential.
Valuation Spin-Off Research
We value DXC at $22.6 billion or $80.00 per share using 9.7x FY17 EBITDA Multiple. We are reiterating ‘Buy’ rating on DXC.
We value HPE at $30.1 billion or $18.00 per share using 10.0x FY17 EBITDA Multiple. We are reiterating ‘Neutral’ rating on HPE.
Index Impact: Based on our valuation estimates we do not expect any selling pressure on HPE. DXC has gained membership into the S&P 500 Index.
Company Description
Hewlett Packard Enterprise Company (Parent)
Hewlett Packard Enterprise Company (HPE) is a leading global provider of cutting-edge technology solutions to optimize traditional information technology and helping build secure, cloud-enabled, mobileready infrastructure. In FY16, HPE generated revenues of $31.3 billion. HPE operates through four segments: Enterprise Group, Software, Hewlett Packard Financial Services, and Corporate Investments.
DXC Technology (Spin-Merger)
DXC Technology (DXC) consists of the Enterprise Services segment of HPE excluding (a) the Mphasis Limited reporting unit and (b) the Communications and Media Solutions product group. DXC is a leading global provider of technology consulting, outsourcing and support services across infrastructure, applications and business process domains in traditional and Strategic Enterprise Service (SES) offerings which include analytics and data management, and security and cloud services.
Share Price as of April 3, 2017 Spin-Off Research
Transaction Detail Spin-Off Research
Key Data - HPE Spin-Off Research
Top 5 Shareholders - HPE Spin-Off Research
Key Data - DXC Spin-Off Research
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3725cf1b8eb8f2b0e4cb698970023d9a | https://www.forbes.com/sites/joecornell/2019/05/20/iqiyi-faces-regulatory-drag/ | iQIYI Faces Regulatory Drag | iQIYI Faces Regulatory Drag
Photographer: Victor J. Blue/Bloomberg © 2018 Bloomberg Finance LP
On May 16, 2019, iQIYI, Inc. (NASDAQ: IQ; $19.04; Market Capitalization: $13.8 billion) announced its 1Q19 results. Revenue for the quarter came in at $1.0 billion, up 43% YoY from robust subscriber growth and revenue from the Distribution and licensing business. IQ remains the second largest video platform in China, after Tencent Video, and added another 9.5 million subscribers, outperforming peers, and increased its paying ratio to 98.6%. However, operating loss margin for the quarter, at 29%, worsened from the prior year period’s 22%. Content costs continue to be high and will remain so to attract customers through original content, with plans to foray into full length original films for the next 2-3 years. Further AI capability development remains crucial for improving efficiency outcomes at scale, reducing costs and improving monetization.
Membership services revenues increased 64% YoY to $513 million, driven by an increase in subscribers to 96.8 million, up 58% from the previous year. Distribution revenues were up 66% YoY to $76 million, down from the 137% growth posted same time last year from monetizing its premium content library for royalties and airing rights. Online advertising services revenue remained flat compared to last year, bringing in $316 million.
iQIYI Inc. and Price Performance Spin-Off Research
Transient Headwinds
With parent Baidu Inc.’s (NASDAQ: BIDU) online ad revenue plummeting, multiple issues are headed for IQ, including a Chinese stock sell-off in U.S. markets due to trade tensions and increased regulatory scrutiny in the Chinese video market leading to delayed content production. However, we note that the membership revenue growing at a faster pace than content costs is a positive sign of an expanding business and better profitability. Content remains the key focus for IQ and despite the transient headwinds, we remain constructive about IQ’s space in the Chinese streaming market, leading us to upgrade our recommendation on IQ with a ‘Buy’ rating.
Carve-Out Details and Top 5 Shareholders Spin-Off Research
Valuation and Recommendation
Based on Price/forward sales multiple implied by BABA’s acquisition of Youku, we estimate IQ’s market capitalization at $18.2 billion or $25.00 per ADS. We are upgrading our recommendation on IQ to ‘Buy’.
Deal Overview
BIDU announced on February 14, 2018 its plans to IPO its online video streaming business, iQIYI, Inc. (NASDAQ: IQ). The announcement was made during BIDU’s 4Q17 earnings release. BIDU’s stock soared on better than expected results driven by stellar advertisement revenues. The separation would involve an equity carve-out of BIDU’s ownership interest in IQ.
BIDU offered 17.1% of its ownership in IQ for sale through the IPO. On February 14, 2018, IQ submitted a draft registration statement on Form F-1 with the U.S. Securities and Exchange Commission (SEC) for a proposed initial public offering and listing of its American Depositary Shares (ADS) representing its ordinary shares on NASDAQ Global Market under the symbol “IQ.”
BIDU, the controlling shareholder of IQ, beneficially owns all of IQ’s Class B ordinary shares and is able to exercise 93.1% of the total voting power following the IPO. Each of BIDU and Hillhouse Capital, an affiliate of IQ’s existing shareholder, held an option to acquire shares worth $200 million or about 77.78 million shares (at midpoint of the IPO price range) through this offering. IQ’s ADSs are listed on the NASDAQ Global Market under the symbol “IQ.”
Key Data Spin-Off Research
Deal Rationale
China, with its rich demographic factor, has proven to be one among most lucrative market for e-commerce and content streaming. IQ is an early player to capitalize on this trend. Over the years, the rivalry between IQ and its close competitor, Youku Tudou, Inc. (now part of BABA), has intensified. The separation is primarily about positioning IQ as a leading player in the Chinese online video streaming market and developing an acquisitive currency, which will play a vital role in enabling IQ to grow in an early consolidating market.
Organization Structure Spin-Off Research
Valuation
1Q19 highlighted some of the short-term regulatory headwinds facing IQ. We believe that these roadblocks merely affect IQ’s content launch timing without any material impact over its content quality. IQ aspires to be the “Disney of China” with a Netflix-style production house and a plan to merchandise and license their massive library of IP. The strategy for the short term remains focused on generating quality original content to attract new paying customers. Revenue comes largely from membership services, distribution services and ads.
At $934 million, content costs were up 38% YoY in 1Q19, bringing costs to twice the size of membership revenue. Expenses however didn’t rise as much as the 97% growth in 4Q18, due to delays in production. The cash burn seems to be paying off. IQ added about 9.5 million subscribers in the quarter, adding to the 87.4 million base at the end of 2018. 98.6% of them are paying subscribers, a promising ratio, given that Chinese users were long used to getting free content in a country with rampant online piracy. The reduction in content costs reflects the industry-wide slowdown due to regulation process updates for video platforms. The content delivery timetable has been the driver of subscriber acquisition, and the slowdown will affect user growth and ad revenue within the next 2 quarters. Exclusive content remains the most important driver for subscriber base growth and a slowdown is cause for concern.
Throughout IQ’s growth phase, IQ has competed with its closest rival, Youku Tudou, for sustainable viewership. Youku was acquired by Alibaba Group Holding Ltd. (NASDAQ: BABA) in June 2016 for a total consideration of about $5.1 billion. Due to lack of comparable publicly listed peers for IQ, we believe that BABA’s acquisition is a suitable precedent to estimate IQ’s valuation.
Youku Acquisition Implied Multiple Spin-Off Research
Even though we feel that Youku is IQ’s closest comparable considering the viewership base and content quality, IQ could demand premium valuation relative to that implied by Youku’s acquisition, since its user retention ratio averages at about 30%, quite higher than the industry average of 10% to 20%. With 454.5 million MAUs, IQ is the second largest internet video streaming service in China in terms of user time spent on the platform. Although the retention rate among PC users is relatively lower for IQ, we expect the improvement in mobile user engagement to continue as IQ adds to its quality content pool.
IQ Enterprise Valuation and Expected Enterprise Value Spin-Off Research
Based on Price/forward sales multiple implied by BABA’s acquisition of Youku, we estimate IQ’s market capitalization at $18.2 billion or $25.00 per ADS. We are upgrading our recommendation on IQ to ‘Buy’.
Implied Stub Value and Embedded Value Spin-Off Research
BIDU carved-out 17.7% ownership in IQ via an IPO and retains 56.7% stake estimated at about $7.8 billion. Each share of BIDU corresponds to 1.18 shares of IQ embedded, implying an embedded value of $22.41 and a stub value of $105.90.
Latest Earnings Update: First Quarter Ended March 31, 2019
Tech Highlights
Technology used in IQ’s AI and machine learning (ML) platforms are not only used for recommending content to users and targeting ads, but also now helps cast actors, edit footage, create personalized content, thus adding to the ecosystem of the user experience. Developing strong AI and ML capabilities along with quality content are the basics to being competitive. A strong IP and AI platform can be the core to managing margins for the tech based entertainment platform to drive ad efficiency. IQ CTO claimed their algorithm to predict popular content has a 88% accuracy rate. The use of AI can save companies money by making library organization, smarter recommendation and improved user interfaces, that, according to Netflix saved them about $1.0 billion annually. IQ’s AI platform is made stronger and more competitive with the backing of BIDU and can improve efficiencies and profitability.
Interactive video will play a starring role in immediate monetization strategy. Interactive Video content like “Black Mirror: Bandersnatch” uniquely brought an interactive choice-feedback gaming experience to creative narration that was a major success for Netflix. “The more immersive, the better” according to IQ’s CTO - and that guides technology and content generation for the platform. This could be important for boosting user-ad interaction opportunities. IQ has released “Guidelines” for content creation in this format this quarter, the first of its peers. However, interactive videos currently only promise higher costs and overheads without an immediate pay-off. To further differentiate themselves, full-length original movies will be pursued - a significantly more expensive endeavor.
IQ still has to catch up to its peers in terms of quality content and expanding a paying subscriber base to match that of Netflix or Disney, which it compares itself to, that makes for a long road to profitability. In 2018 number of subscribers shot up 72% YoY to 87.4 million and also incurred $1.3 billion in losses. IQ’s investment in premium content have helped attract more paying customers, building their membership revenue as well as providing a user base for a competitive ad businesses.
IQ Earnings Update Spin-Off Research
Company Description
Baidu, Inc. (Parent)
Baidu, Inc. (BIDU), founded in 2000, is a leading Chinese technology company specializing in Internet-related services and products, and artificial intelligence. BIDU provides users with many channels to connect to information and services. In addition to core web search product, BIDU powers several popular community-based products. These include Baidu PostBar, the world’s first and largest Chinese-language query-based searchable online community platform; Baidu Knows, the world’s largest Chinese-language interactive knowledge-sharing platform; and Baidu Encyclopedia, the world’s largest user-generated Chinese-language encyclopedia.
iQIYI, Inc. (Carve-Out)
iQIYI, Inc. (IQ) is an online video platform with a content library that includes copyrighted movies, television series, cartoons, variety shows and other programs. IQ derives a majority of its revenues from online advertising services. As is customary in the advertising industry in China, IQ offers commissions to third-party advertising agencies and recognizes revenue net of these commissions. IQ also derives an increasing portion of its revenues from other sources, such as subscription services and sub-licensing of licensed contents to other online video websites.
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b13f1e07b435d4a820c5f4074fce209c | https://www.forbes.com/sites/joecornell/2020/11/19/aarons-holdings-to-spin-off-the-aarons-company-on-november-30-2020/?sh=8e2936e56317 | Aaron’s Holdings To Spin-Off The Aaron’s Company On November 30, 2020 | Aaron’s Holdings To Spin-Off The Aaron’s Company On November 30, 2020
(Carlos Delgado/AP Images for Aaron's Inc.) AP Images for Aaron's Inc.
On July 29, 2020, Aaron’s Holdings Company, Inc. (NYSE: AAN, $61.36, Market Capitalization: $4.1 billion) a leading omni-channel provider of lease-purchase solutions, announced its intention to separate into two independent, publicly-traded companies: PROG Holdings, Inc (Progressive PGR Leasing and Vive Financial) and The Aaron’s Company, Inc. (Aaron’s Business segment). On November 17, 2020, Aaron’s Holdings Company, Inc. announced additional details of the separation. Post spin-off, Aaron’s Holdings will be renamed as PROG Holdings, Inc., while the spun-off unit that will hold the Aaron’s business segment will be named as The Aaron’s Company, Inc. Both the entities will trade on NYSE under the symbols “PRG” and “AAN”, respectively. Headquartered in Draper, UT, PROG Holdings, Inc will comprise of the company’s current Progressive business segment and Vive Financial. On the other hand, The Aaron’s Company, headquartered in Atlanta, GA, will comprise of ~1,400 company-operated and franchised stores in 47 US states and Canada, the e-commerce platform Aarons.com and Woodhaven Furniture Industries.
Aaron's Price Performance Spin-Off Research
The transaction is expected to be completed through a pro rata dividend of The Aaron’s Company stock to parent company shareholders. Each AAN shareholder will receive one share of The Aaron’s Company common stock for every two shares of AAN’s common stock held as of the record date, November 27, 2020. The distribution will not require shareholder approval and is expected to be tax-free to the company and shareholders. The company has filed Form-10 with the SEC, however not yet available publicly (expected to be released on AAN’s website on the record date i.e. Friday, November 27, 2020).
We raise our fair value estimate on PROG Holdings, Inc. to $50.00 per AAN share on sustainable margins, but lower our fair value estimate on The Aaron’s Company, Inc. to $23.00 per AAN share on moderated margin expectations. For AAN (Consolidated), we reiterate our target price of $73.00 per share and Buy rating.
Spin-Off Details Spin-Off Research
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Spin-Off Details / Timeline
(a) Record Date: The record date for the spin-off is November 27, 2020.
(b) Spin-Off Ratio: The spin-off ratio is 1:2, implying each AAN shareholder will receive one share of The Aaron’s Company common stock for every two shares of AAN’s common stock.
(c) When-Issued Trading: Aaron’s and Progressive’s common stocks are expected to commence when-issued trading on or about November 25, 2020 and is expected to continue up to the distribution date of November 30, 2020 under the symbol “AAN WI” and “PRG WI” respectively.
(d) Distribution Date: The distribution date for the spin-off is November 30, 2020.
(e) Regular-Way Trading: Both the stocks will commence regular-way trading on December 1, 2020.
(f) Exchange and Ticker: Aaron’s Holdings Company, Inc. will be renamed as PROG Holdings, Inc and continue to trade on the NYSE under the ticker “PRG”, while spun-off company will be named as The Aaron’s Company, Inc. and will trade on NYSE under the ticker “AAN”.
(g) Tax Status: The spin-off is expected to be Tax-Free.
Aaron's Key Data and Top 5 Shareholders Spin-Off Research
Aaron's (Consolidated) $61.36 per share Spin-Off Research
Deal Overview
On July 29, 2020, Aaron’s Holdings Company, Inc. (NYSE: AAN, $61.36, Market Capitalization: $4.1 billion) a leading omni-channel provider of lease purchase solutions announced its intention to separate into two independent, publicly-traded companies: PROG Holdings, Inc (Progressive Leasing segment) and The Aaron’s Company, Inc. (Aaron’s Business segment). On November 17, 2020, AAN announced additional details of the separation. Post spin-off, Aaron’s Holdings will be renamed as PROG Holdings, Inc., while the spun-off unit that will hold the Aaron’s business segment will be named as The Aaron’s Company, Inc. Both the entities will trade on NYSE under the symbols “PRG” and “AAN”, respectively. Headquartered in Draper, UT, PROG Holdings, Inc. will comprise of the company’s current Progressive business segment and Vive Financial. On the other hand, The Aaron’s Company, Inc., headquartered in Atlanta, GA, will comprise of ~1,400 company-operated and franchised stores in 47 US states and Canada, the e-commerce platform Aarons.com and Woodhaven Furniture Industries.
The transaction is expected to be completed through a pro rata dividend of The Aaron’s Company stock to parent company shareholders. Each AAN shareholder will receive one share of The Aaron’s Company common stock for every two shares of AAN’s common stock held as of the record date, November 27, 2020. The distribution will not require shareholder approval and is expected to be tax-free to the company and shareholders. The company has filed Form-10 with the SEC; however, it is not yet available publicly (expected to be released on AAN’s website on the record date i.e. Friday, November 27, 2020). The Aaron’s Company (Spin entity) and PROG Holdings Inc’s (Stub) common stocks are expected to commence when issued trading on or about November 25, 2020 under the symbols “AAN WI” and “PRG WI”, respectively and are expected to continue until the distribution date. The distribution date for the spin-off is November 30, 2020 and both stocks will commence regular-way trading on December 1, 2020.
Post separation, Steve Michaels, will continue to serve as CEO of the PROG Holdings, Inc. Blake Wakefield, will continue to serve as President of the company. Brian Garner will assume the role of CFO of the PROG Holdings, Inc.
Post separation, Douglas Lindsay, will continue to serve as CEO of The Aaron’s Company, Inc. and Steve Olsen, will continue as President of The Aaron’s Company, Inc. Kelly Wall will assume the role of CFO of The Aaron’s Company, Inc.
John Robinson, President and CEO of Aaron’s, Inc., will continue in his current role and will oversee the separation. He will depart from his role post spin-off and will serve as Chairman of The Aaron’s Company, Inc. Ray Robinson, who currently serves as the company’s Chairman, will serve as Chairman of PROG Holdings, Inc. following the separation.
Goldman Sachs & Co GS . LLC is acting as financial advisor and King & Spalding LLP is acting as legal advisor to the company. In April 2014, Aaron’s Holdings Company, Inc. entered into rapidly growing virtual lease-to-own market by acquiring Progressive Finance Holdings, the then leading virtual lease-to-own company in an all cash deal for ~$700 million. Later in September 2015, Aaron’s Holdings Company, Inc. also acquired Dent- A-Med, Inc. d/b/a the HELPcard (now Vive, that offers second look finance programs for near-prime customers for ~$55 million in cash on hand and the ~$44 million in debt. In July 2017, Aaron’s Holdings Company, Inc. acquired its largest franchisee SEI/Aaron’s, Inc. in an all cash deal of ~$140 million. This enhanced the supply chain synergies between Aaron’s Holdings Company, Inc. and Progressive Leasing in the markets where SEI was serving across 11 states.
Deal Rationale
At the time of its acquisition in 2014, AAN’s management believed that Progressive was a natural extension to its business. Since the combination, Progressive has benefited by leveraging AAN’s scale, while AAN utilized Progressive’s decision-making technology to establish a centralized decision-making process across US-owned stores. However, management now believes that the opportunities for Aaron’s Business and Progressive in operating independently far outweigh the benefits from the ongoing synergies they generate.
Subsequent to a thorough scrutiny and analysis, AAN’s management concluded that separating the two businesses would be the best path to enhance long-term shareholder value. According to the management, the separation will sharpen the strategic focus and operational execution to drive long-term shareholder value. AAN contends that both the entities will benefit from their market leading positions, strong cash flow and balance sheets, thereby unlocking significant shareholder value generation opportunities. Post separation, management expects The Aaron’s Company, Inc. to focus on its strategic priorities such as real estate repositioning and digitally enabled omni-channel strategies; offer customer value proposition through competitive pricing, high approval rates and local servicing; and generate future earnings growth and positive free cash flow. On the other hand, management believes that PROG Holdings, Inc. will be well placed to invest in innovative technologies, grow current retail partnerships and attract new retail partners and maintain an attractive financial profile through capital-efficient model in a high-growth market.
As with most industries, the advent of the internet and virtual marketplaces has led to a transformation of the lease-to-own industry. AAN’s management believes that its acquisitions of Progressive Leasing and Vive have been strategically transformational for the company from this perspective. AAN not only expanded its presence in the virtual rent-to-own market, but also generated robust top-line and EBITDA growth, primarily on the back of the Progressive business acquisition. The product offerings of Vive are complementary to those of Progressive Leasing, allowing the latter to expand into the markets and merchants served by Vive. We opine that the decision to separate Progressive and Vive bundled together factors in this aspect.
During 2016-2019, revenues of Progressive Leasing and Vive grew by 19.8% and 13.3% CAGR, respectively, while their adjusted EBITDA CAGR during the corresponding period was 20.7% and 4.4%, respectively. On the other hand, revenue and adjusted EBITDA of Aaron’s Business contracted during the same period. Consequently, Progressive Leasing’s robust top-line and EBITDA growth rate over the years has led to a jump in contribution of the unit to AAN’s overall business. We believe that some of the key rationales for the separation decision may have been the disparate growth trajectories of the two businesses and the dissimilarities between their risk profiles and business models.
Revenue Growth and Adjusted EBITDA Growth Spin-Off Research
Investment Thesis
AAN is amongst the leading omnichannel providers of lease purchase solutions with over 2 million customers. The company serves through multiple channels such as virtual lease-to-own (Progressive Leasing), lease-to-own stores (Aaron’s Business), e commerce (Aarons.com) and second-look financing (Vive Financial). The lease-to-own option is costlier than buying over the long-term; however, flexible payment options, quick access to goods and easy return policies attract credit-challenged customers. The cost-cutting measures, positive operating cash flow, continued strength in customer payment activity and lower operating expenses position the company well for the future.
The company believes that Aaron’s Business coupled with aarons.com will provide a solid base for future earnings growth and positive free cash flow generation. We are encouraged by Aaron’s Business unit generating consistent margins over the years, despite top-line growth pressure. The unit’s strategic priorities include store count optimization, generating cash flow and efficient cost structure as well as to simplify and digitize customer experience, thereby providing an integrated online and in-store experience.
PROG Holdings, Inc (Progressive Leasing) is amongst the leaders in the high-growth virtual lease-to-own US market. Over the years, on the back of its robust growth, the unit has surpassed Aaron’s Business as the company’s highest revenue and adjusted EBITDA generator. In fact, the unit’s growth has been generated at relatively consistent margins, probably reflective of the company’s ongoing investments to grow active doors. Progressive’s strong growth and invoice volumes during the pandemic should instill confidence in the unit’s growth prospects. Despite the potential top-line synergies for Progressive, we believe the lossmaking Vive unit may be a concern for investors.
In conclusion, we believe that the separation could be beneficial to both businesses as the growth, margin and risk profiles of the two units get segregated, thereby enabling their respective leadership teams to more effectively manage operations. The confirmation of the spin-off and beginning of trading in two separate companies, probably indicates a very favorable risk-reward for potential investors at current levels, especially given the company’s recent growth and margin momentum. We are bullish on both units being able to generate solid margin and cash flow growth as independent entities.
Valuation
We continue to value AAN on Sum-of-the-Parts (SOTP) methodology, based on relevant peers for the company’s business units (The Aaron’s Company, Inc. and PROG Holdings, Inc.). We value the two businesses using blended 2021E EV/Sales and 2021E EV/Adj. EBITDA multiples. As of the spin date, PROG Holdings, Inc. is expected to have net cash of $50-70 million; The Aaron’s Company, Inc. is expected to have cash of $40-50 million and no debt. We consider the average of these net cash figures in our model; $60 million for PROG Holdings, Inc. and $45 million for The Aaron’s Company, Inc. We would like to caution investors that the valuation of both the units is based on limited information available and is subject to revision once Form-10 is available (expected on Record Date of November 27, 2020). We continue to be bullish on both the units as we expect the improved margin trajectory to be sustainable in to 2021 as well, which lowers our risk perception.
1) PROG Holdings, Inc. (Stub entity)
For PROG Holdings, we have considered the combined financials and corresponding forecasts of Progressive Leasing and Vive Financial. For these units as well, there are no direct competitors. Accordingly, we compare the unit with listed companies engaged in retail business including Wayfair Inc, Amazon.com Inc, Lowe’s Companies Inc, Walmart Inc, Sleep Number Corp, La-Z-Boy Inc, Coway Co Ltd, Kroger Co, Boise Cascade Co, Rent-A-Center Inc, Conn’s Inc and HHGregg Inc. Management expects the unit to capture the large virtual lease-to-own market, with shareholders benefiting from the resilient, profitable and capital light business model. We raise our 2021E margin estimates as we expect a better-than-estimated margin growth trajectory, especially after the updated 2020E guidance. We apply multiples about in line vs. peer median. The higher margin estimates more than offset our lower net cash estimate, leading to an implied equity value of $3,380 million. Considering AAN’s diluted share count of 68 million, we raise our fair value estimate to $50.00 per AAN share (previously: $49.00) for PROG Holdings, Inc.
