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1da11f1c2d57a0277ed13fdade4b6937 | https://www.forbes.com/sites/christopherhelman/2021/04/22/how-biofuels-giant-neste-transforms-americas-french-fry-grease-into-clean-diesel/ | How Biofuels Giant Neste Transforms America’s French Fry Grease Into Clean Diesel | How Biofuels Giant Neste Transforms America’s French Fry Grease Into Clean Diesel
“We always thought of it as owning a lot of oil wells, sprinkled around the country.” getty
Nearly every sink in a restaurant flows through a grease trap, which captures and collects oil and grease from our beloved deep fried food. A busy Burger King branch, for example, can generate 8,000 pounds of used cooking oil and grease per year — enough that Mahoney Environmental, a division of publicly traded Neste (Nasdaq: NESTE), sends a truck to suck it out every three weeks.
“Nobody wants to send that material down the drain,” says Rick Sabol, president of the Mahoney division. And not just because fat globules can clog up sewer systems — but because that grease is valuable — if you gather up enough of it. “We always thought of it as owning a lot of oil wells, sprinkled around the country.”
Historically, the business plan was pretty simple: Mahoney would supply a restaurant with grease trap equipment, and come fetch it once a month for a fee. Used to be that waste fat and grease was made into cattle feed or pet food. Increasingly, it’s becoming food for trucks. A year ago Helsinki, Finland-based Neste ($12 billion in 2020 revenues) acquired Mahoney in order to monopolize its supply of grease, which it now exports from the U.S. to specialized refineries in Finland, Rotterdam and Singapore. There Neste subjects the feedstock to “hydrotreating” — which uses hydrogen to remove oxygen from triglyceride molecules — creating diesel. Neste then ships some of this renewable diesel back to the U.S., where it fetches a $1 per gallon federal blending tax credit.
With 1 billion gallons per year of production, Neste is the world’s biggest maker of renewable diesel. And it’s been at it since long before the carbon transition was a sure thing. The biodiesel revolution got underway in the mid-2000s. When oil prices spiked to $147 a barrel in mid 2008, even musician Willie Nelson launched BioWillie, which like so many marginal biodiesel makers went belly up when oil prices fell.
In the U.S. a strong agriculture lobby supported diesel made from soy and rapeseed oils. While in Southeast Asia palm oil became the preferred feedstock. “Palm oil was thought to be the big biofuel savior,” says Jeremy Baines, president of Neste North America. Indeed, Neste nearly a decade ago built massive plants to make fuel out of palm oil in Singapore, plus what Baines says was a sustainable farming operation to supply it. “Others were not so responsible,” he says. Soon palm oil became environmentally questionable because in order to expand their plantations farmers were razing virgin rainforest.
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So for Neste, the challenge became sourcing new feedstock. Any organic fat or grease would do: cooking oil, fish fat, corn oil, rapeseed, even tallow. In 2018 they bought Dutch animal fat trader Demeter. Then a year ago Neste bought Mahoney; a family-owned company since 1953, they started off selling grease into pet food and glycerine markets. Mahoney grew by buying up smaller operations, and have 40% of the market in Illinois, and 8% nationwide. Neste’s purchase price was undisclosed. Baines says he intends to grow the business five-fold in coming years.
A Neste palm oil plantation in Malaysia, 2011. © 2011 Bloomberg Finance LP
Their most reliable customers are the chains like Buffalo Wild Wings, Hooters, Burger King, which I’m told experience a “fryer margin” of about 40%, meaning that out of 100 pounds of fresh fryer oil, 40 pounds of it will end up absorbed into food, with 60 pounds left over for Mahoney to come pick up.
The economics work OK. You can buy cooking oil on the spot market for about 30 cents a pound (versus 70 cents for fresh oil). It takes 7.5 pounds of used oil, about $2.25 worth, to make a gallon of biodiesel. Regular diesel sells for about $2.50 before taxes. Today’s biodiesel subsidies include federal blending mandates and a $1 per gallon tax credit, which President Trump extended for five years before leaving office. In Europe the uplift is even better.
Neste, at 2.7 million gallons per day (65,000 bbl/d), is the world’s biggest producer of renewable diesel, and believes in a long-term market for the fuel, which is advantaged over ethanol in that it is a drop-in biofuel, interchangable with traditional diesel. Ethanol, in contrast, does not mix happily or easily with gasoline. And as it appears the electrification of transportation will begin with smaller vehicles, they feel demand for diesel will endure longer.
Baines is dedicated now to finding buyers who are willing to pay a little extra for certified biofuels, and to participate in the circular carbon economy. In Oakland, Calif., for example, Neste gathers up restaurant grease and returns it as renewable diesel that fuels the city’s truck fleet. While in the Netherlands, McDonald’s supplies Neste with about 370,000 gallons of fryer oil a year; its logistics supplier then buys about the same amount of renewable diesel.
Though Neste is far from running out of used cooking oil, it’s looking for other feedstocks, with an eye toward sourcing 100% of its feed from “wastes and residues” by 2025. This means stuff like forest scraps, algae, and plastic pyrolysis. Pyrolysis is the thermal decomposition brought about by exposing a material to high heat in the absence of oxygen, so that instead of burning, it transforms. In the case of Neste’s joint venture with Alterra Energy, pyrolysis will be used to turn 120 tons per day of recycled plastic into sludge similar to crude oil. Alterra already operates a 60 ton per day plant in Akron, Ohio. With Neste it aims to build one double that size in Europe, which will supply about 8 million gallons of this synthetic oil per year.
Neste opened this Singapore palm oil refinery in 2011. AFP via Getty Images
Alterra CEO Fred Schmuck sees the carbon circularity at work. “It was refined already. We’re breaking it back into its original form, then we give it to refiners as a raw material.” With the European Union writing the cost of carbon into law and the U.S. likely not far behind, “liquefaction is going to score very high,” he says. Neste has an eye toward boosting this plastics-to-oil business by tens of millions more gallons per year — using up thousands of tons per day of waste plastic.
As vast as that sounds, it’s just a start. Last year the United States consumed 1.9 billion gallons of biodiesel, but more than 48 billion gallons of regular diesel. Worldwide, analyst Jason Gabelman at Cowen & Co. sees total biodiesel production at 12 billion gallons out of a total diesel market of 430 billion gallons. Gabelman, doubting Neste’s ability to keep up growth rates, has an underperform rating on the stock. Analysts at Tudor, Pickering & Holt meanwhile think any bad news is priced in, and consider it a solid bet on decarbonization trends.
At $30 per ADR, Neste has a $45 billion market cap and trades at about 30 times 2020 earnings with a 1.2% dividend yield and zero net debt. Watch for quarterly results April 29.
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2cd3ed4ae66975e540dd6b9e005b3184 | https://www.forbes.com/sites/christopherhelman/2021/04/27/in-penneast-case-scotus-will-decide-the-future-of-americas-pipeline-development/ | In ‘PennEast’ Case, SCOTUS Will Decide The Future Of America’s Pipeline Development | In ‘PennEast’ Case, SCOTUS Will Decide The Future Of America’s Pipeline Development
Pennsylvania has seen a flurry of gas pipeline construction, like this one in 2017. © 2017 Bloomberg Finance LP
In a case with enormous implications for the energy industry, the Supreme Court on Wednesday will hear oral arguments in the case of PennEast Pipeline Company vs. New Jersey.
At issue is whether PennEast can use the process of eminent domain to seize land in New Jersey that it needs to construct a 130-mile, 36-inch diameter underground natural gas pipeline from Pennsylvania into New Jersey. The $1.1 billion pipeline would carry 1 billion cubic feet of gas per day from the Marcellus shale fields.
But New Jersey politicians want to block the pipeline, by preventing PennEast from acquiring easements across 40 parcels of land owned by New Jersey.
In order to take the land, PennEast would need to sue the state under eminent domain statutes (and fairly compensate its owners for the trouble).
New Jersey argues that the 11th Amendment to the Constitution gives states sovereign immunity against lawsuits brought by private companies. If PennEast is constitutionally barred from suing New Jersey, then it won’t be able to get the land, and can’t build the pipeline.
In 2018 a U.S. district court rejected that, and sided with PennEast, which argued that it’s not just acting on its own but under the auspices of the Federal Energy Regulatory Commission, which in 2018 issued an order approving the pipeline plan. This is not some new federal overreach. Since Congress passed the Natural Gas Act seven decades ago the FERC has delegated its federal eminent domain power dozens of times to pipeline companies. The NGA says that if FERC has approved a pipeline, the developers can use eminent domain to take land from uncooperative land owners (under the condition they pay “just compensation”). Because federal authority supercedes state authority, argues PennEast, there should be no question that FERC’s order delegates to PennEast the ability to sue New Jersey.
The PennEast pipeline would travel from northeast PA into New Jersey. Courtesy PennEast
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Naturally, New Jersey appealed that decision. And in 2019 the Third Circuit Court of Appeals vacated the district court ruling, finding that the federal government did not have authority to hand PennEast an exemption to the 11th Amendment.
PennEast (owned by Southern Company SCCO , Enbridge ENB and UGI Corp UGI .) and FERC dispute that of course, pointing to, among other things, the fact that the wording of the Natural Gas Act does not include any exception for state-owned properties, and doesn’t even provide a mechanism for the FERC to enforce its pipeline citing orders because Congress didn’t even consider that a state had the ability to object.
Indeed, they say, that if the Supreme Court were to allow the appelate court decision to stand, it would essentially give states veto power over any FERC-approved pipeline. Any private property owner along a proposed pipeline route would then be able to grant an easement to a state, which could then kibosh the whole plan.
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In its briefs presented to the Supreme Court, New Jersey concedes that the Constitution does allow the federal government to condemn and seize state property. The state disputes only that the feds can delegate that authority to a private party.
PennEast, in its brief, says this is absurd: “It was well-established at the founding that the sovereign eminent-domain authority was delegable. Thus, conceding federal eminent-domain power but contesting its delegability is not a valid option.”
Nineteen other states, interested in preserving their own authority, support New Jersey’s case, as do environmentalists and anti-fossil fuel groups. Oregon, for example, wants to exercise its immunity to block a FERC-approved pipeline that would feed gas to the proposed Jordan Cove liquefied natural gas export project.
Among the companies supporting PennEast are Columbia Gas, which in a brief wrote that it too has had a FERC-approved pipeline project blocked because of Maryland “refusing to sell an easement over a small plot of state-owned land and refusing to consent to condemnation.”
Pipeline building labor unions, the FERC and the U.S. solicitor general all support PennEast. And like the Trump administration before it, so does the Biden Administration (despite Biden’s early decision to kill the Keystone XL pipeline).
It’s easy to be of two minds about the situation. Opponents of fossil fuel development may have a knee-jerk opposition to the pipeline, but ironically there’s good reason for them to hope the court sides with PennEast — a precedent that FERC orders overrule state-level objections it could pave the way for aggressive expansion of wind turbine projects, solar fields, and especially the thousands of miles of high-voltage interstate transmission lines that will be required to get that renewable energy to population centers.
The Court’s decision is expected in late June.
SCOTUSblogPennEast Pipeline Co. v. New Jersey - SCOTUSblog
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99df6f297460800ae28a2b0dbc31be0f | https://www.forbes.com/sites/christopherhelman/2021/04/28/how-green-is-wind-power-really-a-new-report-tallies-up-the-carbon-cost-of-renewables/ | How Green Is Wind Power, Really? A New Report Tallies Up The Carbon Cost Of Renewables | How Green Is Wind Power, Really? A New Report Tallies Up The Carbon Cost Of Renewables
Finsihed blades ready for shipment. Corbis via Getty Images
How green is wind power? It’s not a simple question. Of course the wind blows without carbon emissions, but catching it isn’t easy. Building and erecting wind turbines requires hundreds of tons of materials — steel, concrete, fiberglass, copper, and more exotic stuff like neodymium and dysprosium used in permanent magnets.
All of it has a carbon footprint. Making steel requires the combustion of metallurgical coal in blast furnaces. Mining metals and rare earths is energy intensive. And the manufacture of concrete emits lots of carbon dioxide.
In the case of wind and solar power, those emissions are nearly all front-loaded. That contrasts with fossil-fueled electric power plants, where emissions occur continuouisly as coal and natural gas are combusted.
It’s a big distinction. But how significant? Analyst Deepa Venkateswaran at Bernstein Research looked into it.
Citing data from the likes of National Renewable Energy Laboratory, Vestas, Siemens Gamesa Renewable Energy, and Bernstein estimates, Venkateswaran determined that the biggest contributors to the carbon footprint of wind turbines are steel, aluminum and the epoxy resins that hold pieces together — with the steel tower making up 30% of the carbon impact, the concrete foundation 17% and the carbon fiber and fiberglass blades 12%.
Good news: amortizing the carbon cost over the decades-long lifespan of the equipment, Bernstein determined that wind power has a carbon footprint 99% less than coal-fired power plants, 98% less than natural gas, and a surprise 75% less than solar.
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More specifically, they figure that wind turbines average just 11 grams of CO2 emission per kilowatthour of electricity generated. That compares with 44 g/kwh for solar, 450 g for natural gas, and a whopping 1,000 g for coal.
But beating them all is the original large-scale zero-carbon power source, nuclear power, at 9 g/kwh.
Thanks to technology, these stats aren’t static. Offshore wind turbines are becoming enormous, with General Electric’s GE Haliade X featuring blades 360 feet long and generating 14 megawatts. The carbon footprint of such monsters could get as low as 6 g/kwh.
LIANYUNGANG, CHINA - APRIL 27: Employees work on the assembly line of wind turbine blades at a ... [+] factory on April 27, 2021 in Lianyungang, Jiangsu Province of China. (Photo by Geng Yuhe/VCG via Getty Images) VCG via Getty Images
And they could be trending lower, thanks to the advent of so-called green steel. Swedish companies Hybrit and H2 Green Steel are investing billions to make millions of tons a year of green steel. Instead of burning metallurgical coal to fire a traditional blast furnace to reduce iron ore into pig iron, they will use green hydrogen electrolyzed via renewable power.
They’re working as well on reducing the carbon footprint on the backend of wind and solar projects — by recycling old photovoltaic panels and turbine blades.
In Italy a company called Sasil aims to recycle 3,500 tons of old solar panels a year, while Veolia in France intends to increase the capacity of its panel recycling to 4,000 tons a year. It’s as easy as unscrambling an egg. At Arizona State researchers are working on electrochemical processes to extract metals like tin, copper and lead from solar cells by dissolving them in baths of nitric acid, then hydrofluoric acid and sodium hydroxide.
They won’t run out of material — the International Renewable Energy Agency predicts that we’ll have to deal with a cumulative 78 million metric tons of antiquated solar panel waste and tens of millions of tons of old turbine blades by 2050
Those blades, made of carbon fiber and fiberglass composites held together with plastics, are tougher to recycle. Wind farm operators tend to upgrade or “repower” their turbines about once a decade, which results in piles of old blades that typically end up being landfilled.
Increasingly these old blades are being put to modest new use — broken down, ground up and added to cement as filler. All progress on the long path to net-zero.
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73334a3d85d6752b8830fae2485d8559 | https://www.forbes.com/sites/christopherhelman/2021/05/03/buffett-finally-names-berkshire-hathaway-heir---foreshadowing-future-focus-on-electric-sector/ | Buffett Finally Names Berkshire Hathaway Heir — Foreshadowing Future Focus On Electric Sector | Buffett Finally Names Berkshire Hathaway Heir — Foreshadowing Future Focus On Electric Sector
Long-running act. Buffett and Munger in 2019. ASSOCIATED PRESS
Warren Buffett and Charlie Munger revealed over the weekend that Greg Abel, the CEO of Berkshire Hathaway’s vast electric power generation business would be taking over from them some day. "The directors are in agreement that if something were to happen to me tonight it would be Greg who’d take over tomorrow morning," Buffett said.
With that ended years of speculation on one of the closest kept secrets in finance. Abel, at 58, is a spring chicken compared with Buffett, 90, and Munger, 97. And he’s different in a another way: he’s not naturally a stock picker and asset allocator, rather he’s a business operator.
So don’t expect Abel to pick stocks (that role looks likely to remain with Todd Combs and Ted Weschler), but rather to keep building his energy businesses. Abel has already been instrumental in assembling a family of electric utilities that as a standalone company would be among the nation’s biggest, with 33,000 megawatts of generation, 21,000 miles of natural gas transmission lines and 5.2 million customers. And it’s an important cash generator, contributing $21 billion in revenues last year and $2.5 billion in pretax earnings.
“That dramatically changes the general character of what Berkshire Hathaway will be and what the investment motivation of owning it will be,” says Bill Smead of Smead Capital Management, which has held Berkshire shares for decades. “Warren has always kind of been the secret sauce,” he adds. Without him, “there just won’t be any magic attached to it.”
That said, Smead thinks the shift makes sense, because low interest rates and high equity valuations have left them “no fish in the barrel left for them to shoot” — with energy being somewhat of an exception. Regulated monopolies tend to be resistent both to recessions and to inflation. Plus, capital is in hot demand for heavily subsidized “decarbonization” investments. Last year Berkshire dropped $8 billion on Dominion Energy’s D gas pipeline business. In recent months Berkshire has announced its willingness to invest another $8 billion to build 10 new gas-fired power plants in Texas.
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Speaking over the weekend, Abel said that the Texas power grid “fundamentally let the citizens down” in not being resilient enough to withstand the February deep freeze. "We've gone to Texas with what we believe is a good solution," he said. "The health and welfare of Texas was at risk, and we needed to effectively have an insurance policy in place for them."
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Greg Abel, chairman of Berkshire Hathaway Energy Co., speaks during the virtual Berkshire Hathaway ... [+] annual shareholders meeting. © 2021 Bloomberg Finance LP
Abel was born in Edmonton, Alberta and graduated 1984 from the University of Alberta. He worked at accountancy PriceWaterhouseCoopers, then landed at geothermal company CalEnergy before joining MidAmerican Energy in 1992. Berkshire acquired the company for $2 billion in 2000 as part of Buffett’s initial rollup of electric utilities. In 2005 they bought Pacificorp from Scottish Power for $5.1 billion. In 2011 Abel replaced David Sokol as CEO of Berkshire Energy (after revelations that Sokol bought $10 million in Lubrizol LZ stock before recommending Berkshire acquire the company). They’ve since acquired the Topaz solar farm for $2 billion, NV Energy in 2013 for $5.6 billion, and in 2014 bought Canadian power distributor Altalink for $2.9 billion. By 2015 Berkshire had developed half of Iowa’s wind farms.
Buffett has called Abel an excellent deal maker. That’s in part because he knows when to walk away. In 2017 it looked as if Berkshire was set to acquire Texas electric distribution company Oncor for $9 billion. But the deal didn’t go through — Sempra swooped in with a $9.5 billion bid (plus the assumption of $9 billion in debt). Berkshire didn’t see the point in trying to top them — the would point of the deal had been to Oncor at a good price.
In 2018 Abel was appointed Berkshire vice chairman, alongside Ajit Jain, 69, head of insurance operations. Both have “Berkshire in their blood,” Buffett said at the time. "He's a first-class human being," Buffett said about Abel in a 2013 video. "There's a lot of smart people in this world, but some of them do some very dumb things. He's a smart guy who will never do a dumb thing."
In the first quarter of 2021 Berkshire’s energy business delivered $703 million in net earnings compared with $561 million a year ago. Abel has reduced Berkshire’s coal-fired power generation by nearly half in recent years.
Investor Smead predicts that Abel and Berkshire will be very patient in looking for acquisitions, likely waiting for interest rates to go up a couple hundred basis points, which could loosen up market values.
The timing might not be right for Berkshire to make a big electric company acquisition right now — but that doesn’t necessarily mean you have to wait. Tim Porter, chief investment officer at Reaves Asset Management, thinks there are ample opportunities for regulated utilities to generate outsized returns by investing for “decarbonization” into wind, solar and batteries. “The grid is old and will need a lot of investment to accomodate new power,” says Porter, whose favorites include Wisconsin’s WEC Energy WEC , which is investing $16 billion into renwables, while mothballing old coal-fueled plants. Xcel Energy XEL recently reached a milestone of 10,000 megawatts of wind turbines. Alliant LNT is accelerating its phase out of coal and already get 30% of their power from renewables. While Ameren AEE is early in its transition and has just begun investing $4.5 billlion into wind and solar. All sport p/e ratios around 25 and dividend yields just below 3%.
Berkshire Hathaway meanwhile traded at $421,000 today, at 25 times expected 2021 earnings. Shares are up 60% in one year.
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385781fc6f507a751ca1d354d9f8bfab | https://www.forbes.com/sites/christophermarquis/2020/06/14/for-businesses-to-be-actively-anti-racist-they-have-to-put-in-the-work-and-investment-for-the-long-term/ | For Businesses To Be Actively Anti-Racist, They Have To Put In The Work And Investment For The Long-Term | For Businesses To Be Actively Anti-Racist, They Have To Put In The Work And Investment For The Long-Term
Photo by Clay Banks on Unsplash
“There is no quick fix. This is about committing to going on a journey that will likely take many years—and not only committing to it, but investing in it and finding the best ways to hold yourself and your business accountable.”
This statement was part of a conversation I was privileged to have with Anthea Kelsick, co-CEO of B Lab U.S. & Canada, the North American arm of the global nonprofit that assesses, certifies and connects the community of Certified B Corporations. I wanted to talk with Kelsick after her release of a letter to the B Corp community earlier this month, as it provided both a personal and systemic call to action on the problems of racial injustice that plague the U.S.
She writes in the letter, “These events are not simply the result of individual actions by bad people, they are born out of a system of structural racism that infects our society. If we want progress—if we want to be part of a solution that moves us toward a system that is truly inclusive, equitable and empowers all people—then we must talk about race and take action to dismantle racism and white supremacy.”
In addition to my personal commitment to interrupt racism and bigotry, as a business school professor at Cornell one way I can contribute is by helping to dismantle the structures of white supremacy through my students, most of whom go on to be entrepreneurs and company leaders. When I look out at the classes I teach, many times the majority of the faces looking back at me are white, like mine. So I wanted to seek Kelsick’s advice on what I can do to help my students, and also learn more about what I can do myself. As a white man, I recognize I am in a privileged position, but I am also committed to creating the sustained change that Kelsick’s letter intoned through my regular interactions with students, entrepreneurs and fellow academics.
With that, I’ll let Kelsick’s words from our conversation speak to the long-term work there is to do.
Christopher Marquis: Do you have any recommendations on topics, companies to study and/or readings that students need to learn about?
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Anthea Kelsick, co-CEO of B Lab U.S. & Canada Courtesy of B Lab
Anthea Kelsick: What has become clear in the last two weeks, as resources emerge from anti-racist or equity-building consultants, is that the work starts with the individual. And doing that work in the context of business is equally as powerful as doing it in your own home and in a classroom. It starts with the most personal level of naming acts of racism, systemic racism, White supremacy, and understanding what those things are and doing the work on yourself to continually dismantle those things from your own perspective and in your relationships and companies and classrooms. It involves going on an educational journey, reading and engaging in the literature, but it also involves a lot of discussion and personal acknowledgment.
We’re seeing some B Corps and some individuals collectively come together to educate themselves and have these discussions, to have the really hard conversations about how individuals can be complicit in a system without the intention of doing so, but by doing so blindly, they perpetuate behaviors that keep the inequitable system in place. Everyone can search for these resources and take action accordingly.
There are two specific places I would point people: The Dismantle Collective, which has a great page on what it means to be a White ally, to Tiffany Jana and her B Corp TMI Consulting. She has a great resource called Manifest Equity, which is a series of conversations with thought leaders on her website. She was also co-author of the second edition of The B Corp Handbook, which has a stronger focus on inclusion than the first edition and could serve as an interesting curriculum for a business leader or a student to understand what it means to be an effective business where JEDI (justice, equity, diversity and inclusion) is not an adjacent activity that you do on the side in a separate department but is the filter by which you see the entirety of your business.
As I referenced in my letter, B Lab is going on this journey and we have two incredible women, among others at our organization, leading us: Dr. Ellonda L. Green, Ed.D., who’s our director of equity, diversity and inclusion and focuses internally on our team, and Dr. Sloane Kali Faye, Ph.D, who’s our director of inclusive economies and focuses on our external work. Together they are creating a program for us as an organization to go on to become an anti-racist organization. Even that statement—becoming an anti-racist organization—there’s no one-size-fits-all definition of what that means. It’s essentially saying you’re going on a journey, and committing to developing a practice of continually naming and interrupting racist practices as they arise.
We’re starting the journey at B Lab by having everyone in our organization read How to Be an Antiracist by Ibram X. Kendi. It’s a practical guide that helps us all talk about these issues from a personal point of view using the same language and the same constructs and the same frameworks.
Marquis: When I did the research for my book, Better Business, I talked to 60-plus B Corps. Many of them expressed surprise and disappointment at how they had fared initially on the B Impact Assessment’s Inclusive Economy section and how, despite being committed to an inclusive company and recognizing their issues, they still found it hard to change and make progress. Based on your experience, how are purpose-driven companies falling short, including ones with inclusive policies in place, in building anti-racist businesses? What more could and should be done?
Kelsick: That’s the million-dollar question, right? Because we exist in this system that perpetuates systemic racism, businesses, including B Corps, are inherently built on foundations that will continue to perpetuate that unless we actively work to dismantly them. There isn’t a silver bullet. But I do think one of the things that starts to hopefully move companies in the right direction is to center Black people and People of Color, in a business’ strategy and practices.
For example, when a social-impact organization or B Corp says, “We are committed to equitable pay across every individual on our team,” or, “We are committed to professional development and support,” the approach is broad-based across the entire company and organization. What happens is that it perpetuates the system that inherently will prioritize the folks who’ve always come first. So, even in those practices, a company should reframe and be specific, and instead say, “We’re going to create equitable pay and ensure that is true specifically for our Black employees.”And by just nuancing the angle with which you’re looking at the problem, you will come up with a different solution and uncover different places where that problem exists.
Marquis: Are there examples from the B Corp community or companies you’d recommend for other businesses to learn from in taking steps to building a more inclusive economy?
Kelsick: Yes, one is Sundial Brands, founded by black entrepreneur Richelieu Dennis, and became Unilever subsidiary in 2017. As a condition of the acquisition event, Unilever committed to an initial investment of $50 million through their New Voices Fund. The fund invests specifically in Black women entrepreneurs and is part of their philosophy of Community Commerce, where proceeds from every purchase go back into the community to support education, healthcare, safety, and fair wages.
Sundial is investing back in Black communities by design.
There are also examples of companies who’ve developed innovative businesses practices for an inclusive economy. One is Greyston Bakery, a company designed to employ people fairly. They happen to make brownies for companies like Ben & Jerry’s, but really their mission is to hire people without regards to their background. And that innovation, called Open Hiring, has become an example of excellence that many companies have adopted. Another is Rhino Foods, which led in launching the Income Advance program, which provides an employer-based answer to the question, “How do you create employee relief funds or a low-cost loan program when so many Americans don’t have access to capital in an emergency and then fall prey to predatory lending?”
And then you do have companies like Ben & Jerry’s, which is one of the companies that made a commitment to Black Lives Matter several years ago. As a White-led, majority White company, they’re calling out and being very vocal about the challenges of racism – it’s not just that George Floyd was killed, there’s a system that valued his life less than others. Ben & Jerry’s has named police brutality and White supremacy, and then they’ve backed that up actions. They have adopted a policy platform to combat those issue, which is rare in the corporate sector due to the risk of becoming ‘too political’. Obviously, in our political landscape, the risk is even greater, but the company’s leadership and team are willing to do that and stand by their values. And I hope that is a call to other companies, particularly those making the million-dollar donations in the last two weeks, to go beyond support in the moment, and dig into systemic change driven by policy.
Ultimately, there is no quick fix. This is about companies committing to going on a journey that will likely take many years. And not only committing to it, but investing in it and finding the best ways to hold business leaders and their companies accountable. And I’m hoping that the B Corp community can do that.
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f435400bbd327d72149674216fd1da1d | https://www.forbes.com/sites/christophermarquis/2020/06/18/how-a-toothbrush-could-help-solve-our-ocean-plastic-crisis/ | How A Toothbrush Could Help Solve Our Ocean Plastic Crisis | How A Toothbrush Could Help Solve Our Ocean Plastic Crisis
Everyday 8 million pieces of plastic find their way into our oceans. Getty
When Eric Hudson founded Preserve in 1996, his goal was to turn America’s recycling into household products that are attractive for more than their sustainable nature. While Preserve initially got its start making toothbrushes from recycled materials, his broader mission, he says, was “to reverse the harm caused by the industrial age by showing that products can be better to use and lighter on the Earth.”
“I wanted to create a business that we all could feel great about going to every day, that is genuinely going to have a good purpose and lighten the footprint of products on the Earth,” Hudson says. “The climate crisis that we’re currently in was definitely not happening then. My motivation was more along the lines of being more resourceful.”
Over the last 20-plus years, Hudson and his colleagues have made good on that goal by building Preserve into a leading sustainable consumer goods company and producer of 100% recycled household products while also acting to counter the U.S. emissions created through the production, use, and disposal of consumer products. And, with its latest POPi initiative, the company has expanded into directly addressing the ocean plastic crisis through a line of toothbrushes and razors made from plastic waste collected from coastlines and waterways at risk of entering and polluting oceans.
But they realize much more remains to be done, as I learned while talking with Hudson and Deana Becker, director of stakeholder operations at Preserve, as part of the research for my upcoming book, Better Business. They shared how Preserve’s operations have been guided by Hudson’s early goal and, as COVID-19 reshapes businesses and our economy, Preserve has made changes in their processing and distribution models. Guided by its values as a Certified B Corporation, a corporate certification that assesses a company’s social and environmental impacts, Hudson and his team are leaning into its aligned partnerships to keep the mission and the business alive.
From the Curb to the Kitchen
Eric Hudson, founder of Preserve. Preserve
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Hudson’s vision for Preserve from the start was to make beautiful, useful products from the items that people were putting in their recycling bins and taking to the curb. Recycled yogurt cups are used to create colorful toothbrushes; takeout containers are transformed into tableware.
“It’s been a good place to be focused,” Hudson says, noting that the amount of plastics in U.S. landfills and oceans around the world continues to climb. “We certainly want to reduce pollution emissions by reusing Earth’s resources, but we also realize we’re getting into a finite world here as far as resources are concerned for reuse and resourcefulness in our business. We’re now steering into new realms in food service and in household materials.”
By using recycled plastic for its products, Preserve advances several goals: reducing the amount of virgin plastic to save water, energy and electricity; and encouraging recycling to lower the amount of plastic in landfills and beaches. The last goal helped provide the motivation for its newest project, the Preserve Ocean Plastic Initiative (POPi), that launched this spring.
Using plastics collected from coastlines and waterways, Preserve is creating POPi toothbrushes and razors and donating 25% of proceeds for those items to nonprofits working to stop the flow of plastic pollution—an estimated 8 million tons a year—from source to sea. POPi became a reality in part because of a B Corp partnership between Preserve and Grove Collaborative, an online subscription platform for sustainable home products that helped get POPi off the ground through prepaid orders for the products.
“In essence, they helped us develop and launch this product and program, which we're extremely excited about,” Hudson says. “Grove supported POPi from its ideation stage, and we’re launching the products with them.”
While the coronavirus pandemic has halted operations at some U.S. manufacturing plants, Becker says POPi production was able to continue.
“We’ve been lucky to have great manufacturing partners who are, in most cases, considered essential, so continuing to manufacture razors is not an issue,” she says. “It’s an example that positive things continue to happen in the world.”
Partnerships Provide Strength in a Pandemic
COVID-19 has meant other business challenges for Preserve, as sudden shutdowns reduced demand for many products in its food service division, which sells cutlery and other items to universities, convention centers, health care facilities, and clients including Whole Foods Market.
“We had to take drastic action,” Hudson says, noting that as a B Corp the company considered how its actions would affect workers, customers, community and environment, as well as the business’ bottom line. “We would never change our sustainability initiatives to cut costs. That would go against everything that we created this company for.
“We’ve been transparent about our financial situation,” he says. “Every partner that we work with, whether they’re B Corps or not, has principles that are aligned with ours. All of them were incredibly supportive of the changes that we needed to make to reduce our expenses.”
Those close partnerships are another hallmark of Preserve’s operations, Hudson says, and a perk of being part of the B Corp community.
“We have a penchant for partnerships to begin with, so the B Corp community is our closest platform for partnering with other companies, whether it’s marketing initiatives, social initiatives, or environmental,” he says.
Becker adds that beyond the partnerships, the B Corp structure provides a gauge for businesses and motivation for continual improvement through the B Impact Assessment that measures a company’s impact on workers, community, environment, and customers.
“The process, in and of itself, is incredibly valuable for any organization, because it really is going through a lot of things that no one person is ever looking at on a daily basis,” Becker says. “It’s a really interesting process of getting different internal groups talking about these issues.
While Preserve historically has scored well on the assessment’s environmental side, she says the company found it had room for improvement in other areas.
“Certainly, we can keep improving on the environmental side, but we’ve also seen there’s a lot more that we can do on the community side,” she says. “The B Impact Assessment provides best practices and ideas for how to move some of those pieces forward. We’ve continued to look at things that we may have been doing in an informal way - and the assessment has had us institutionalize those things so they are ongoing.”
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f4a9426baa7631e7356917745c6dc36d | https://www.forbes.com/sites/christophermarquis/2020/06/29/how-allbirds-is-reinventing-shoes-the-leader-driving-the-industry-into-a-circular-purpose-driven-future/ | How Allbirds Is Reinventing Shoes: The Leader Driving The Industry Into A Circular, Purpose-Driven Future | How Allbirds Is Reinventing Shoes: The Leader Driving The Industry Into A Circular, Purpose-Driven Future
Allbirds sustainably produced Wool Runners Allbirds
When it comes to industries that contribute to environmental degradation, fashion ranks among the worst offenders. Fast fashion, the quick production of new styles for consumer purchase, has disrupted seasonal cycles and created a culture of consumption that has accelerated wastefulness.
But consumer trends indicate fast fashion may be in jeopardy. According to Forrester Research in 2018, seven in 10 Millennials and 52% of all online U.S. adults “consider company values when making a purchase.” These statistics do not bode well for businesses that do not consider the impact they have on the world.
Allbirds, a sneaker company, has consistently operated with sustainability since its founding. The company’s shoes are made from wool, tree fibers, sugarcane, recycled plastic bottles, and caster bean oil. The shoe boxes are made from 90% recycled cardboard.
And it isn’t just on environmental issues where Allbirds exhibits its values. In response to the coronavirus pandemic, the company donated more than $500,000 worth of shoes to medical professionals, launched a buy one, give one program for customers to aid in the efforts, and partnered with Strava (the company behind a popular exercising app) to donate $1 up to $50,000 to World Central Kitchen for every 5K race that participants in the initiative completed.
Allbirds is among thousands of businesses around the globe that have certified as B Corporations, surpassing third-party verified environmental and social thresholds. In a conversation with Joey Zwillinger, Allbirds cofounder and co-CEO, for my upcoming book, I learned more about the company and why purpose is so central to its mission, and how that plays into their public efforts and climate change efforts.
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Christopher Marquis: How can companies continue to prioritize climate change mitigation efforts while the effects of the pandemic continue to be top of mind?
Joey Zwillinger, Allbirds Co-Founder and Co-CEO Peter Prato
Joey Zwillinger: We need to look at the collective response to the global health crisis as a lesson for how we can confront climate change, and it is more urgent than ever. We can’t return back to the way things were; otherwise, we will have no chance of avoiding a disastrous outcome for our species in the coming decades.
More than ever, consumers are voting with their wallets and supporting businesses who do not compromise on social and environmental issues. This trend is not going away—consumers are demanding more of companies, and the ones who thrive as we emerge from the pandemic are going to be the ones who take a hard look in the mirror at their sustainability practices and act swiftly and comprehensively.
Marquis: How is Allbirds addressing the pandemic?
Zwillinger: As a B Corp, we do not ascribe to the shareholder-only model of capitalism that has led to corporate excess and poor environmental practices. Even though we felt the impact of COVID-19 along with the rest of the retail industry, we take our role as a business leader focusing on all stakeholders seriously and we acted accordingly.
In addition to shuttering our corporate offices and mandating that our employees worked from home to encourage health and safety, we also shut our retail stores. And despite the economic hit that we were taking with that significant loss of income, we committed to ensuring that all of our retail employees would receive at least their full wages and health care benefits for a four-month period, and have avoided making layoffs in our corporate team.
Even when faced with all this initial uncertainty, we knew one thing for sure: Our broader community needed help. The most obvious thing we figured we could do was provide some comfort to health care workers on the frontlines, so we quickly mobilized to donate more than $500,000 worth of shoes to medical professionals. When we were met with an overwhelming need beyond what we could do on our own, we invited our customers to also contribute via a buy-one-give-one program. Their enthusiastic response helped further our support for health care workers during such a critical time, and inspired us to launch another community-based initiative to benefit World Central Kitchen. In partnership with Strava, for every 5K race completed by a participant, we donated $1 to WCK, up to $50,000.
The collective action exhibited by our community has been a beacon of light in an otherwise dark time, and offers hope for how we may continue to come together to face this global challenge and others, like climate change.
Marquis: Recently, Allbirds chose to label all of its products with a carbon footprint. Why? And what does your company hope to accomplish with this initiative?