PROG Holdings Inc. Spin-Off Research
2) The Aaron’s Company, Inc (Spin-Off entity)
For Aaron’s, in absence of direct peers we compare the unit with listed companies engaged in retail business including Wayfair Inc, Amazon.com Inc, Lowe’s Companies Inc, Walmart Inc, Sleep Number Corp, La-Z-Boy Inc, Coway Co Ltd, Kroger Co, Boise Cascade Co, Rent-A-Center Inc, Conn’s Inc and HHGregg Inc. Management has cautioned on 2021E margin headwinds on expenses as a standalone public entity as well as normalization of labor costs. Accordingly, we moderate our adjusted EBITDA margin expectations, although it remains slightly above the upper end of the updated guidance. We continue to apply multiples at a discount vs. peer median to reflect the decline in recurring revenues and uncertainty around supply chain disruption. Apart from the lower margin, the lower net cash based on guidance leads us to a lower implied equity value of $1,574 million. Considering the diluted share count of 68 million, we lower our fair value estimate to $23.00 per AAN share (previously: $24.00) for The Aaron’s Company, Inc.
Aaron's (Spin-Off entity) Spin-Off Research
3) Aaron’s Holdings Company, Inc. (Consolidated)
We add the equity values of PROG Holdings, Inc. and The Aaron’s Company, Inc. to arrive at the combined equity value of $5.0 billion for AAN (Consolidated). Considering shares outstanding of 68 million, we retain our target price ($73.00 per share) and Buy rating on AAN (Consolidated), given significant upside. We opine that the strong market position of both entities underpins compelling prospects for the units, with the spin-off probably uncovering further shareholder value creation opportunities.
Aaron's (Consolidated) Spin-Off Research
Company Description
Aaron’s Holdings Company, Inc. (Parent)
Aaron’s Holdings Company, Inc. is a leading omni-channel provider of lease-purchase solutions. Headquartered in Atlanta, Aaron’s Holdings Company, Inc. has three business segments- Progressive Leasing, Aaron’s Business and Vive Financial. Progressive Leasing provides lease-purchase solutions through 19,000+ retail and e commerce partner locations in 46 states and the District of Columbia. The Aaron’s Business engages in the sale and lease ownership and specialty retailing of furniture, home appliances, consumer electronics and accessories through its ~1,400 company operated and franchised stores in 47 states, Puerto Rico and Canada, and also through its e-commerce platform, Aarons.com. Vive Financial (“Vive”, formerly Dent-A-Med, Inc.), provides a variety of second-look credit products through federally insured banks.
The Aaron’s Company, Inc. (Spin-Off)
The Aaron’s Company will be engaged in sales and lease ownership and specialty retailing of furniture, home appliances, consumer electronics and accessories. The company will comprise of ~1,400 company operated and franchised stores in the US and Canada, Aarons.com (the e-commerce platform) and Woodhaven Furniture Industries.
Organization Structure Spin-Off Research
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599907bcea01ec48ca599d2c2f54728e | https://www.forbes.com/sites/joeescobedo/2016/10/24/whats-the-ideal-length-for-your-business-digital-content/?sh=61d7b2b92181 | What's The Ideal Length For Your Business' Digital Content? | What's The Ideal Length For Your Business' Digital Content?
I recently got a LinkedIn message from a product developer based in Singapore. He mentioned he just launched a training aggregator mobile app and was now working on a content strategy for his company's blog. He asked me, "What's the ideal length for my business' digital content?" It's a question I've been asked many times by startups in Asia.
Here's the advice I gave him
Before you dive into how long your content should be, ask yourself three simple questions:
1. Who is my audience?
2. What are their pain points?
3. How does my business help?
Once you’ve answered those questions, start by defining your audiences in terms of personas. (Not sure where to start? HubSpot offers a free buyer personas template.)
Now put yourself in your personas' shoes. What kind of content would solve their pain points or interest them? Let’s say your target audience are busy CEOs. They’re likely interested in topline insights and best practices rather than long-form whitepapers. (At least, that’s been the case in my experience.) Alternatively, if you're targeting digital marketing managers, they often crave in-depth articles with practical tips on a particular topic. See the difference?
For a more data-driven approach, I recommend checking out BuzzSumo’s Content Analysis tool.
Once again, let’s assume you’re promoting digital marketing courses. If you enter “digital marketing” into the tool, it will show you the length of related articles that get the most shares online.
According to the chart above, "digital marketing" articles over 2,000 words tend to get more shares online. It's interesting to note that articles less than 1,000 words received around the same amount of shares as articles over 2,000 words, at least on LinkedIn.
So, it's worth noting not only the total shares across social media platforms but also the total shares on the social media network that your personas use.
By using this data along with your personas' insights, you’re more likely to develop the right content for your audience.
What about SEO?
Your content's position on Google can often make or break your content, in terms of views and conversions.
So which does Google prefer: shorter or longer content?
According to search engine results page (SERP) data from SEMRush, they found that longer content tends to rank higher on Google. In fact, the average Google first page result contains 1,890 words.
Now content length is not the only factor that Google considers when ranking content on the first page, but it does have an impact according to the studies above.
Remember this...
While longer content tends to perform better on search engines and get more shares, the most important variable when considering your content length should be your audience. Keep them satisfied and your rankings and shares will follow.
Experiment time!
Let's put the longer content theory to the test. Try publishing an online article at least 1,900 words and let me know in the comments section which position your article ranks on Google. Let the games begin!
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7c49335b4671ae6cde907c21e19c4437 | https://www.forbes.com/sites/joeescobedo/2017/04/25/from-dyslexic-to-davos-how-ali-bullock-became-a-social-media-expert-at-infiniti-other-big-brands/?sh=60de5fdd4ffd | From Dyslexic To Davos: How Ali Bullock Became A Social Media Expert At Infiniti & Other Big Brands | From Dyslexic To Davos: How Ali Bullock Became A Social Media Expert At Infiniti & Other Big Brands
Ali Bullock, Global Senior Manager, Sponsorship and Social Media at INFINITI Motorsports (Ali... [+] Bullock) Ali Bullock, Global Senior Manager, Sponsorship and Social Media at INFINITI Motorsports (Ali Bullock)
Ever been told you weren’t smart enough or good enough to do something?
It can bring you down. But it’s those who rise back up that are the most successful in life.
In this story, Ali Bullock, Global Senior Manager, Sponsorship and Social Media at INFINITI Motorsports and Davos speaker, shares how he became a social media expert at global brands despite being dyslexic.
Joe Escobedo: When were you diagnosed with dyslexia?
Ali Bullock: Around 10 years old when I was first applying to the next stage at school. Looking back, I guess it was obvious but in those days it wasn’t something as widely supported as it is today.
Finding out was a scary feeling. In one way it helped me understand why I couldn’t read and why things took me longer to understand and process. At the same time, it made me feel more alone than ever before.
Escobedo: How has dyslexia affected your professional life?
Bullock: Being dyslexic has changed my life. Yes, reading everything from emails to reading pitch documents is tough, but I can’t let it hold me back. It forces you to think outside of the lines and bend the rules that everyone else follows. To me that is what great entrepreneurs do, they find a way around or a new way to do things.
I always joke that Twitter was made for me. After all it’s hard to screw up a post in 148 characters! Though I have managed to a few times.
Being dyslexic has always given me a sense of pride in every achievement, but at the same time a strong ethical stance as well.
Last year I wrote a LinkedIn post about the ethics of an agency winning at Cannes. The article went viral. It resulted in the agency returning the award that I felt they had won through misrepresentation. The power and reach of social media combined with my stance and support from both agencies and brands ensured they took notice.
Escobedo: Were you ever told you wouldn’t be able to do something because you are dyslexic?
Bullock: Yes. Many times and more than I can remember if I’m honest.
Some of my teachers told me I would never be successful. Others told me I would never go to university. It gets hard to pull yourself up when you are constantly told you have no chance. So, you start to believe people in authority. That group thinking becomes your direction.
I was lucky in that I was offered an opportunity to break that direction and follow my own path. I was offered a scholarship by the De Beers foundation. But despite that, being different, no matter why, is lonely at times. I feel for kids today struggling with sexuality, race, bullying and not being able to fit in. It’s a hard road and many people underestimate how it feels.
Escobedo: How did you overcome dyslexia in your career?
Bullock: You don’t ever really overcome dyslexia. You find ways around the walls and look for solutions where others don’t. But it’s tough. It’s frustrating when you can’t read or pick up on something fast enough though.
But again that is a positive. It is something that pushes me every day. There is no easy day, no rest, no complacency in my world.
Many professionals tend to say “no” to projects and ideas. It’s safe. No one gets fired for doing the safe thing.
My way is the opposite. I say “yes” to every project - risk and failure aren't an issue for me. I’ve been fortunate in the support and faith I have been offered has resulted in some great projects. The outcome is what matters, not your ego.
In that sense, I feel in some ways I have overcome dyslexia in that there isn’t a fear of failure to me. Sometimes you give it 110% and it works and sometimes it doesn’t. But people see that. Putting yourself out there is what matters.
Escobedo: How has dyslexia helped your social media career?
Bullock: Saying "yes" to every opportunity and not ever being afraid to fail has helped me in my career. The social media world is new to most of us. In this world, the risk takers thrive; not someone who went to the right school or who has the best degree.
At Cathay Pacific, no one wanted to get into social media. It was wrong for the audience, wrong for the brand, too risky. I went to every department and got the same response. Yet, my GM at the time told me to go ahead and I promised him we would make it work. When we passed 100,000 fans, no one ever questioned again whether social media was important to the business.
Then came the step up to INFINITI. They asked if I felt up to the challenge of working on one of their most important campaigns, the Formula One program. I knew social media would be at the heart of this and it would be one of the biggest challenges I have ever taken on.
Again I said "yes". It was nothing short of an incredible opportunity.
Escobedo: What was your proudest moment in your career?
Bullock: I’m really proud of leading the social media presence for so many of the world's leading brands. I have topped over 100 million video views on social media across YouTube, Twitter and Facebook. I’m working on Wechat with our China team, again something new to learn. That is the great thing about social, you can’t sit still and there is no room for complacency.
Escobedo: What advice would you give to others struggling with dyslexia or other impairments?
Bullock: The only impairment is the one in your own mind. Whether it be dyslexia, race, gender or just confidence. Doing right by yourself and others will get you there. You may not get there as fast as others, but you will get there in the end.
Stay true to yourself is the best advice I can give.
(Bullock’s views are personal and are not intended to reflect those of INFINITI or any other brand mentioned.)
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bfef848efb7ce3593f7a279974569be6 | https://www.forbes.com/sites/joeescobedo/2017/05/29/how-4fingers-grew-its-revenue-from-2m-to-30m-in-only-four-years/ | How Singaporean Fried Chicken Chain 4FINGERS Grew Its Revenue From $2M To $30M In Only Four Years | How Singaporean Fried Chicken Chain 4FINGERS Grew Its Revenue From $2M To $30M In Only Four Years
Steen Puggaard, CEO of 4FINGERS Crispy Chicken 4Fingers
What do you do when you get fired? Do you give up? No! You turn the company that fired you into a multi-million dollar business. That’ll show ‘em!
That’s exactly what Steen Puggaard, CEO of 4FINGERS Crispy Chicken did. After being fired by the previous owners for refusing to breach his fiduciary duties as a Director of the company, Puggaard returned as CEO and grew 4FINGERS from one outlet store to 21 in four short years. In doing so, he grew the company from $2M to a $30M business, from owned outlets excluding franchises.
I spoke with Puggaard to find out how he managed to achieve such an impressive turnaround and ultimately grow the business across Southeast Asia.
Joe Escobedo: What is one thing that very few people know about you?
Steen Puggaard: I am a former competitive rower and was the national champion in Singapore in 2004. I tend to be quite uncompromising in the pursuit of goals, something I learned from competitive sports.
Escobedo: How have you grown 4FINGERS’ revenue from $2M to $30M in only four years?
Puggaard: As a young, relatively new brand, we had the advantage and freedom of molding ourselves to match current trends and consumers’ demands. This is especially true in a market so saturated with established food chains. We are constantly on the lookout for ways to disrupt the status quo as opposed to blending into the wallpaper.
From an operations point, we take care of our staff while compensating them well so they’re committed and dedicated to the 4FINGERS’ brand. They’re the ones facing the customers and who better to convey what we stand for?
Escobedo: How has digital marketing and PR contributed to this success?
Puggaard: We put a lot of thought into what our brand stands for, connecting with our customers for the full brand experience from their meals to the music played in-store. For example, we created a 4FINGERS Spotify playlist that connects consumers across all the countries we’re present in. All tracks in the playlist were curated by the team. We also recently had an online game named Get cLucky. Customers received a special code with each purchase and they could go online for a chance to win a 5-star trip to Melbourne. This contest helped us boost site traffic by 30% and collect a good amount of leads for future activities.
Rather than be seen as just a chain serving fried chicken, we wanted to give our customers the experience of casual dining in a vibrant, underground setting. We’re about giving our consumers quality, tasty food that’s against the norm. Everything about us reflects this - our stores’ designs with the graffiti walls and subway signs, the grungy underground look of our website, down to our packaging. This all reflects the rebellion and disruption against the norm that we at 4FINGERS stand so firmly for.
Interior of a 4Fingers outlet 4Fingers
Escobedo: What’s your criteria for evaluating PR agencies?
Puggaard: An agency should be a partner for us rather than just a vendor. We look for partners who can get under our skin, understand our DNA and also be keen to use 4FINGERS as a canvas to create something new. The agency should be a partner who adds value rather than just execute, by proactively suggesting opportunities and looking at what’s talked about to not only ensure we stay relevant but remain a step ahead.
Escobedo: What are your global expansion plans?
Puggaard: It’s in our brand’s DNA to constantly disrupt the scene around us. In our world domination plan, we are focusing a lot more on mature western markets where people are fed up and unhappy with the old entrenched brands. We want consumers who are hungry for new and better companies, and are sick of brands getting too comfortable; brands who are losing their relevancy and competitiveness.
When identifying potential countries to launch 4FINGERS in, we make sure legal, financial and commercial criteria are in order:
Legally, we prefer to do business in countries that respect the rule of law and the sanctity of contracts. Financially, we prefer countries where the currency is a multiplier, not a divider- markets with substantial spending power. Commercially, we look for consumers who are showing sign of brand fatigue; consumers who are disenfranchised from the old established brands and are seeking new brands with more relevance and better products.
Escobedo: How do you plan on using digital marketing and PR to achieve your global ambitions?
Puggaard: While the potential overseas markets like the U.S., UK and Australia, we are eyeing, are extremely competitive and cut-throat, we know we have an excellent brand to offer. If we ensure our brand matches the people’s needs and show them 4FINGERS is a brand capable of sparking a revolution, we can capture those markets. So along this journey, we will share the 4FINGERS story and connect with consumers through digital marketing and PR activations. We even have a music festival planned later this year to give back to our customers.
We also aim to use the right technology in our business. F&B is traditionally a very low-tech industry that’s slow to maximise the potential of technology. We want to be a totally technology-enabled F&B business - not just for marketing purposes - but to “uberize” the business.
We will be integrating tech in new ways for our global store openings. For example, all our training videos will be in an app format, including certifications and tests. We will also be launching our own queue-buster app with CRM capabilities that can be customized for each user. We hope to use tech and mobile tech as a way to engage and communicate with our customers, rather than just talk to them.
Escobedo: Besides 4FINGERS, what’s your favorite F&B outlet in Singapore?
Puggaard: Anywhere with good laksa!
(Got any other questions for Puggaard? Share them in the comments section!)
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4b35b5991f1324887c2c12726b7b9284 | https://www.forbes.com/sites/joefolkman/2015/07/23/feeling-overwhelmed-you-are-far-from-alone/?sh=5ebc233119a4 | Feeling Overwhelmed? You Are Far From Alone | Feeling Overwhelmed? You Are Far From Alone
Recently a friend of mine told me about his role as a new project manager in a large healthcare organization. He’s constantly asked to take on the projects of senior leaders and was living in fear that saying “no” would harm his career. As a result he was overwhelmed and wasn’t sure he could keep up the pace. There were so many people to please and he didn’t want to disappoint them. As I thought about my early career and the stress of pleasing those at the top, I wanted to assure him the feelings of being overwhelmed will soon go away and everything will work out. But the truth is we all feel overwhelmed at various points in our careers. Thankfully, there are some things we can do.
In a recent global survey we found that 14% of the 2,957 people we queried feel chronically overwhelmed. At the end of a busy day they feel drained. Of the group, 16% of those who feel overwhelmed were female; 13% were male.
Attitudes of the Overwhelmed
Those who feel overwhelmed are significantly more likely to agree with the following statements:
- I don’t do my best work and worry about making mistakes when performing under a deadline.
- I hate to be rushed and in a hurry.
Others described these individuals as steady and consistent rather than fast moving. They enjoy work the most when there is sufficient time to get everything right. They are more concerned, when making decisions, about moving too fast and making mistakes then making the decision quickly.
Not surprisingly, those who felt overwhelmed rated themselves significantly lower on their perceived control of circumstances in their current environment.
Even though they didn’t feel they had control over their circumstances, they also rated themselves as significantly slower on activities such as getting work done, making decisions, holding meetings, getting ready in the morning, taking a test and taking a shower. When asked if they could be more effective if they were able to move faster, 74% agreed or strongly agreed with that statement.
For those who would like to be less overwhelmed there are two possible solutions:
Find a way to reduce your obligations and workload or Find ways to work faster and more efficiently.
We know that young people feel more obligated to volunteer for assignments and resist saying no. But one of the biggest problems with being overwhelmed is that psychologically the feeling of being overwhelmed makes people slow down. Think about a time you felt extremely overwhelmed. Were you moving faster than normal or did you struggle to make it to the end of the day? It’s as if you are dragging around in lead shoes. Taking on additional work and performing the work poorly will not help your career.
Most people worry that saying no to additional assignments will hurt them. I have always liked the way an individual in our organization, Mike, has approached this with me. Occasionally I go to Mike and say, “Can we do a new project?” Mike’s immediate response is, “Yes, I am glad to help.” I say, “Thanks so much” and start walking away. Then Mike says, “Before you go, can you help me clarify my priorities?” Mike then lays out his priorities and asks, “Where does this new project fit and what should move further down in my priorities?” Ninety-nine percent of the time I say, “It does not fit, all the other priorities here are more important.” I love Mike’s willingness to help. But in his situation, like yours, remember that other people don’t remember the number of priorities you have or your workload. It helps to remind them in a positive way, without complaining. The reality is, however, that most people are going to have a difficult time reducing their load.
The second way to become less overwhelmed is to increase the speed and efficiency of your work. We analyzed our 360-degree feedback data from more than 700,000 colleagues to see what set fast-and-effective leaders apart from those who don’t move fast enough. What we found was that these leaders used a few key skills to help them move faster.
Innovation and Knowledge
Several years ago I was talking with a colleague about how much I hated voice mail messages. I mentioned that whenever people would leave their phone numbers they would typically speed up their communications and mumble so it was impossible to capture the number. My colleague agreed, he then said, “and when you miss the number you need to listen to the entire message over again!” I said, “But what about the “7”? My colleague looked confused and asked, “What do you mean the “7”? I responded, “Pushing the “7” while playing a voice mail makes the recording back up 5 seconds.” He was astounded. He never knew. For three years he had wasted a lot of time listening to messages again and again to catch the few digits he needed at the end of the call. Think of the number of things we use everyday in which we don’t understand and use valuable features. There are likely many features that could save time and energy if we would take a few minutes to learn our systems and processes better.
Communicate
It is natural for all of us to believe that others understand our motives, intentions and plans when, in fact, they don’t. How many people communicate too much information? There are a few that do this, but most people don’t communicate enough, to let people know what is going on, when a project is due, the status of assignments and our expectations and concerns. Leaders who are skilled at keeping others informed are able to execute faster and more efficiently.
External Perspective
It is easy to focus primarily internally on your group, your assignment, and your circumstances. When this happens you lose perspective. I notice this most when I am riding my bike up the canyon by my house. From my perspective, I am tearing up the path at a tremendous speed. The reality of my speed becomes apparent to me only when someone passes me like I’m standing still. When people take the time to look outside their own arena, they realize much better how they could potentially work faster and become more efficient as well.
Being overwhelmed is a continual battle for us all. The world is speeding up, but the good news is that we can increase our speed and we can take back the feeling of being more in control of our lives. (Moving faster has an interesting impact on a person’s attitude, we’ve discovered. When people move faster, they feel they have more control.) To get a better sense about the pace you work, your focus on quality or quantity, and your level of patience go to and take the speed self-assessment to see where you stand.
Gallery: Five Ways To Overcome Burnout 6 images View gallery
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c48f753a222baf932a40133be28e20d7 | https://www.forbes.com/sites/joefolkman/2016/04/13/are-you-on-the-team-from-hell-5-ways-to-create-a-high-performance-team/?sh=3d872a077ee2 | 5 Ways To Build A High-Performance Team | 5 Ways To Build A High-Performance Team
Have you ever been part of a great team at work? A team where you loved to come to work every morning, a team that charged you up with energy, and a team that encouraged you to accomplish goals you thought were impossible. On this team you felt a great sense of belonging and believed that others had your back in every situation. This team made work fun, exciting and an adventure every day.
Have you ever been on the team from hell? A team where there was constant conflict and disagreement, a team where you were walking on egg shells and were afraid to speak up or share honest feelings? People were afraid, kept their heads down and were okay throwing you under the bus if it helped them in any way. Work was painful, hard and exhausting but vacations were wonderful merely because you escaped the team for two weeks.
Gallery: How To Be A Better Leader: Four Essential Tips 5 images View gallery
When I recently interviewed an individual on a team from hell, I asked how he made it through the day. He replied, “Every day at lunch I buy a lottery ticket and put it in my front pocket.” “Why the front pocket?” I asked. He replied, “If I am in a meeting and I feel especially bad, I reach into my pocket and rub the lottery ticket. It helps me make it through the day.”
As we examine high-performance teams (and their opposites) we wondered what behaviors do team leader’s exhibit that create these extraordinary teams? From our data set of more than 66,000 respondents, we asked team members to rate a series of leadership behaviors and to also rate their satisfaction, engagement and commitment. To understand specifically what led to high performance, we focused on a measure that evaluated the extent to which the team environment was a place where people would go the extra mile. We discovered strong, highly significant correlations and selected the top 15 behaviors associated with the willingness to go the extra mile. We factor analyzed the results and discovered five key dimensions that were essential to these high-performance teams.
In the graph below we created an index from the five dimensions and then calculated the deciles. We then calculated the percentage of employees in a team willing to go the extra mile. Leaders who were rated lowest on these behaviors had about 13% of team members who were highly committed. But team leaders who were exceptional on these all five dimensions (those at the top 10%) had 71% of team members who were highly committed. Some people look at this finding and ask why the leaders at the top 10% didn’t have 100% of their team members highly committed? Actually, 35% of those in the top 10% did have 100% of their team highly committed but averaging that data over 6,000 people underscores the reality that it is very difficult to have every team member 100% committed. But averaging 71% of team members highly committed would create a positive at the atmosphere in any team.
Dimensions That Deliver High Performance
These five factors describe the behaviors of leaders who had those high-performance teams.
1. Team Leaders Inspire More Than They Drive
High-performance teams are more pull than push. Leaders in high-performance teams know how to create energy and enthusiasm in the team. Team members feel inspired, that they are on a mission and what they are doing is of great importance.