Zwillinger: The word “sustainability” means 10 different things to 10 different people—from air quality, to microplastics, to biodiversity, to fair trade. While these are all important, combating climate change is the most urgent issue of our time.
Man-made gas emissions that warm the atmosphere are the primary driver of this global crisis and, as such, carbon-equivalent emissions can serve as a singular metric that all businesses can track, eventually managing down to zero.
With this in mind, we decided to label every product we make with the amount of carbon emitted during its production, development, and customer use and disposal. It provides clarity to the conversation around sustainability and allows for a future in which shoppers can compare carbon numbers at the mall just like they do nutritional labels in grocery aisles.
We hope this approach becomes the standard for our industry and beyond.
Marquis: Production of products like shoes is complex and many of the components are manufactured by third parties. Can you say a bit about how you assess the sustainability of your suppliers?
Zwillinger: In terms of our supply chain, from a carbon perspective, we use third parties to do a lifecycle analysis. It’s super complicated and expensive. We don’t only do a tier one carbon measurement, which is what I think most companies do just to look like they’re doing the right thing. We go deep into absolutely every bit of carbon that affects our production of our product, including logistics and distribution and end-of-life.
An example is, our wool production uses something called “ZQ Certified Wool” and our Tree fiber production uses “Forest Stewardship Council Certified Fibers.” At tier one, we rely on things like ISO certifications and different kinds of standard bodies to make sure that we’re doing things in the way that we would feel proud if somebody walked into our factory. We also closely track fair wages, safety and employee standards across all tiers of our supply chain as well.
Marquis: Do you have any examples of how you address tradeoffs between sustainability and making a profit?
Zwillinger: One simple example. We decided to use recycled plastic bottles as a basis for producing polyester for the laces, instead of using virgin polyester. We’re actually taking PET out of circulation. Yet, when we first introduced that, it cost us three times as much as we were paying for virgin polyester, but we decided to absorb that cost into our margins, rather than putting it back on the consumer. Our consumer does care about the authenticity of what we do, and we have to live up to our expectations that we set. We thought up a win-win where we sell laces as an add-on product.
When we launched a new material called “SweetFoam,” which we use in the midsole of our shoes, we open-sourced it to the world. Production of SweetFoam’s base resin is carbon negative, which means it achieved our goal of being like a tree, where it actually sucks more carbon equivalent emissions out of the atmosphere and locks it into the product. The open-sourcing of that sounds super altruistic because if everyone uses it, the planet’s way better off. That is a big component of why we did it, but it’s also quite pragmatic, because as more people use it, the cost comes down for us and everyone.
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8ebb5e6879284c8a6b9c5175fd3d3316 | https://www.forbes.com/sites/christophermarquis/2021/03/09/tablas-creek-vineyard-cultivates-growing-market-for-regenerative-products-with-decades-old-winemaking-practices/?sh=53e5ae2770d2 | Tablas Creek Vineyard Cultivates Growing Market For Regenerative Products With Decades-Old Winemaking Practices | Tablas Creek Vineyard Cultivates Growing Market For Regenerative Products With Decades-Old Winemaking Practices
Tablas Creek produces award-winning wines and is also shaping regenerative organic standards to ... [+] include soil health and welfare of farm workers. Tablas Creek
American wineries are increasingly adopting planet-friendly practices to ensure a resilient future and meet growing consumer demand for sustainability, but organic wine production in the United States lags the global rate. It’s partially of a matter of taste, but some winemakers are pursuing new paths to reach consumers with wines made using organic practices.
Thanks to its history of Earth-friendly practices, Tablas Creek Vineyard in Paso Robles, California was selected to be a pilot winery for a certification program overseen by the Regenerative Organic Alliance. The alliance was looking to go beyond the USDA Certified Organic standards by creating a new stakeholder-minded certification that incorporates soil health and animal welfare components as well as social benefit by considering the welfare of farm workers and farmers.
To learn more about this new certification and the role of organic and regenerative agriculture in purpose-driven business for my research, I recently talked with Tablas Creek’s general manager and partner Jason Haas, and viticulturist Jordan Lonborg. While the certification is new for Tablas Creek, planet-friendly practices — modeled on those used for decades at French wineries — have been the norm since the winery was founded in 1989 as a family-owned partnership.
A ‘Cool Opportunity’ to Craft Standards
Jason Haas, Tablas Creek’s General Manager and Partner Tablas Creek
While organic farming has been part of Tablas Creek’s operations since its start, Haas says the winery’s thinking and practices have evolved over time. “Our principal motivation behind this was to help the vines express the character of place as clearly as possible and minimize what we were putting on the vines and land,” Haas says. That led Tablas Creek to some aspects of biodynamics — a holistic, ecological, and ethical approach to farming — and the start of its flock of sheep and use of cover crops, which eventually led to piloting the Regenerative Organic Certified (ROC) program through the Regenerative Organic Alliance.
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“There are ROC protocols that conform to that baseline of soil health, animal welfare, social welfare, but the specifics for what you have to do in a vineyard is going to be different than what you’re going to be doing if you’re growing rice or if you’re growing cotton,” he says. “Being a part of the pilot program was this cool opportunity for us to help craft those standards for the wine community. If there’s the opportunity to share practices that we think are going to be good for the community at large, we’re all in.”
Regenerative agriculture involves a closed-loop philosophy that limits the use of external products, Lonborg says, which means Tablas Creek generates its fertilizer on-site. “That’s basically what regenerative farming is,” he says. “It’s nothing new, but it’s a way people have been farming for hundreds and hundreds and hundreds of years, although like with other certifications, it forces you to look at your property a bit differently.”
Tablas Creek has also grown its original sheep herd of about a dozen to the current 250 who serve as “the heart” of the winery’s soil fertility program, Lonborg says.
“We generate all of our own compost on the property. We do not import any fertilizers whatsoever,” he says. “The core of our pest management program, if you will, is the planting of perennial beneficial gardens and planting large swaths of annual beneficial gardens doing whatever we can by working with nature to make the property as viable as possible. Our approach is to take more cues from nature and try to work with nature as opposed to against it, or to control it.”
Another area of focus for the ROC program is carbon capture or sequestration, which requires comprehensive testing to show that Tablas Creek is maintaining or building carbon levels in its soil and addressing the climate crisis. “We include a cover crop during the winter months, so we're photosynthesizing 12 months out of the year” says Lonborg.
But one unique aspect of ROC caught Lonborg’s eye. “There’s a social pillar tied to the certification … a huge focus on how you treat the people that are working at the winery, plus the animal welfare and farming aspects,” he says.
Making It ‘More Than Just A Job’
Tablas Creek viticulturist Jordan Lonborg Tablas Creek
One of the biggest impacts of the ROC at Tablas Creek is the social benefit component that includes cultivating input and involvement of field workers, Lonborg says. “Around the world, the dark side of agriculture is the way the workers are treated,” he says.
Now, Lonborg says the Tablas Creek team has weekly meetings where the dozen or so full-time field workers discuss politics and other current topics, which is a new opportunity for many of them.
“They never had a voice. They get jobs in the fields, and they’re assigned the task, and they do the task, and they get another job, and they complete that task, and it becomes a repetitive motion,” he says. “We want input, and it took a long time for them to start getting comfortable with that. We’re at a point now where those walls are broken down. We can all talk about each other’s jobs and come up with suggestions for how we think we can do things better.”
In addition to building worker empowerment and ownership, Lonborg says the winery has seen production benefits because the workers realize they are valued and feel a stronger connection with the business.
“It’s become much more than just a job or a place that they show up to every day and collect a paycheck on a Friday,” he says. “There’s a lot more meaning behind what they’re doing now out there, and it’s been super powerful to watch.”
Connecting with Consumers
Overall, the wine industry has a unique opportunity to bring attention to the benefits of regenerative farming, Haas says, because many wine drinkers value where and how their wines are made.
“There’s a language that the wineries have had to develop that talks about the impact of their choices in the vineyard on the product that people are drinking,” he says. “Because wine is a value-added product, wineries can be recognized and rewarded by the market for their investments, as the same practices that make for better soils also make for better wine in a more direct way than, say, a grain farmer or cotton farmer might be able to demonstrate.”
But Haas points out that “the reputation of organic wine in the United States is not good, and that’s a relic of the way that the National Organic Program wrote the standards.” To get the USDA organic seal, U.S. wineries cannot use sulfites, which keep the wine from oxidizing and inhibit bacterial growth — a different standard than the rest of the world. Haas says that makes the wines less shelf-stable and less attractive to many wine drinkers.
“They tend to be marketed to the people who want to buy something that’s organic rather than the people who want to buy something that’s great wine,” says Haas, who notes that Tablas Creek and many other quality wine producers in the U.S. and around the world actually are farming organically but choose not to market their product as organic.
But this perception may be changing. “In general, younger consumers are more concerned with how the products that they buy and consume are made,” Haas says. “The feedback that we’ve received from sharing the story of how we have been working on regenerative organics and the fact that we got the certification has been tremendously positive.”
Tablas Creek flock of sheep in tall grass Tablas Creek
New Ideas for Better Businesses
Tablas Creek’s regenerative practices even caught the attention of Yvon Chouinard, founder of Patagonia, who attended a dinner that featured some of the winery’s lamb where he met Tablas Creek winemaker Neil Collins.
Leading companies in the organic space like Patagonia and Dr. Bronner’s were part of the Regenerative Organic Alliance that helped push for development of the ROC program. Patagonia wanted a more holistic certification that covered its supply chain, from cotton to row crops to orchards to chocolate, while rebuilding topsoil, reducing pollution, and sequestering carbon. A few months after the dinner, Tablas Creek was invited to be a part of the ROC pilot program.
Following the path forged by these larger companies through regenerative practices continues Tablas Creek’s tradition of collaboration and community-building.
Lonborg and Haas say learning and sharing with others is part of the way things are done at Tablas Creek, whether it’s presenting seminars for other winemakers. “We have a long history of people kind of looking to us for new ideas, new ways of farming better. We do have a ton of just informal relationships with other people in the community,” Haas says. “We did a series on dry farming with the California Alliance for Family Farmers. The lower the demand on this shared (water) resource that we all rely on, the better it is for everybody.”
Future plans include workshops on regenerative farming to help others get on that path, with Lonborg serving as a key resource for those looking to enhance their sustainability efforts.
“A lot of people when they close their eyes and they think of a vineyard they just see grapevines,” he says. “If you’re going to start farming organically, you need to hit that reset button and re-evaluate what you think a healthy vineyard should look like. There shouldn't be just grapevines — it should be as far from a monoculture as possible. That could be planting fruit trees throughout your property or vegetable gardens or perennials … doing whatever you can do to create more of a biodiverse ecosystem. Getting away from herbicide usage and increasing biodiversity — those are the first big steps that farmers need to take if they want to move down that regenerative farming path.”
Through the ROC pilot program, Haas says he hopes that Tablas Creek has helped regenerative agriculture advocates reach new audiences and connect with future wine drinkers.
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8ad13a7ef8701a9f981a29160f408d9a | https://www.forbes.com/sites/christophermarquis/2021/04/12/danish-meal-kit-firm-simple-feast-is-bringing-regenerative-agriculture-to-the-masses/ | Danish Meal Kit Firm Simple Feast Is Bringing Regenerative Agriculture To The Masses | Danish Meal Kit Firm Simple Feast Is Bringing Regenerative Agriculture To The Masses
In addition to producing delicious vegan meal kits, Simple Feast supports regenerative agriculture ... [+] and other advanced environmental sustainability practices. Simple Feast
Our global agricultural system not only produces a large CO2 output but is also responsible for upwards of 45% of global waste. Vegan meal kit brand Simple Feast aims to address these issues by championing regenerative farmers and focusing on waste minimization.
The company was founded in Denmark and just entered the US market. Simple Feast has achieved B Corp certification for its social and environmental performance and believes its impact and a purpose-driven ethos will resonate with Americans.
In the three years since its founding, Simple Feast has grown to serve 220,000 meals per month in Denmark and Sweden. The company calculates they save 2,235 lbs of CO2 and 60.5 gallons of water per meal compared to an average meat diet. Based on these figures, in January, 2021 alone, the company helped save a total of13,362,147 gallons of water and 493,341 pounds of CO2.
I recently interviewed CEO Jakob Jønck on how he intends to scale his company in America. Below is an lightly edited transcript.
Christopher Marquis: You mention Simple Feast champions regenerative farmers and waste minimization. Can you describe how you have done so in Denmark and how you will replicate this in the U.S.?
Simple Feast Founder and CEO Jakob Jønck Simple Feast
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Jakob Jønck: Our relationships with our farmers are a critical part of our business. With a global food system set up to benefit retailers, rather than consumers or the earth, we decided to rework the system from the ground up. In the Nordics, we champion organic and regenerative farmers by working with them directly for as long as we can. We work only with organic farmers and have a set of principles that all of our suppliers have to live up to in order for us to partner with them. A few of the requirements include being 100% organic, following labor laws, and a regenerative perspective on how they take care of their land.
As we expand to the US, we’re looking to replicate this farm-to-doorstep approach, which takes time. As we first launch in California, we’re recreating the same processes as closely as possible, but will need to work with a few distributors initially as we develop our relationships with local farmers and scale our business. We expect to work directly within the first year in-market.
Launching in the U.S., California was a natural first market for us given its abundance of amazing produce and organic farms. Sustainable business is not always the most rapid, but we’re making sure we do it right by our customers and the planet.
We estimate our meals are saving 60-75% of CO2 compared to typical U.S. meals. Additionally, a family who’s a Simple Feast customer, is saving 250 gallons/per day of water when compared to an average meal. This includes calculations of livestock water consumption and CO2 output and transportation of both raw materials and final product.
Marquis: How do you factor travel related carbon for meal kit delivery into your environmental impact assessment?
Jønck: One of the beautiful things about local, organic and regenerative farming is the minimal impact on the environment where it can even become a positive relationship. With a complete focus on local sourcing and plant-based foods (as opposed to livestock), environmental impact is built into our model by design.
As far as delivery to the consumer is concerned, we prioritize route optimization and deliver to 50-60 families in one truck route, which minimizes CO2 output further when compared to all 50+ families driving individually to the grocer. We deliver once a week on Sundays for predictability and transportation minimization reasons. On top, in the Nordics we are coming close to 30% of our deliveries done with electric vans.
Marquis: How have you varied the menu and portion size for USA v. Denmark/Sweden?
Jønck: We’ve tested a lot with our portions and find producing the perfect size for every single person will never exist as we all need a different caloric intake based on our personal weight and activity level, not the country we live in.
We’ve ultimately decided to not change this too much for the U.S. as we’ve found it’s a great system to give anyone what they’re looking for in terms of portioning.
Marquis: Some mission-focused food companies do include minimal meat offerings for the U.S. market as completely plant-based may limit market acceptance. Did you consider this?
Jønck: As an entrepreneur, I completely understand this perspective. As a founder running a company with an environmental mission, we’ve decided against it. In fact, four years ago, we had a bit of meat in some of the dishes for this market acceptance reasoning. We found, however, if we start including meat, everything else is perceived as a side dish.
Our business is different as we build food innovation by putting plants at the center of plate. If a customer wants to add meat, they’re welcome to, but it’s not our job as a business to solve for meat. When we as a culinary team don’t have to care about meat, we can spend time on true plant innovation. For example, grocers give you the choice between six or seven potatoes, but there are over 3,000 potato varieties out there. That’s where we spend our time and resources. Our customers have become more interested in fermented products, sauces, and the true healthy gastronomy plant-centric meals can offer.
Marquis: Why not expand further in Europe as opposed to USA? Why Southern California as opposed to another USA region?
Jønck: California was a logistical decision as we began to expand outside of the Nordics. In Europe, we’re restricted by the seasonality of ingredients. Restaurants that lead the food innovation in Europe are having to import their ingredients from all around the world or spend a tremendous amount of energy growing crops indoors. In California, with a mild climate and ample USDA organic farmers, we can source seasonal ingredients locally 10 months out of the year using the best and most sustainable power source - the sun itself.
Marquis: Why did you become a B Corp? What did you learn as part of the process of certification?
Jønck: Becoming a B-Corp was a natural fit for our business. I believe firmly in corporate altruism and am proud to have built what it means to be a B-Corp into every aspect of the business possible, starting from day one. This includes a digital produce exchange platform that connects us directly with farmers to help plan a zero-waste order and delivery system, vertically integrating kitchens with chefs as opposed to redistributing produce in a warehouse, portioning sizing to reduce food waste, and rejecting single use plastics.
The most surprising part about the certification process was proving this was actually in our DNA, not something we were superficially changing about our business. For the first time instead of just naturally operating under B-Corp principles, we had to start documenting, proving, and talking about it on a larger scale.
Marquis: How have you adapted your business model to support your mission?
Jønck: We are a food innovation company that’s vertically integrated and innovate to best support our environmental and health-focused goals. In order to maintain the freshest product while minimizing waste, we’ve developed innovations like our closed loop delivery in the Nordics (which we plan to replicate in the U.S.). In fact, we are the first direct-to-consumer food company in the world to go completely waste free in terms of delivery materials, including insulation.
We’ve also minimized steps from the farm to your house. It’s difficult to get fresh, locally sourced ingredients from nearby farmers at scale. To make it possible, we had to find a way to streamline our model. Whereas the traditional food system is more geared towards maintaining longer retail shelf-life, ours is built around getting fresh foods to consumers in as few steps as possible.
Lastly, we don’t have warehouses, we have kitchens. Unlike most meal kit services out there, we have kitchens where our chefs are designing the meals and preparing the ingredients as opposed to packaging facilities. To make this work at scale, we needed to overhaul our business operations to be more like a restaurant that is scaling than like a meal kit service just distributing raw ingredients.
Marquis: There are a lot of plant-based companies out there today, what makes Simple Feast different?
Jønck: First of all, we’re excited to see the growing consumer interest in plant-based foods and it’s great to see so many strong players in the market. Whether people are eating plant-based because of us, or someone else, we consider it a win for people and the planet.
We take a fresh, whole foods, organic approach to plant-based food innovation and eating. Instead of over-processing ingredients to create a plant-based product, we use tried-and-true techniques like precision fermentation to unlock the optimal taste and nutritional value in our meals. Then we put this philosophy into action when thinking about how can scalable plant-based products be done version 2.0 where they are as good for you as they are for the planet. Most other plant-based food companies have solved for the planet, not for human health. We are doing both.
We also have chefs with Michelin-starred backgrounds designing these plant-based feasts. Eating plant-based or being “vegan” can carry the stigma of being healthy at the expense of tasting delicious. We fundamentally disagree with this and think that the ultimate challenge is creating plant-based foods that actually taste great. Our chefs bring their culinary excellence to maximize the flavors and indulgence in plant-based foods.