2. Team Leaders Resolve Conflicts And Increase Cooperation
Conflicts can tear teams apart and leaders need to work to help resolve differences quickly and promote cooperation. Often team leaders assume that mature people will resolve conflict on their own. If that were true, however, there would be no divorce, separations or wars. In high-performance teams, differences are addressed quickly and directly. This requires a level of maturity in team members. When people believe that they are trusted and others have their back, disputes can be resolved. Team leaders that focus on competition versus cooperation never achieve outstanding results.
3. Team Leaders Set Stretch Goals
Leaders who know how to set stretch goals create an internal drive in the team to accomplish the impossible. People don’t really want to come to work and do something that any other team could accomplish; they want to do something extraordinary. When they accomplish something that is extraordinary they recognize that they personally are capable and competent. Doing something out of the ordinary helps people recognize that they are exceptional and their satisfaction with work, their engagement and pride all go up.
4. Team Leaders Communicate, Communicate, Communicate The Vision And Direction
Be a broken record and help team members to be focused on the vision. High-performance team leaders stay on message, they constantly communicate and keep people focused on the vision and mission to accomplish. It’s easy for anyone to get distracted or miss a turn. Shiny objects are all around us and sometimes team members get diverted from their mission. High-performance team leaders keep people informed, up-to-date and on track.
5. Team Leaders Are Trusted
If a team leader is not trusted, they can’t be inspiring or trusted to resolve conflicts, get the team to embrace stretch goals or believe their communications. The lack of trust slows down everything. We have found that there are three basic pillars that build trust. The first pillar of trust is relationships. We trust people that we like. We trust our friends and we distrust our enemies. Building a positive relationship increases trust. The second pillar of trust is knowledge or expertise. We trust people that have the right answer or can provide insight. We trust people when they can help solve problems. Use your knowledge and skills to help others solve a problem and it will increase trust. The third pillar of trust is consistency. When you say you will do something and you do it, people trust you. Being consistent and walking your talk makes you a person that can be trusted.
Having worked on both high-performance teams and teams from hell I know the difference is huge. Life is not good when you are in the team from hell. That experience can infect other parts of your life in a very negative way. Life is good on a high-performance team, and we all deserve to be a part of one.
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73c6b9b7c893470a7181d08006dc3039 | https://www.forbes.com/sites/joefolkman/2017/12/15/top-10-reasons-you-received-a-poor-performance-review/ | Top 10 Reasons You Received A Poor Performance Review | Top 10 Reasons You Received A Poor Performance Review
Shutterstock
When people get a poor performance rating they are often mystified about the reasons why. They ask their boss things like, “What did I do that was so terrible?” Their boss may give them a vague answer like, “You just failed to reach the potential I know that you have” or recounts some tardy project or major mistake. But Zenger Folkman’s research suggests that those are not the most common reasons behind the perception of lagging performance. In fact, the big insight that came from our research was that poor performance reviews seldom came from something the individual did. They came, instead, from what the person didn’t do.
My colleague Jack Zenger and I analyzed 90,000 assessments of leaders and examined four different data sets where we could identify the bottom performers. We researched a variety of industries, including high tech, pharma, and manufacturing; so that we could see the overall trends. Our conclusions are not industry specific. We collected specific data on low performance based on 49 behaviors that separate the best from the worst performers.
Any one of these behaviors can be the trigger for a poor performance review. Our conclusions are listed in descending order, with the first being the behavior that is most frequently associated with poor performance. Here is the top 10 list:
Low Effort. Colleagues notice effort. Many people today work in more informal work environments where you see people having casual conversations, joking with each other, and even making a little mischief. Don’t be fooled; everyone knows when you spend too much time in a personal conversation about your personal life and fail to show real dedication to your job. Look around and notice those people who are focused on delivering positive results. If someone wishes to have higher performance reviews, they need to behave like the ones putting forth serious effort. Failure to Anticipate Problems. Many people get surprised by a blinding flash of the obvious. Your organization does not hire individuals to behave like a robot on autopilot; they hired a person who should think and look around the corner. If you are able to anticipate problems before they happen, then that will impress a boss. Lacks Courage. 50 years ago, companies were more prone to hire “Yes” men and women. Today, organizations want people with opinions, perspectives, and a point of view that they will express. It takes courage to disagree with a superior, or point out a potential problem in a new approach. It takes courage to make a change or suggest a new way to do your work. Every boss wants a courageous employee who will constructively challenge them. Lack of Technical Depth. Organizations are full of complexity, new technologies, and changing requirements. It doesn’t take long for colleagues to know who is over their head or trying to fake their way through a technical conversation. High performers understand the key technology, dig in and get smart. When you promise something, others remember. The failure to deliver on time or to consistently keep commitments is a major cause of people being perceived as poor performers. That a good reminder to all of us. Keep track of your commitments, set up reminders to ensure that you keep commitments. If you can’t deliver, be candid about the fact you missed a commitment. Let others know. Rectify any bad consequences of your failure. People are impressed by others who acknowledge their failure and do their best to keep a commitment. Failure to Deliver. Delivering on objectives is what keeps you employed. We can all come up with a variety of excuses about why we can’t deliver, but they are meaningless unless you have done everything possible to achieve your goals and objectives. Poor People Skills. You don’t need to be an interpersonal wizard, but you do need to be considerate, kind, and sensitive to others. People differ in their interpersonal abilities but don’t give yourself the excuse that it’s okay to be a jerk. Low Energy. Others can feel your energy and enthusiasm. Some people walk into a room and absorb the energy and kill any enthusiasm. High performers don’t need to be a cheer leader, but colleagues expect that everyone will engage, support, and build on the momentum of others. For some, this may take practice. Some people are by nature pessimistic. They believe they add value by always throwing a wet towel on everything. High performers exude their energy and express their enthusiasm. It will make a difference for yourself and others at work. Resists Feedback. Most people are open to feedback early in their career but over time conclude they don’t need any more feedback. Our research has demonstrated that people who continue to ask for feedback throughout their career are significantly more successful. Resisting feedback keeps poor performers from understanding what they can do to improve and be more successful. Asking others for feedback is an important skill for high performers. Not Strategic. Regardless of your position in the organization, people appreciate employees who understand the strategic direction and connect their work with the mission of the organization. Those who are not strategic can get off course because they don’t see the big picture of how the organization can be successful. When employees understand the strategy, they are often the first people to see and identify a strategic threat to the organization. This makes them a hero.
Again, the 10 items listed here are in descending order from the issue that has the most impact to those with lesser effect. However, all are critical and can impact the perception of an employee’s competence. If you are an employee who is looking for ways to raise your performance, find the one or two areas that are most critical in your current job. Share your plan for improvement with your boss. That alone will impress your boss, but only if you follow up and make changes. Don’t make this review just an evaluation of the past, but rather a conversation about the future. You as the subordinate have the opportunity to transform that conversation into a coaching conversation, in contrast to it simply conveying a less than satisfactory picture of you.
We have found that others in the organization can provide excellent feedback on both your strengths and weaknesses. To learn how others perceive your performance on these dimensions, we strongly recommend participating in a 360-degree assessment.
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095a219de5fd036c5381f7fe723fb3a4 | https://www.forbes.com/sites/joefolkman/2020/01/09/there-are-many-wrong-ways-to-set-stretch-goals-3-skills-to-keep-you-on-the-right-path/?sh=4c302dfd975b | There Are Many Wrong Ways To Set Stretch Goals: 3 Skills To Keep You On The Right Path | There Are Many Wrong Ways To Set Stretch Goals: 3 Skills To Keep You On The Right Path
African girl shows excitement for achieving her goal. Getty
Leaders who know how to set stretch goals correctly are perceived as significantly more effective leaders, and they also raise the level of employee engagement. To demonstrate the impact of leaders who are effective at setting stretch goals, my colleague Jack Zenger and I gathered data from direct reports of over 76,000 leaders. In the graph below, we show leaders’ effectiveness at setting stretch goals going from those that were rated the worst (1st – 9th percentile) to those who were rated the best (10th to 100th percentile.) The bars represent the overall leadership effectiveness rating of direct reports based on 15 competencies and the employee engagement score of those same direct reports. It seems clear that leaders who are skilled at setting stretch goals are rated as significantly more effective leaders and have direct reports who are highly engaged.
Effectiveness at setting stretch goals ZFCO
Several years ago, an interview with the senior leader of a division in a large organization was presented as an excellent example of setting stretch goals. This leader was convinced that the organization needed to cut costs. The overhead had grown more than the organization's profits. He came out with a bold announcement to the organization that every department was to cut costs by 15%. In the interview, he was privately asked how he came up with that number. Was it based on some calculation or comparison to competitors? His reply was, “No, I was thinking about what the number should be, 20% seemed like that would be too difficult, and 10% wasn't enough to make a difference, so I decided on 15%." That number was based totally on intuition. Departments were given 30 days to come up with a plan for the cuts in their department. If a department came in with anything less than 15% regardless of the rational or logic for how the cuts would hurt more than help, they were sent back and told not to come back until they reached the magic number. They were also reminded that if they could not find a way to cut back, then they would be replaced. The process took on a very negative tone. People came up with derogatory nicknames for the executive. In the end, the cuts were achieved. Unfortunately, in some cases, the cuts were too deep, and some departments needed to hire back more resources. The process was by and large, viewed as a negative event, and it created a great deal of resentment. At corporate, however, it was viewed very positively. They thought this was a textbook example of how a leader ought to set stretch goals. Clearly, the goal was a stretch goal, and the reduction process may have been necessary for the organization, but the execution drove employee engagement down rather than up.
Many leaders, when faced with the objective of setting a stretch goal, simply multiply goals by two. Leaders need to understand that the skill of correctly setting stretch goals requires three critical skills: Push, Pull, and Problem Solve. In the example from the case study above, the leader did one of these three well. He knew how to push. Leaders who do this may achieve some short-term gains but end up without the great benefits that come for doing it correctly.
Push. For a leader to be effective at setting stretch goals, there needs to be some push. Asking a team to set a goal that is achievable and where everyone is comfortable will not be a stretch goal. It will not have a positive impact on your leadership effectiveness or the engagement of employees. Achieving something very difficult creates positive engagement. People want to accomplish something that feels impossible, and when they do, they feel they are special. Leaders push by setting the goal high, by establishing a deadline and by holding individuals accountable for achieving their specific piece of the goal.
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Pull. Pull is inspiration, energy, and excitement. Without pull, the employees feel like galley slaves working hard to avoid punishment but having no vision of where they are going and why they are going there. The pull aspect is more important and more difficult than the push. Leaders know how to push. Most of us learn to push from our parents early on in life. Leaders who know how to pull share a clear vision and communicate that vision to others. Leaders that pull are quick to recognize people for their contributions. They are role models and lead from the front. They get cooperation from others across the organization and provide coaching and development.
Problem Solve. Without problem solving, a stretch goal can only be accomplished by working harder, faster, or longer. Problem solving involves a clear understanding of the problems, trends, and opportunities. Stretch goals will require needed changes in how work is done, relationships, partnerships, and infrastructure. Leaders need to be willing to challenge standard approaches and find new innovative methods. They need to be aware of outside trends that could help or hurt internal efforts.
Impact of the Three Critical Skills
A leader’s skill at these three critical capabilities impacts their ability to set stretch goals effectively. By looking at data from over 100,000 leaders, we can accurately estimate the impact. For example, if a leader were above average on push but below average on pull and problem solving, their effectiveness on setting stretch goals would be at the 44th percentile. If a leader was rated at or above the 75th percentile on push, but below average on the other two skills, their effectiveness at setting stretch goals would only move to the 49th percentile. The graph below shows the impact of effectiveness at setting stretch goals along with their ability on the three critical skills. It is interesting that if a leader is above average on all three skills, their effectiveness at setting stretch goals is at the 79th percentile. Leaders should set as a minimum that all three skills should be above average.
3 Behaviors for Stretch Goals ZFCO
It is the time of year to set some goals. Make sure you do it the right way.
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64c6945a328d28430b8ec53df608b769 | https://www.forbes.com/sites/joefolkman/2020/06/17/trust-your-elders-why-younger-leaders-are-winning-the-game-of-trust/ | Trust Your Elders? Why Younger Leaders Are Winning The Game Of Trust | Trust Your Elders? Why Younger Leaders Are Winning The Game Of Trust
Waist up portrait of young businesswoman holding clipboard asking questions while talking to boss or ... [+] business coach, copy space Getty
We often hear sayings like, "With age comes wisdom," and you should "respect your elders." Many people believe that, with all this wisdom and respect, older leaders are more trustworthy than younger ones. We have measured trust for over 15 years, and we thought it would be interesting to look at trust by age and time. Before 2015 there was not a clear trend for any age group of leaders being more trusted. However, from 2015 onward, we noticed a clear trend that younger leaders (those 40 and younger) had significantly higher trust scores than the 41-to-50 and the 51-and-up group. In the last five years, there has been a significant impact from technology and industry disruption that has had a profound impact on many organizations and the way that leaders are viewed.
In the graph below, we show results for leaders who were assessed from 2015 to 2019. For the most part, these are different leaders being assessed. 65% of the population of leaders come from the US but the remainder from across the globe. The assessment to collect the trust data was the Extraordinary Leader 360-degree assessment, where managers, peers, direct reports, and others provide feedback to a specific leader. On average, 13 raters provided feedback on each leader. Post hock test indicated the results for the 21 to 40 group were statistically significant from the other two groups for 2019 and 2018.
Trust in Younger Leaders ZFCO
Why are Younger Leaders More Trusted?
I analyzed the results for the 2019 data to identify which behaviors most highly correlated with trust and showed the largest difference between older and younger leaders. The results point out the four most influential factors.
1. Willingness to ask for feedback and improve. Younger leaders were rated significantly higher on their willingness to ask for feedback from others and to create an atmosphere of continuous improvement. Our research shows that as people age, their willingness and effectiveness at asking for feedback declines. They assume that they have learned all the lessons and have the experience needed to be successful because they did ask for feedback at a younger age. The reality is that with the dynamic changes occurring in technology, the needs of every organization are continually changing, which requires leaders to be more agile today. For older leaders to maintain the respect and trust of others, they need to ask for and be open to feedback, and continuously be looking for ways to improve.
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2. Consistency. Younger leaders were rated significantly higher on their ability to be counted on to follow through on commitments. Too often, older leaders write checks that others cannot cash. Older leaders tell others they are doing fine when their performance is only average. They agree to achieve a difficult commitment but then miss deadlines and expect others to accept their excuses. Older leaders are rated lower on their ability to honor obligations and keep their promises. This erodes trust.
3. Building Positive Relationships. Older leaders were rated less positively on a series of behaviors that were all focused on relationships with others. These behaviors included cooperation, collaboration across groups, staying in touch with others' concerns, resolving conflict, skillful communications, inspiring others, and balancing getting results with a concern for others' needs. The bottom line is we trust those that are more likable. Some people, as they age, seem less willing to invest time and effort to maintain positive relationships, eventually becoming grumpy old men and women.
4. Poor Judgment and Lack of Expertise. We trust others that are well informed, knowledgeable, and understand new technologies. Often when a physician tells us we much stop some habits, we listen even though we have heard suggestions from other people hundreds of times. When a leader does not have in-depth expertise, but because of their position, they make a poor decision and lose the trust of others. Leaders can gain the perception of expertise by listening to and utilizing the advice of experts in their decision making which enhances the trust that others have in them.
Not Every Older Leader is Untrusted
Many of the most trusted leaders are older. It is not a leader's age that causes them to be trusted or untrusted it is their actions. We know that by being open to feedback, consistent, having positive relationships, and exercising good judgment, a person can become more trusted.
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38d5bd2a54002a4c5eee819ddcc4beff | https://www.forbes.com/sites/joefolkman/2020/09/08/the-shifting-alliances-of-peers-from-friend-to-competition/ | The Shifting Alliances Of Peers, From Friend To Competition | The Shifting Alliances Of Peers, From Friend To Competition
Hands of man people fist bump team teamwork and partnership business success, Black and white image getty
As you think about your peers at work, are they some of your best friends, always helpful and supportive, or are they your harshest critics, pointing out your mistakes and flaws? While everyone's situation is different, the answer to this question often is, "It depends." Context is critical here, and over time in an organization, relationships can change significantly.
To answer the question, we looked at ratings for individual contributors and managers. The ratings were collected using multi-rater feedback assessments for both groups. The assessed behaviors were exactly the same on 80% of the items but slightly different on 20%. In the graph below, we show the results for 9,787 individual contributors. For individual contributors, the others category tended to be the most favorable rating group, followed by peers. Managers were the most critical raters.
Individual Contributor Ratings ZFCO
For individual contributors, peers tend to rate them more positively. When a person is an individual contributor, peers are their teammates and colleagues. Everyone in the group is generally in the same situation, and there are numerous incentives and encouragement for people to work together and collaborate. There is some competition between peers, but often, that is friendly competition.
Ratings for Managers
Next, we looked at the ratings of managers. In this data set, we had results from over 100,000 managers. When a person is a manager, often, their peers are also managers. While, typically, there is an overarching group goal where every peer team's results contribute, most peers are primarily concerned about the results of their team and less on the overall results for the group. The graph below shows that the manager and the peer rating were tied to the most negative, direct reports were mostly positive, and others were slightly less positive.
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Manager Ratings ZFCO
It is clear from this data that something changes with peer relationships in the move from individual contributor to manager.
Possible explanations:
What are the possible reasons for peer ratings between managers tending to plummet, when peer ratings for individual contributors are high? There are several alternative explanations.
1. Perceiving the person as a threat. As people move up through the hierarchy of management, competition increases for a fewer number of positions, as the pyramid narrows.
2. Managers held to a higher standard. As someone ascends in the management hierarchy, they are expected to perform at a higher level, be more knowledgeable, and possess a more polished skill set. Hence, the lower scores.
3. Less alignment of goals and more opportunities for competition. An individual contributor's peers are more apt to be people from within your immediate team, who, by definition, have more aligned goals. Peers at the managerial level are more prone to come from staff functions, other functional areas, or other operating groups. It has often been jokingly said that there is more competition between groups in many large organizations than between the company and its other major competitors. Competition is often heightened because of vying for resources of all kinds. Competition easily devolves into conflict.
4. Age related. At younger ages, people often view each other as buddies.
To illustrate this further, recently, we worked with a senior leadership team of a CEO and eight team members. The results are displayed in the graph below. In this case, the manager, direct reports, and others were quite positive in their ratings, but the peers were extremely critical of each other.
Senior Leadership Team Ratings ZFCO
Implications
The data we have gathered shows that the relationships of individual contributors with their peers is quite positive. They are all on the same team and generally work toward the same goal. When a person transitions from individual contributor to manager, the relationships change. Typically, their peers are other managers who have their own teams, different priorities, and more competition between team members. In many ways, this dynamic is very understandable, but the peers in the graph above do not appear to be trying to help and support their peers. Instead, they appear to be in bitter competition with each other. In the specific case we were describing, they were looking for a way to get ahead at the other person's expense. This did considerable damage to the organization, and it negatively impacted the results.
One United Team
We believe there is an important implication of this research. The magic created on a team of individual contributors where they support and work together ought to be the goal of every senior team. When peers want the best for each other, that plays an important role in making the organization more successful.
As a peer, are you looking for the mistakes of your peers or recognizing their strengths? Do you feel like you compete with your peers? Are you looking for ways to help your peers to be successful?
As a manager of people who manage others, do you have favorites? Are you encouraging competition between your team members? Do you reward people when they support their colleagues? Are some of your direct reports winners and others losers?
There are some dynamics about the situation here that are difficult to overcome. The stakes seem higher for managers. The incentives are different, but if you let nature take its course, the results are precisely what this data reveals. Management teams will not be as collaborative as teams of individual contributors. Working hard to encourage others to work together and support each other can provide a great benefit.
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3e720f79366ede1abb2efd4b696a71b2 | https://www.forbes.com/sites/joeharpaz/2013/11/20/corporate-reputation-influences-tax-strategy/ | Corporate Reputation Influences Tax Strategy | Corporate Reputation Influences Tax Strategy
Perhaps it was the sight of some of the most well-known company CEOs testifying before Congress on the details of their global corporate tax strategies. Or, maybe it was the widely disputed Government Accountability Office (GAO) report on corporate tax rates that called out U.S. corporations for paying an average 13% tax rate in 2010. Whatever the specific impetus, the outcome is clear: reputation is increasingly becoming a factor that influences corporate tax strategy.
We recently raised this topic to a panel of corporate tax experts representing some of the world’s largest accounting firms at our annual SYNERGY 2013 client conference and got some real-world insight into the challenges large companies are currently confronting when it comes to managing their global tax planning, a process heavily influenced by global supply chains and associated transfer pricing compliance. KPMG’s Rema Serafi explained:
“The transfer pricing environment is currently facing a perfect storm. Increased tax scrutiny combined with increased media attention around tax planning has magnified attention on transfer pricing. Interestingly, while there continues to be a focus on the pricing strategy, there is now increased focus on how pricing policies are implemented for accounting purposes. Stakeholders now include tax authorities, regulators, internal audit and external auditors. Concern about getting the implementation right has moved from the tax department to the C- suite. CFOs, legal departments, risk controllers and those responsible for regulatory matters are now just as concerned about transfer pricing as tax departments. As such, companies are looking for more efficient ways to implement accurately by looking at technology solutions, among other things.”
She’s right. Governments and NGOs around the world, like the OECD, G20, UN and World Bank, are getting involved in the debate over global corporate tax strategies. Meanwhile, companies are facing increased tax complexity as they continue to expand in emerging markets and audits are on the rise. Add the fact that many established economies around the world have been running budget deficits since the recession and you start to see why, suddenly, just about everyone is interested in international taxes.
Hadley Leach, a partner with Ernst & Young LLP, cited the results of a recent survey her firm conducted¸ which found that 66% of companies identified “risk management” as their highest priority for transfer pricing, which was a 32% increase over surveys conducted in 2007 and 2010. She added:
“There has definitely been a trend toward more conservatism among corporations on international tax strategy. We’re seeing a huge shift in perception around issues of reputational and audit risk and that’s really starting to affect how companies approach tax planning.”
It appears that evolving tax policies, including efforts by the OECD, are going to push harder to ensure that there’s substantive value creation assigned within countries where companies are reporting revenue, and therefore paying tax.
The clear consensus among all of the participants in our panel was that perception has become a serious factor driving corporate tax strategy. The current focus on international tax is rapidly becoming less about limiting tax exposure and more about limiting reputational risk exposure. As Serafi summed it up: “The optics matter.”
As companies continue to move in this direction, expect to see more collaboration between the tax department, finance, accounting and the CFO and more demand for company-wide synchronization of tax policy, global strategy and corporate message.
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2775386a5b5b04e8e60b6a3ffc6a1852 | https://www.forbes.com/sites/joeharpaz/2014/07/17/internet-tax-ban-could-be-big-win-for-skype-and-snapchat-major-loss-for-states/ | Internet Tax Ban Could Be Big Win For Skype And Snapchat, Major Loss For States | Internet Tax Ban Could Be Big Win For Skype And Snapchat, Major Loss For States
The U.S. House of Representatives passed a vote this week to permanently ban any taxation of Internet access, unleashing a litany of controversial issues around technological innovation and state tax revenue.
First some background: With this vote for the Permanent Internet Tax Freedom Act, the House has agreed to permanently prohibit any state or local taxes on Internet access. Not to be confused with state taxation of online shopping purchases, which is another issue that’s been debated for some time, this bill focuses squarely on the ability of a state to impose a tax on Internet connections. A temporary ban, which has been in place since 1998, is set to expire in November of this year. The bill is reported to have bipartisan support in the Senate.