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76329b78dd1652a54ffb1b77a475ce39 | https://www.forbes.com/sites/christophermarquis/2021/04/19/why-are-so-few-life-sciences-companies-certified-b-corps/ | Why Are So Few Life Sciences Companies Certified B Corps? | Why Are So Few Life Sciences Companies Certified B Corps?
Recently Certified B Corp New England Biolabs was founded with the advancement of science and ... [+] stewardship of the environment as its highest priorities. NEB
The Covid-19 pandemic has shown the significant contributions of life science companies to a safe and healthy world. So it is not surprising that many articulate that their primary mission is not necessarily economic return, but to contribute to individuals’ health and well-being. Accordingly, one would think there would be many life sciences businesses among the approximately 4000 worldwide B Corps – companies that are certified for their social and environmental performance. Yet there are only a handful.
To understand this paradox, Brian Tinger, Corporate Controller of New England Biolabs (NEB), a biotech company that develops enzymes for everything from vaccine development to DNA assembly, recently told me that maybe the reason is that “the life science industry is capital intensive and typically requires significant outside investment” and so he suspects that “it’s challenging to find the right investor or corporate structure to support the policies and procedures that B Corp certification requires.”
As part of my research of purpose-driven businesses, I recently interviewed Tinger via email following NEB’s announcement that it has recently joined that small group of B Corps in the life science industry. I wanted to understand why the company pursued certification and what benefits it receives. As he expressed, for a company that printed its very first paper catalog, in 1975, on 100% recycled paper, this achievement was a natural progression.
Christopher Marquis: Why did NEB pursue B Corp certification?
Brian Tinger, Corporate Controller of New England Biolabs NEB/Mileidy Rodriguez
Brian Tinger: NEB was founded with the advancement of science and stewardship of the environment as its highest priorities. Since the mid-1970s, NEB has worked on a number of initiatives through the company and the community that speak to this ideal, including establishing the first shipping box recycling program in the U.S., creating the New England Biolabs Foundation to foster community-based conservation, commissioning the design of a LEED (Leadership in Energy and Environmental Design)-certified laboratory, hosting science events for the community and engaging with art-based programs worldwide. As such, when we took a hard look at the B Corp mission, we recognized that our core values align closely, so it was a logical step in terms of formalizing the certification.
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Marquis: What benefits did NEB see from the certification and what did you learn by going through the process?
Tinger: The B Corp assessment helped to provide a detailed roadmap for improvements that we could incorporate into our business. We examined several aspects of our business — from the way we work with our customers to the impact on our community to the happiness and satisfaction of our employees — to really understand what we were doing right and what area we could improve upon. We found that we lacked documentation of certain metrics referenced in the B Corp assessment and by measuring these aspects of the business we’ll be in a better position to monitor our performance going forward. We also discovered opportunities to improve our supply chain management by encouraging improved social and environmental performance of our suppliers.
However, attaining certification is only the first step. We see the B Corp assessment as a way to challenge NEB to evaluate its actions and enhance its ability to use business as a force for good, not just today but 20 or 30 years from now. We foresee many more businesses embarking on this journey because awareness of our social and environmental responsibility will continue to grow.
Marquis: Why do you think there are not more life science and healthcare companies that have become B Corps?
Tinger: There are a number of reasons why more life science companies are not B Corps. Through our own research, we noticed that B Corp status is more often associated with and pursued by consumer brands, such as Patagonia and Ben & Jerry’s, so there may be a general lack of awareness in our industry. Secondly, since the life science industry is capital intensive and typically requires significant outside investment, I suspect that it’s challenging to find the right investor or corporate structure to support the policies and procedures that B Corp certification requires. In addition, every organization is different but there are always competing priorities that a business has to consider and becoming B Corp may simply not be a priority.
Ultimately, however, B Corp certification is recognition that a company is meeting very high standards of social and environmental accountability, which is something that all life science and healthcare companies should strive for.
Marquis: Why should (or should not) more science based companies become B Corps?
Tinger: As B Corporations continue to gain prominence and visibility, I think the value of B Corp will resonate strongly within the scientific community. Life science companies, intrinsically, are on a mission to use science to improve the world and make it a better place. However, just like any other industry, life sciences can also leave behind a carbon footprint, which is why it’s critical to have a more holistic approach towards corporate responsibility. As a result, aiming for B Corp certification can further expand that mission by placing more emphasis on social responsibility, corporate culture and environmental sustainability.
Long term, this has great benefits for the company as well. From attracting new talent who are equally invested in sustainability to partnering with customers who are seeking companies committed to the values expressed by B Corp.
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763b2e12b565448de54e716f54769fe0 | https://www.forbes.com/sites/christophermarquis/2021/04/21/can-corporate-america-go-plastic-free-how-1-business-is-eliminating-plastic-entirely/ | Can Corporate America Go Plastic-Free? How One Business Is Eliminating Plastic Entirely | Can Corporate America Go Plastic-Free? How One Business Is Eliminating Plastic Entirely
Eco-friendly home goods company Grove Collaborative is on a path to becoming plastic-free by 2025 Grove Collaborative
We’re familiar with the common edict to “reduce, reuse, and recycle” in order to help reduce the amount of waste we leave in the environment. And while we should all be looking for ways we as individuals can help keep our planet healthy, to truly address climate change, the greatest corporations must begin to truly and effectively address their environmentally harmful impacts.
Take plastics, for example. Even when plastic is sent to be recycled, it often doesn’t actually get reused and much of it, in fact, is thrown away. And creating virgin plastics is actually cheaper for companies than using recycled plastics in their products. All of this has led to a huge plastic pollution problem, especially considering some plastics can take several hundreds of years to decompose. Many plastics end up in our oceans and waterways, the fish we eat, and the water we drink.
With rising awareness of the harmful nature of plastics, a growing number of companies have committed to reducing their plastic production and usage with some, like Grove Collaborative, going further and working to become plastic-free companies.
“When you look at recycled plastic, is it better than what we have today? Absolutely, but it's a false choice to say the options are today's insane and unconscionable use of virgin plastic or just increasing plastic recycling,” Stuart Landesberg said. “Of course, it's better to be recycling, but that's not actually the choice that we, as an industry, have.”
Grove Collaborative is a company that sells cleaning and household products both created by the company itself and from other businesses. Recently, I spoke with Landesberg, cofounder and CEO of Grove Collaborative, as part of my research of purpose-driven companies to learn more about the process of becoming plastic free and for an update on the company’s Beyond Plastic initiative, launched just over a year ago.
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Chris Marquis: It’s been more than a year since Grove Collaborative launched its Beyond Plastic initiative aimed at reducing and ultimately eliminating the company’s use of plastics. Can you share some highlights from the first year of the initiative.
Stuart Landesberg, co-founder and CEO of Grove Collaborative Grove Collaborative
Stuart Landesberg: Sure, our plastic-free products created as part of this initiative prevented nearly 2 million pounds of plastic from entering the landfill in 2020. Additionally, by choosing our plastic-free and plastic-reducing products, our customers avoided using more than 4 million pounds of plastic.
In the last year we have launched a partnerships with Plastic Bank and rePurpose Global, which has led to the collection and recycling of 5.3 million pounds of ocean-bound plastic. Through these partnerships, Grove pays a “tax” to Plastic Bank and rePurpose Global to compensate the cost of collecting this ocean-bound plastic, giving our company a financial incentive to reduce our plastic usage. We have encouraged others in our industry to follow this example as well.
Marquis: Part of Grove’s goal with the Beyond Plastic initiative is becoming plastic free by 2025. What work goes into becoming a plastic-free company?
Landesberg: Fundamentally, it's about understanding what the true cost of your product is on society and trying to not just create a product that is positive for you and your company from a dollars and cents perspective but also takes into account the full cost of externalities.
For us, the biggest externality is plastic. So that was why we wanted to become plastic neutral and ultimately plastic free. As I mentioned earlier, we put a tax on ourselves and other companies to create an economic incentive for getting out of plastic, but obviously it can't stop there. We do have efforts focusing on carbon and water and all the other pieces that matter from an impact perspective. When people ask me, “How do you get started in building an ESG program that's impactful but also achievable?” To me, it's really about addressing the biggest impact of your product.
There's an 80-20 rule from an impact perspective. How do you find whatever the 20% is that's driving 80% of the impact? I think, for us, on the plastic side, it really is about how can we — not to sound like a kindergarten teacher — reduce, reuse, recycle? But like we all know, recycling plastic is not really working, so we offset. And offsetting is not a solution, but it's something that at least prevents us from tipping the scale any worse than it is already tipped until we can solve the problems. But we much prefer to reduce the size of our vessels and pull water out of products, so we can avoid plastic packaging and make them less harmful to the environment. One example of this is Peach, a line of waterless, plastic-free hair and body products we developed.
We really do try to offset our impact, but neutrality is a last resort for the places where we can't either reduce the overall footprint of the product or remove water entirely so we don't need plastic.
Marquis: What are you doing to help your supply chain partners and other companies reduce their plastic usage and ideally go plastic free?
Landesberg: This is such a good question because the supply chain is invisible to so many people. We have the opportunity to be influential across the supply chain in a host of ways. We're a small player today, but for many of our partners on the supply chain side, we are one of their larger customers. So we can push them to improve their impact.
When we work with factories, we do audits. If we have a red flag come up in an audit, rather than ditching that factory and saying, “Okay, cool. Someone else can use this factory that is polluting,” we will incentivize them to fix the problems, which we think is significantly better than just allowing the problem to continue and now it's someone else's problem. We want to actually fix it, so we invest real resources to both factory audit and remediation where we see issues.
Probably more exciting than that is how we work across the supply chain to build the infrastructure that's going to allow a new generation of product and that's twofold. Number one, we advocate with our supplier base for new formats and new forms that are more environmentally friendly, for example moving from plastic to aluminum when possible.
Number two, we lead a plastic working group, which is made up of over 60 companies from across the industry. Some companies are much bigger than us, some companies are much smaller than us, and some companies are about the same size. All of these people bring their best ideas. And we're all businesses, but it's not a business-oriented group, it is a solutions-oriented group. That allows us, and I think other players in the industry, to put our efforts together and be able to feel like we're not going to be on an island or the only person rowing the oars. We then can share good ideas and good innovation.
So I think, from a supply chain perspective, there's both the blocking and tackling work, which is really important, and then there's collaborative innovation. Collaborative is the second word in our company name because I believe in that deeply. I've said it many times, and it's totally true, if Grove were to suffer because every product from the world's largest consumer packaged goods (CPG) company went zero plastic, then that would be an awesome outcome. But it is really hard to get out of plastic, so I am inspired by the collaboration that we have with other companies and am amazed and humbled that Grove organizes it.
Marquis: What are some of the product innovations that you see being able to replace plastics in the future? And what will it take to make those products mainstream?
Landesberg: We don’t know which plastic-free products will become mainstream winners with the consumers, because plastic free consumer products are still a very new concept. This is one of the places where I feel that Grove is so differentiated from many because we can have an active dialogue with our consumers to help us get plastic-free CPG products mainstream. Maybe in 20 years, we'll all be using dissolvable hand soap sheets where there's no water in them, you can ship them in paper really easily. Or maybe if liquid hand soap is still popular we’ll be using liquid hand soap that's in aluminum-based containers. Or maybe everybody will move to bar soap, so we'll see where consumer preferences go.
One of the beautiful things about Grove is it was built to be able to participate in all parts of that transition and to be able to meet the consumer where he or she or they are. And not say, “Hey it's our way or the highway,” in terms of using this next generation product. We really want to meet consumers wherever they are in their sustainability journey and celebrate the fact that they're putting their finger on the scale for better.
Probably at some point, that will mean we’re using all water free substrates in one form or another, but liquid hand soap is still far and away the preferred form, for better or worse. In bringing consumers on the journey from single-use plastic to zero waste, we don't know what the endpoints are going to look like. We are willing to meet the consumers where they are on that journey.
When you look at recycled plastic, is it better than what we have today? Absolutely, but it's a false choice to say the options are today's insane and unconscionable use of virgin plastic or just increasing plastic recycling. Of course, it's better to be recycling, but that's not actually the choice that we, as an industry, have. The choice that we, as an industry, have is, “Do we want to be using a material that is so environmentally destructive or do we want to try to reduce the overall amount of packaging and choose materials that can be as close to a closed loop in recycling as possible, like aluminum and paper?”
I think plastic recycling is such a wonderful distraction for consumers. About 9% of plastic is actually recycled. I see that everywhere now. But it's just a really wonderful distraction that allows the consumer to distance him or her or themselves from the negative impact of the single-use product that they're consuming. So I think you have to reject the false choice of recycled versus virgin plastic.
In addition to all of this, there's a lot of talk right now around how some of the largest CPG companies are putting the onus on consumers to recycle or change their behaviors to drive sustainable change, and that they are responsible for the sustainable future that we're all trying to create. It obscures the companies’ responsibilities.
Ask the question in a different way, which is, “If we believe that we're on the brink of a number of environmental crises, what's the business model that's going to allow this industry to not add to this mounting environmental crisis that the world is facing?" And the solution to that question is zero plastic and as little packaging as possible as fast as possible.
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4e35960c380d208be7bb6d1eb21ef281 | https://www.forbes.com/sites/christophermarquis/2021/05/02/producer-of-organic-pasture-raised-eggs-becomes-a-b-corp-but-doesnt-stop-there/ | Producer Of Organic Pasture Raised Eggs Becomes A B Corp (But Doesn’t Stop There) | Producer Of Organic Pasture Raised Eggs Becomes A B Corp (But Doesn’t Stop There)
Handsome Brook Farms © Michael George Photography 2019
The scale of production for the humble little egg is much more massive than most people realize. There are 394 million laying hens in the U.S. flock as of March 22, and they produce more than 8.6 billion eggs each month. And yet, only about 15% of these are organic.
Why is organic important? The organic label covers what the hens eat (organic, pesticide-free, non GMO feed) and where they live (in pastures with no toxic chemicals or pesticides). In addition to being healthier to eat, organic practices help ensure that the earth is healthier for generations to come because there are no pesticides to run off into the groundwater during rains or herbicides to contaminate other nearby fields.
However, it's worth noting that organic is only one piece of the puzzle. The label, unfortunately, doesn't guarantee that chickens have space to roam. Recently I talked to Matthew Sherman, the Chief Marketing Officer at Handsome Brook Farms, and he explained that the organic standard only requires hens be cage free, not that they have lots of outdoor space. He emphasized that in raising hens, it's important to combine organic with "pasture-raised" and as a result how the farm uses its land comes into play.
For more on why regenerative farming is essential to the future of sustainable agriculture, and the company’s recent B Corp certification, please see below for edited excerpts of my email discussion with Sherman and Kristen Wharton, Vice President of Corporate Responsibility at Handsome Brook Farms.
Christopher Marquis: Can you talk a bit about your specific B Corp certification process? What did you learn? Did you change anything in your operations as a result?
Kristen Wharton: As a young company, we did a lot of things that were part of the B Corp certification process… but we documented and formalized much less of it. For example, we have always donated eggs, but the process was haphazard by anyone who wanted to donate to whomever — there were no guidelines. Now we have a Philanthropic & Community Investment Policy & Procedure that has guidelines regarding to whom we donate & when we have charitable initiatives, plus our COO is now tracking the in-kind donations with a real dollar amount so we can see annually how much we donated. Best of all, we are much more focused on our giving so that it makes an impact.
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The same holds true for things like hiring interns, onboarding and off-boarding procedures, DEI initiatives, employee wellness, etc. B-Corp pushed us to formalize and codify processes that were often there, but not written and fully evaluated.
On a more operational note, while we have always held the environment to be a part of our decision-making, now we have documented what is most important and created firm goals and processes to get there, which I’ll get into more below!
Marquis: You say that B Corp status is just the beginning — and that looking at it as an end goal could actually be dangerous for the future of our country’s sustainability. Can you say more about what you mean by this?
Matthew Sherman: Definitely. B Corp is an incredible certification, and we’re incredibly proud to be in the midst of other companies doing good work — whether that’s for their employees, their communities or the environment. That said, we don’t believe that reaching this goal allows us to stop and remain complacent. In fact, even B-Corp operates on a sliding scale in how it judges companies, and we have room to improve. But that is not always what the consumer sees. That is why, if we’re going to continue to improve the lives of those around us, we need to evolve our policies and set new, aggressive goals so that we continue to move forward beyond B-Corp.
This is especially true when it comes to sustainability — which is something that can always be improved. That’s why, along with this B Corp certification, we’re announcing a comprehensive series of next-step sustainability initiatives focused on Regenerative Farms (e.g. regen ag practices on all partner farms), Responsible Operations (e.g. 100% sustainable packaging), and Thriving Communities (e.g. reduce GHG emissions) to achieve by 2027. Additionally, and perhaps most crucially, we’re launching a Pasture Improvement Cost Share Program – created to incentivize/aid our small, family-owned and operated partner farms to implement sustainable systems that actually work for their specific needs and thrive for generations to come (rather than a cookie cutter, one size fits all approach that fails to prioritize what’s best for the farmer, and ultimately, the planet).
Marquis: Why is this certification important specifically for agriculture (+ eggs specifically)?
Sherman: When it comes to dangers facing our planet, climate change is right there at the top. Clearly, agriculture — if not handled sustainably — can be an enormous contributor to climate change. This is why B Corp certification is particularly important for agricultural companies and specifically those working with animals of any kind. Part of this B Corp certification is a commitment to more rigorously defined sustainability practices, something that is lacking in this space on a broader scale. If more major companies got on board with these commitments, we could start to see some real shifts.
Handsome Brook Farms farmer plants tree on Kentucky pasture as part of the company's regenerative ... [+] program Left Field LLC
Marquis: Can you discuss your commitment to regenerative practices? How does this play out in your operations both daily and over the long term?
Wharton: While our handsome hens are far (read leaps and bounds) gentler on the earth than high impact factory farming and using conventional chemicals, they can also be mildly destructive if not watched closely (thankfully, on our farms, they are)! An example: While not exclusively grass-eaters, hens love to pick away at pasture grasses day by day. Their sharp little beaks also tend to peck at plants, grass, and soil in their quest to explore, which can quickly deplete a once vibrant plot of vegetation into bare dirt. This is especially true near to the barn, where rain run-off can also contribute to soil erosion.
With that said, a big part of our regenerative role at HBF is to balance out the impact of our hens on Mother Earth. Some examples include: Restoring grass and plants on a regular basis while also taking preventative measures to avoid overgrazing—this means not only planting fresh shade trees and shrubs, but rotating the space in which the hens graze (“rotational grazing”). It can also include restoring soil health by planting “cover crops” to avoid having bare soil exposed (which can lead to soil erosion) & installing proper gutters and downspouts to help water flow gradually away from the barn, avoiding erosion.
Finally, as mentioned earlier, we’ve just announced a series of goals to achieve by 2027 - the first of which is tied to regenerative agriculture. Our goal here is to advance regenerative agriculture practices across 100% of the farmers in our network using the supporting tactics mentioned above, plus others like hen manure management, on-farm workshops, and implementation of renewable energy sources.
Marquis: What's next as far as sustainability practices at HBF? How do you make sure your farmers can achieve new goals you set?
Sherman: This series of goals for 2027 in our core focus. In addition to to advancing regenerative agriculture practices across 100% of the farmers in our network, we working toward 100% sustainable packaging by increasing the post-consumer recycled content in hybrid cartons, changing our jumbo egg cartons from plastic to pulp, and partnering with How2Recycle for carton labels and using minimal and thoughtful sourcing of virgin fiber (i.e. never from high conservation value forests). We’re also taking steps to reduce greenhouse gas emissions intensity by 10% across our supply chain by partnering with 3rd party reduction strategy advisors and defining Handsome’s carbon accounting methodology.
To ensure that our farmers can meet these goals without it being a major burden to them personally, we’re simultaneously launching a Pasture Improvement Cost Share Program. We work with 100+ small, family-owned and operated partner farms, and every single of one of them is unique. This cost share program allows each farm to take stock of their terrain, their infrastructure and their hens and invest in exactly what they need to meet the goals we’ve set. This is important, because goals set without aid or issued with a one size fits all approach often means they fall flat. Customization is key for efficacy here.
Marquis: What do you hope to see from other egg producers/farmers when it comes to regen ag & sustainability?
Sherman: First of all, a commitment to evolving along with a growing body of research is incredibly important. We’re not claiming that we have all of the answers at any given time, but we have a team here that is focused on staying on top of new learnings about regenerative agriculture and sustainability more broadly so that we can adapt accordingly.
On this note, oftentimes sustainable solutions are… well, not so sexy. I’m talking about adding quality gutters, planting grasses, managing hen manure — these aren’t initiatives that are photogenic or that you’ll see highlighted in the headlines. That said, I’d love to see more people talking frankly about what these real environmental commitments look like to help raise awareness and educate those who are unfamiliar with what it takes, and why.
Finally, at the risk of sounding cliché, one aspect that’s really lacking when it comes to farming & egg production, specifically, is transparency. Labels are confusing (and often meaningless), and this is intentional in order to mislead consumers into thinking they’re making responsible choices. I’d love to see more commitments to (and regulations around) transparency across the board (i.e. being clear about what things like “cage free” and “free range” actually mean, and eradicating meaningless labels like “all natural”). This way, consumers can become more active in selecting the brands in which they want to invest, thereby supporting sustainable initiatives with their dollars.
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de999432bae41134f0eae7ba16d5cf84 | https://www.forbes.com/sites/christophermarquis/2021/05/03/lemonade-bets-on-trust-and-transparency-to-gain-customers-and-transform-the-insurance-industry/ | Lemonade Bets On Trust And Transparency To Gain Customers And Transform The Insurance Industry | Lemonade Bets On Trust And Transparency To Gain Customers And Transform The Insurance Industry
Lemonade attracts investors and consumers with an innovative insurance model built on tech, trust ... [+] and transparency Lemonade
With an innovative business model that aims to transform the insurance industry, Lemonade is attracting customers and investors with its technology- and transparency-driven products. Rooted in its values as a Certified B Corporation and public benefit corporation, the startup insurer builds its business on a give-back system that allows customers to select nonprofits that receive any unused premiums.
Lemonade cofounder and CEO Daniel Schreiber says that by donating that money rather than keeping it as profit, the company produced more than $1 million in donations in 2020. It’s a practice that he says goes against the industry’s traditional relationship with customers.
“I don’t think about what we’re doing as being charitable in the traditional sense of the word,” he says. “We do give money to charity, we do partner with charities, and in so doing we are solving an absolute business challenge, which is that insurance companies are deeply distrusted.”
The New York City-based company made waves last summer with its debut on the New York Stock Exchange as the second public benefit corporation and B Corp to do so. In addition to this investor attention, Lemonade is attracting customers looking for a new way to insure their homes and lives. The insurer finished 2020 with over one million customers, a milestone that Schreiber says takes other companies much longer to achieve. Lemonade also is growing geographically, with expansion to Germany, Holland, and France in the last 18 months, and adding products such as term life insurance and pet insurance.
Schreiber says Lemonade’s intention to do insurance differently gets at the conflict inherent in the product.
“There is an asymmetry of power: You’ve given me the money; I have it. You feel disadvantaged because it’s not a level playing field. I’ve been collecting your premiums for the last 10 years, now you’re trying to get them out. There is an asymmetry of information: You don’t really know what the policy says; I do,” he says. “That’s what we were contending with in founding Lemonade: How do you create a trusting and trustworthy brand in a domain where the fundamentals of the business are designed for conflict of interest?”
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As part of my research on purpose-driven business, I recently spoke with Schreiber about Lemonade’s intentional approach to doing insurance differently and why that strikes a chord with investors and customers. Below are excerpts of our conversation.
Chris Marquis: How did the concept of Lemonade’s Giveback program originate as a new model for the insurance industry? And how does it enable collective impact and large-scale giving for your customers? Does this product tend to attract younger customers or a range of ages?
Daniel Schreiber, cofounder and CEO of Lemonade Lemonade
Daniel Schreiber: Coming into the sector, we were trying first of all to determine why insurance companies are so deeply distrusted. We have plenty of data that show people don’t trust insurance companies, and this can elicit nefarious behaviors — a willingness to lie, to defraud — by upstanding citizens. For myself and my co-founder, who didn’t come from the world of insurance, that was perplexing and intriguing. When we started the company, I talked with a Nobel Laureate in game theory and another one who has a Nobel Prize in behavioral economics. We ultimately reached the conclusion that the problem isn’t with the players, it’s with a game. There’s something structural about insurance that produces these predictable results.
Just saying, “Oh I’m going to be better behaved, trust me because I’m a good guy,” doesn’t get you anywhere. Broadly speaking, if you understand incentives, and you are running the insurance company, you’d get the same kind of behavior patterns emerging pretty quickly. The fundamental problem is I make money by denying your claim. So I have a fundamental interest in you not being paid. I’m simplifying things, but it’s a zero-sum game: One of us is going to be $1,000 richer, one of us is going to be $1,000 poorer, and so long as that’s the case there’s a problem.
But we joined forces early on with Professor Dan Ariely, who became our Chief Behavioral Officer. He wrote a book called The Honest Truth About Dishonesty. He spent 10 years researching what it is that makes us willing to lie and be poorly behaved and reached the conclusion that, if you set out to create a system to bring out the worst in humanity, it would look a lot like the insurance market. All the things that his research found made us feel fine with lying or stealing were manifested in insurance companies.
That’s where the Giveback came in — to change insurance from a conflicted bilateral game to a trilateral game. By adding a nonprofit to the room, we change the very fundamentals of the dynamics and other incentives. We tell you up front that our profit is not going to depend on how many claims we pay. We’re going to take a flat fee from the monthly premiums, 25 cents on the dollar, that’s how much we’re keeping. The rest we’re going to use to pay your claims. OK, but what if there’s money left over? We’re not going to pocket that, because that is the very money that poisons the well. If there’s money left over, it’s going to go to a charity of your choice. That changes my incentive, because I don’t make money by denying your claim.
We also want to pay claims pretty quickly because we don't want a protracted process that wastes money. Therefore we pay about a third of our claims in three seconds — algorithmically, automatically — and that also changes your behavior. If you’re coming to make a claim against a nameless, faceless behemoth in a conflicted relationship, you may feel entitled to embellish a claim. But if you feel like you’re going to be taking money from the soup kitchen where you volunteer on Sundays or whatever it is, that will moderate your behavior; that is what it’s all about.
Marquis: So how does your model account for large disasters, when bigger pools of money may be needed?
Schreiber: What if there’s not enough money? The answer to the question is something called reinsurance. We’ve created a financial structure called reinsurance where we pay 75% of the claims, but if the claims exceed that 75% threshold, the real money comes from reinsurance partners. You as a consumer don’t know this, because you get paid by us either way. It’s behind-the-scenes counting. We will pay every year a little bit to flatten the curve, so that we lose money most years on reinsurance but it is there for those times.
Marquis: As a B Corp that recently went through a successful IPO, your company is often pointed to as evidence of the market’s growing acceptance and shift toward stakeholder capitalism. What challenges did Lemonade face during the IPO process? What unique considerations did the company face as a benefit corporation/B Corp? What advice or tips would you offer to other B Corps considering a public offering?
Schreiber: We’ve been a B Corp since the get go, pretty much. It’s not something I even think about, it is just, “This is what we are. This is what we do.” It’s something that we’re proud of. During our IPO, we talked about it, and it didn’t engender pushback or questions or concerns.
I do think that people should work hard at creating that kind of win-win. It’s good to be able to build a business model where the act of giving something to the wider community isn’t at the expense of your shareholders. Otherwise, you create unhealthy tensions and frankly put a glass ceiling on how much good you can do, because at some point it’s not a social good to take money from one investor and just donate on their behalf. For us, Giveback is not a bolt on like one-for-one giving. There’s the whole “giving a fish versus teaching to fish” kind of dynamic. The more you can match it in your business in a way that becomes self-serving — in the positive sense of the word — that’s good.
Marquis: Lemonade’s S-1 disclosure says B Corp status is crucial for internal culture and the business model, but it also says benefit corporation status may be a negative risk that reduces profit and creates potential takeover opportunities. How do you reconcile this dichotomy?
Schreiber: The S-1 is a disclosure document, where you put in everything but the kitchen sink — every concern anybody could have, because you don’t want somebody to complain later. That’s the nature of the document. Lawyers like covering all the bases: This could go wrong, and this could go wrong, whatever could happen.
Early investors in public markets attract all kinds, but we were issued by Sequoia Capital and Softbank. So these are profit-maximizing investors. It’s not that they don’t have values, but that’s not their primary mission in life.
I actually don’t apologize to our shareholders for B Corp or for Giveback, and I don’t get pushback on this, and this was not a bone of contention on the road show. The S-1 also includes our founders letter, which we call our “Lemonade Stand.” Being a public benefit corporation gives us legal protection against shareholders suing us and saying, “Oh, you gave money to that charity or nonprofit, you should have spent it on more marketing or more technology.” So we do have a legal framework that allows us to think about stakeholders beyond our shareholders, but I’m quite convinced that this is entirely in the shareholders’ interest, ultimately.
Early investors in public markets attract all kinds, but we were issued by Sequoia Capital and Softbank. So these are profit-maximizing investors.It’s not that they don’t have values, but that’s not their primary mission in life.
There’s no question that we’re doing the right thing by customers in engendering trust. I wouldn’t want to be generous with somebody else’s money; I can be generous with my money. We are building shareholder value by solving human problems that manifest in share price. So I don’t have to apologize for the money that we pay to charities, and our shareholders buy into that. Those who don’t believe it don’t buy shares in the first place.
Marquis: The growing climate crisis has experts predicting more severe weather events. What practices/policies does Lemonade have to address climate change and mitigate this risk, some of the conflicts of interest that you mention?
Schreiber: In 2018 we took a stance and published a statement that we will forswear investment in any polluting industries. Insurance companies are big investors; they are the second-largest supporters of the coal industry and other polluting industries in America. It’s stunning — half a trillion dollars of insurance premiums are invested in producing the very problems that they’re insuring against.
If you think about it, it again raises the self-interest issue. The chances are pretty high that the very things that you’re trying to protect me against are made worse through pollution and climate change. We took refuge in the fact that we are a public benefit corporation, and nobody can say anything if we take a strong position on this. Normal corporations could do it as well, but we felt that we actually had a duty, legally, to think this through and position ourselves.
I think we are still the only insurance company in America that has taken that strong position. We did something very similar on guns. We got a tremendous amount of hate mail around this, but following the massacre in Vegas we issued a position that we will not insure automatic weapons, and we will cap coverage of firearms to $2,500; people who have big collections should go to our competitors. We also limited coverage to guns that are responsibly stored and responsibly used.
We do take the B Corp and benefit corporation values seriously. So we take controversial positions on things like climate change and gun control.
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bc1097e7ee084ffc717a7f574e0a126b | https://www.forbes.com/sites/christophermarquis/2021/05/04/remaking-marketing-centering-the-business-itself-in-purpose-for-long-term-success/ | Remaking Marketing: Centering The Business Itself In Purpose For Long-Term Success | Remaking Marketing: Centering The Business Itself In Purpose For Long-Term Success
Global Prairie is an employee-owned strategic consulting and marketing firm that helps clients ... [+] identify their purpose and engage their stakeholders Global Prairie
When family ties led to moves to two new cities, colleagues Anne St. Peter and Douglas Bell decided to seize the opportunity to build a new marketing consulting enterprise with what they call an “inside-out approach.” In establishing Global Prairie in 2008, they built an employee-owned firm designed to help clients identify their purpose and engage their stakeholders around it.
Now, with offices in nine cities around the globe — including their respective offices of Kansas City and Cleveland — St. Peter and Bell have further baked purpose into Global Prairie’s DNA by becoming a Certified B Corporation and adopting public benefit corporation legal status, both of which ensure the company is managed in a way that delivers value to all stakeholders. In its recent B Corp re-certification, Global Prairie scored 168.4 on the the B Impact Impact Assessment, and is now the 4th highest scoring B Corp in the world.
“We believe it’s time for a global marketing consulting firm such as Global Prairie to become more engaged in the global dialogue about conscious capitalism, and about stakeholder value versus shareholder value,” St. Peter says. “This conversation has mainly involved investment firms, business journalists, and academia, but given marketing’s role in engaging stakeholders, firms like ours have an important voice going forward.”
From the start they incorporated purpose by consciously adopting a long-term vision of success rather than seeking short-term financial benefit, St. Peter says, and that foundation serves as a steadying force in an ever-changing industry. As part of my research on purpose-driven business, I recently spoke with St. Peter and Bell about Global Prairie’s history and their belief in doing meaningful work as well as building financial success for their entire team. Below are edited excerpts from our conversation.
Christopher Marquis: How does prioritizing a stakeholder approach change how you market for your clients? How do you choose your clients? Do you have any filters, based on your own company's values and mission?
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Douglas Bell, Co-founder of Global Prairie Global Prairie
Douglas Bell: We looked at building the company from the inside out and talked about culture. First, we focused on the office environment and the experience we wanted for our team. That allowed us to pivot from our colleagues to our clients. We are dedicated to expressing our gratitude in meaningful and thoughtful ways, whether it be celebrating business or personal milestones or sending a Giving Card to clients so they can donate to a charitable organization they are passionate about.
Anne St. Peter, Co-founder of Global Prairie Global Prairie
Anne St. Peter: We set out to work with people who shared the notion of business as a force for good by working in purpose-oriented sectors: human health, animal health, environmental sciences, sustainability, philanthropy, and education. That alignment also presents an enormously clear filter of the organizations and sectors that we will not work in. At the start, we had some opportunities with big paychecks attached and we had to ask ourselves, “Do we want to take the money, or do we want to stay true to our purpose and values?” This purpose alignment gives us a nice clear line of sight. Building a culture with purpose at our core is part of our strategy, and the longer we are in business, the more clients come to us because of our purpose orientation. With the growth of the B Corp movement and the focus on having a broad base of stakeholders versus shareholders, people are seeking us out as pioneers in this space, and it’s nice to see that trend.
We had other opportunities in the interim. In years three to seven, we had offers from larger companies to purchase us. In the agency world there has been tremendous consolidation and in the last 20 years large publicly traded holding companies have been formed. There is a cycle where entrepreneurs get an idea, leave a big holding company to start an agency, and then after they have grown a bit they are gobbled up by the big companies and the cycle starts again. Instead of selling, we decided to sustainability and go for the longer term strategy, one that allows us to not only build wealth for our employee owners and their families, but also do something better for the world. In short, we wanted to make our colleagues and our children proud of the decisions we made along the way.
Marquis: How did you come up with the idea of starting Global Prairie?
St. Peter: Working at a large media agency headquartered in New York City, the notion was it’s all about competition, and at some level you start to look across the board and the agencies all become almost interchangeable. A business that is supposed to be about individuality and creativity becomes instead focused on scale and size.
I have two parents who are physicians. Growing up, people would come up to me and say, “Your parents saved my child’s life.” It was a profound experience and reinforced the value of meaningful, purposeful work. Doug and I were raised in the Catholic faith with Doug attending Jesuit schools — so we both appreciate the Jesuit philosophy of “men for others.” When Doug and I first started working together, we would talk about wanting more purpose and meaning in our work and our lives.
We read about the launch of the B Corp movement in 2007 and saw an opportunity to bring this movement to the world of consulting and build a differentiated agency. Doug and I decided to write a business plan, secure funding, and build the first global marketing firm that is a B Corp, a legally certified public benefit corporation, and a 100% employee-owned company because we were disenchanted with the concentrated wealth of the holding companies. We decided that Global Prairie would work towards becoming 100% employee owned and that we would take a long-term approach with a goal of selling to our employees downstream.
Marquis: As a Midwest-based B Corp, do you find yourself in the company of many other purpose-based businesses? Are B Corps known and recognized widely in the Midwest, where there is the lowest concentration of B Corps in the U.S.?
St. Peter: There’s something special about the Midwest — a community mindset, an incredible work ethic and a strong desire to take care of others — that I heard about growing up. I think this spills over into the ethos of the businesses in the Midwest. When I moved to Kansas City, I was lucky to be surrounded by Kansas City entrepreneurs like Henry Bloch (Founder, H&R Block), Don Hall Sr. (son of the Founder, Hallmark), Min Kao (Founder, Garmin), Jim Stowers (Founder, American Century), and Neal Patterson (Founder, Cerner). I consider myself enormously blessed to have watched them build and sustain their companies and I learned so much. They were focused on the success of their companies, but they were also enormously grateful to our Kansas City community, for being such a fertile ground for their organizations. They all gave back to the Kansas City community in impactful ways. It is expected that Kansas City business leaders show up and participate in making certain our region continues to grow and thrive both now and for future generations.
While we were growing Global Prairie, I served as the chair of the board for both the Kansas City Chamber of Commerce and the Greater Kansas City Community Foundation, and served on the boards of the KC Area Life Sciences Institute and the KC Area Development Council. These collaborations with other Midwest CEOs served to reinforce our belief in purpose-oriented businesses. This community engagement helps foster a really wonderful ecosystem that reinforces a collaborative business culture in Kansas City and frankly makes Global Prairie even stronger. It reinforces for me the notion that healthy businesses and healthy leaders don’t go at it alone. If your goal is to build a better business, it is mandatory to show up and help lead in your community — and support one another.
When we launched Global Prairie, we made a commitment to donate 10% of our profits annually to causes our team is passionate about. The Greater Kansas City Community Foundation worked with us to establish our Global Prairie philanthropy strategy, which entailed every Global Prairie employee getting their own donor-advised fund allowing them to decide how much money to donate, paycheck by paycheck, to philanthropy. We actively encourage our Global Prairie employee owners to be philanthropists and want to show them how easy it is to be philanthropic day in and day out.