On the surface, this all looks pretty benign. With the exception of seven states that were grandfathered out of the temporary Internet tax ban, notably Texas, Wisconsin and Ohio, states have never taxed Internet access, so a permanent ban on something they never taxed anyway should come as no great loss. Peel back the layers of this issue a bit further, though, and a very complicated set of issues emerge that factor into everything from technological innovation to generational trends in communication to persistent shortfalls in state government coffers.
To truly understand the potential implications of a permanent ban on Internet access taxes, you have to look at the growth of Internet access in this country over the last several years. According to the Leichtman Research Group, a media and entertainment research firm, there were a total of 85.5 million broadband Internet subscriptions in the U.S. through the first quarter of 2014. Approximately 1.2 million of these were added in Q1 of this year alone. On top of this, the trade group CTIA-The Wireless Association, reports that mobile Internet use in the U.S. more than doubled to 3.2 trillion megabytes from 2012 to 2013.
Carla Yrjanson, vice president of tax research and content at Thomson Reuters, puts those numbers in perspective in terms of their potential tax revenue: “If Internet access were taxed similarly to the way in which states levy sales and use taxes for other services, we’d be looking at an approximate 8% tax on Internet connections. It’s significant revenue.”
She added that a lot of the state-level thinking behind the initial temporary ban on Internet taxes was focused on allowing the Internet to gain a critical mass of users before it ultimately became a gold mine of tax revenue. “A lot of states are looking at the huge growth in Internet use and are asking: Are we there yet? They’ve been waiting a long time to be able to tap into the Internet for tax revenue.”
Based on an analysis conducted by the Center on Budget and Policy Priorities, which tracked nationwide broadband Internet utilization and assumed a $40.03 average cost per month for Internet access, a permanent ban on the tax would cost states almost $6.5 billion in potential state and local taxes each year in perpetuity.
But that’s only half the equation. The other critical part of the Internet tax issue is innovation. Just as the trend lines in broadband Internet access and mobile Internet access are spiking nationwide, the number of landline telephone subscribers is plummeting. In fact, according to U.S. Census Bureau data, just 71% of households had landlines in 2011, down from 96% in 1998.
For a while, the trend in landline phone usage wasn’t a problem for states. The decreases were more than offset by the increases in cellular voice plans and text messaging, which states tax heavily. These taxes and fees can total upwards of 24% of a user’s monthly phone bill, according to Yrjanson.
So, where does a tweet fall into this mix? Or, for that matter, a Snapchat, Instagram, or Skype call? All of these Internet-based communications tools let users bypass cellular networks to communicate directly with others via the Internet, a proposition that may soon be permanently tax-free.
According to Business Insider, Snapchat users alone are sending 700 million photos and videos per day. Immediately following Germany’s World Cup victory over Argentina, a new record of 618,725 tweets per minute were posted about the match. According to U.S. tax law, these are not taxable events.
That’s a financial recipe that’s already got many tech companies working on new ways to communicate via the Internet and many state tax officials wringing their hands over budget shortfalls. Prepare to hear both constituencies grow louder as the Internet Tax Freedom Act makes its way through the Senate.
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da823e8eec746a0a2b487f5c892c832b | https://www.forbes.com/sites/joeharpaz/2015/03/24/congress-renews-push-for-internet-sales-tax-will-it-stick-this-time/ | Congress Renews Push For Internet Sales Tax...Will It Stick This Time? | Congress Renews Push For Internet Sales Tax...Will It Stick This Time?
A group of nine U.S. senators reintroduced the Marketplace Fairness Act last week, once again setting in motion one of the longest-running and hotly debated sales tax issues in the land. Will it pass this time? It won’t be easy, but companies that sell things over the Internet will want to watch closely.
There have been several bills introduced in the U.S. to address the issue of out-of-state sales tax on goods sold online and taxation of Internet access itself. The first true tax on goods sold over the Internet was introduced 1998 – the same year then-Merrill Lynch analyst Henry Blodget famously put a $400 price target on Amazon.com . The most recent bill was presented a couple weeks ago. Along the way, the Internet Tax Freedom act was also enacted to ban federal authorities from taxing internet access. While this last one does not involve tax on goods sold via the Internet, it often gets confused with the various other Internet-related tax proposals — all of which have provoked plenty of controversy.
To understand why something as seemingly simple as sales tax continues to create such a stir, you need to start with the history of this legislation and its potential impacts. As I wrote last week, virtually every retail business – small and large – is selling online. While this has opened up truly global opportunities that did not exist even 10 years ago, it also has created huge administrative and compliance challenges for businesses and regulators.
With a proposed Internet sales tax, these challenges mount considerably. There are just under 10,000 different taxing jurisdictions in the U.S., each with their own compliance requirements, rates and collection processes. Managing sales tax across the U.S. is a considerable effort and will vary depending upon which version of the online sales tax proposal becomes law.
For more clarity on the issue, I turned to Carla Yrjanson, Thomson Reuters vice president of tax research & content. Carla spends her days overseeing a research group that keeps tabs on every single change in any one of those 10,000 tax jurisdictions to make sure our customers are not caught off guard when something new comes into play.
She explained that this issue traces its roots back to the 1967 Supreme Court decision in National Bellas Hess vs. Illinois and later affirmed in the 1992 Supreme Court the decision of Quill vs. North Dakota:
“The whole debate about Internet sales tax actually pre-dates e-commerce; it started with legal cases involving mail order and catalog sales. The decision in the Quill case, which has set the stage for all subsequent debates, was that retailers needed to have a physical presence in a state before they were required to collect sales or use tax in the purchaser’s state. However, the decision specifically contains a clause that gives Congress the right to overturn the decision.”
This base decision has pretty much governed the way sales tax is handled by online retailers since before the Internet was even a factor. Since then, a variety of approaches have been introduced with varying degrees of complexity, including the Streamlined Sales Tax Agreement, Click Through Nexus, Marketplace Fairness Act and the newest, the Online Sales Simplification Act of 2015. Also included is the Internet Tax Freedom Act which addresses sales tax on Internet Access. I’ve broken out the high points of each in the table below.
While it’s impossible to forecast what versions of these may eventually come out of Washington, it is a pretty safe bet, based on how the latest proposals have been worded, that retailers will need to charge some form of sales tax on goods sold over the Internet. Whether it will be the tax rate based on a combination of the location where the seller is based and where they have a physical presence – as is proposed in the Marketplace Fairness Act – or based solely on where the seller is located – as is proposed in the Online Sales Simplification Act – remains to be seen.
What we do know is that businesses selling goods via the Internet are going to be under the microscope as the debate around an online sales tax continues to escalate. It will be critical that businesses of every size are ready to comply.
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3d76629084f71b8ed886d00ad7ead514 | https://www.forbes.com/sites/joeharpaz/2015/09/17/puerto-rico-brings-first-ever-value-added-tax-to-the-u-s/ | Puerto Rico Brings First-Ever Value-Added Tax To The U.S. | Puerto Rico Brings First-Ever Value-Added Tax To The U.S.
Value-added taxes (VAT) have made their first landfall on U.S. shores as a potential fix to Puerto Rico’s financial crisis. Is this a harbinger of things to come in the continental U.S.? That may depend on how things go in Puerto Rico.
First some background: VAT is consumption-based tax that is applied at each point in the production and sale of goods whenever value is added. For example, if a farmer sells corn to a processing company for $1, the processing company then sells high-fructose corn syrup to a soda company for $2, and the soda company sells the consumer a two liter bottle of root beer for $3, each of the three producers has a value-added of $1. In a VAT environment, each $1 profit in the supply chain would be taxed. Likewise, expenses at each leg of the chain are used to offset the tax.
Tax authorities around the world (with the exception of the U.S. and Saudi Arabia) have been implementing this type of tax as a means of increasing revenues without directly increasing retail sales taxes. They love VAT because it is embedded directly into the supply chain, allowing for full transparency into each step in a transaction, and is thus very difficult to avoid through clever accounting practices. Although it serves the same basic function as a standard retail sales tax, the VAT typically ends up generating more revenue for governments, depending on the details of how it is implemented.
As I wrote earlier this year, several different tax authorities around the world, including Japan, New Zealand, the UK, and Malaysia have all recently expanded their VAT systems in an effort to stimulate revenue. Many have been successful. New Zealand, for example, raised its VAT from 12.5% to 15% while reducing corporate tax from 38% to 33% in 2010. Over the next four years, total tax revenue increased 22% while GDP increased over 53%. By striking the right balance between corporate and consumption taxes, New Zealand was able to generate more tax revenue without disrupting its economic growth engine.
While no two economies or specific tax plans are identical, the trend toward global adoption of VAT is hard to ignore.
In the case of Puerto Rico, a 10.5% VAT will be applied to a wide range of goods and services effective April 1, 2016. The move is part of a sweeping plan to inject $1.5 billion into the island as part of a turn-around from its recent financial crisis.
Anil Kuruvilla, senior manager for tax research and content at Thomson Reuters , has been tracking recent trends in VAT. He says Puerto Rico’s approach is unique because it does not apply to the raw materials imported by the island’s largest industry: manufacturing. He explained:
“Within Puerto Rico’s VAT law, there is a provision which applies a zero percent tax rate to many of the goods that are imported for manufacturing (raw materials, certain machinery, equipment, etc.). Normally in a VAT system, when you import items for use in a manufacturing facility, the importer is required to pay VAT on the import. The electricity, gas and water and other variables required to run a manufacturing facility will be subject to the tax, but the raw materials will not be subject to the tax. This creates a sort of hybrid customs and VAT system that was designed to preserve the preferential treatment Puerto Rico has afforded historically to its manufacturing sector under its old sales and use tax formula.”
That’s an interesting wrinkle in Puerto Rico’s approach to VAT and one that U.S. businesses will want to watch closely as the law takes effect. In some ways, by exempting raw materials imported by the manufacturing sector from the VAT, Puerto Rico is giving up one of the largest sources of tax revenue it would gain by implementing the VAT in the first place. However, it is also a carefully orchestrated strategy by the government to make sure it doesn’t damage to its manufacturing sector at the hands of the new tax. In this age of tax inversions, in which seemingly every major corporation is ready to relocate for preferential tax treatment, Puerto Rico was clearly sensitive about slapping a new tax on the sector that makes up 46% of its economy.
Will the strategy work? Just as we’ve seen in Japan, where Prime Minister Shinzō Abe has been trying to maintain a tenuous balance between macroeconomic policy, business growth and consumer spending with the right formula of corporate and consumer taxes, Puerto Rico is carefully adjusting the levers of fiscal policy to spark an economic turnaround. If it works, you can bet the rest of the U.S. will be taking notes.
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cbdfa8ffccc72ed880292ca7565f17b0 | https://www.forbes.com/sites/joeharpaz/2016/09/30/big-data-bigger-wines-high-tech-vineyard-reengineers-the-magic-of-winemaking/?sh=5a85c22f1db7 | Big Data, Bigger Wines: High Tech Vineyard Reengineers The Magic Of Winemaking | Big Data, Bigger Wines: High Tech Vineyard Reengineers The Magic Of Winemaking
For businesses around the globe, there isn’t a single day that the innovation challenge doesn’t rear its head. Disruptors, new buying preferences, and new demographic and geographic shifts are all constantly impacting the way business has to be done.
It’s visible in every industry, from consumer products like new Under Armor sneakers that are manufactured on 3D printers, to complex business solutions built to leverage machine learning capabilities. Layer this rapid-fire technological development with end user expectations for products that are easy to use, beautiful to look at, and able to provoke a positive emotional reaction (thank you Apple), and what becomes evident is that traditional business cultures, acumen, and skill sets are all being tested. The man and the machine working and learning together, the blend of art, science, and design, and the willingness to risk old business models are stressing entire industries.
It’s a challenge for those of us in large, established businesses who must juggle the demand to invest and develop future breakthroughs against the realities of existing models and customer needs. It’s even harder in businesses that are steeped in artisanal processes – industries like watchmaking, homebuilding, and farming – for whom doing things the old fashioned way is synonymous with authenticity, a badge of honor for craftsmen and women who’ve managed to resist the tide of change.
I recently had the chance to meet with a fascinating company that’s making a bold attempt to bring that old world craftsmanship into the new age of big data and cognitive computing. They are called Palmaz Vineyards and they are arguably driving one of the world’s oldest business models with some of the world’s most advanced technologies. Their experience is inspiring for all of us who’ve ever had to reconcile the demand to innovate with the pressure to preserve the magic of the past.
Palmaz is located in the heart of Napa Valley, the ancestral home of the U.S. wine industry for the last 150 years, but their facility is decidedly un-Napa. Looking more like a NORAD bunker than a pastoral Tuscan villa, Palmaz’s 18-story wine cellar is literally carved into a mountain to leverage gravity to move production from grape to bottle while eliminating any hardships on the juice as it moves through the winemaking process. The result is a wine that Palmaz calls “gravity finished.”
The design was the brainchild of Dr. Julio Palmaz, an interventional radiologist from Buenos Aires who moved his family to California while he was conducting the research at UC Davis that would lead to the invention of the coronary stent. After licensing the stent to Johnson & Johnson in the early 1990s, Palmaz gathered up his scientific background, his love for wine, and his considerable financial means and bought a winery.
While he set about on a seven-year project to build his incredible cellar, his son Christian was getting a degree in business and learning the finer points of geoscience and computer science. Once he joined the team, the tech side of things got even more extreme.
Christian believed that combining sensor technologies with Big Data could open up key information about the winemaking process that had historically been left to fate. Eventually he developed an end-to-end production analytics solution that measures billions of points of data, from the planting of a grape vine to the delivery of a bottle to your home.
The process starts in the vineyard with an elaborate geographical information system that gathers images from an infrared, multi-spectral camera flown over the vines twice a week to see how much chlorophyll is in the leaves of each plant. This information is used to dial-in precise watering instructions for each vine. The surrounding soil is then tested with a neutron probe that scans the soil like an X-Ray to determine moisture content around each plant. The system, called VIGOR (vineyard infrared growth optical recognition), is focused on standardizing and improving vine growth, detecting problems such as viruses, insects, or broken water pipes before they can impede growth. It all creates millions of statistically-meaningful data points.
These data are then handed off to a second software system, FILICS, or fermentation intelligence logic control system, which tracks every detail of the fermentation process at the molecular level. Using a process called sono-densitometry, vibrations in the fermenting wine are measured 10 times per second to reveal detailed data points on changing sugar and alcohol levels. The system also uses advanced thermographics with the capability to compute 3.5 million points of temperature during the 35-day fermentation process.
With the touch of an app, Christian is able to display all of these meaningful statistics, anomalies, and other data points on the dome of a fermentation room that looks far different than any other in Napa Valley. Christian’s computers are displayed in full color graphs and charts to quickly enable his winemakers to see just how the grape juice is doing.
Even the final step, putting the juice in a barrel, is broken down to a statistical science to get the best quality and taste of wine. With thousands of possible barrel configurations, the process that is usually chalked up to guess work is now controlled by a mass spectrometry of data on trees, techniques, grain thickness, complex carbs in the barrels, and more.
Christian explained that some of the most interesting findings he and his winemakers take from all of this data are the anomalies.
“You’d expect that only the perfect grows would make the best wine. But it’s not always that intuitive. Sometimes it’s a trouble growth that makes the best wine when it’s combined with the right barrel.”
Needless to say, these innovations have the old guard of the wine industry watching Palmaz very closely, even if they are critical of the Palmaz family’s approach as being too new school for the highly traditional Valley. But at the root of it, Christian’s world-class winemakers still make all the decisions, they’re just now equipped with extra precision that no other winemaker can boast.
Christian explained that the philosophy behind his family’s approach to wine isn’t just tech for tech’s sake or reverse-engineering a perfect bottle; it’s really about getting a better understanding of how to capture the magic of winemaking.
“One of the challenges we have in winemaking is that it takes an incredible amount of time. You’re building on what you’ve done just yesterday for two to two-and-a-half years. When you get to the finish line and you’re presented with these raw ingredients, you struggle to know what single point is responsible for the things we’re proud of versus what we’re not so proud of.”
He added that even with all of the data he’s collecting, the final blend still comes down to the feel of the individual winemakers.
“The big data process lets you identify what went right and helps us find relationships between variables so we can intervene while we still can make a correction, but our winemakers still make the final blend blind. At that point, it’s not about the data. They make the blend and it is what it is. Then we do an amazing amount of analysis to find out what went into this parcel, the barrels used, etc. to make it the way it is.”
I asked Christian directly about his detractors and the fear many traditionalists have that winemaking is losing the battle of art versus science:
“The mystery and the magic and the human element do not need to decrease because of the presence of technology. These things are going to happen with or without you and you’ll just spend your time wondering what happened. Right now I’m seeing more artistic elements and humans being more tuned into the winemaking process than I’ve ever seen before. This is where we need to go. People think people will come to our wineries forever because they are in Napa Valley. They won’t. Differentiation is everything, and if we fall asleep at the wheel –our industry has a tendency to do that – we could lose ground. We have to be careful and stay aware of what our customers want.”
A minimization of production errors, improved quality, and repeatable, positive results; that’s all any company can strive for when trying to solve the innovation challenge. Add the fact that Palmaz is now using about 20% less water per acre thanks to its VIGOR system and the technology that may have seemed like weird science to some is just a smarter, more precise way to produce a beautiful bottle of wine. As organizations around the globe continue to wrestle to find new ways to improve their businesses, they may just want to turn to this beautiful corner of California for some answers.
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75591adf17071e17ea30f1589239519e | https://www.forbes.com/sites/joeharpaz/2017/03/15/will-trumps-environmental-policies-stall-the-electric-car-movement/ | Will Trump's Reduced Emissions Rules Kill Auto Industry Innovation? | Will Trump's Reduced Emissions Rules Kill Auto Industry Innovation?
President Donald Trump has ordered a review of tough U.S. vehicle fuel-efficiency standards put in... [+] place by the Obama administration (AP Photo/Alex Brandon, File)
President Trump put smiles on the faces of auto industry executives this week when he announced plans to roll back government fuel economy standards.
The regulations in question are the controversial Corporate Average Fuel Economy (CAFE) standards, which were put in place by the Environmental Protection Agency (EPA) under President Barack Obama, and call for auto manufacturers to have an average fuel economy of 54.5 mpg across their fleets by the 2025 model year. The average fuel economy for all cars sold in 2012, when the laws were passed, was 23.2 mpg.
The looming threat of meeting the new standard has forced automakers to make some serious changes. The most obvious, of course, has been the growth of the electric vehicle (EV) segment. True EVs like the Tesla, Chevrolet Bolt, and Toyota Prius Prime saw their sales increase 59% in 2016 and new alternative power vehicles are popping up in showrooms from virtually every manufacturer in the world. Despite their rising popularity, though, electric vehicles still represent just 1% of total U.S. auto sales, making them very much a speculative bet on the future for the companies who make them.
Cresting the 54.5 mpg hurdle has also manifested itself in some less obvious ways that involve keeping gasoline-powered engines, but using technology to make them more efficient. Examples include the widespread use of lower displacement engines, aided by turbochargers, and the use of ultra-light-weight building materials. BMW, for example, now puts at least one turbocharger in every new car it sells in the U.S. – with the exception of its all-electric i3. Ford, for its part, has begun building its best-selling F-series pick-up trucks out of aluminum and special military-grade alloys, which make the trucks lighter, and thus, they require less gas to move.
That last point is an important one. The Ford F-150 pick-up truck has been the best-selling vehicle of any kind in America for the last 35 years. Americans really like trucks. In fact, through January of this year, nearly 60% of U.S. new vehicle sales were accounted for by light trucks and SUV. That trend is supported by average U.S. gasoline prices that have stayed in the $2-$3 per gallon range for the last few years, but, even when gas prices shot above $4 per gallon in 2012, SUV and truck sales stayed strong. However, by using lighter weight materials, a turbocharged V6 motor and a 10-speed transmission, Ford has managed to crank the average fuel economy of the F-150 up to 17 mpg in the city and 21 mpg on the highway. They also managed to increase horsepower and torque along the way.
Porsche has gone even further. Its newly-introduced, second generation Panamera sports sedan is a 4,400 pound, four-door that cruises to 60 mph in just 3.6 seconds, has a top speed of 190 mph and a computer system running over 100 million lines of code. To put that in perspective, the previous generation Panamera had 2 million lines of code, the Space Shuttle ran on about 400,000 lines of code, and Microsoft Office 2013 had about 45 million lines of code. The new Porsche isn’t a car with a computer in it; it’s a computer with wheels! The Panamera uses all of this computer wizardry, of course, to catapult its gigantic body through space at break-neck speeds while also managing to get about 29 mpg on the highway.
That brings us to the issue of President Trump’s promise to reduce the environmental regulations that, in many ways, were a catalyst to this renaissance in auto manufacturing. The phenomenon underscores the double-edged sword nature of many regulations. While regulation clearly burdens industries with new costs and compliance demands, in this case, it also trigged the auto industry to take a hard look at the way it was engineering and designing cars.
Though it may have been done begrudgingly at first, auto manufacturers have addressed the CAFE standard mandate by innovating. Instead of compromising driver experience to get into compliance as they did in the gas crisis of the 1970s, today’s automakers have managed to build the best cars and trucks ever made, while still increasing fuel economy.
Will eliminating CAFE standards now dis-incentivize automakers to keep investing in this new technology?
Not if Teslas keep beating Ferraris in drag races.
Because manufacturers responded to the threat of new fuel efficiency requirements with a corresponding investment in innovation, the resultant consumer expectation has been set for constant improvement in both performance and economy. As a case in point, the newest Tesla Model S P100D electric sedan just became the world’s fastest production car, reaching 0-60 mph in just 2.28 seconds. The previous record holder was the $1.4 million gasoline-powered Ferrari LaFerrari.
Computer code, sophisticated engineering, lightweight materials, and good old-fashioned ingenuity are the new muscle in the auto business. The fact that the performance is arriving along with record levels of fuel efficiency is proof that some things are good enough to succeed with or without regulation.
The latest comments from the Trump administration suggest that the looming threat of the CAFE standard will not be the primary driver of auto innovation for long. But the consumer expectations that have been built-up by the auto industry over the last five years will likely prove to be an even more powerful motivation.
No doubt, regulations like the CAFE standards have triggered a wave of innovation across the auto industry. But with momentum now pushing fuel economy and improved performance as not just government mandates, but competitive mandates, the stage is set for significant disruption. The growth of electric vehicles, the advance of self-driving technologies, even the emergence of ride-sharing services like Uber are all going to have a profound effect on the auto industry as we’ve known it. Ironically, though, now that the innovation train has left the station, deregulation may actually spur even more growth.
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d36e2c61c995a1d4afa1b25d87dd7a27 | https://www.forbes.com/sites/joeharpaz/2017/04/06/why-trump-should-sweat-the-details-on-corporate-tax-reform/ | Why Trump Should Sweat The Details On Corporate Tax Reform | Why Trump Should Sweat The Details On Corporate Tax Reform
U.S. President Donald Trump (R) and King Abdullah II (L) of Jordan participate in a joint news... [+] conference at the Rose Garden of the White House April 5, 2017 in Washington, DC. President Trump held talks on Middle East peace process and other bilateral issues with King Abdullah II. (Photo by Alex Wong/Getty Images)
How do big companies really feel about the Trump administration's corporate tax plan? The answer isn’t quite as simple as a lower topline corporate tax rate might suggest. For some clarity on the issue, I spoke with DuPont’s vice president of tax Mary P. Van Veen. Speaking from her vantage point on the front lines of high stakes corporate tax, Van Veen warns that getting tax reform right will require a delicate balancing act.