As for the dearth of B Corps, we’ve found that Midwesterners are not big on labels and logos and brands. Midwesterners let their actions speak louder than words. Part of overcoming this reluctance to adopt the B Corp label is education and explaining the value and power of being part of the B Corp movement and then celebrating it. Once I explain what the B Corp movement is and how important it is, every Midwestern CEO says, “We’re doing this.” It’s the movement that most people don’t know about, but the idea of incorporating stakeholders into business decisions is gaining traction and awareness.
Bell: We heard the very same things in Europe about B Corp as we were launching our brand there: “The B Corp movement is a U.S. branding technique; but it’s the fundamental way we do business in Europe.” Lo and behold, global organizations like Danone and others of that caliber are now converting to B Corps and recognizing the importance of not just saying that’s what you do, but being open about it and transparent about how you choose to do business.
St. Peter: A data-driven approach works with CEOs, letting them know that the B Corps and the 100% employee-owned companies that truly have a broad stakeholder group are outperforming their peers, particularly in challenging times, like the pandemic and the 2008 recession. Since we launched Global Prairie in March of 2008, we have proof points about how we’ve outperformed our peers with 13 years of year-over-year growth and a higher-than-average employee retention rate. We are convinced our performance is attributed to the alignment of purpose, the needs of our stakeholders, especially our employee owners and really being able to tap into the B Corp and employee owner mindsets.
This has become even more relevant in the marketing industry, where traditional agencies are feeling the largest effects of the disruption of technology — from the digital revolution to the fragmentation of media, programmed media buys, to viewers cutting the proverbial cord, to the disdain for interruption advertising, to the disruption of Facebook. Audiences now have virtually unlimited, on-demand options for media consumption. Today, customers have different relationships with brands and higher expectations, and they are seeking to align with companies that have purpose and share values similar to their own.
Marquis: When large data “battles” between tech giants, like Google, Apple and Facebook, put user privacy and data collection and advertising through an ever-changing set of rules, does a more purposeful approach offer any advantages?
Bell: There are at least two elements to that question. Speaking to the global perspective first, about 10 years ago we invested in our ability to collect and analyze data. We work with clients in highly regulated industries, in terms of privacy issues and other big-picture issues around communicating the awareness of the collection of data and meeting the threshold of what’s necessary to do that. In life sciences and healthcare, the power of that information for good is tremendous. We’re creating larger data sets that are more powerful without transcending or going across boundaries that we shouldn’t be crossing.
The second point is, I think, the more difficult one, and one that I’m not certain we’re going to shape as much — addressing the underlying business model of companies like Facebook, changing the underpinnings of that business model that basically allows those organizations to grow and thrive. I’m not certain where that’s going to land, but I do believe that is an underpinning of the problem: The very thing that generates the wealth of the shareholders of Facebook is the very thing that may be causing systemic problems.
I have hopes that there are ways to change it, and maybe some of it has to do with our responsibilities as parents and society, to having a closer hold on how we choose to engage with those social media and social data experiences.
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9f227fd7e1c39e3ad30efa508f13b6e1 | https://www.forbes.com/sites/christophernelson/2015/06/03/how-i-picked-70k-as-my-companys-new-minimum-wage/ | Dan Price: How I Picked $70K As My Company's New Minimum Wage | Dan Price: How I Picked $70K As My Company's New Minimum Wage
Dan Price of Gravity Payments created a bit of a stir last month when he announced that he intends to raise the minimum salary for his employees to $70,000.
Last week I explored the question of whether you can buy your employees' happiness. I quoted Price in my article, but since he was kind enough to submit to an interview with one of my colleagues, Kristin Kloberdanz, I thought it would be informative to let him speak for himself.
I have decided to run the entire interview here because Price shows a degree of thoughtfulness, grace and concern for community that I hope may become characteristic of our future leaders. What follows is a slightly condensed version of his response, in which he explains why he settled on the $70,000 figure.
Kristin Kloberdanz: You’ve obviously made your employees quite happy with your recent news to boost the minimum wage at Gravity Payments to $70,000. Did this decision result from a great deal of discontent about wages in your organization?
Dan Price: Since starting Gravity Payments, a series of moments over the past 12 years led me to my decision. When I first started out, I was only able to pay my first hire $24,000 with no health benefits. Because I had limited ability to pay what I wished I could, it was my mission to provide the team with a world-class learning experience. But I still felt horrible about that wage. It would eat away at me that I couldn’t pay more. I promised myself I would do the best I could to solve that problem as soon as possible.
Then in 2010, I read a Princeton study that basically states the magic number for happiness is somewhere near $70,000. Dollars over $70,000 don’t really have a positive influence on happiness. Making less than that actually has an impact on your emotional health. But dollars up to $70,000 per year do have a huge impact on someone’s happiness. You could afford more over $70,000, but dollars over that amount don’t really make an impact on emotional well-being. You can afford more luxuries, but your basics needs are covered at that point.
After reading that, I crunched some numbers to see if the company could afford to do this. Although we were successful and growing, at that time we couldn’t make it work.
Then two months ago, I went on a hike with a friend near where I live in Seattle. She started talking about how her rent would be increasing by a few hundred dollars a month, and she was worried how she was going to financially afford this. She is someone who is just as smart as me, works just as hard as me and had served three tours in the military. I thought, here I am making a million dollars a year while she’s just trying to figure out how to make ends meet.
When I got home, I again started crunching numbers to see if I could make the “magic number for happiness” work this time around. I realized if I cut my own pay down and used company profits, we could set a new minimum wage at $70,000 per year.
Some people thought I was insane when I told them my idea, but I believe this will have a positive impact not only on business but society. I’ve always believed we need to do what is right, to put skin in the game, for the benefit of the greater good.
Kloberdanz: Was there a particular moment that made you connect the article you read on happiness with your own employees? Did you look around and realize that your employees seemed unhappy?
Price: My company is located in Seattle, the first city to have a government-enforced minimum wage increase. Many of my colleagues at Gravity are in a variety of support positions that typically pay about $40,000 per year. Although their salaries represent competitive market pay, they are still struggling to get by in a city that has become increasingly unaffordable.
Seattle is a wonderful place in so many ways, but one of the worst when it comes to affordability. Most need to make $40,000-$70,000 to get by, with the expectation they’ll have to pay an average of $1,266 in monthly rent. When I calculated that out, I found the majority of my team is contributing over 40% of their monthly income to rent. Experts consider housing costs over 30% to be unaffordable.
When I thought about all of that, I felt guilty.
Every team member at Gravity is all about serving others and making sacrifices to help our clients. They’ve canceled Friday-night dates, stayed over at a client’s business to make sure their system was working properly for opening day, and woken up at all hours of the night to answer phone calls from clients in emergencies. I wanted to enable more of that type of activity, but realized the payoff wasn’t so great for them.
If I’m paying my team below the Princeton study’s “magic number for happiness,” there’s a huge gap where they could be happier, and in turn make their job an extension of their values, rather than a place they go to make ends meet.
My team understands the importance of investing time in long-term relationships with our clients; the sacrifices they’ve made have doubled our profits over the past few years. I’m fortunate to work with like-minded people who are passionate about emotionally connecting with our clients and doing more while asking for less.
Kloberdanz: Your father was a business consultant and motivational speaker. Did he have any influence on how you lead and run your company?
Price: My mom and dad both work really hard and continuously set a great example for me. More specifically, my dad had a short stint in the credit-card-processing industry. During that time, I was able to look over his shoulder and help figure out a way I could apply business lessons I learned from him and the Idaho community where I grew up.
Rural Idaho was influential to me in many ways. We had an ethos of small business much different than you see in bigger cities. At that time, my idea of business was what I saw from my dad, my family and the Idaho community, which was basically that business is about service. It’s not about taking for yourself, but instead giving to others.
You should strive to give the most value you possibly can to your clients and to your community while charging a fair amount, or less than a fair amount, because you want to give back. That was the way I learned to do business. Some people might say that’s the stupidest business model in the world, but to me it made sense. And it still makes sense today.
Kloberdanz: Do you feel that your peers in business and leadership are looking for new ways to build companies that are good to their workers and to the surrounding communities? Or does it seem more like you are looking to the past, perhaps to your parents’ generation — the old Rotary clubs, for instance — as a roadmap?
Price: There were a few critics who came out after the $70,000 minimum wage decision who said everyone who works for Gravity is going to be on food stamps, is going to be on welfare, and this will kill their drive and motivation. They said human nature will take over and the company is going to implode and will forever be an example of how to destroy a company and a society.
Funnily enough, I think those critics are half right. I appreciate that what they say holds a lot of merit. But what those critics are doing is appealing to the part of human nature we’re moving away from. I think this decision is appealing to the part of human nature we’re moving toward. I think we underestimate the quiet strength inside of us that says “Always do the right thing” and “Always live by your values.”
The latest science seems to indicate money is a decent motivator. It’s probably four or five on the list. So what is truly motivating to people? In today’s society, we want to be part of something bigger than ourselves. We want to look out for people we care about. Most importantly, we want to have a purpose and an impact.
I started Gravity Payments with a mission to help our small-business-owner clients, and that one simple thing has made all the difference in our success. By taking care of others, in return they’ll take care of you. My decision to raise the minimum wage was a commitment to take care of my team, who work really hard and take incredible care of our clients.
It’s our moral imperative as leaders to do the best we can for everybody around us. If we do that, I think as a society and as business leaders, we’ll get farther faster. At the end of the day, live the best life you possibly can while staying true to your values and helping others. With that, we’ll always find new and innovative ways to do good for those we lead and do business with.
Kloberdanz: Millennials in business seem to be more determined than their predecessors to go beyond the bottom line and build companies that will change the world for the better. Do you recognize yourself in this description, and is the happy news for your employees part of this trend?
Price: First and foremost, I’m in this for our clients. I made this decision because it has always been my conviction to put Gravity’s clients’ needs ahead of our own. It’s my honest belief that imposing a $70,000 minimum wage will not only impact my team’s quality of life, but in turn will improve the success of our clients.
Secondly, I did this for my team at Gravity, who sacrifice so much to make our clients’ lives easier. My team has achieved incredible results based on our mission to stand up for the little guys and treat them better, and more fairly, than others in our industry. This has resulted in incredible success for our clients.
My 50-year goal is to fundamentally change how business is done. I want to be a small speck of sand in a revolution where business ceases to be about financial engineering and greed [and instead becomes about] one that is about values and serving others.
In life, we should aim not just to survive but to thrive. Income inequality has become a huge issue and everyone is waiting around for a solution. I knew, as a leader, I needed to take a bold action instead of waiting around for someone else to do something I had full power to do myself. It was my hope when making this decision that other business leaders would recognize you can pay a living wage and still manage to thrive. But emerging from that action was something I would have never expected.
Over 500 million people from all corners of the world voiced their support and have been inspired enough to start making bold actions of their own. We’ve seen others who want to follow our lead and do what they can to better the lives of their team. One of our clients owns a business down in Federal Way, Washington. We were able to save him over $7,000 on processing and instead of keeping those savings, he decided to take that money and some of his own profits and give everyone in his company a raise.
Another business owner down in Florida was inspired enough to assess his own situation and ended up giving his employees a 35-50% raise across the board. Even recently, Facebook announced they were increasing the minimum wage for their team.
I firmly believe my decision and all these other decisions will have a positive impact on business. This is the beginning of a conversation that says you can do business with integrity and successfully get by. I challenge each and every one of you, no matter if you’re 15 years old or 90 years old, to assess your own situation and see what you can do to make your bold action in solving the issue of income inequality.
Gallery: The Companies With The Biggest Jumps In Employee Happiness 11 images View gallery
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2a2115b7bf8e6f61a0fa93a4a29742bb | https://www.forbes.com/sites/christophernelson/2015/11/01/latest-research-says-praising-employees-boosts-productivity-after-all/?sh=1d987ce85f80 | Latest Research Says Praising Employees Boosts Productivity After All | Latest Research Says Praising Employees Boosts Productivity After All
Remember when praising was considered a good thing? No more. It’s become almost fashionable these days to think that praise is bad.
It’s bad for toddlers. It’s bad for older children. Maybe even children of any age. And is it bad for employees? If you listen to some experts, it’s almost certainly terrible for them. In fact, employees should beware of bosses who praise them.
But a new study from Harvard Business School suggests that — at least in regard to employees — we have it all wrong.
Telling your employees that they are doing a good job might lead to them having less stress, higher... [+] creativity and better problem solving skills.
Perhaps the anti-praise movement arose as a backlash to excessive concern for developing “self-esteem” in children. Many feel that the result of instilling lots of self-esteem is not entirely healthy, especially when it is not supported by actual accomplishments. There is a long tradition of thought holding that self-esteem ought to be balanced, if not governed, by humility.
The promptings to humility that derive from the Protestant work ethic are deeply ingrained in the American psyche. The Book of Proverbs says, “Pride goeth before destruction, and an haughty spirit before a fall.” And folk wisdom encourages us not to make much of our deeds so that we don’t succumb to the vice of excessive pride. Think of all the famous literary characters who were undone, or nearly undone, by hubris — Oedipus, Macbeth and Mr. Darcy come quickly to mind, to name just a few.
In polite society we generally resist the urge to seek praise. We tend to prefer moderately modest people to those who cannot help tooting their own horns.
And at work, where judgments are based on success at doing our job well, employees and supervisors often have to convey that success with overtones of humility. The annual review traditionally contains some praise for work that has been completed well, but its more serious part, both for supervisors and employees, is pointing out flaws and offering critical suggestions for improvement.
But Dr. Jooa Julia Lee, one of the co-authors of the Harvard study, says that this is actually not the best way to do it. In trying to discover the effect on employees of being told that they have done something wonderful, the study (which included two lab experiments and a field experiment in a global consulting firm) found that when people were reminded of their best work, as if they were hearing their own eulogies, they had more creativity and less stress. “In our study, we implemented a tool that is called ‘reflected best self exercise,’ which was originally developed by the University of Michigan scholars,” emails Lee, who is a postdoctoral fellow at University of Michigan’s Ross School of Business. “This narrative-based exercise allows employees to learn about their positive impact and contribution to others through the eyes of their social network (family, friends, colleagues, etc). Our study found that activating one’s best self concepts via reflections (which was done as part of corporate onboarding) can predict better performance outcomes and reduced emotional exhaustion and turnover, one year after the onboarding.”
In the study, participants visited the Harvard Decision Science Laboratory and were asked to solve problems. Approximately half of the participants were told to ask friends and family members to send them an email just prior to their participation that described a time when the participant was at his or her best. Overwhelmingly, those who read positive statements about their past actions were more creative in their approach, more successful at problem-solving and less stressed out than their counterparts. For instance, participants had three minutes to complete Duncker’s candle problem. Fifty-one percent who had read emails prior to the task were able to successfully complete it; only 19% of those who did not receive “best-self activation” emails were able to solve it. Those who received praise were also significantly less stressed than the control group.
If results like these seem worth striving for, here are a few suggestions for trying to increase “best-self activation” in your workplace:
Focus annual evaluations on strengths rather than weaknesses.Plenty of research shows that the customary evaluations are actually detrimental to a company’s overall health. “I think most corporate performance evaluations (e.g., 360 degree surveys) tend to focus on identifying weaknesses rather than celebrating strengths, because people tend to focus on limitations and blind spots,” Lee says. “Plus, studies have found that existing performance evaluation tools failed to foster learning and personal development but rather became punitive to employees, increasing a perception of threat and vulnerability.” On Forbes.com, Daniel Kleinman suggests employers take an idea from the new Harvard study: “Perhaps by using best-self activation in a performance review, a manager and an employee can generate more success than attainable via the traditional review style.” Promote a culture of commendation. Ask your employees to get in the habit of telling each other when they think they’ve done a good job. Incorporate a comment box. Persuade your employees to anonymously drop notes into the box sharing moments when they saw another employee doing something extraordinary — even if what was done was not related directly to work. Share some of these stories at regular meetings. Encourage employees to keep growing, provide plenty of opportunities for them to succeed and let them know they are doing well in these areas. Set up training programs and lunchtime learning activities. Urge your employees to attend college classes. Spontaneously tell your employees they are doing a great job. Email a quick message to them, stop by their desk with a few kind words or invite them into your office for a quick boost. “My hunch is that good leaders should inspire and empower,” Lee says, “rather than managing based on fear and anxiety (which would be the case if leaders focus on criticism too much).”
Any of these suggestions can help to alleviate a problem that, I’m afraid, cannot be completely solved. The hierarchical nature of our companies makes it almost impossible for the people in them to see one another in purely human terms. Many employees see supervisors as threats because of the power they hold. And many supervisors see employees as underlings whose value is contingent on the amount and quality of the work they get done. Neither attitude is conducive to treating others with the respect and dignity to which they are entitled as free and independent human beings.
Moreover, there is a corresponding supervisory responsibility that goes along with encouraging workers to keep growing along with their jobs. A conscientious supervisor will not only urge employees to push the boundaries of their current abilities, but will also support their attempts to do so, give them the autonomy to figure things out on their own, try to provide them with what they need to succeed and even attend to well-intentioned criticism if change would improve things.
Of course, there are no guarantees in life. Even with the best intentions in the world, some employees will feel badly treated by their supervisors, and some supervisors will feel let down by their employees.
But any steps that can be taken to mitigate the inherent disadvantages of hierarchy — especially steps that are as easy to implement as the suggestions above for increasing “best-self activation” — must certainly be welcomed by everyone who is concerned about promoting a healthy work environment.
Dr. Lee and her colleagues put it this way in the conclusion of the Harvard study:
Most societies and organizations have not created vehicles for reminding people who they are when they are at their best, even though theory suggests that this information can inspire them to achieve more of their potential. By activating people’s best-self concepts and highlighting examples of them making extraordinary contributions, we found positive changes in their physiology, creative problem solving, performance under pressure, and social relationships, particularly when the stories were reflected back to them by others. These results suggest that there is considerable lost potential in keeping silent about how others affect us when they are at their best.
It is worth remarking that the “lost potential” being described here is not merely the potential for productivity and profits, but — much more important — the potential for personal growth, for expanded competence generally in life and for increased self-direction. Companies that help their workers advance in these areas will certainly reap the benefits of their employees’ growth, and at the same time will be doing what they can to treat their people as ends in themselves rather than as resources from which to extract value.
Gallery: How America's Top CEOs Motivate Employees--And Get Results 18 images View gallery
So let’s start telling our employees often that we appreciate their superb work. Waiting until their funerals is too late to do anyone any good.
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4f0dbfe1563472c36bcd0af87e2940fc | https://www.forbes.com/sites/christopherorr/2020/06/08/vast-of-night-review-perfect-sci-fi-movie-for-this-moment/ | Sci-Fi Indie ‘The Vast Of Night’ Is The Perfect Movie For This Moment | Sci-Fi Indie ‘The Vast Of Night’ Is The Perfect Movie For This Moment
Sierra McCormick in Andrew Patterson's 'The Vast of Night' Amazon Studios
A teenage girl sits alone in a room at night. A teenage boy sits alone in another room. They both hear it over the airwaves: Unprecedented things are happening outside. Disturbing, possibly dangerous, things.
A typical evening at my house these days? Pretty close. But I’m guessing this scenario—with or without teenagers—resonates with more than a few people.
Which is why this awful moment in America, beset by sicknesses both cultural and epidemiological, is precisely the moment for The Vast of Night, the rookie feature by director Andrew Patterson.
Patterson didn’t know, of course, that his film would land in the midst of all this, and it is only at the margins a political film. But as an exercise in claustrophobia, paranoia, and mistrust in government, it hits the sweet spot. Set in the 1950s, it is even framed as a Twilight-Zone-style TV show broadcast on a magnificent old Philco Predicta set—again, a perfect match for these days of shuttered multiplexes. (The Vast of Night is currently streaming on Amazon.)
Set over the course of one night in the fictional town of Cayuga, New Mexico (population: 492), the film follows teens Fay Crocker (Sierra McCormick) and Everett Sloan (Jake Horowitz), the former the town’s switchboard operator and the latter a DJ at the local radio station WOTW. (Yes, the “War of the Worlds” acronym is entirely intentional.) While the rest of the town attends a big basketball game at the school, Fay and Everett sit by themselves, listening in on the murmurs of the troposphere.
Jake Horowitz listens in to a mysterious sound in Andrew Patterson's 'The Vast of Night' Amazon Studios
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It’s Fay who hears it first, a staticky, rhythmic whomp-whomp coming in over one of the phone lines. She calls Everett, and he puts the sound out over the radio, asking if anyone out there has ever heard anything like it. An old man calls in, ex-military, and tells the story of how he heard the sound long ago, during a bizarre, top-secret mission. It doesn’t take a psychic to see where this story is headed, and it gets to its ultimate destination with a minimum of narrative steps.
The destination itself is a mild disappointment, but the execution of each step of the journey is riveting. An energetic opening foray through the high-school gym introduces the characters; later, a long tracking shot rumbles ominously through town, from Fay’s switchboard into the middle of the hoops game and back out a window to the radio station. (The superb cinematography is by Miguel Ioann Littin Menz.)
The quieter moments are equally evocative, befitting a film about the search for a sound: Everett showing Fay how to use her brand-new tape recorder; Fay, in her cat-eye glasses, thrusting plugs in and out of sockets as she juggles calls at the switchboard; Everett, perched intently at his microphone at the station. When “Billy” (Bruce Davis), the old military vet, calls in, the screen repeatedly goes black, turning viewers into listeners—just like Fay and Everett.
Just as important as the ways in which 'The Vast of Night' conjures the current moment are the ways ... [+] in which it differs. Amazon Studios
Patterson’s young leads, McCormick and Horowitz, are both exceptional, the former offering an indelible portrait of the intrepid good-girl, and the latter recalling a young Christian Slater with his mesmerizing patter, half-cool, half-nerd. In supporting roles, Davis and Gale Cronauer (who plays an elderly shut-in whom the kids visit) are given the kind of extended monologues that actors dream of, and both exceed the challenge.
But the real star is Patterson, who pseudonymously co-wrote the film with Craig W. Sanger. Patterson told Forbes.com’s Josh Weiss that The Vast of Night was inspired in part by All the President’s Men and the movies of Richard Linklater, and many have likened the film to Spielberg’s Close Encounters. But it also made me think of David Fincher’s knack for kinetic dialogue, the Coens’ stylistic precision, and the the sense of lurking strangeness in Stephen Soderbergh’s early work. With one slight, 90-minute film made for just $700,000, Patterson has introduced himself as a cinematic talent to be watched closely.
Just as important as the ways in which The Vast of Night conjures the current moment—the claustrophobia, the fear—are the ways in which it differs. There’s an innocence to the film, with its small-town hoops and canny teen investigators. Even the anxieties it unlocks—could the sound be made by the Russkies? Or by an alien spacecraft?—seem oddly quaint by today’s standards. Ultimately, this may be the most satisfying way in which Patterson’s movie is suited to this moment: not as a reminder but as a respite.
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627463a4a04aa04876c87c015e94f5df | https://www.forbes.com/sites/christopherrim/2019/01/25/how-asl-is-conquering-the-ivy-league/?sh=63debbbf7ec7 | How ASL Is Conquering The Ivy League | How ASL Is Conquering The Ivy League
Two young woman speak in sign language Photo Credit: Getty Getty
The most widely-cited study on the prevalence of American Sign Language showed that ASL was the third-most-frequent language to require a court interpreter. This doesn’t mean ASL is the fourth most-used language in the US but does imply ASL users are the fourth-largest monolingual population. As an American who studied Spanish in high school and whose motivation for studying a language is to be able to communicate with people who don’t or can’t speak English, studying ASL in college seemed like the logical choice.
At the time, Yale didn’t offer an ASL class. I had to study a language in order to graduate, and ASL was the only one I was interested in, so I went to the administration. They said that they would help me take it as an independent study and connect me with a teacher, but studying ASL would not count towards meeting the language study requirement because there is no written component. Frustrated and with no room in my class schedule for an elective, I ended up signing up for Korean, even though I grew up speaking English in a heavily Korean-American community that was far from monolingual — most people knew enough English that I never felt the need to improve my rudimentary Korean skills.
My enthusiasm for and difficulty studying ASL isn’t unique — a recent op-ed in the Columbia Spectator sums up the experience of many college students: “Universities with complete ASL programs—or even the ability to take ASL classes—[are] too hard to find. ASL is often rejected as a foreign language credit across college campuses, if it is even offered as a class at all.” The author, a student at Barnard College, points out the deep irony of both Columbia and Barnard’s lack of ASL education even though Columbia’s tenth president and Barnard’s namesake, Frederick Barnard, was Deaf and fluent in sign language.
Knowing the barriers students face in trying to learn ASL, how popular do you think it is, compared to other languages students study in college? I chose Korean over ASL — do most college students? What about Chinese, Italian, German, Arabic, or Japanese? The answer may surprise you — according to the Modern Language Association’s 2016 study of US colleges and universities, ASL is the third most-studied language, outnumbered only by Spanish and French. What would that number look like if more colleges offered it, and let it fulfill requirements?
We may soon find out. If recent trends in the Ivy League are anything to go by, 2019 is the year the tide turns on ASL education in the US. In the past six months, four of the eight Ivy League schools have made major progress toward offering full-scale, language-requirement-fulfilling ASL courses. Harvard began counting toward language requirements the ASL courses they began offering two years ago. Princeton University will begin offering intermediate and beginning ASL courses taught by the same visiting professor who taught a popular course in the spring of 2017. Cornell passed a new curriculum proposal that will allow ASL courses to count toward language requirements, although the changes will likely not take effect until fall 2020, and although I only graduated a year and a half ago, I’m already missing out on Yale’s brand-new ASL class.
Of the remaining four Ivy League schools, two didn’t make strides in 2018 because they already have full-scale ASL programs. Brown University and the University of Pennsylvania seem to currently have the most rigorous ASL programs among the Ivy League, both offering introductory and intermediate two-semester courses, independent studies, and, in UPenn’s case, advanced courses on linguistics and Deaf culture.
Only two Ivies are falling behind the pack. Despite Frederick Barnard’s legacy, Columbia does not offer undergraduate ASL classes, although their Teacher’s College offers a master’s. Dartmouth’s only online mention of sign language study is a blog post that cheerfully offers their ASL student club as a substitute. You might think that Dartmouth, with the smallest student population of the Ivies, should get a pass, but consider that they offer classes for Latin, Ancient Greek, Russian, Portuguese, and Italian, all less popular in higher education at large than ASL.
Obviously, if ASL was the third most popular language to study in college in 2016, other schools must have been offering ASL courses long before these 2018 changes came to the Ivy League. For one, UC Berkeley has been offering ASL classes since 2013. However, the Ivy League has a wide-reaching influence, and its recent strides in offering ASL adds weight and legitimacy to the academic study of the language. I predict that these changes are early indicators of a widespread tidal shift in the US higher education system.
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be0767f38d557bbb3ca1c616b1303bd7 | https://www.forbes.com/sites/christopherrim/2019/09/11/the-sat-adversity-score-is-still-happening-and-colleges-may-use-it-against-low-income-students/ | The SAT 'Adversity Score' Is Still Happening --And Colleges May Use It Against Low-Income Students | The SAT 'Adversity Score' Is Still Happening --And Colleges May Use It Against Low-Income Students
Princeton University Photo Credit: Getty Getty
Earlier this year, the College Board (the nonprofit behind the SATs and AP classes/exams) announced a new program that faced immediate backlash. They planned, starting this college application cycle, to offer colleges information on students’ neighborhoods and schools (including crime rates, average family incomes, etc.), to assign these students what quickly became called an “adversity score.” The idea of this score was to help colleges evaluate students in context, mitigating the impact wealth and other advantages have on metrics like GPA and test scores. Two weeks ago, the College Board announced that the proffered admissions tool would not be a single number, but a ‘dashboard’ of metrics. Although this announcement was characterized by headlines as “abandoning” the adversity score, the ‘Environmental Context Dashboard’ will still be made available to colleges this year—and the impact may not be as positive as the College Board hopes.
The adversity score (sorry, Environmental Context Dashboard) will have a different impact depending on the type of school. Although this is an oversimplification, I would say there are three categories of colleges and universities—average public schools, wealthy private schools, and average private schools. Each will use the ECD to different effects—and it’s the average private schools I’m concerned about.
The Good News About Public Colleges
The good news first: at the average public state university, the College Board’s dashboard may truly lead to a more equitable admissions process. Most public universities process an incredible number of applications each year and will often primarily rely on data that’s quick and easy to evaluate (like standardized test scores and GPA/class rank) to make their decisions. (In general, the more elite a public university is, the more time they spend on harder-to-evaluate data like essays and teacher rec letters, but they’re still dealing with massive influxes of applications). So having a standardized way to evaluate students ‘in context’ may have a significant positive impact on the number of disadvantaged students admitted. There’s also little chance it will be used against disadvantaged students, as, beyond in-state vs out-of-state tuition, the university gets about the same amount of tuition dollars from each student, even if most of that tuition may come from student loans and federal grants.
The Good News About Private Colleges
As a private college admissions consultant, my clients are primarily concerned with the most elite schools (both public and private), but these schools are the least likely to see changes in who they admit based on the Environmental Context Dashboard. At elite private colleges that offer need-blind admissions and need-based financial aid (think Stanford, Yale, Pomona), the Environmental Context Dashboard will likely do little beyond relieving some of the workload of the admissions office. This is because these schools already devote significant effort into evaluating students ‘in context,’ and none of the data that the College Board provides is proprietary—schools are already able to look up what ZIP code students come from and attend school in and evaluate their records keeping this information in mind (along with student-provided contextual information like their parents’ jobs and education history, etc).
These schools have massive endowments and are, to a certain extent, able to admit students regardless of their ability to pay. Of course, even ‘need-blind’ schools still have limits on how much aid they’re able to give out per year, and to some extent build their class profile accordingly, but they’re not as reliant on tuition dollars as other schools. These schools often spend more per student than even their full sticker tuition price (check out this chart for Williams, which shows that the college spends $116k per student despite a sticker price of $68k and average cost after need-based aid of $40k, which means two-thirds of their per-student spending comes from donations and endowment funding. So it makes sense that they’re primarily interested in admitting students who will become successful later in life, regardless of their current situation.
The Bad News About Private Colleges
However, as you move down the list of private colleges, that calculation begins to tip, and a student’s ability to pay begins to factor more and more into the admissions decision. This weekend, the New York Times Magazine published a fascinating article by author Paul Tough titled “What College Admissions Offices Really Want,” which offered an inside look into the admissions offices of Trinity College, a somewhat highly-ranked college on the East Coast with a hefty (but not Harvard or Yale-level) endowment. At the beginning of the admissions season, the officers focused on identifying the best students—but as they began to narrow that list, revenue became more and more of a factor. Despite the best intentions and desires of the admissions officers, the need to keep the college sufficiently funded imposed serious limits on how many financial-aid-seeking students they were able to admit. Reading this article, and imagining similar scenes playing out at schools with even smaller endowments, I began to feel serious concerns about the impact the College Board’s Environmental Context Dashboard could have.
In a perfect world, the ability to pay would not be a factor in college admissions. Most elite schools claim to not consider ability to pay in their admissions decisions (Trinity College is an exception)—but ultimately, whether it’s an official need-aware policy or a more complicated calculation based on zip code, private colleges do have a sense of what students are able to pay and do use that to impose unofficial limits on which students they offer admission to. Some colleges are able to set that limit quite high, and most aspire to increase it, but the limit still exists. And that means that the College Board’s Environmental Context Dashboard, despite its best intentions and the best intentions of the private colleges using it, may not be a good thing for students from disadvantaged backgrounds. Getting a full ride to these schools is an incredible opportunity—and although more students from disadvantaged backgrounds should be encouraged to apply, incredible students from every background are not the limited resource—the full rides are.
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de9000746979858425e04f7c6b730c2e | https://www.forbes.com/sites/christopherrim/2020/03/16/another-sat-cancellation-delays-testing-timelines-for-millions-of-students/ | Another SAT Cancellation Delays Testing Timelines For Millions Of Students | Another SAT Cancellation Delays Testing Timelines For Millions Of Students
Student studying for the SAT exam. (Photo by Jessica Rinaldi/The Boston Globe via Getty Images) Boston Globe via Getty Images
The College Board announced this morning that they have cancelled the May 2, 2020 SAT and SAT Subject Tests. This is following the cancellation of many locations for the March 14, 2020 SAT exam just this past weekend. “In response to COVID-19, we're canceling the May 2 SAT, as well as March makeup exams. Registered students will receive refunds. We will provide additional SAT testing opportunities as soon as feasible in place of canceled administrations.”
Students should not worry about this cancellation, as it is a precautionary measure. As COVID-19 continues to spread exponentially, precautionary measures such as the cancellation of large gatherings, including standardized tests, are the most effective way to prevent the spread of the virus.
The next exam date is currently scheduled for June 6, 2020, but its administration is contingent on the status of coronavirus at that time. As with all SAT exams that are canceled due to extenuating circumstances, the College Board will reschedule a make-up exam once it is safe to do so; “College Board will provide future additional SAT testing opportunities for students as soon as possible in place of canceled administrations.”
Spring cancellations will most affect juniors who have not yet sat for their SAT, or who were depending on spring test dates as an opportunity to earn their goal score. These students especially should take advantage of the extra time they now have to study, and focus all of their energy on preparing for their next exam date, whenever that may be. Students should maintain a structured study schedule that mirrors the one they kept before the COVID-19 pandemic as continuing to study for the standardized tests will ensure that they do not delay their exam schedule further than it already has been by these cancellations.
Students should consider the possibility that they may have less opportunities to sit for their exams before the college application deadline. That being said, higher education institutions and their admissions offices are aware of these cancellations, and will take them into consideration come admissions season. These students may no longer be able to rely on perfect scores and should focus on finding additional ways to stand out on their college applications, like developing their passions and pursuing non-academic goals that allow them to stand out.
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Students should monitor their emails and the SAT website for updates. They can also monitor College Board’s Instagram or Twitter for updates concerning canceled and rescheduled exam dates.
Full coverage and live updates on the Coronavirus
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63d5e632b87abd4ec05d4d89d6910f49 | https://www.forbes.com/sites/christophersteiner/2012/04/24/biz-dev-is-a-clever-name-for-dirty-work/ | Biz Dev Is A Clever Name For Dirty Work | Biz Dev Is A Clever Name For Dirty Work
If you're not getting dirty, you're not doing biz dev.
We recently called out to the Hacker News crowd with a job opening for a non-hacker “hustler type.” We got a load of resumés, thank you. While we were pleased with the applicant pool, we were also surprised at the general attitude of many of the job seekers.
Judging from the people who applied, it’s clear that startups have seized the zeitgeist that Wall Street once held with the youngish, smartish crowd, as a remarkable breadth of people now want to work at startups.
Within the applications, we saw a lot of pithy clichés like “thinking big” and “building something special” and joining “an exciting company.” Applicants all seemed willing to read the latest Seth Godin book—if they hadn’t already—but a very select few, it seemed, were willing to do what we need done most: things that aren’t glamorous, don’t involve whiteboard dreaming and do comprise tasks that are, in general, taxing and annoying.
The kind of tasks that founders do, in other words.
For the most promising applicants, I would follow up with an email repeating what this job is: it will be a grinder; it will involve travel to spots that are far from cosmopolitan; it will require cold calls, rejection and the application of the law of large numbers. I’d finish the email with “If you’re still interested, please let me know. If you’re on the fence, then this job isn’t for you.”
The email may have been a bit stark, but we’re still surprised at how many people it completely scared off. One fellow, who came on strongly in his initial pitch and resume, responded to my email with this:
“Yeah, I don’t think this job is for me. But if you have something in the future that’s more focused on biz dev, please reach out and let me know.”
This applicant is a senior in college.
Hello there, son: this is biz dev. This is the beating, pumping heart of biz dev. I get the impression, from a lot of these biz dev’ers, that they think of biz dev as fun and sexy. One minute you’re grabbing lunch with Ron Conway and Ashton Kutcher and the next minute you’re closing a deal on the phone while you wait in the lobby at Microsoft to give Steve Ballmer the bad news: “No, we will not accept your acquisition offer of 3 trillion dollars.” From there, you head out for cocktails and swirl single-malt Scotch while discussing why Apple is so badass.
That might be biz dev at Facebook , but biz dev in the true startup world is 90% dirty work. The “fun” stuff, I’m afraid, is the hacking and the product development. That’s usually not in the job description for biz dev’ers.
And the big, big, big meetings? You don’t walk in the door at a startup and get to do those. It’s not easy to get a meeting at the headquarters of companies who measure revenue in the tens of billions. Did you think we were going to just pluck you from college—or, for those b-schoolers of you out there, your MBA program—and send you right on in there?
Making a startup succeed is a mission that’s indefinable and, invariably, involves lots of that ambiguous thing called hustle. One day is never the same as the next:
• One day you’re writing 1,500 thank you notes by hand.
• One day you’re taking customer service calls.
• One day you’re wandering the aisles of a supermarket writing down UPC numbers, looking for leads.
• One day you’re cold-calling those leads, getting rejected.
• One day you chase down a bug that, unbeknownst to you until this moment, has been killing your conversion rate.
• One day you’re putting 1,200 stickers on grocery store items.