Large U.S. corporations – and their investors – are waiting with bated breath for a formal announcement from the Trump administration on its official plan for corporate taxes. For good reason. Trump’s campaign promises for a 15% corporate tax rate and a repatriation tax holiday were largely responsible for the “Trump bump” stock market rally that had the S&P 500 up 6% through March 20 of this year. Then, on March 21, amid new fears that the administration could delay those tax cuts, the market suffered its worst one-day performance since before Trump’s election. Markets fell further over the course of the last week as the failed Republican healthcare bill raised further questions about the Trump administration’s ability to deliver on his ambitious economic agenda.
Why this obsession with the prospect of a lower corporate tax rate? After all, it’s been widely reported that few large corporations pay anywhere near the full 35% statutory corporate tax rate. Would lowering that rate to 15%, which is Trump’s plan, or 20%, as the Congressional Republican blueprint suggests, really make that big of a difference in the grand scheme of things?
In a word: yes. But it’s not just the topline tax rate that’s got corporate CFOs, investors, and tax pros dissecting Congressional proposals and scanning tweets for any indication of what the official corporate tax plan might look like. It’s the litany of details on how that plan will be implemented, what strings will be attached, and how long it will take to implement it that has corporate America on pins and needles. There will be clear winners and losers based on the structure of tax reform alone, not just lower headline corporate tax rates.
For example, U.S. companies have been implementing a wide range of strategies over the past several years to maximize profits by reducing their exposure to the 35% corporate tax rate. At the extreme end of the spectrum, many have done inversion deals whereby the company acquires a foreign entity in a lower tax regime and moves its corporate headquarters to that location. Less extreme, but far more common, companies have moved essential staff into lower tax regimes in different countries and otherwise built-up foreign infrastructures in order to claim ever-higher percentages of earnings in parts of the world where the tax rate is lower than the U.S.
This has had an obvious impact on U.S. corporate earnings, share price growth, and job creation. But the mechanics of all of that tax planning will not be easy to unwind. Add the details of how the U.S. tax reforms will be implemented, how they correspond with global tax reform initiatives, such as those proposed by the Organisation for Economic Cooperation and Development (OECD) in its Base Erosion and Profit Shifting (BEPS) project, and how they impact each company’s individual tax plan and it’s easy to see where a low corporate tax rate alone may not be enough.
To get a better sense of how a large U.S. corporation could be affected by the various components of a significant corporate tax reform, I spoke to Mary P. Van Veen who is vice president, tax at DuPont, where she oversees the multinational chemical giant’s global tax function. Van Veen has been a source of insight into the way big companies think about tax and build it into their overall business strategies for a long time, and I’ve been sharing her outspoken views on tax reform in this forum since 2013. It helps that her company is a poster child for complex tax challenges. DuPont delivers products and solutions in about 90 different countries and achieved $25 billion in net sales in 2016. It’s also in the midst of a major merger with longtime competitor Dow Chemical Company that will create a $130 billion market cap behemoth.
Now that we’re getting to a place where we may start to see some significant tax reform taking place sooner than later, I was really interested to see how Van Veen and her team at DuPont were interpreting the current state of affairs. Ultimately, she finds a lot to like in the Trump plan, but also warns about some pretty significant lingering question marks that could have huge impacts.
“We’ve been looking at the House GOP plan and we clearly like the low rate they are proposing at 20%, and we like Trump’s suggestion of a 15% corporate tax rate even better. This would put the U.S. in line with most of our trading partners and put U.S. companies on a level playing field with foreign competition. We also really like the idea of a territorial tax system. The U.S. is far behind the rest of the world in enacting a territorial system so that our overseas earnings are not taxed when they are brought back to the U.S."
A territorial system would eliminate the need for repatriation tax in the future and would permanently remove any tax incentive to leave cash outside the U.S. The proposal also contains a controversial border tax component, which would exempt any U.S. exports from tax, but apply a tax to imports. The border tax is one of the bigger details that could dramatically impact the fortunes of U.S. companies depending upon how the tax is implemented.
As Van Veen explained, that comes with some good and bad:
“DuPont is a net exporter so when you look at it from a pure tax perspective, it could be very favorable, but when you look at it from a broader economic perspective, it’s less clear. There are a lot of economic theories that the dollar will adjust accordingly to compensate for the non-deductibility of imports. It’s still not clear what will happen, but you have to ask the question: ‘What does it mean to be a U.S. company with a really strong dollar if the majority of your sales are outside the U.S.?’ On the other hand, without the border tax, it’s difficult to fund the lower tax rate.”
Her comment underscores just how insanely complicated any one change to the corporate tax code can be. Consider, for example, the potential impact of the border adjustment tax on giant retailers like Wal-Mart and Target that are among the largest importers of foreign goods in the world. Wal-Mart alone receives about 700,000 containers full of imports per year. Take the tax deductibility out of those goods and the scale of impact is enough to change the value of the U.S. dollar.
Then there’s the issue of repatriation. Trump has said that he wants U.S. companies to be able to bring their offshore profits back into the U.S. at repatriation rate of just 10%. The House GOP plan similarly calls for a one-time 8.75% tax on accumulated foreign cash and liquid assets and 3.5% on reinvested earnings. Beyond that one-time tax holiday, the GOP plan obviates the need for repatriation in the future since it is based on the territorial system Van Veen mentioned earlier.
However, there are still a ton of devils in the details when it comes to how, exactly, this repatriation plan will be treated. Van Veen explained one challenging scenario DuPont is preparing for now.
“For companies like DuPont, we’re not in favor of a one-time repatriation holiday without also changing to a territorial system. While we do have cash offshore that could be invested in the U.S. if we were able to repatriate, it’s relatively small compared to the amount of our accumulated earnings overseas. We’ve been operating overseas for decades but t we’ve re-invested our earnings in those markets: we’ve built plants, made acquisitions, etc. So, we would be taxed on something we no longer have the cash for. We could live with that if it changes our ability to repatriate our foreign cash in a tax efficient manner.”
This is a classic example of how U.S. companies have, over the course of years of high corporate tax rates, adjusted their business strategies to invest outside the U.S. and build real economic footholds in foreign countries.
It’s also a level of detail you don’t typically see when you read about the trillions of dollars in profits U.S. companies have sitting offshore. It’s tempting to picture those earnings sitting in piles in vaults somewhere, but they’re not. That money is being put to work for these companies in the local markets where they are active.
That’s where the issue of tax reform really hits home for U.S.-based multinational corporations. They have incredibly complex businesses that have been operating a certain way based on existing tax code for many years. While it may be advantageous for them to get the reforms the Trump administration has been suggesting it will deliver, the transition also comes with a great deal of challenges that will need to be overcome. If those challenges are offset by policies that make the U.S. more competitive overall, the effort will have been worth it. But great care will need to be taken to get the details right.
Van Veen perfectly summed up the political and business balancing act that needs to happen in order for corporate tax reform to work:
“The real question for us is not whether the administration will get the tax reform legislation through, it’s whether it will stick that really matters. If you don’t have bipartisan reform and you just ram it through a Republican Congress, I think it’s very subject to change in the future. We’re seeing that in healthcare right now. Corporations need stability in tax policy in order to appropriately plan for the future, including building new plants and adding jobs.
It’s worth noting too that my conversation with Van Veen occurred before the Republicans pulled their health care bill, making her comments amazingly prophetic and underscoring just how important it is to have some stability behind major legislation of this scale.
Until we know for sure how that will all play out, business leaders, investors, and the corporate tax world will be watching very closely for signals out of Washington. But don’t expect any easy answers.
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a02a668eeb5d87af625694196ce772db | https://www.forbes.com/sites/joeharpaz/2018/11/15/why-you-should-care-about-big-data-this-flu-season/ | Why You Should Care About Big Data This Flu Season | Why You Should Care About Big Data This Flu Season
Could Twitter help predict how bad this year’s flu season will be? What can walk-in clinics tell us about where and when the worst of the virus will peak?
What could big data tell us about flu season forecasts? Photo courtesy of Unsplash.
From targeted ads to Netflix, if there’s one thing big data has taught us, it’s that creatively mining information can offer insights that increase efficiency and improve outcomes. The healthcare industry presents one of big data’s greatest opportunities, with an estimated 2,314 exabytes (one exabyte = one billion gigabytes) of health data expected to be produced annually by 2020. That’s an astronomical amount of information, and it undoubtedly holds valuable insights that could drastically improve patient care.
As healthcare becomes increasingly connected, how will big data transform patient diagnosis, vaccine development, epidemic prevention and more? Let’s take a look at big data in healthcare through a lens we likely all know too well: flu season.
Taking The Temperature On Flu Season Forecasts
Each year, starting around now, different strains of influenza spread across the country, ultimately affecting 15 to 40 percent of the population. To prepare for the epidemic, the Centers for Disease Control and Prevention (CDC) publishes a weekly “FluView” report, which details the virus’ spread in counties across the U.S. These models are used to determine which strains of the virus will most likely be prevalent in the upcoming flu season, whether or not a new vaccine is needed, and how effective the flu shot will be.
Let’s take a look at the epidemic from a patient perspective. Hoping to prevent the flu, Patient X receives the flu shot at her local Minute Clinic. The vaccine she receives was selected based on last year’s prediction models and protects against two A strains of influenza — H1N1 and H3N2 — and a B strain — B/Victoria. After receiving the shot, the patient feels optimistic about her chances of remaining flu-free.
However, flu shots are only between 40 and 60 percent effective. Not only that, but FluView only pulls data from a limited number of sources, making predictions little more than educated guesses. Case in point, by the second week of January 2018, the CDC thought flu season had already peaked and was on the decline. They could not have been more wrong, however: Peak didn’t occur until February and the season ended up as one of the worst in recorded history.
Big data could prevent situations such as this, helping communities better prepare for the flu and ultimately save lives. Mining non-traditional data sources such as social media and Google search patterns in addition to electronic health records (EHRs), could arm medical providers with more accurate and contextually-rich insights. In fact, studies have already proven that unexpected data sources such as Twitter can accurately predict flu outbreaks up to six weeks before they happen — far sooner than the models we currently rely on.
Northeastern University researchers analyzed more than 50 million tweets containing words related to the flu to predict the virus’ spread and how many people would be affected. This data provided a better idea of how contagious different strains of the virus were and the regions where each strain was most prevalent. Data like this can better inform flu shot development and distribution, uncovering ahead of time which regions will see which strains of the flu and where regional pockets of antiviral resistance may be present. Ultimately, this data will make vaccinations more effective and could lead to the development of regionally specific flu shots.
The importance of these prediction models cannot be overstated: Last year’s incorrect flu forecasts resulted in shortages of flu-fighting antiviral drugs in many clinics, and hospitals were ill-prepared to care for the unexpected influx of patients. Thinking both creatively and critically about where additional sources of data could be pulled from — such as the purchasing of over-the-counter drugs, wearable tech or even IoT enabled smart thermometers — will ensure that when the flu shot is developed and preventative measures prescribed, the best available data is used.
Flu-focused Big Data Uncovers A Growing Resistance
Let’s check in on Patient X again. It’s December, and she visits her primary care physician with a sore throat, cough and fever. Her doctor tests for Strep Throat, bacterial pneumonia and tuberculosis, but it will be a few days before the lab results are in. The patient’s symptoms could be anything ranging from a bacterial infection, to the flu, or to pneumonia. Should the physician prescribe a general antibiotic, hoping to give her some relief during 24 to 48 hours it typically takes for test results to confirm a diagnosis? The problem: Despite receiving the flu shot, she has influenza and antibiotics aren’t going to do anything for her.
With the growing popularity of “on-demand care,” this situation isn’t uncommon. In fact, a recent study found that nearly half of all outpatient prescriptions for antibiotics are unnecessary. Overprescribing antibiotics is known to contribute to the rise of superbugs – and if you want to understand just how rapidly bacteria can develop mutations that make them antibiotic resistant, this short video gives a very compelling demonstration. Already, superbugs cost the U.S. billions of dollars in higher medical costs each year, and it’s estimated we could face a $20 billion superbug problem if we don’t get misdiagnosis and antibiotic overprescription under control.
Back to Patient X. Access to information about her recent travel, where she works and the drugs currently being used in her area can empower her physician to execute an ideal data-driven treatment plan. Knowing, for example, if there was an outbreak of a certain illness in an area the patient is known to frequent could help her physician prescribe the correct antibiotics much faster. Data could also mitigate the frequency of misdiagnosis by helping to identify when an uncommon disease is the culprit, another area where misdiagnosis is common.
Alternatively, as in this case, real-time data could have demonstrated that the patient’s local area is currently seeing a spike in a strain of the flu known to be resistant to the flu shot she received, helping the physician to know that antibiotics would be ineffective.
Big Things Coming For Big Data
We are just entering the next frontier of data-driven care, and flu season represents one particularly data-rich moment in time where we can synthesize powerful insights. However, the tactics employed to improve flu season diagnosis and treatment extend far beyond a single disease. Adding big data into the process can help physicians more accurately diagnose any illness, leading to faster treatment, improved resource allocation, and decreased instances of misdiagnosis.
The end goal, of course, is to improve patient outcomes and overall population health through better-informed health decisions, and to reduce waste and unintended consequences through misdiagnosis or best guess medicinal treatments.
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7f8b955d6dd5692c37c04551d285e9bd | https://www.forbes.com/sites/joeharpaz/2019/08/26/6-expectations-millennials-healthcare/?sh=5da505ef30ec | 6 Expectations Millennials Have For Their Healthcare | 6 Expectations Millennials Have For Their Healthcare
Photo by William Iven on Unsplash
You may have seen recent news headlines proclaiming that millennials are killing napkins. Or that they’re ending plastic drinking straws, the beer industry or even homeownership. While these stories may be a bit extreme, there’s no doubt millennials are shaking things up, considering they make up nearly 23% of the U.S. population. Healthcare is no exception, and unsurprisingly, millennials have some pretty strong opinions about what they want from healthcare providers.
The majority of millennials — typically defined as those born between 1982 and 2000 — grew up as digital natives and expect convenience, speed, and transparency from the services they purchase. With these expectations bleeding over into healthcare, millennials are turning the traditional care delivery model on its head. Here are six expectations they have for their care:
1. They Take Care Into Their Own Hands
Millennials see themselves as responsible for their own care and are less likely to rely on a health system they are dissatisfied with. In fact, a survey by the Kaiser Family Foundation found that 45% of 18 to 29 year-olds and 28% of 30 to 49 year-olds have no primary care provider (PCP). This is a stark difference compared to the survey’s findings among older generations, 85% of which have a PCP. On top of that, over a third of millennials prefer healthcare from retail walk-in clinics over visiting their doctor’s office.
These statistics foretell of a larger generational shift toward on-demand healthcare, where younger patients prioritize speed of delivery and availability of appointments over the relationship developed with a PCP.
It will be curious to see if, once millennials start aging and experiencing additional health concerns, their attitudes will shift and align with what we see among the boomer population today.
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2. They Do Their Research
Considering how many millennials don’t have a dedicated PCP, it’s less surprising to hear that 38% say they trust their peers more than their physician. Additionally, over half (55%) said the information they find online is “as reliable” as their doctor.
In fact, for non-urgent health concerns, millennials are twice as likely as other generations to act on health advice found online, including from sources like social media. Nearly 50% of millennials and Gen-Xers also use online reviews to select care providers, compared to 40% of baby boomers and 28% of seniors.
“Millennials do research and come into our offices more informed about their medical conditions,” says Kim Jenkins, CEO of OrthoSouth. “They’re also researching the physicians and paying close attention to online reviews and social media commentary. When you think about it, this really isn’t so different than what baby boomers do — boomers get insights from their friends and neighbors next door. Millennials get insights from their ‘neighbors’ online. Both groups seek outside opinions, but millennials are drawing from a vastly larger and often better-informed ‘neighborhood’.”
3. They Want Up Front Cost Estimates
Price-transparency is a hot topic in healthcare and millennials are the generation most often attributed as the purveyors of change. A recent survey found millennials are twice as likely as seniors and boomers to request cost estimates before undergoing treatment, often checking prices at multiple locations before making a decision. Unfortunately, upon receiving the bill, over a third surveyed noted it was higher than the estimate and only 8% reported a bill lower than the estimate.
The same survey also found that millennials and Gen-Xers are more likely to forgo care because of the expense. While all age groups thought healthcare was too expensive (79%) and costs are unpredictable (77%), 54% of millennials and 53% Gen-Xers have put off care due to costs. Conversely, just 18% of seniors and 37% of baby boomers have put off care due to high costs.
4. They Want Apps — And Lots Of Them
While this may seem obvious, digital options for patient engagement are a must for millennials. That doesn’t just mean electronic access to their health records, however, or an app for their doctor’s office. While it’s true that 71% of millennials want to schedule appointments through an app, access medical records online or receive automated appointment reminders, 60% also want an option for virtual doctor’s visits and would choose a telehealth visit over an in-person one if given the choice. Additionally, over two thirds would prefer post care follow-ups via email or text message instead of the phone — or even via chatbots like Alexa, who recently became HIPPA complaint.
According to Jenkins, “Convenience, availability, and accessibility are paramount for capturing millennial patients. Online appointment scheduling, easy access to medical records and a simplified communication path to providers are all key elements to meeting the expectations of millennials.”
It doesn’t end there. Jenkins adds, “In addition to convenience, millennial patients are demanding great customer service as well…which they should. Healthcare is a service business. It’s time for healthcare practices to provide outstanding customer service to go along with providing great medical care.”
5. “Healthy” Means More Than “Not Sick”
On average, millennials have a very different definition of what health means compared to older generations. In an Aetna survey, millennials were twice as likely as boomers and Gen-Xers to cite eating healthy and exercising as part of the definition of overall health. They were also far less likely to say maintaining a healthy weight and “not being sick” are a key part of what it means to be healthy.
As part of this, millennials are motivated by holistic and non-traditional forms of healthcare, such as fitness perks and homeopathic medicine, and 71% think of wellness as including both mental and physical health.
6. Shopping for Healthcare Insurance
Consumer behavior applies to “shopping” for health insurance when it comes to the millennial population. When given the choice, millennials prefer to shop online for health insurance, with 55% focusing on cost when selecting a health insurance plan. They are often less brand loyal and would switch plans if it resulted in money saved. When it comes to understanding their plan, from coverage to benefits and their financial responsibility, including how various components like co-insurance, FSAs and HSAs work, they are not so confident. This leaves room for insurance companies and employers to better educate the public.
Even though most millenials feel they have a “positive” relationship with their carrier, with 76% trusting that their insurance carrier has their best interest in mind, confusion is still prevalent. Nearly a quarter (24%) of millennials identify themselves as "customers" of their insurance companies and only 38% correctly identify themselves as "members." The variations in these mindsets will continue to drive change and shape both health insurance and healthcare industries as a whole.
The Doctor Will Heal You Now...
As the largest generation in the U.S., millennials have a lot of power and influence over the future of healthcare. The non-traditional care models they prefer are rapidly making inroads across the industry, resulting in more digital options for care, an increasing number of retail walk-in clinics nationwide, and a growing number of providers offering cost comparisons up front.
Jenkins concludes, “The changes in healthcare being driven by millennials are long overdue. Today’s patients — millennials in particular – have become more informed and more demanding. Their push for improvements is making healthcare better for everyone.”
Where and how millennials will contribute to the healthcare industry is the $3.4 trillion question and one that we can expect to play out on the debate floor this election season.
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d015bcf53aeb08d7cfd44a0f78c21ae3 | https://www.forbes.com/sites/joeharpaz/2020/06/30/medical-school-20-how-covid-19-will-help-usher-in-the-next-generation-of-medical-superheroes/?sh=19f972fa60dd | Medical School 2.0: How Covid-19 Will Help Usher In The Next Generation Of Medical Superheroes | Medical School 2.0: How Covid-19 Will Help Usher In The Next Generation Of Medical Superheroes
“Pursuing a career in medicine has and always will be a calling to help others," shared Dr. Adam ... [+] Wulkan, director of laser & cosmetic dermatology at Lahey Hospital and Medical Center. © 2020 Bloomberg Finance LP
35,040 hours. That’s equal to four years, the typical length for completing medical school. And that’s not including the countless hours of studying, stressing and not sleeping. It’s certainly an accomplishment that deserves to be celebrated and applauded. Although graduation celebrations took place virtually this year due to Covid-19, it certainly does not make becoming a physician any less meaningful or impactful; it’s quite the opposite.
Dr. Adam Wulkan, director of laser & cosmetic dermatology at Lahey Hospital and Medical Center shared the passion needed to go into medicine. “Pursuing a career in medicine has and always will be a calling to help others. The science and practice of medicine are constantly evolving. It requires an eternal thirst for knowledge and love of medicine,” stated Dr. Wulkan.
That passion and grit are needed now more than ever as Covid-19 continues to be a global threat. So how will medical school, like many other industries, adjust now and into the future to prepare the next generation of physicians?
The Next Pandemic? A Physician Shortage
By 2032, the United States is predicted to see a shortage of nearly 122,000 physicians. Getty
By 2032, the United States is predicted to see a shortage of nearly 122,000 physicians. It’s basic economics—demand will exceed the supply. With an aging population of physicians and patients, the rate of physicians being produced hasn’t kept pace. This infographic from the Association of American Medical Colleges (AAMC) illustrates many other important stats such as taking a total of 7-15 years for a physician to complete their training.
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Medical school acceptance rates for the top 25 programs range between 3-7%, with around 81-84% of medical students graduating, followed by approximately 94% of students matching with a residency program. Although it adds to the prestige, low medical school admission rates may be partially to blame. Combine that with the “Residency Bottleneck” as some medical residency programs are not expanding to meet the increased numbers, often due to capacity limitations. Plus, medical school enrollment is up only 7% over the past 5 years which equals about 6,000 more physicians to be—still not enough to close the anticipated gap.
So should we expect this disparity in physician numbers to grow due to Covid-19? Many students are now taking a gap year after high school graduation due to the Covid-19 landscape. Some medical students who are partially through their schooling are taking a pause to pursue an MBA or do research and are putting the clinical portion on hold. Will enhanced virtual learning environments allow schools to increase capacity? How might these changes impact the predicted physician shortage?
It seems like only time and future enrollment will tell. But there is the notion that when crisis situations arise, people rise to the occasion.
This is a sentiment that Dr. Sarah K. Wood, senior associate dean of medical education at the Schmidt College of Medicine at Florida Atlantic University echoed. “I believe there will be a new generation of healthcare workers inspired by the heroes they have seen battling the Covid-19 crisis on the front lines. With significant physician shortages looming, and with the Covid-19 pandemic requiring a robust workforce of healthcare professionals, it is even more critical that we continue to educate a pipeline of future physicians and scientists. The next generation of doctors want to step up now more than ever. I have watched first hand our medical students’ desire to contribute in any way possible. I also think we may see medical students and trainees potentially deciding to pursue their education and careers closer to home.”
An Altered State of Affairs: The Class of 2020 (& Beyond)
In 2020, the Covid-19 global pandemic quashed many typical aspects of medical school. By mid-March, most third and fourth year medical students around the country were taken out of clinical environments while medical school and hospital administrations evaluated the rapidly changing and unpredictable landscape. The safety of medical students was uncertain and there were insufficient learning opportunities as elective surgeries virtually vanished. This, combined with limited availability of personal protective equipment (PPE) and restrictions on participating in the care of Covid-19 patients, made it a less than ideal clinical learning environment.
Clinical rotations went virtual with schools getting creative and using technology to mimic clinical scenarios as best as possible from virtual visits to online curriculums. While not the same as being physically present with a patient, it was the next best learning experience that reduced potential exposure to the virus for both students and patients.
Clinical rotations went virtual with schools getting creative and using technology to mimic clinical ... [+] scenarios as best as possible from virtual visits to online curriculums. Getty
In light of all the chaos, it didn’t affect the record number of medical students who celebrated Match Day 2020, albeit virtually. A record-high of 40,084 applicants submitted program choices for 37,256 positions. Instead of celebrating with peers, most celebrated at home with close family and friends, like these Stanford students. The match rate was nearly 94% for senior medical students from MD-granting medical schools— the same rate as it has been historically. This monumental day in a physician’s career marks another meaningful, ritual celebration in our culture that has gone from in-person to virtual over the past several months.
Plus, at least thirteen medical schools around the country even allowed students to graduate a bit early to help meet the increased patient need due to coronavirus and medical professionals falling ill. Areas that were hit hard like NYC had early graduates assist with needs outside of seeing Covid-19 patients to help lessen the burden on hospital staff.
Becoming a Physician Amid Covid-19
This unprecedented time has also required both new and tenured physicians to respond quickly and ... [+] learn on the fly. Getty
Nervous. Conflicted. Determined. Those were some of the feelings that several recent medical students shared in a TIME magazine article. Perhaps starting at a time when uncertainty about a novel virus is at its peak is the ultimate test of who is cut out to be a physician. As alluded to in a Statnews.com article by Dr. Lawrence G. Smith, this global pandemic could very well help usher in a generation of even better doctors. He brought up the point that in medical school, the focus is often on excelling in one’s field. That often does not directly include empathy, a skill that many healthcare professionals need, perhaps even more so in recent days. This unprecedented time has also required both new and tenured physicians to respond quickly and learn on the fly.
Dr. Levonti Ohanisian, a 2020 graduate from FAU’s Schmidt College of Medicine, feels empowered and humbled to become a physician during this historic time. “I understand that there’s so much I don’t know, and that there’s a tremendous amount to learn, but I’m happy that I am able to participate, at least as a small part, of the solution. After all, it is a privilege to become a physician. It is a privilege to have patients come to you at their most vulnerable moments. That vulnerability seems amplified in magnitude and multiplied in number. I’ve always viewed the profession as a calling and it’s time to step up,“ shared Dr. Ohanisian.
Revamping the Medical School Curriculum Now And Into the Future
In 2013 the American Medical Association (AMA) started the “Accelerating Change in Medical Education Initiative” to help pave the way for medical schools of the future. Today, 37 medical schools are part of this consortium with the goal of disseminating ideas to positively transform medical education. One of the tasks of the group has been to make technology work for learning, something that the Covid-19 pandemic put front and center.
The proliferation of technology and distance learning will result in an explosion of even more ... [+] simulation resources. Getty
The proliferation of technology and distance learning will result in an explosion of even more simulation resources, such as watching practical videos on basic surgical techniques like knot tying and suturing. Wolters Kluwer provides digital learning resources such as illustrated books, exams and digitized anatomy atlases. Some companies have really upped the ante when it comes to leveraging the latest tech for medical training. Level Ex, a medical video game company, recently launched levels in their platform to help diagnose Covid-19 patients. OssoVR is on the leading edge of providing immersive virtual surgical training experiences and currently has over 20 residency partners.
Finding the right balance of in-person learning combined with digital platforms will most likely become the norm for current and future medical students. As businesses around the globe have resorted to remote work, as long as the right technology is available and output remains consistent, it could very well turn into a winning combination for medical school students, too.
The Schmidt College of Medicine at Florida Atlantic University embraced and swiftly adjusted to the challenge at hand. Dr. Wood shared, “In the face of this pandemic, medical schools have had to respond with rapid and transformational change. Yet with great change comes great opportunity. There has been a steep learning curve for our medical educators but an impactful one. We exponentially increased the integration of technology and educational platforms into our curriculum in a matter of weeks. We launched virtual multidisciplinary clinical skills training sessions so medical students could enhance their history taking and telehealth skills. Students interact remotely with standardized patients online as faculty observe and provide feedback. Educators use a mix of synchronous and asynchronous learning modalities to keep students engaged. I believe training in telehealth and virtual learning will remain a meaningful part of our medical education program.”
The addition and focus of telehealth curriculum will remain post-Covid-19 and will certainly be weaved into the academic and even clinical setting. Many would agree that the proliferation of telehealth in all capacities is a good change that Covid-19 brought about.
This global pandemic has shed even more light the importance of social determinants of health, and while the virus doesn’t discriminate, the impact it has varies based on numerous socioeconomic factors. Areas of medicine like population health may become stronger points of focus in medical school curriculum and for students pursuing such avenues.
Away Rotations Remain Closer to Home
Away rotations, often known as audition rotations, are common during the final year of medical school. These too have been cancelled for the class of 2021, with some rare exceptions based on national guidelines. During away rotations, students have the chance to showcase their abilities and get a feeling for potential residency programs while obtaining coveted letters of recommendation. Because of this change forced by Covid-19, many programs such as emergency medicine have had to adjust their specialty-specific requirements, which previously necessitated multiple away rotations. This year, students will have to rely on their home institution and local affiliates to gain their clinical experience. Many institutions are rapidly developing virtual elective courses and online networking opportunities to help fill this gap for both student learning and program recruitment.
Janelle Nassim, MD, senior resident physician in the Harvard Dermatology Residency Program shared her perspective on this uncharted territory. “An away rotation can provide crucial opportunities for students — particularly for those coming from state medical schools or med schools without a home department in that specialty. It provides a time to connect with and show interest in a department, to network, and to prove that they are deserving of an interview. This is often especially important in competitive specialties. Additionally, away rotations can serve as an opportunity to seek a letter of recommendation from an expert in a specific field and see if the program is a good fit for them. Unfortunately, without away rotations, both medical students and programs may have a more difficult time assessing each other’s strengths and fit for one another.”
Residency Interviews And Visits Go Digital
Virtual residency interviews may have both short- and long-term effects, like reducing costs for ... [+] students and programs. Getty
Lectures and graduations are not the only aspects of medical schooling going virtual. The months before Match Day are filled with soon-to-be grads traveling from residency program to residency program both being assessed and assessing the landscape themselves. It’s quite typical that a medical student’s fourth year will include visiting an average of 12 residency programs with students easily spending a median of $4,000, but costs can easily stretch to over $11,000. This expense has “virtually” vanished for the class of 2021. Days filled with interviews, socializing and evaluating the facilities and visualizing themselves there, have now gone digital. So what type of impact will the transition to virtual interviews have?
Dr. Nassim recounted all the fond memories and the sort of rite of passage her residency interviews provided to her and her colleagues. “The concept of virtual residency interviews are hard to wrap my mind around, but I do see potential short- and long-term benefits. It will prevent students from building up added costs to an often already overwhelming sum of student debts. It could level the playing field for students who would have passed on opportunities due to the costly interview process. Virtual interviews could be far less stressful and eliminate the packing, unpacking, delayed flights and unpredictable winter weather and inherent travel drama. Programs will have to get creative with how they ‘show off’ to attract students,” shared Dr. Nassim.
Since 2017, UT Southwestern and students have benefited from virtual interviews. Since they have the largest general surgery program in the country, it was often a challenge to identify a large number of potential applicants, and over the past years have been able to have an increase in applicants and matches through the addition of virtual interviews. Some other benefits cited of going virtual could include reducing the white noise, reducing costs incurred by both students and universities, aiding to reduce burnout and even providing a more level playing field.
The Prognosis: Gratitude
These challenging times have brought to light many of the roadblocks physicians face, and not just ... [+] because of Covid-19. Getty
Given the way tech and healthcare are evolving to keep pace faster than ever, perhaps the outcome will be improved medical school programs that give way to even better physicians. While it has always been true, the statement that necessity is the mother of invention has become even more apparent.
These challenging times have brought to light many of the roadblocks physicians face, and not just because of Covid-19. From physician burnout to compensation challenges, mental health concerns and limited resources, physicians have a lot to focus on outside of patient care. They are real-life superheroes.
I will never be a physician and will forever be a patient. I wanted to end this post expressing the respect, admiration and appreciation for all those who have focused their livelihood on bettering others and to the next generation of physicians. Covid-19 has created a lot of inconsistency and unknowns for all of us, but what I do know is that current and future physicians and healthcare professionals will remain a constant, and for this I am grateful—thank you.
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ab8274b8d4ed101ef919166685864451 | https://www.forbes.com/sites/joeharpaz/2020/12/18/patient-engagement-in-the-era-of-covid-19/?sh=c738059ab386 | Patient Engagement In The Era Of Covid-19 | Patient Engagement In The Era Of Covid-19
Over the past year, the healthcare industry has undergone unprecedented change as a result of the Covid-19 pandemic. From the availability of telemedicine visits to drive-in waiting rooms at the doctor’s office, patients and physicians alike are adjusting to healthcare’s new normal. As we look to the future and envision a post-pandemic world, many of these changes are likely here to stay. While technology use was already growing in the healthcare space, the pandemic has fast-tracked these already impending changes and it’s almost like we’re seeing the future of medicine a decade early.
Here are some of the ways in which patient-doctor interactions have changed as a result of both the Covid-19 pandemic and ever-advancing technological innovations.
Telemedicine: The Doctor Will Video Chat You Now
Virtual patient visits hold the promise of improving access to care while simultaneously opening ... [+] communication channels and strengthening the doctor-patient relationship. Modernizing Medicine
In just a few short months, telemedicine has gone from a futuristic healthcare buzzword to a common form of doctor visit. Pre-pandemic, just 8% of patients had ever had a virtual doctor’s appointment, despite the fact that 66% of consumers said they’d be willing to try it. Fast-forward to today and the loosening of telehealth regulations and changes to reimbursement rates has resulted in an 57% increase in usage, with about 20% of all medical visits expected to be conducted via telemedicine in 2020.
The pandemic has helped illuminate the many benefits of virtual visits, from safer, socially distant appointments for potentially contagious patients to improved convenience. Instead of travelling for an appointment and waiting to be seen by a physician, patients can conduct an initial visit via telemedicine, then determine if an in-person visit is warranted. The format is especially beneficial for things like follow-up appointments and medication check-ins, or for remote patients or those with limited mobility.
Overall, virtual patient visits hold the promise of improving access to care while simultaneously opening communication channels and strengthening the doctor-patient relationship. Patients tend to agree that telemedicine can help them play a more active role in their well-being, with 91% of consumers stating in a recent survey that it would help them stick to appointments, manage prescriptions and refills, and follow wellness regimens as dictated by their doctor.
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Patient Portals: Book Appointments, Access Test Results And Communicate With Your Doctor
The move to virtual visits has had a positive effect on patient portals as well. While about 90% of practices offer a patient portal, pre-pandemic, fewer than 10% of patients reported actually using one. However, the shuttering of practice front doors resulted in an opening of patient portals online, as physicians turned to digital platforms to communicate and manage the health of their patients. The ability to securely send direct messages, refill prescriptions, book appointments, and access telemedicine visits is encouraging usage from patients and providers alike. Care management platforms have also played a role in the dissemination of Covid-19 test results, further promoting their use.
“Millennials often prefer instantaneous access to information, so having a portal that’s available 24/7 is a big draw,” said Jennifer Stambook, corporate controller at Empire Eye and Laser Center. “We’ve found that patients place a lot of value on being able to ask a question about their ocular health at 10 p.m. vs. waiting to call the next day, especially because our doctors and support staff are judicious about answering them in a timely fashion.”
With most users already primed for the adoption of online portals from the use of other consumer technologies, it’s likely the convenience factor and ability to communicate directly with doctors will ensure their increased use, even post-pandemic.
Automated Appointment Reminders: Can You Text Me Instead?
Many physicians are now sending automated appointment reminders in the patient’s preferred format: ... [+] text, phone call, email or a combination of formats. Modernizing Medicine
For decades, it’s been standard practice for front office staff to pick up the phone and call hundreds of patients every day to remind them of upcoming appointments. Not only is this time consuming, but it begs the question: How many people today regularly pick up the phone for an unknown number or check their voicemails?
Many physicians are now sending automated appointment reminders in the patient’s preferred format: text, phone call, email or a combination of formats. While it can take multiple calls and voicemails before a patient responds to confirm an appointment, text messages and emails are typically responded to within hours, if not minutes, and result in fewer missed appointments.
“We really encourage medical practices to utilize phone, email, and text for appointment reminders. It’s best practice to use all three in order to stay on a patient’s radar,” says Michele Perry, CEO of Relatient. “Patients have no patience for phone tag, they expect intuitive, digital communication. When medical practices come to us and start utilizing optimized, mobile-first patient outreach, we see their no-show rates take a dramatic dive, often reduced by 40% to 50% or more.”
As an added benefit, in the case of an unexpected cancellation due to weather or a physician falling ill, automated reminders can be sent out to hundreds of patients immediately.
Price Transparency: How Much is This Going to Cost Me?
Healthcare is one of the only industries where you often don’t know what the final bill is going to be, both in terms of healthcare services and prescription costs. However, after decades of escalating drug prices, there’s now some relief for consumers in the form of cost estimators and drug pricing comparison tools.
While these technologies don’t solve the underlying issue of drug pricing increases, they can help consumers ensure they’re getting the best value. For example, some doctors’ offices are embedding tools like Surescripts directly into electronic medical record (EMR) interfaces, so patients and providers can compare after-insurance costs for a variety of medications and generic versions during a physician visit. The savings can be significant. Using Surescripts, patients taking blood glucose lowering medications (excluding insulin) save an average of $88 per prescription and those taking antidepressants save about $105.
For patients who either don’t have insurance or who want to see if paying out-of-pocket is cheaper than using their insurance, there’s also GoodRx, a free online resource that helps consumers compare drug prices at local pharmacies and save using coupons. GoodRx’s platform gathers retail prices from more than 70,000 pharmacies in America, and the discount coupons offer savings of up to 80%. GoodRx is now available in some EMRs as well, so physicians can help patients uncover coupons to lower their total out-of-pocket costs at the point of prescribing.
As of a year ago, hospitals and physicians’ offices have been required to publicly post the cost of procedures online, but many have complained that these “healthcare shopping lists” are all but unreadable, not to mention irrelevant, since they don’t take patient insurance information into account. Many health systems are looking into ways to more readily provide up-front estimates on the cost of a procedure using technology that can calculate expenses based on patient insurance information and deductibles, even comparing costs at different nearby hospitals and outpatient centers.
What Does The Future of Healthcare Look Like?
Medical practices that focus on patient experience and invest in modern technologies are likely able to better-weather the impact Covid-19 has on the continuity and continuation of patient care. From virtual visits to online patient portal usage, the pandemic has accelerated the consumerization of healthcare and raised patient expectations surrounding the need for rapid and easy medical access, changing the very way in which practices operate and care is administered.
In many ways, we’re witnessing the future of healthcare unfold before our eyes as the Covid-19 pandemic fast-tracks regulation changes and technology use. Whether the traditional waiting room will survive or not is yet to be seen, but it is inevitable that the acceleration of technology adoption will promote better patient outcomes and ensure the financial viability of medical practices.
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9fcb36c5b159235d0aeb22e40428c4c7 | https://www.forbes.com/sites/joelbackaler/2015/01/14/10-chinese-companies-going-global-in-2015/?sh=7a7054ca62d8 | 10 Chinese Companies Going Global in 2015 | 10 Chinese Companies Going Global in 2015
2015 is here, and more Chinese executives and entrepreneurs than ever before are planning to take their businesses global. I spent the majority of 2014 on the road speaking with many of these executives in China, Europe and the United States for my new book. While most are still developing their overseas expansion strategies, there is tremendous interest in entering advanced economies such as the US and EU, for both business and personal reasons.
As I have previously written in this column, “going global’ is not just a Chinese government directed policy, but even more so a practical business decision by Chinese businesspeople facing intense competition and increasing costs in China as overall domestic economic growth slows. While it is clear that a growing number of Chinese companies will attempt to take the international stage in 2015, the big question investors and executives want to know is—‘which Chinese firms should we be watching?’
In 2013 and 2014, I published Forbes articles with my predictions for Chinese companies to watch in the New Year. These rankings were based on a combination of factors, including their existing global presence, pending overseas transactions, and internationalization of their management team and user/customer base. Here are the top 10 Chinese companies to watch in 2015:
Lenovo – Best known for its 2005 acquisition of IBM’s ThinkPad division, the firm had a big year in 2014 with two major acquisitions in the US: Motorola Mobility and IBM’s x86 enterprise server division. In 2015, the firm is set to continue to grow its global mobile business though both organic and potentially inorganic means. Dalian Wanda – The Chinese diversified conglomerate first made a name for itself in 2012 with its $2.6 billion acquisition of AMC Entertainment in the US. Dalian Wanda, led by billionaire founder Wang Jianlin, has since made other major overseas investments including Sunseeker yachts in the UK and high-profile real estate acquisitions including Chicago’s third tallest building. Fosun – Fosun operates across a diverse range of sectors including real estate, insurance and healthcare, and it has deep pockets to fuel global expansion. In December 2014, the firm announced a $433 million deal to acquire Michigan-based Meadowbrook Insurance. It also is currently engaged in an 18-month bidding war for French vacation resort firm, Club Med, and invested in multiple international real estate projects. Huawei – Despite facing challenges in the US in its core telecommunications equipment business, the firm continues to do exceptionally well around the world. The firm’s consumer business has been booming overseas, and many of its new products were featured at the 2015 Consumer Electronics Show in Las Vegas. Wanxiang –The Chinese automotive and new energy firm has acquired more than two dozen companies in North America since opening its overseas headquarters there in 1994. In 2014, Wanxiang purchased Fisker Automotive, prompting reports that Wanxiang may seek to challenge Tesla in the electric vehicle space. Alibaba – The e-commerce giant’s record-breaking 2014 IPO in New York was just the tip of the iceberg—an overseas acquisition spree, particularly in the US and other Asian markets, combined with greenfield investments, make this a top Chinese firm to watch in 2015. Xiaomi – Currently valued at $45 billion, the Chinese smartphone maker is taking the mobile industry by storm and becoming a serious competitor to global rivals Apple and Samsung. The firm may take part in an overseas IPO as early as this year. Baidu – Despite its US IPO in 2005, Baidu has focused primarily on the Chinese market in recent years. However, in 2014 the firm began pushing more aggressively overseas with its Nokia partnership, $3 million Israeli startup investment and strategic stake in Uber. Tencent – The Chinese gaming and social app giant has been stepping up its investments in Silicon Valley during the last two years. The global success of its WeChat social messaging app also makes it a key company to watch this year. Bright Food – Bright Food previously made headlines for high-profile investments in the UK and New Zealand, and the firm is aiming to achieve 25% of revenues from overseas by 2017.
In addition to these ‘top ten’ there will surely be other Chinese companies making significant overseas movements in 2015. Prior to October 2014, few in the West had heard of Anbang Insurance Group. However, this changed when the Chinese insurance group announced a $2 billion acquisition of the historic Waldorf Astoria Hotel in New York City. Similarly, Shuanghui International was a name few outside of China had heard of—or could pronounce correctly—prior to its then record-breaking $4.7 billion acquisition of Virginia-based Smithfield Foods. Given the vast amount of capital many Chinese firms have accumulated and the increasing attractiveness of investing outside of China, it’s not surprising that each year new Chinese firms emerge on the international stage. For 2015, we’ll need to wait a bit more time before a new set of global Chinese firms begin to appear.
Learn more about these companies, their international expansion strategies and the executives charged with taking them global in 2015 –
China Goes West: Everything You Need to Know About Chinese Companies Going Global
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02813c420da4ea040c72c000e3094981 | https://www.forbes.com/sites/joeljohnson/2018/04/18/how-to-bounce-back-after-a-market-correction/ | How To Bounce Back After A Market Correction | How To Bounce Back After A Market Correction
Market Correction Adobe Stock Images
Once a market correction happens, there are strategies you can follow to help bounce back. What exactly is a market correction? A stock market correction is when the market falls 10%. A "bear market" is defined as a 20% drop. These times can be very uncertain for investors, however, 27 of the last 36 years have ended positively with an average rate of return of 11.4%. Often, the quick response is to remove oneself from the volatility, but history has proven the importance of staying the course, being patient and remaining for the long haul.
If you happen to have lost a significant amount in the market during this time, it is important to not panic and not react. Easier said than done, right? Hopefully, you have a plan in place that you can fall back on – one that provides you with the confidence to weather the storm. If you react, you are doing so based on emotion rather than facts and research. The strategies listed below are recommendations to help stay the course during a market correction:
Keep Perspective
If you are a long-term investor, it is important to think about the future and not react in the short term. A decline in the market can be very upsetting and stressful, but it is important to keep your perspective and understand that over time, the stock market has recovered and has been able to provide long-term investors with favorable results.
Practice Self-control
Often during this time, individuals stop adding to their 401(k), but in actuality, this is the time to continue adding and if possible, to increase your contributions. Practice self-control and stay committed to your long-term investment plan.
Do not try to time the market
The individual investor has no chance of timing the market – it doesn’t work. Usually what happens is when the market goes down, people inevitably panic and sell. When the market goes back up, people buy. Buying high and selling low won’t provide sustainability and security for long-term investments.
Consider hiring a financial professional
There are many trustworthy and qualified financial professionals with backgrounds in investment and retirement strategies. Just like you may be apt to do research on hiring a contractor for a home project, the same holds true for a financial advisor. Interview and do your research so you find an individual you feel comfortable working with. It is important to have a well thought out investment plan based on your needs and wants for your future. Everyone’s situation is extremely different, therefore, it is important to create and develop an investment plan which caters to your individual lifestyle.
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5d46903986447eda5f4dd61bc521da4f | https://www.forbes.com/sites/joeljohnson/2019/05/10/retirement-common-fears-plaguing-adults/?sh=23e2d4e04f4c | Retirement: Common Fears Plaguing Adults | Retirement: Common Fears Plaguing Adults
Fears in Retirement Adobe Stock Photo
Common fears among individuals run the gamut from public speaking to an extreme fear of heights to claustrophobia and the list goes on and on. You can ask any psychologist or psychiatrist and they will most likely tell you they are currently helping or have helped someone work through a genuine fear or phobia. Financial advisors, like psychologists and psychiatrists, can be instrumental in helping pre-retirees and retirees face their financial fears head on and provide confidence as they enter a new and exciting phase of their life.
As people enter retirement, they lose the power of earning a paycheck and the reality of what they have saved will be what they live on for the rest of their life. This causes some individuals to be overwhelmed with fear, thus changing their behavior. According to the National Retirement Planning Coalition, a Boomer Expectations for Retirement 2016 Study, only 24 percent of Baby Boomers are confident that they will have enough savings to last throughout retirement. However, encouraging news from the same study found that more than 8 in 10 Boomers who have worked with a financial professional feel they are better prepared for retirement as a result of their working relationship. Some of the common fears facing adults as they approach retirement:
Investment Loss
Some people worry about the market going down and therefore, may put their savings in too safe investment options earning little interest. I’ve seen that this can be a huge mistake. It is important to talk to someone like a financial advisor who can calm your fears and suggest a reasonable balance of investment options based upon your needs and wants.
Running out of money
The number one subject that comes up – will I have enough money to live on for the rest of my life? I recommend everyone having a financial plan. If you don’t have one, unfortunately, the uncertainty could cloud your judgment and I have witnessed individuals not always acting in their best interest regarding financial decisions.
Unprepared for a major health event
Healthcare is a major concern amongst individuals heading into retirement. The U.S. Centers for Medicare and Medicaid Services reported the U.S. spends close to $3.5 trillion a year on healthcare. Insurance premiums go up every year and those who have Medicare have learned that unfortunately not all expenses are covered including long term care. The Insured Retirement Institute conducted a survey in 2017 amongst consumers ages 50 to 75 and found 58 percent believe they are only somewhat or not very prepared for a major health event. Based upon these fears, I would recommend setting aside a reserve account to cover healthcare expenses, especially those unforeseen at the moment.
Effect of inflation
As many people have been living way into their 90’s, I think it’s likely that those who are in their 60’s could live 30+ years requiring more money to live on. Inflation is defined as a general increase in prices and fall in the purchasing value of money. Over time, the U.S. dollar buys fewer goods and services and therefore, I always suggest to my clients to account for this in their retirement planning.
Having a well thought out financial plan is a good way to help alleviate some of the common fears plaguing individuals nearing retirement. And, although even the most well analyzed and detailed plan may not alleviate all of your fears, it certainly could go a long way in diminishing some of those uneasy and stressful feelings you may have.
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45ea6832c3914ce747c29adade448494 | https://www.forbes.com/sites/joelkornblau/2014/05/30/like-facebook-under-41/ | Like Facebook Under $41? | Like Facebook Under $41?
Facebook stock has had a tumultuous ride since its IPO in May 2012. But, as of today investors in the IPO have seen a 65% return on their investment, and those who were lucky enough to wait and snatch up Facebook stock near the bottom are sitting with a 250% gain.
Looking back to 161 days ago, Facebook (NASD: FB) priced a 70,000,000 share secondary stock offering at $55.05 per share. Buyers in that offering made a considerable investment into the company, expecting that their investment would go up over the course of time and based on early trading on Friday, the stock is now 14.3% higher than the offering price.
Investors who did not participate in the offering but would be a buyer of FB at a cheaper price, might benefit from considering selling puts among the alternative strategies at their disposal. One interesting put contract in particular, is the January 2016 put at the $45 strike, which has a bid at the time of this writing of $4.25. That would result in a cost basis of $40.75 per share before broker commissions in the scenario where the contract is exercised. If the contract is never exercised, the put seller would still keep the premium, which represents a 9.4% return against the $45.00 purchase commitment, or a 5.8% annualized rate of return (at Stock Options Channel we call this the YieldBoost).
Click here to find out the Top YieldBoost Puts of of Stocks with Recent Secondaries »
Secondaries can often present buying opportunities for bullish investors interested in purchasing shares, because the sudden extra supply of stock tends to require that the offering be priced at an attractive discount to where the stock had previously been trading before the offering announcement. That can also introduce near-term volatility which improves the premiums a put seller can achieve. Selling a put does not give an investor access to FB's upside potential the way owning shares would, because the put seller only ends up owning shares in the scenario where the contract is exercised. The chart below shows the one year performance of FB shares, versus its 200 day moving average:
Looking at the chart above, FB's low point in its 52 week range is $22.67 per share, with $72.59 as the 52 week high point — that compares with a last trade of $63.14.
According to the ETF Finder at ETFChannel.com, FB makes up 10.99% of the Social Media Index ETF (NASD: SOCL) which is trading lower by about 0.7% on the day Friday.
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43ab25138203d78c175b0f316026df07 | https://www.forbes.com/sites/joelkotkin/2011/05/31/the-katrina-effect-renaissance-on-the-mississippi/ | The Katrina Effect: Renaissance On The Mississippi | The Katrina Effect: Renaissance On The Mississippi
Image via Wikipedia
In this most insipid of recoveries, perhaps the most hopeful story comes from New Orleans. Today, its comeback story could serve as a model of regional recovery for other parts of the country -- and even the world.
You could call it the Katrina effect. A lovely city, rich in history, all too comfortable with its fading elegance and marred by huge pockets of third-world style poverty, suffers a catastrophic natural disaster; in the end the disaster turns into an opportunity for the area's salvation.
Had Katrina never occurred New Orleans would likely have continued its inexorable albeit genteel decline; the area's population dropped from 627,000 in 1960 to 437,000 in 2005, the year the hurricane occured. Instead the disaster brought new energy and a sense of purpose to the Big Easy.
I first realized that New Orleans was going through some kind of renaissance when looking at some numbers. In Forbes' list of the country's biggest brain magnets -- based on analysis of where college-educated adults were moving to by demographer Wendell Cox -- New Orleans ranked No. 1, ahead of such hot spots as Raleigh-Durham, N.C., and Austin, Texas.
Then came our analysis of the best large cities for jobs: New Orleans ranked No. 2 in our survey, up a remarkable 46 places. New Orleans' performance was particularly impressive in the information field, which includes software and entertainment, and in which the Big Easy grew the most -- over 30% last year alone -- among our major metros.
Yet numbers do not tell the whole story. Sometimes statistics simply look great against the background of catastrophic decline. New Orleans was so far down and received so much recovery money that recent improvements could be explained as a short-term bounce back from a disaster.
But the resurgence of New Orleans, whose population is now back to almost 350,000, represents something far more significant and long-term. For one thing, the storm undermined the corrupt, inept political regimes that had burdened the area for decades. "Katrina shattered the networks and broke down the old hierarchies," notes Tim Williamson, a New Orleans native and founder of Idea Village, a nonprofit focused on aiding local entrepreneurs. "People felt we were dying. Now we feel like we are refounding a great American city."
For example, inept leaders like former Mayor Ray Nagin and the equally lost Kathleen Blanc have been replaced by more effective figures like Mayor Mitch Landrieu and Gov. Bobby Jindal. Equally important, according to a recent Brookings report, New Orleanians have become noticeably more engaged with their community. Particularly impressive have been improvements in the local schools, once among the nation's worse. Last year, the majority (61%) of public school students in Orleans Parish (counties in NOLA are called parishes) attended charter schools, which are now attracting some middle class families.
Most impressive, this once stagnant region has transformed into an entrepreneurial hot bed. "Five years ago people thought we were crazy to be here," says Matt Wisdom, founder of Turbosquid, a firm with 45 employees that provides three-dimensional images to corporate clients. "Now instead of people being amazed we are here, they want to get here to ride the wave."
Walking along Magazine Street from the edge of the Garden District to the Central Business District, you still pass some rough areas. But the way is peppered with scores of independently owned shops and small businesses, many of them opened since the hurricane. Their owners for the most part appear to be younger than 40.
"We used to have this huge brain drain to the Northeast, the West Coast and Texas, but this has changed," Williamson says. "After Katrina everyone was forced to become an entrepreneur. The dominant concept for the rebuilding has become one of resiliency and self-employment -- it's been bottom up. It's become as much of our identity as Mardi Gras or the Jazzfest."
Since its founding back in 2000 Idea Village has assisted 1,000 local companies with business plans, financing and focus. Most are small, but some of what Williamson calls post-Katrina generation companies, like Naked Pizza, founded in 2006, have expanded rapidly. Specializing in a healthy, organic version of the traditional high-fat fast food, Naked Pizza has won financial backing from Dallas Maverick owner Mark Cuban. The company, which employs 40 employees at its New Orleans headquarters, expects to have over 70 franchises by the end of the year .
Many rapidly rising businesses specialize in digital media, attracting talent from other places like the West Coast and New York. 37-year-old Kenneth Purcell, founder of Iseatz, moved his entertainment and travel business from New York to NOLA in 2009 and has since grown his company from seven people to 25.
One big advantage of starting a business in New Orleans is its affordable housing. Based on median price against median household income, the region's prices are roughly 50% less than those in New York or San Francisco. This is particularly attractive both to middle-aged couples with children who can afford a spacious suburban home that are far less expensive than their equivalents in Los Angeles, Westchester or Silicon Valley.
It also is attractive to the smaller subset of employees, many of them young, who are drawn to traditional cities. Some New Orleans neighborhoods remind me of pre-1980 Greenwich Village, offering a charming urban environment without either the extortionate price tag or oppressive density.
Immigration, much of it from Mexico, also is contributing to the regional remake. Over the past decade, as both white and black populations dropped, the Asian population grew by 3000 and Hispanics by 33,500, most of them settling in suburban Jefferson Parish. Once predominately African-American, New Orleans is returning to its more multi-racial past while re-establishing its strong cultural and social ties to Latin America.
Yet despite all positive signs, it may be too early to proclaim, as some boosters do, a "New Orleans miracle." After all, the city's population remains over 100,000 below its depressed pre-Katrina levels. There are still over 47,000 vacant housing units in the city, many of the uninhabitable, notes Allison Plyer, who runs the Greater New Orleans Community Data Center. Overall, the recovery remains stronger in the suburbs, many of which suffered less damage from the storm. The share of regional population living in Orleans Parish, where the city of New Orleans is located, has slipped to 29% compared with 37% in 2000. Jefferson Parrish now has more jobs than the city across all income categories.
Plyer believes the priority for the entire region lies in restoring the higher-paid blue-collar and middle-class jobs that for decades have disappeared from the city. Young tech and media firms can help gentrify parts of a city, but they are not sufficient to provide opportunities to the vast majority of its residents. To do this, Plyer suggests, the region will have to focus more on "export" oriented jobs in industries such as energy, manufacturing and trade.
Critically these fields can provide decent salaries for a broad swath of workers. Right now, Plyer adds, 45% of the workforce earns less than $35,000 a year, one byproduct of the domination of the generally low-paying tourism industry. Jobs connected to shipping pay twice as much on average as tourism; energy three times as much. A new steel plant announced recently by Nucor in suburban St. James Parish could create more than 1200 jobs with average pay of $75,000 annually.
"We've allowed Houston and Biloxi to move ahead in a lot of these other industries," she explains. "We have to move ahead in engineering and services and energy to compete with Texas. We can't be just a tourism economy."
Ultimately, New Orleans' long-term recovery may depend on exploiting historic raison d'etre: location. The region stands astride the primary corridor for the Midwest grain trade and sits in the middle of the Gulf trade routes. It also boasts some of the nation's richest energy deposits.
Coupled with its enormous cultural appeal, resurgence in the more traditional economy could spark the most remarkable urban comeback story of the new century. Once the poster child for urban despair, New Orleans may develop a blueprint for turning a devastated region into a role model not only for other American cities but for struggling urban regions around the world.
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e20688b7393277d03d9cd52e1315a447 | https://www.forbes.com/sites/joelkotkin/2011/10/18/dense-urban-thinking-down-under/ | Dense Urban Thinking Down Under | Dense Urban Thinking Down Under
Image by Hasitha Tudugalle via Flickr
Ku-ring-gai is a piece of suburban paradise in the inner rings of Sydney. A district of modest homes and quaint small-scale shopping districts, it sits near one of the last remaining stretches of blue-gum forest inside Australia's largest city. You can still catch the occasional cockatoo luxuriating on a branch.
First built around 1900, the neighborhood of 106,000 boasts all the charms of the classic "garden city," balancing nature with modestly scaled development. Yet today the Ku-ring-gai community -- including the remaining flora and fauna -- is threatened with extinction by planners and developers seeking to pack the district with non-descript apartment tracks and ten-story commercial structures.
"They're doing everything they can to destroy this area," says long-time community activist Kathy Cowley, a founding member of both Save Our Suburbs and Friends of Ku-ring-gai over lunch of meat pies and salad at her cottage. "They approach it as if it was a greenfield [or previously undeveloped] site for high-density housing. They are trying to destroy everything with bad planning."
Cowley speaks bitterly about how the state government of New South Wales, which controls development, cares little about disturbing a sensitive human as well as natural urban environment. Most of the new apartment dwellers, she notes, tend to be recently arrived residents. Many appear to be Chinese students, who ride on the surprisingly rickety trains largely to schools closer to Sydney's center city.
This assault on Cowley's neighborhood reflects a peculiar density ideology that, although present in the United States, is far more powerful in New Zealand, Great Britain and Australia. Density advocates swear that everything from the necessities of economic competition to limited resources require "cramming" future populations in ever smaller spaces. It doesn't matter that the population might object.
In contrast, suburbs are constantly painted as on the verge of extinction. They are destined to become the dull victims of everything from demographics, "cool" migration, green ideology and the rise of "rentership" over home ownership to the ever-present, never-quite-happening "peak oil" that is destined to drive people out of their cars and into the inner cities.
Economically, the density industry emphasizes the central city's producer of high-end jobs tied particularly to financial services and its role as home to most universities, government institutions and media. But in the future, even elite industries seem more likely to disperse than concentrate. Look at high tech, where the vast majority of employment tends to be in suburban areas such as Silicon Valley, the counties surrounding Washington, D.C., and sprawling Durham, N.C.
The same can be said in terms of demographics. Rather than becoming more dense, the vast majority of American cities have become more spread-out. The same has happened in many major metropolitan areas in advanced countries worldwide.
The density obsession seems particularly ill-suited to Australia, a sparsely populated country where less than 0.2% of the land is urbanized, compared with less than 3% in the U.S. and around 6% for Great Britain. But such thinking has taken root in this vast continent --- to the detriment of many of its people. "The writing is on the wall for the Australian dream," says Joe Flood, professor at the Flinders University Institute for Housing, Urban and Regional Research.
Perhaps the biggest impact of pro-density policies has been rising land prices. State governments, which control most planning in Australia, along with their developer allies have discouraged development of new houses on greenfield sites, preferring to see the next generation of Australians living cheek to jowl close to the urban core.
Because of this Australia, once a bastion of middle class aspiration, has suffered some of the world's highest housing prices. Sydney itself ranks second, behind Vancouver, in the English-speaking world's unaffordability sweepstakes. In 1990 a Sydney household median income required five years wages; today it requires almost ten.
Prices have been shaky recently, but current planning strictures will likely keep them artificially high. In America you can escape California or New York prices by heading south or inland. Even Australia's second-tier, slow-growing burgs like isolated Adelaide are more expensive than larger economically vibrant cities like Seattle and more than double as costly relative to incomes as Indianapolis, Dallas-Fort Worth or Houston.
As a result, many younger Australians -- and their parents -- have reason to wonder if the next generation will ever be able to own a home. What they call the "Great Australian Dream" -- with a backyard and shady streets -- is being supplanted by the planner's utopia of dense urban dwellers. Nothing wrong with having a dense option, but this is not about choice; it's about coercion. The feisty New City Journal, edited by onetime Labour Party activists, described the process as "ruining our cities in order to save them."
Sadly much of the densification policy is based on faulty logic, increasingly justified by climate change. It's ironic hearing pious greenhouse gas obsessions in a country dependent on exports of raw materials, most prominently coal, to China, the world's biggest emitter. And a domestic reordering would have little to no impact on climate change since Australia generates barely 1% of the world's greenhouse gases.
But even if you agree Australia must do its part against climate change, many policy recommendations are based on a total misreading of modern urban form. Planners and media pundits assume, for example, that people can save energy by taking the train downtown; but even in Sydney, Australia's largest and oldest big city, barely 12% of the labor force works in the central district, well below the levels decades ago.
There's also a presupposition that people living in downtown apartments are inherently less energy consumptive than their suburban counterpart. Yet a recent study done by researchers at the University of South Australia showed that overall urban dwellers -- who travel, eat out more and consume more goods per capita -- also consume more energy, once things like elevators and common areas are factored in, than the suburbanites living in townhouses or single-family homes.
A similar finding was also made by the Australian Conservation Foundation. But in this particular battle, facts rarely intrude. Who needs to think after you have spent years in college being conditioned to believe that all density is good, the denser the better? And for the big urban landowner, what could be better than stating a moral cause for limiting the suburban competition, thus spiking property prices?
What is happening to lovely Ku-ring-gai and the Great Australian Dream should stand as a warning of what happens if planners, and their big developer allies, gain total sway. Let's just hope America's traditional decentralization of authority will prevent our middle class dream from following the sad trajectory of our hitherto lucky friends down under.
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30330866ff8a54be1414033d03d3ec7b | https://www.forbes.com/sites/joelkotkin/2011/11/18/the-best-cities-for-technology-jobs/ | The Best Cities For Technology Jobs | The Best Cities For Technology Jobs
Gallery: The Best Cities For Tech Jobs 10 images View gallery
During tough economic times, technology is often seen as the one bright spot. In the U.S. this past year technology jobs outpaced the overall rate of new employment nearly four times. But if you're looking for a tech job, you may want to consider searching outside of Silicon Valley. Though the Valley may still be the big enchilada in terms of venture capital and innovation, it hasn't consistently generated new tech employment.
Take, for example, Seattle. Out of the 51 largest metro areas in the U.S., the Valley's longtime tech rival has emerged as our No. 1 region for high-tech growth, based on long- and short-term job numbers. Built on a base of such tech powerhouses as Microsoft, Amazon and Boeing, Seattle has enjoyed the steadiest and most sustained tech growth over the past decade. It is followed by Baltimore (No. 2), Columbus, Ohio (No. 3), Raleigh, N.C. (No. 4) and Salt Lake City, Utah (No. 5).
To determine the best cities for high-tech jobs, we looked at the latest high-tech employment data collected by EMSI, an economic modeling firm. The Praxis Strategy Group's Mark Schill charted those areas that have gained the most manufacturing, software and services jobs over the past 10 years, equally weighting the last five years and the last two. We also included measures of concentration of tech employment in order to make sure we were not giving too much credence to relatively insignificant tech regions. Our definition of high tech industries is based on the one used by TechAmerica, the industry's largest trade association.
Despite the Valley's remarkable concentration of tech jobs -- roughly six times the national average -- it ranked a modest No. 17 in our survey. This relatively low ranking reflects the little known fact that, even with the recent last dot-com craze sparking over 5% growth over the past two years, the Valley remains the “biggest loser” among the nation's tech regions, surrendering roughly one quarter of its high -tech jobs -- about 80,000 -- in the past decade. Only New York City (No. 44) lost more tech jobs during that time.
In contrast to this pattern of volatility, our top performers have managed to gain jobs steadily in the past decade -- and have continued to add new ones in the last two years. In addition to our top five, the only other regions to claim overall tech gains in the last 10 years are Jacksonville, Fla. (No. 6), Washington, D.C. (No. 7), San Bernardino-Riverside, Calif. (No. 9), San Diego, Calif. (No. 9), Indianapolis (No. 11) and Orlando, Fla. (No. 24).
So what accounts for high-tech success, and where will jobs most likely grow in the next decade? Certainly being home to a major research university makes a big difference. Seattle, Columbus, Raleigh and Salt Lake City all boast major educational and research assets.
But it's one thing to produce scientists and engineers; it's another to generate employment for them over the long term. Clearly for the San Jose metropolitan region (which is home to Stanford) and the much-hyped No. 29 San Francisco area (home to the University of California Medical Center) academic excellence has not translated into steady growth in tech jobs. Over the past decade the Bay Area has given up 40,000 jobs, or 19% of its tech workforce, including a loss of nearly 6,000 in software publishing.
Or look at the Boston region (ranked No. 22), which arguably boasts the most impressive concentration of research universities in the country. The region did add jobs in research and computer programming, but these were not enough to counter huge losses in telecommunications and electronic component manufacturing. Over the past decade, greater Beantown has given up 18% of its tech jobs, or more than 45,000 positions.
One possible explanation may lie in costs, including very high housing prices, onerous taxes and a draconian regulatory environment. In tech, company headquarters may remain in the Valley, close to other headquarters and venture firms, but new jobs are often sent either out of the country or to more business friendly regions.
Just look at the flow of jobs from Bay Area-based companies to places like the Salt Lake area. In the past two years Valley companies such as Twitter, Adobe, eBay, Electronic Arts and Oracle have all expanded into Utah. This region has many appealing assets for Bay Area companies and workers. Salt Lake City is easily accessible by air from California, possesses a well- educated workforce, has reasonable housing costs and offers world-class skiing and other outdoor activities.
Another huge advantage appears to be closeness to the federal government, which expends hundreds of billions on tech products both hardware and software. This explains why Baltimore, primarily its suburbs, and the D.C. metro area have enjoyed steady tech growth and, under most foreseeable scenarios, likely will continue to do so in the coming years. Both regions have seen large gains in technology services industries, particularly programming, systems design, research, and engineering.
Yet even business climate, while important, may not be enough to drive tech job growth. Texas ranks highly in most business surveys, including our own, but it did not fare so well in this one. Indeed No. 32 Austin, often thought as the most likely candidate for the next Silicon Valley, lost over 19% of its high-tech jobs over the past decade, including more than 17,000 jobs in semiconductor, computer and circuit board manufacturing. No. 18 Houston did far better, although it has also lost 6% of its tech jobs over the same period due to the cutbacks in the engineering service, a big sector there. Even more shocking: No. 46 Dallas, generally a job-creating dynamo, has seen roughly a quarter of its high-tech jobs go away, due primarily to losses in telecommunications carriers and in manufacturing of communications equipment and electronics.
How about other potential up and comers for the coming decade? Two potentially big and somewhat surprising winners. The first: Detroit. Though the Motor City area lost 20% of its tech jobs in the past decade (ranking 40th on our list), it still boasts one of the nation's largest concentrations of tech workers, nearly 50% above the national average. In the past two years, the region has experienced a solid 7.7% increase in technology jobs, the second highest rate of any metro area.
The Motor City region seems to have some real high-tech mojo. According to the website Dice.com, Detroit has led the nation with the fastest growth in technology job offerings since February -- at 101%. This can be traced to the rejuvenated auto industry, which is increasingly dependent on high-tech skills. Manufacturing is increasingly prodigious driver of tech jobs; games and dot-coms are not the only path to technical employment growth. This could mean good news for other Rust Belt cities, such as No. 28 Cincinatti or No. 38 Cleveland, as well as our Midwest standout, Columbus, which could benefit from growth sparked by the local natural gas boom.
Another potential standout is No. 8 New Orleans, whose tech base remains relatively small but has expanded its tech workforce nearly 10% since 2009 -- the highest rate of any of the regions studied. With low costs, a friendly business climate and world-class urban amenities, the Crescent City could emerge as a real player, aided by the growing prominence of research and development around Tulane University. There has also been a recent growing presence of the video game industry in the city.
Looking forward, however, it makes sense to be cautious about where tech is heading. By its nature, this is a protean industry; the mix of jobs and favored locales tend to change. If the current boom in social media continues, for example, the Bay Area could recover more of its lost jobs and further extend its primacy. Similarly a surge in manufacturing and energy-related technology could be a boon to tech in Houston, Dallas as well as New Orleans. But based on both historic and recent trends, the surest best for future growth still stands with our top five winners, led by the rain-drenched, but prospering Seattle region.
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088b62aeda87a94498efc08594d6294d | https://www.forbes.com/sites/joelkotkin/2011/12/15/heavy-metal-is-back-the-best-cities-for-manufacturing/ | Heavy Metal Is Back: The Best Cities For Manufacturing | Heavy Metal Is Back: The Best Cities For Manufacturing
Gallery: The Best Cities For Manufacturing Jobs 10 images View gallery
For a generation American manufacturing has been widely seen as a "declining sport." Yet its demise has been largely overplayed. Despite the many jobs this sector has lost in the past generation, manufacturing remains remarkably resilient, with a global market share similar to that of the 1970s.
More recently, the U.S. industrial base has been on a powerful upswing, with employment climbing steadily since 2009. Boosted by productivity gains and higher costs in competitors, including China, U.S. manufacturing exports have grown at their fastest rate since the late 1980s. In 2011 American manufacturing continued to expand, while Germany, Japan and Brazil all weakened in this vital sector.
To determine the best cities for manufacturing my colleague Mark Schill at Praxis Strategy Group measured the 51 largest regions in the country in terms of how they expanded their "heavy metal" sector -- think automobiles, farm and energy equipment, aircraft, metal work and machine shops. We averaged absolute growth rate and momentum in 148 heavy metal manufacturing industries over ten-, five-, two-, and one-year time frames.
Our top ranked area, Houston, is one of only four regions that enjoyed net job growth in manufacturing in the past 10 years. This year its heavy manufacturing sector expanded by almost 5%. Houston’s industrial growth is no fluke; over the past year its overall job growth has been about the best among all the nation’s major metros.
Houston's industrial success owes much to the city's massive port and booming energy sector, says Bill Gilmer, senior economist at the Federal Reserve office of Dallas. "Houston is about energy -- it’s about fabricated metals and machinery," he says. "It’s oil service supply and petrochemicals. It’s all paced by a high price of oil and new technology that makes it more accessible."
This shift towards domestic energy augurs well for a huge and economically beneficial shift in America’s longer term economic prospects, he points out. Cheap natural gas, for example, makes petrochemical production in America more competitive than anyone could have imagined a decade ago. Linkages with Mexico in terms of energy as well as autos has made Texas -- which is also home to No. 4 ranked San Antonio and No. 15 ranked Dallas -- the nation’s primary export super-power, with current shipment 15% to 20% above pre-crisis levels.
The energy and industry connection also can be seen in No. 10 Oklahoma City, where heavy industry has been booming through much of the recession due to its strong fossil fuel industry. This synergy between energy and manufacturing could also spread to other regions, including many not associated with large fossil fuel deposits New finds in the Utica shale in Ohio, for example, could be worth as much as $500 billion; one energy executive called it "the biggest thing to hit Ohio since the plow."
These gas finds may help ignite the heavy metal revival. As coal-fired plants become more expensive to operate due to concerns over greenhouse gas emissions, the region will have a new, cleaner and potentially less expensive power source.
Already the boom in natural gas has sparked a considerable industrial rebound in parts of eastern Ohio including the building of a new $650 million steel plant for gas pipes in the Youngstown area. Karen Wright, whose Ariel Corporation sells compressors used in gas plants, has added more than 300 positions in the past two years. "There’s a huge amount of drilling throughout the Midwest," Wright says. "This is a game changer."
But the industrial rebound is not only about energy. Another critical factor is rising wages in East Asia, including China. Increasingly, American-based manufacturing is in a favored position as a lower-cost producer. Concerns over "knock offs" and lack of patent protection in China may also spark a growing "Made in the USA" trend.
The shift back to U.S. production may be a great sign for many regions. Our No. 3 ranked area, Seattle-Tacoma-Bellevue, is picking up heavy metal jobs associated with the aerospace industry. A growing focus on domestic production for Boeing’s new aircraft could bring even more prosperity to the high-flying region, which also ranked No. 1 on our recent information industry ranking.
If new industrial growth is just another piece of good news in the Pacific Northwest, it’s manna from heaven to the long suffering industrial heartland heavily concentrated in the Great Lakes region, which includes much of Ohio, Michigan, Indiana, Illinois , Wisconsin and Minnesota. Long reviled as the "rust belt" this area now leads in the industrial rebound with over 100,000 new manufacturing jobs in just the past year.
Particularly well positioned is No. 2 ranked Milwaukee, which is home to a wide array of specialized manufacturing firms ranging from machine tools to energy. Over the past year alone the region added almost 3900 heavy metal jobs and has consistently led other Great Lakes communities in job creation.
But Milwaukee is not the only rust belt rebound town. The greater Detroit area, No. 6 on our list, actually added the most heavy metal jobs -- more than 12,000 -- than any region of the country. The area’s ranking, however, was dragged down by its legacy; greater Detroit still has lost almost 130,000 positions in the past decade.
The heavy metal revival has a long way to go. And we cannot expect it to produce the same kinds of jobs produced in the last century. For example, the new jobs will be more highly skilled; even as the share of the workforce employed in manufacturing has dropped from 20% to roughly half that, high skilled jobs in industry have soared 37%, according to a New York fed study.
Regions seeking strong industrial growth will have to focus more and more on training more skilled workers. Even after years of declining employment and surplus numbers of graduates in the arts and law, manufacturers in heavy industry are running short on skilled workers. Industry expert David Cole predicts there could be demand for 100,000 new workers by 2013. According to Deloitte Touche, 83% of all manufacturers suffer a moderate or severe shortage of skilled production workers.
The resurgence of heavy metal should lead regions, and the federal government, to consider shifting their emphasis toward productive, skilled based training and away from a single-minded focus on the BA or graduate degree. Few regions suffer a shortage of art history or English graduates. This more practical emphasis is particularly critical for the Midwest, which is home to four of the ten highest-ranked industrial engineering schools in the nation.
Even more important: training workers for the assembly lines of tomorrow. These jobs, notes Ariel’s Karen Wright, will require not BA degrees but high degrees of math and mechanical skills that can be apply to expanding companies like hers.
As we enter a new economic era, regions should look beyond the current obsession with "creative" and "information" industries. Instead, they should focus on a resurgent industrial economy -- which then can provide a customer base for advertising, graphics and software companies -- as a primary driver of economic growth. Turn down those soulful Adele tracks: Heavy metal is back.
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96746fb6d2257b3eb11cf82f1101855c | https://www.forbes.com/sites/joelkotkin/2012/03/19/the-expanding-wealth-of-washington/ | The Expanding Wealth Of Washington | The Expanding Wealth Of Washington
Throughout the brutal and agonizingly long recession, only one large metropolitan area escaped largely unscathed: Washington, D.C. The city that wreaked economic disasters under two administrations last year grew faster in population than any major region in the country, up a remarkable 2.7 percent. The continued steady growth of the Texas cities, which dominated the growth charts over the past decade, pales by comparison.
Boom times in the capital -- particularly amid a weak recovery elsewhere -- are driving this growth. Since 2007, notes Stephen Fuller at George Mason University, the D.C. region’s economy has expanded 14 percent compared with a mere 3 percent for the rest of the country. Washington’s unemployment never scaled over 7 percent, well below the national average, and is now down to around 5.5 percent, about the lowest of any major metropolitan area. Unemployment of course is much higher, reaching 25 percent, in some of the district’s poorer neighborhoods.
This prosperity is rooted largely in the steady growth of the federal workforce, as federal spending accounts for one-third of the region’s economy. Over the past decade 50,000 bureaucratic jobs have been added in the area while local federal spending grew 166 percent. The D.C. region, with 5 percent of the nation’s population, garners more than three times that percentage in payroll and more than four times that percentage in procurement dollars.
This debt-financed gusher has helped expand the economy beyond simply federal workers. You think California is the biggest beneficiary of the current tech boom? Think again. Washington’s tech sector employment , according to an analysis by Economic Modeling Systems Inc., has expanded by more than 5 percent since 2009, more than twice the national and California average of barely 2 percent. California may have Facebook, Google and Apple, but Washington tech has federal agencies, the defense establishment, a growing media sector and the lobbying industry to feed upon.
Washington also ranks fourth in middle-income job growth, with employment in that category expanding at four times the national average over the past two years. The relatively higher salaries -- and far better benefits -- propel even modestly educated workers into middle incomes. The recession may have been brutal for the middle class, but not those who work for Uncle Sam. Not surprisingly, according to Gallup, Washingtonians are the most optimistic in the country about the improvements in the economy.
This, of course, did not start with the Obama administration’s relentless expansion of federal power. The Washington region has been growing steadily -- well ahead of all major eastern regions -- for a generation. The expansion of defense spending under President Ronald Reagan and then again under George W. Bush helped create wealthy suburbs around the city; four of the nation’s five wealthiest counties (the other is in suburban New Jersey) and nine of the top 15 are located in the Virginia and Maryland suburbs around the capital. These counties all enjoy median house incomes over $100,000, twice the national average.
But the biggest change has occurred in the district itself, which last led the nation in population growth in the early 1940s. The hopelessly dysfunctional, crime-ridden city of the era of four-term Mayor Marion Barry in the 1970s and ‘80s has been left behind like the much-maligned 19th century swamp town that aspired to be the next Paris but was widely regarded by diplomats as a hardship posting. Barely three decades after its founding, the city had “not a single great mercantile house,” a foreign dignitary observed in 1811-12, according to “The Age of Federalism,” by Stanley Elkins and Eric McKittrick, and had “a total absence of all sights, smells, or smells of commerce.”
Washington may still not be a great center of real commerce, where people make things or risk their livelihoods on ideas. But it thrives as the marketplace for the collusional capitalist state that has been growing for decades and may now be at its apex. Offices fill with well-paid lobbyists and lawyers, and their service help, as they protect the interests of investment banks, real estate interests and unions that are increasingly influenced by Washington. The central area has been revived by new condo, hotel and office developments. It may still not be Paris, or even Chicago’s Gold Coast, but it’s a fair bit better than the drab, dangerous place of 30 years ago.
No one should ever disparage the success of a region, but there is something disturbing in D.C.’s recent rise. Most expansions of the federal region came to meet a perceived national challenge: the Depression, the Second World War, the Cold War, the Space Race and the Civil Rights movement. Since the Depression, Washington’s “good times” usually have paralleled that of the rest of the country. Only now do we see a “new normal” where Washingtonians, like the pigs in Orwell’s Animal Farm, seem “a bit more equal” than the rest of us.
Will this trend continue? The outcome of the election may prove determinative. In a second Obama term – which should bolster the power of agencies such as the EPA, Energy and Justice – the federal grip on daily life will expand. This could greatly expand the appeal of being close to the capital. When everything from zoning and the location of industrial plants and healthcare is under Washington’s control, the capital could conceivably even emerge as a challenger to New York’s two century reign as the country’s most important city.
Yet as the Washington Post’s Steve Pearlstein points out, this ascendency could be curtailed. Even under a second Obama administration, he notes, “the federal gravy train” could be derailed, with inevitable cuts in spending. Steve Cochrane at Moody Analytics suggests that the Washington as “the leader in terms of job growth and economic strength are really over.”
The election certainly will determine which part of the Washington ox get gored. If Democrats rule, one can expect these cuts to come in large part at the expense of defense firms, which, after all, now tilt to the Republicans. This could be particularly tough on the suburbs, where many military contractors reside.
More dangerous still would be a Republican sweep, which would bring a budget-cutting mentality back to the White House, particularly on the social spending and regulatory apparatus dear to many Democrats . These jobs tend to be in the district. Even a renewal of the current balance of power threatens federal expansion since the House still holds the appropriation purse strings. The oxygen that sustains Washington seems likely to be cutback in any case.
None of this, however, means that D.C. is about to slip back to its dystopian past, much less its swampy roots. The region boasts the nation’s wealthiest and best-educated population. This could give it a leg up on other areas in the tech and business service job markets. Many millennials may find a steady career in the bureaucracy safer, and even more satisfying, than finding places in a slow-growing, hyper-regulated private sector economy.
Yet the key lies to Washington’s future may lie with the fate of the national economy. Eighty years of relentless federal expansion has created a relentless parasite that knows how to feed on its host. But if that host weakens, so too will the federal state. To sneak an early pick for this scenario, hop a flight to Madrid, Rome or Athens, where being tied to the bureaucracy no longer provides exemption from the vicissitudes of economic struggle.
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942f26f531defbdc51d229c40b4a1388 | https://www.forbes.com/sites/joelkotkin/2012/05/24/seattle-is-leading-an-american-manufacturing-revival/ | Cities Leading An American Manufacturing Revival | Cities Leading An American Manufacturing Revival
Gallery: Cities Leading The U.S. Manufacturing Revival 11 images View gallery
In this still tepid recovery, the biggest feel-good story has been the resurgence of American manufacturing. As industrial production has fallen in Europe and growth has slowed in China, U.S. factories have continued an expansion that has stretched on for over 33 months. In April, manufacturing growth was the strongest in 10 months.
There are a number of reasons for this revival. Rising wages in China – up from roughly one-third U.S. levels to half that in a decade — and problems associated with protection of trademarks and other issues have led many U.S. executives to look back home. Some 22% of U.S. product manufacturers surveyed by MFGWatch reported moving some production back to America in the fourth quarter of 2011, and one in three said they were studying the proposition.
Certainly how long this expansion can last is an open question, particularly given weakness in Europe and the slowdown in formerly fast-growing developing countries. But one thing is clear: the industrial resurgence is reshaping the economic and employment map in often unexpected ways.
Now rather than being pulled down by manufacturing, our Best Cities For Jobs survey, conducted by Pepperdine University’s Michael Shires, found that many industrial regions are benefiting from their prowess.
From 2010 through March, manufacturers added 470,000 jobs and enjoyed a rate of job growth 10% faster than the rest of the private economy. In the past many areas suffered from having too many industrial workers. Now it looks like we will have too few skilled ones, even in hard-hit sectors like the auto industry. In 2011 there were 50,000 unfilled U.S. job openings in industrial engineering, welding, and computer-controlled machine tool operating, according to the forecasting firm EMSI. If the revival continues, this shortage could worsen.
To determine the cities that are leading the manufacturing revival, we assessed manufacturing employment growth in the 65 largest metropolitan statistical areas. Rankings are based on recent growth trends, as well as job growth over the past five and 10 years, and the MSAs' momentum.
Where Technology Meets Manufacturing
In an era of excitement over the Internet, it is often forgotten that a majority of the country’s scientists and engineers work for manufacturers, and that industrial companies account for 68% of business R&D spending, which in turn accounts for about 70% of total R&D spending.
Nowhere is this linkage between technology and industry more evident than in the Seattle-Bellevue-Everett area, which ranks first on our list of the metropolitan areas leading the manufacturing revival. Over the past year the region was No. 2 in the nation in manufacturing growth, with employment expanding 7.9%. The aerospace sector, led by Boeing, accounted for roughly half this expansion.
The growth in aerospace and high-tech employment creates precisely the kinds of high-wage jobs, including for blue-collar workers, that are lacking in many parts of the country. In 2010 the average factory wage in the area was $64,925, up 9% from 2007. Most critically, manufacturing activity drives growth in other sectors of the economy. About one in six of all private-sector jobs depend on the manufacturing sector, and every dollar of sales of manufactured products generates $1.40 in output from other sectors, the highest of any industry.
Full List: The 10 Cities Leading The U.S. Manufacturing Revival
As manufacturing employment overall has dropped, the percentage of higher-wage, skilled industrial jobs has been climbing over the last decades, particularly in high-technology related fields Overall, according to EMSI data, the average American factory worker earned $73,000 in 2011, $20,000 more than the average job.
Seattle is not alone in creating high-tech-oriented industrial jobs. Over the past two years Salt Lake City, Utah, which ranks third on our list, has seen significant growth in both electronics and aerospace employment, including a new Northrop Grumman facility. Firms connected to the medical device industry such as Biomerics are also expanding in the area.
Manufacturing is also rebounding in Austin-Round Rock-San Marcos, Texas, which ranks eighth on our list and No. 1 on our overall list of Best Big Cities For Jobs. Last year industrial employment in the Texas state capital area jumped 5%. Semiconductor firms are a big force, employing over 10,000 workers. Although more known for its high-tech electronics, Austin has also enjoyed an expansion in automobile-related employment as well as medical devices.
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Energy Capitals
The largest grouping of manufacturing stars have emerged from the Texas-Oklahoma energy belt. With the shale drilling boom unlocking ample supplies of natural gas and lowering prices, petrochemical companies have undertaken major expansions. The rise in drilling and exploration has also sparked greater demand for industrial products such as pipes, drill rigs and other machinery. No surprise that the biggest backers of shale gas exploration are prominent CEOs of industrial firms. A recent study by PwC suggests that shale gas could lead to the development of 1 million industrial jobs.
The shale drilling revolution is making an impact across the country, in places like North Dakota and Youngstown, Ohio, but the epicenter of this boom remains firmly in the oil patch. The Thunder you hear in Oklahoma City is not just on the basketball court -- energy growth has propelled a 1,500 person jump in manufacturing employment, a 6.1% increase, with another 1,000 new jobs expected this year. Oklahoma City ranks second on our list.
Other energy capitals are also thriving on the industrial front, including Houston (fourth place), San Antonio (seventh) and Ft. Worth-Arlington (ninth). Although energy is the main driver, manufacturing has been on the rise in a broad array of areas, including aerospace, biomedical and food processing. The surging export economy -- Texas is easily the nation's number one exporter -- has further bolstered this growth.
Rustbelt Rebounders
The high-tech and energy economies may be fast-breaking in terms of industrial growth, but manufacturing’s comeback has put some new bounce in the step of many long forlorn parts of the nation’s “rustbelt.” Warren-Troy-Farmington Hills, Mich., epitomizes this trend. Unlike Detroit, which has suffered mass disinvestment, this more suburban area a half hour drive away has become the epicenter of a new, more tech-oriented auto industry.
The Warren-Troy area’s rich concentration of skilled tradespeople and industrial engineers has been described as America’s “automation alley.” It continues to attract high-industrial firms from abroad such as Brose, a German car parts manufacturer, which has recently announced a $60 million investment in the area. Even housing is on the rebound, with rents rising at the fourth highest clip in the country, just behind such standouts as San Francisco and Miami.
Nor is the Midwest manufacturing rebound limited to Michigan. Over the past year sixth-ranked Cincinnati enjoyed 5.4% growth in industrial employment. Manufacturing growth was also strong in Milwaukee-Waukesha-West Allis, Wisc., a center for the production of machine tools and other precision equipment that ranks 10th on our list.
Who's Falling Behind
Of course not all regions have benefited from the industrial resurgence. For example, the nation’s largest industrial area, Los Angeles, ranks a miserable 49th. The area lost some 20% of its industrial jobs since 2006, and the losses continued over the past year. This goes a long way to explain the area's continued underperformance before, during and, now, in the early days of recovery from the financial crisis.
Some other large regions did even worse, including such one-time industrial powerhouses as Philadelphia (55th) and New York (59th). Some may argue that these, and other areas, which have been losing manufacturing jobs for decades, no longer need to engage in the messy business of making stuff. But that long fashionable way thinking may be outdated itself, as seen by the improving fortunes of our industrial top 10.
Full List: The 10 Cities Leading The U.S. Manufacturing Revival
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2b75fefa72180ee4bc5f7d8c0401ad4c | https://www.forbes.com/sites/joelkotkin/2013/02/07/the-cities-winning-the-battle-for-the-biggest-growth-sector-in-the-u-s/ | The Cities Winning The Battle For The Biggest Growth Sector In The U.S. | The Cities Winning The Battle For The Biggest Growth Sector In The U.S.
In an era in which many businesses that pay high wages have been shedding jobs, the wide-ranging employment category of professional, scientific and technical services has been a relatively stellar performer, expanding some 15% since 2001. In contrast, employment dropped over 20% in such lucrative fields as manufacturing and information-related businesses (media, telecom providers, software publishing) over the same period, and finance and wholesale trade experienced small declines.
With an average annual wage nearing $90,000, this category -- which includes computer consulting and technical services, accounting, engineering and scientific research, as well as legal, management and marketing services -- increasingly shapes the ability of regions to generate higher-wage jobs. In order to determine which metropolitan areas are doing best, Forbes and Praxis Strategy Group compiled rankings based on both long and short-term growth, as well as the extent and growth of each region’s business service economy compared to the national average.
Gallery: The Cities Winning The Battle For America's Biggest Growth Sector 11 images View gallery
Notably absent from the top 10 are Chicago and the big metropolitan areas of the Northeast and California that have traditionally dominated high-end business services. The only exception is the third-ranked San Francisco-Oakland-Fremont metropolitan statistical area, which has logged 21% growth in this sector since 2001, while expanding the proportion of such jobs in the local economy to nearly twice the national average. Over the past year alone the region added 22,000 professional and business services jobs, which was more than a quarter of all new positions during that period.
The continuing vitality of nearby Silicon Valley, and the region’s attraction to educated workers, have made the Bay Area easily the best performer of the nation’s mega-regions. Yet the other leaders on our list are generally smaller, growing metro areas whose expansions have been propelled by a rapid increase in employment in technology and professional management services. These include our top-ranked metro area, Austin-Round Rock-San Marcos, Texas, which enjoyed over 46% growth in employment in professional services since 2001; fourth-place Raleigh-Durham, N.C.; and No. 5 Salt Lake City, Utah. These areas have enjoyed strong net-in migration of educated workers, and have poached companies from more expensive regions.
More surprising still has been the rapid ascent of such unheralded regions as second-place Jacksonville, Fla., and Oklahoma City (sixth place). In Oklahoma City, where business and professional services employment has grown over 30% since 2001, progress can be traced to the city’s burgeoning energy sector.
But some other areas on our list are benefiting from a hitherto unnoted shift of high-end services to lower-cost and often lower-density regions. Jacksonville may be the poster child for this. Over the past decade, the northern Florida metro area's population has grown 20% to over 1.3 million, but business services employment has expanded nearly 50%, the biggest jump of any of the country’s 51 largest metropolitan areas. Once a business services backwater, the share of jobs in that sector in the local economy has rapidly climbed towards the national average. This growth has been driven by management consulting as well as computer and data center services, an area in which Jacksonville has enjoyed among the highest growth rates in the country. One major player is web.com, which employs 500 people at its headquarters in south Jacksonville.
Other industries that rely on professional and business service providers have recently added jobs in the market, including BI-LO and Winn Dixie, which moved their combined headquarters there, as did environmental services company Advanced Disposal. Financial giant Deutsche Bank has also expanded in the area.
Jerry Mallot, president of the local business development group Jaxusa Partnership, suggests that low costs, a high rate of housing affordability and Florida’s lack of income tax make Jacksonville attractive to companies seeking to expand or relocate. The state, according to a recent report from New Jersey-based www.BizCosts.com, is now home to five of the country’s least expensive and most pro-business cities. Jacksonville, Orlando, and Tampa also are all among the U.S. metro areas adding college-educated residents the fastest.
Full List: The 10 Cities Winning The Battle For America's Biggest Growth Sector
Of course up-and-comers like Jacksonville, Charlotte, and Oklahoma City, and even Portland (10th place), still lack the critical mass of high-end business services of many of the larger, more established metropolitan areas. Some have continued to see strong growth in their professional services sectors. Not surprisingly, this includes greater Washington, D.C. (11th), with 26% growth since 2001, keyed by the expansion of government and the regulatory apparat in recent years. The share of professional services jobs in the local economy is two and a half times the national average, the highest concentration in the country.
Yet many of America's largest metro areas, including longtime business service bastions, have lagged well behind. New York, home to Wall Street and many leading consulting, legal and professional firms, ranks a mediocre 32nd out of the 51 largest metro areas, with relatively meager growth of 8.5%. The share of professional services jobs in the New York economy fell, as it did in Los Angeles-Long Beach-Santa Ana (36th) and Chicago-Joliet-Naperville (43rd). This suggest trouble ahead for the future.
Chicago was among the few areas that actually lost employment in this generally fast-growing field. The other big losers include Detroit-Warren-Livonia, Mich. (39th) , despite a decent pickup in the last two years as the auto industry has rebounded; the Cleveland metro area (47th); Milwaukee-Waukesha-West Allis, Wisc. (49th); Birmingham-Hoover, Ala. (50th); and last-place Memphis.
What do these trends tell us about the future of high-wage employment? Certainly size is not enough, nor even the possession of strong legacy in business service industries. The relative declines of our three largest metro areas -- New York, Los Angeles and especially Chicago -- alone tells us that. Chicago, which has touted itself as a capital of business expertise, now seems to be falling into the nether reaches long inhabited by older Rust Belt cities and Southern backwaters.Chicago leaders such as Mayor Rahm Emmanuel needs to spent less time being possessed by what Time Out Chicago called a “world class city complex” and look into why, as urban analyst Aaron Renn suggests, the city’s vaunted global economy is not enough to produce enough high-wage jobs to sustain its vast surrounding region.
At the same time, being small and affordable, while helpful, is also not sufficient for business services success, as the presence of a number of smaller metro areas at the bottom of the list suggests. But the strong performance of many mid-sized cities -- ranging from Austin, Raleigh and Salt Lake to less-heralded Jacksonville, Kansas City, Oklahoma City and Richmond -- suggest that these jobs will likely continue to migrate to smaller, less costly and generally less dense urban regions.
Once considered the natural domain of megacities and dense urban cores, high-wage business service jobs, largely due to technology, can increasingly be done anywhere. This suggests that the playing field for such positions, rather than concentrating, will become ever wider. As the struggle for good jobs intensifies in the years ahead, expect the competition between regions to get even greater.
Full List: The 10 Cities Winning The Battle For America's Biggest Growth Sector
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