• And one day maybe, just maybe, you put marker to whiteboard. Oh, but wait, that was just the who-takes-out-the-trash-this-week whiteboard.
Biz dev at a startup involves making hard phone calls over and over again. It involves locking yourself in a room and not coming out until you’ve scheduled three other meetings in that third-tier city on the other side of the country where, even if you had the budget, there isn’t a four-star hotel to be slept in. Biz dev at a startup means taking your fancy degrees, putting them in the basement and filling the place with concrete. They mean nothing.
On the bright side, biz dev at a startup includes lots of McDonald’s cheeseburgers, so don’t forget to bring your running shoes and log some miles on the highway next to that $49-a-night Days Inn at which you’re bunking.
You win at this game by hustling. Luck helps, but hustling helps more. So that’s why we requested a hustler in our job post and that’s why, no doubt, we’ll specify this requirement again. Hustling means doing tasks that suck, over and over again. If you can’t hustle in the startup world, you can’t win.
We have an incredible team of engineers. They do anything and everything related to our web-app. The roles are not well defined. At our size, they can’t be. Everybody knows how everything works. It’s the same for biz dev. There’s no whiteboarder position. There’s no “big thinker” job. There’s a lot of dirt to shovel—and sometimes the shovel is big and wide. And sometimes it’s small, unwieldy and annoying. If you don’t like shoveling, then don’t work at a startup. If you like “managing stuff,” then don’t work at a startup.
You build or you sell. There’s nothing else to do.
I’m not going to do that for somebody else, you say? Well, okay. Then go do it for yourself.
Christopher Steiner cofounded Aisle50, a Y Combinator company acquired by Groupon in 2015.
Follow Christopher on Twitter here.
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f511a7ead72ab0fc2da69151d99ccd03 | https://www.forbes.com/sites/christophersteiner/2012/08/30/how-the-nasdaq-got-hacked/ | How the Nasdaq Got Hacked | How the Nasdaq Got Hacked
ON A DAY IN EARLY 1987, a man who worked for the Nasdaq stock market—let’s call him Jones—showed up in the lobby of the World Trade Center. He found the appropriate elevator bank for his floor and pressed the up button. He was making a routine visit to one of the Nasdaq’s fastest-growing
customers.
A receptionist greeted him and retreated to another room to fetch his host. When she returned, a short, dapper man with a full head of silvering hair accompanied her. Thomas Peterffy’s blues eyes warmly greeted Jones. He spoke with an accent.
Jones couldn’t have known that Peterffy would later become a man worth more than $5 billion, one of the richest people in America. He was still at that point a Wall Street upstart. But his trading volume had been streaming upward, and so had his profits. Jones was always curious as to how people like Peterffy figured out ways to beat the market so consistently. Had he hired the sharpest people? Did he have a better research department? Was he taking giant risks and getting lucky?
What Jones didn’t know was that Peterffy wasn’t a trader at all. He was a computer programmer. He didn’t make trades by measuring the feelings of faces in the pit, the momentum of the market, or where he thought economic trends were leading stocks. He wrote code, thousands of lines of computer language—Fortran, C, and Lisp—all of it building algorithms that made Peterffy’s trading operation one of the best on the Street, albeit still small. He was chief among a new breed on Wall Street.
As Peterffy led the way onto his trading floor, Jones grew confused. The more he saw—and there wasn’t much to see—the more flummoxed he became. He had expected a room bursting with commotion: phones ringing, printers cranking, and traders shouting to one another as they entered buy and sell orders into their Nasdaq terminals. But Jones saw none of this. In fact, he saw only one Nasdaq terminal. So who was making all those trades?
“Where is the rest of the operation?” Jones demanded. “Where are your traders?”
“This is it, it’s all right here,” Peterffy said, pointing at an IBM computer squatting next to the sole Nasdaq terminal in the room. “We do it all from this.” A tangle of wires ran between the Nasdaq machine and the IBM, which hosted code that dictated what, when, and how much to trade. The Nasdaq employee didn’t realize it, but he had walked in on the first fully automated algorithmic trading system in the world.
With the hacked data feed coming from the Nasdaq terminal, Peterffy’s code was able to survey the market and issue bids and asks that could easily capture the difference between the prevailing price at which buyers would buy and sellers would sell. That difference, called the spread, could grow past 25 cents a share on some Nasdaq stocks at that time, so executing a pair of 1,000-share orders—one to buy at $19.75 and one to sell at $20.00—resulted in a near-riskless $250 profit.
Peterffy’s operation marked a new dawn on Wall Street, as programmers, engineers, and mathematicians mounted a two-decade invasion in which algorithms and automation, sometimes incredibly complex and almost intelligent, would supplant humans as the dominant force in our financial markets.
Jones stood agape. Where Peterffy saw innovation, Jones saw somebody breaking the rules with a jury-rigged terminal.
“You can’t do this,” Jones said.
The Nasdaq had no trading floor; all of its trades took place over the phone or on its computer network that took users’ orders as they entered them on the keyboard of a dedicated Nasdaq terminal. Peterffy had taken the incoming data wire meant for the terminal and spliced it, soldering the split end into a circuit board that his team of programmers and physicists had built from scratch and embedded into the motherboard of an IBM PC. The IBM ran software that Peterffy wrote himself. As the PC got data from the Nasdaq wire splice, its algorithms analyzed the market and made quick trading decisions, firing these trades back through a tangle of wires that wound their way into the innards of the Nasdaq terminal. Peterffy, unbeknownst to anybody until that moment, had hacked the Nasdaq.
The Nasdaq didn’t need word of this contraption, this mad scientist’s laboratory, reaching the market. Would other traders be comfortable knowing they were matching wits with algorithms powered by an IBM rather than other gut-following gamblers? The Nasdaq didn’t want to find out.
“The terminal needs to be disconnected from this IBM and all orders need to go through the keyboard, typed one by one—just like the rest of our customers,” Jones said. Jones left. Peterffy stood in his office contemplating what might be the end of his business. The Nasdaq had given him a week to comply with the inspector’s edict. The thought of dismantling his machine wrenched Peterffy. He had little interest in going out and finding traders, even young and cheap ones, to sit in chairs and punch orders into Nasdaq terminals. It had taken him years to wring the human element and its capricious whims out of his operation. It would be difficult to reinject people, their errors, their laziness, and, most important in this case, their slow typing back into the process and expect the same results. His operation was going to lose most of its efficiency overnight.
Before he went to sleep that night in his Upper East Side apartment, a solution came together in his head. It wouldn’t be easy, but it offered possibilities. Peterffy thought he could pull information from the Nasdaq terminal without touching the machine. No spliced wires, no attached circuit boards, none of that. But how to do it? He asked his crew of engineers and physicists if they could build something that read data straight off the screen, like a camera, and then translated that information into electronic bits and sent it to the waiting IBM PC. The answer was yes.
But the data feed was only half the problem. How would Peterffy execute his trades without having a team of people sit at Nasdaq terminals? He could not send a wire back into the machines as he had done before. No, the trades had to go through the keyboard, just as the Nasdaq had ordered. Peterffy had an idea, a crazy idea. But could such a thing work? During a frantic week, Peterffy and his best engineers welded metal, wrote code, and soldered wires. Their goal: create a trading cyborg.
This story is excerpted from Automate This, How Algorithms Came to Rule Our World, a book released on Aug. 30, 2012 by Portfolio-Penguin.
Christopher Steiner is a former Forbes magazine staff writer and now cofounder at Aisle50, a Y Combinator company bringing group buying to the grocery world. Follow him on Twitter.
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7140ea23e127c232ca6c04adf0419f49 | https://www.forbes.com/sites/christophersteiner/2013/11/13/the-top-10-ski-resorts-in-the-united-states-for-2014/ | The Top 10 Ski Resorts In The United States For 2014 | The Top 10 Ski Resorts In The United States For 2014
This is the list for 2014 -- There is an updated Forbes Best Ski Resorts List For 2015, which can be found here. Rankings for all 221 of the best ski resorts in North America are here.
As we arrive here at the precipice of a new winter, we're pleased once again to offer you the Forbes Top 10 U.S. Ski Resorts. These are the best ski resorts in the United States. The mountains haven’t moved and what constitutes snow hasn’t changed, but this year’s list was put together with an intensity of purpose and breadth of inputs that bests our previous efforts. We analyze more data and more of what matters for ski trips and for what makes the best ski resorts.
If you’ve read our rankings in the past, then you know that we use a proprietary algorithm that renders for each resort what’s known in PhD circles as the Pure Awesomeness Factor, or PAF. By measuring PAF, we determine what ski resorts are best. The PAF score for each resort is the most scientific and proven way to determine how many drips of fun can be wrung from one ski trip. It’s one of the more important metrics developed during our time. You’ve heard of Joules, Ohms, Amperes and the Richter Scale, of course? The PAF measurement will follow these names into history.
Yes, Stockholm, we’re waiting by the phone. Just call already.
This year’s rankings: We spent a good deal of the summer greatly widening the data set we use to inform the PAF calculations. Our improved database includes more than 30 categories of data for the best 221 North American resorts. It was a long summer of toil, but we’re now prepared to release this emission of awesomeness to the world. Even better, in addition to the top 10 listed here, the entire rankings set—221 resorts worth of data, and rankings for regions, snow, expert mountains, family mountains and travel ease—now resides at ZRankings.com, the most comprehensive site for the best ski resorts and their rankings on the web.
We’re more confident than ever that the Forbes Top 10 U.S. Ski Resort List is the best one in the industry. Things we’re also confident in:
Top 5 Winter Gear for 2014- it's a great winter to be in the market for some swag.
The Top 5 U.S. Ski Resorts for Families - the rankings crew is getting older; this matters to us.
A Q & A with the man of the moment in the skiing industry, Rob Katz, the CEO of Vail Resorts, the $2.5 billion company that owns marquee resorts in Colorado, California and, now, Utah
Before we get to the overall top 10 list, a few words on our methods:
To calculate PAF scores and determine which resorts are the best in the United States, our algorithm dances across more than two dozen categories of data on each resort, including: terrain makeup; lift quantity and quality; accessibility (a big, nearby airport is a plus); total vertical; vertical continuity (can it be skied all at once with a minimal of flat run-out or cat-tracks?); skiable acreage; ski town ambience; and, finally, and more important than any other single category—snow.
Data and rankings for 182 U.S. Resorts - ZRankings determines what ski resorts are best.
We’ve always paid close attention to snowfall in these rankings. It’s the one thing that can send a ski trip from “that was a nice, fun, wholesome time” to an entirely different kind of trip: “I’m pushing my return flight back a week, pawning my wedding ring and putting up a down payment on a mountainside condo.” Or, more prudently, you could just buy new skis. The trips that shuffle to the top of your memory after decades of life’s general flotsam are the ones that came with 30 inches of snow. That’s just science.
So yes, snow is important. Snow regularly visits Stockholm.
Knowing that, we’ve greatly increased the depth of our snow data by hooking up with Tony Crocker, a fanatical skier who holds a statistics degree from Princeton and who has been tracking snowfall for more than 20 years with an actuary’s meticulousness. He is an actuary, in fact—the kind of math whiz who figures out how much a $100,000 annuity should cost for a 55-year-old who regularly treks to La Grave to appease an addiction to skiing icy 60-degree pitches.
Crocker actually should get a call from Stockholm, if the Swedes knew anything about skiing to go along with their inherent kinship with the cold. Crocker has compiled snowfall data on 100 resorts stretching back more than 40 years in some cases; it gives us an excellent idea of the averages and standard deviations of a ski area’s annual snow bounty. It allows us to reward a resort’s ranking for not only large annual averages, but also penalize rankings for inconsistent snowfall—i.e.: a annual snowfall of 500 inches is amazing, but less so if it often comes 6 feet at a time with large gaps—30 days or more—with little to no snow.
The best kind of snowfall comes dependably and with abundance. There are only a few places where these conditions dominate, and most of them boast high PAF scores. Alta being the ultimate case, of course, with more than a fifth of its winter days seeing more than six inches of snow, more than half of its months getting more than 90 inches of snow, and an extremely low penchant for drought—only 2% of its winter months get less than 30 inches of snow.
In addition to incorporating snowfall frequency and the chance of prolonged periods of drought, the PAF algorithm ingests data on snow quality when rendering its scores. As anybody who’s spent more than a few days skiing knows: not every flake is created equal. Some are feather light, some are sopping with moisture and some of them fit wondrously in the middle, giving skiers enough mass per unit of volume to float their ski, but not so much as to make skiing hard or dangerous. The snow that’s best for skiing contains between 8% and 9% moisture. The super light stuff—less than 7% moisture—can be fun if you get two feet or more of it, but any less and your ski easily falls through to the old, hard surface, creating the dreaded dust-on-crust effect.
Ten feet of snow in the Sierras, whose warmer storms often leave behind snow that’s 12% moisture or more, isn’t as valuable as 10 feet of snow in Utah, whose snow often hovers in that lovely zone between 8% and 9%. Colorado’s central mountain ranges receive some of the lightest snow, often below 7% moisture, which in giant abundance can be great, but put eight inches of that on a skied-up mogul field and you’re going to wish you stayed on the groomer. All of this said, snow varies storm to storm. Utah can get paper-dry snow and Oregon-style wet snow; the same goes for everywhere.
In addition to all of this wonderful data, we're lucky this year to have a unique contribution from a stalwart in the ski industry to this year's rankings. Greg Wright, a ridiculous skier and the publisher of Freeskier magazine, has equated each of our Top 10 Resorts with the celebrity that best fits the mountain's persona. Alta, for instance, is Sid Vicious and Alyeska is Jack Kerouac.
We try not to make readers slog through 800 words when we do one of these resort profiles that accompany our rankings, and that can be hard task considering how much work we put into our metrics and how many different elements we measure. The readability police have been emphatic in saying that a Top-10 Ski Resorts List that includes 8,000 words of narrative, no matter how sweet and righteous each and every single one of those words might be, in no way comprises the form we want.
We’ve assented to this request, but just know there’s a lot we didn’t say here. Luckily, we have the PAF—and the numbers it produces say a lot already.
You’ll find the hallowed Forbes Top 10 Ski Resorts List below. Enjoy the winter.
1. Jackson Hole Mountain Resort, Wyoming - PAF: 94.6
No. 1 Lift, No. 1 Mountain.
At some point during the last 20 years, Jackson Hole Mountain Resort went from being a sleepy, snowy outpost in the state with the fewest people to what is now a true destination resort. Jackson has always had the ultimate asset: an unrelenting vertical continuity with true skiing fall lines in every direction and a snowfall pattern that has proved stubbornly copious even when the rest of the West has suffered. That’s always been there.
What hasn’t always been there: An efficient gondola that ferrets people up 2,784 feet of vertical, installed in 1997. A Four Seasons, opened in 2003. A new $30 million tram in 2008, the greatest ski lift, technically and aesthetically, in North America. And perhaps the most important factor of all for any ambitious destination resort, and especially Jackson: air service that rivals any ski destination in the west that’s not Denver or Salt Lake City—and this mountain is just 35 minutes from the newly renovated Jackson Hole Airport that’s so gorgeous it’s almost bizarre. If a Russian oligarch had a tasteful streak of mountain fever, this is what he would build.
This gleaming airport now welcomes non-stops from American, Delta and United that hail from 12 different cities, among them: New York, Chicago, Los Angeles, San Francisco and even Atlanta. So a place that was once hard to get to, but worth it, is now far easier to get to, and still worth it. Anybody who ever boards planes with the purpose of skiing should go here.
That Jackson is strictly the province of experts, huckers and powder fiends is a myth whose day is fading, but still perseveres in some corners. The bottom of the mountain is mild and inviting for beginners; and last year was the first season for Jackson’s new Casper high-speed lift that services expanded intermediate terrain, giving skiers a bastion of blue runs higher up on the mountain.
All of this destination resort talk shouldn’t give readers the idea they’re in for lift lines at Jackson. Representatives of the PAF algorithm, minions, if you will, have spent many a day mining Jackson’s slopes and in this time they have only reported significant lift lines at one lift, and only on powder days. The lift specified, of course: the tram. Even so, that 30-minute wait results in 4,139 vertical feet of skiing, which is an entire half-day for many people. And if that large spate of vertical includes Corbet’s Couloir, it could be the most indelible gravity-fueled journey a visiting skier ever takes.
As we mentioned in 2013’s rankings, the culinary scene in Jackson has kept up with the ski lifts and the lodging. For a perfect morning, we think Pearl Street Bagels is perhaps the best place for boiled dough that’s not in a zip code starting with one-zero. That’s serious praise from serious bagel eaters.
For snow geeks: Jackson’s snow isn’t quite as dependable as that of the west-facing side of Utah’s Wasatch, but it still posts high scores for its percentage of winter days with more than six inches of snowfall—16.4%—while its relation to the prevailing jet stream ensures that Jackson sees very few winter months with drought-like conditions—only 11% of months get less than 30 inches of snowfall. Jackson has a lot of terrain that faces east, which tends to lose snow more quickly, but that’s largely mitigated by the fact that Jackson, as just mentioned, is in Wyoming, which tends to be cold.
Jackson’s typical snow makes for excellent powder skiing as its density is closer to that of Utah’s (8%-9% water content) than it is to much of Colorado’s snow, which trends closer to 7% water, which still makes for wonderful stuff, but the Colorado snow, being so light, doesn’t float a ski as well, which can lead to more situations that coined the term “dust on crust,” as it takes more snow to gain sufficient coverage.
Greg Wright's Celebrity Match: John Wayne.
Where to Stay: The options keep expanding at Jackson, but the best bet is to get into a condo in Teton Village. They're well priced compared with other ski-in, ski-out options at top-tier resorts and your time from bed to tram can be cut to 5 minutes, assuming you sleep in your gear like we do.
2. Snowbird, Utah - PAF: 92.8
Like Jackson, Snowbird's lifts are as big as the mountain.
What if, say, you could board a plane in Chicago at 8 a.m., land someplace at 10:30 a.m., and before noon be standing atop a ski lift that just climbed 3,200 feet of a mountain that gets 500 inches of snow, and where nearly every fifth day is a powder day deeper than six inches? You would board the plane, clearly. And you’d be flying to Snowbird, a place where access, snow and terrain combine so beautifully that most travelers can ski four days while only staying three nights. And during your short getaway, you’ll likely get dumped on.
That lift doing all of the climbing is the Snowbird Tram, an ascending capsule that gives skiers more in one ride up than any other lift outside of Jackson Hole’s people mover. A lot of the things that make Jackson great are traits of Snowbird, as well: unrelenting vertical, magazine-worthy terrain everywhere, elite ski lifts, and a consistency of experience that traces back to snow, snow and snow.
The Little and Big Cottonwood Canyons east of Salt Lake City – Little holds Snowbird and Alta; Big houses Brighton and Solitude, hit the geographical lottery with the best snowfall—quality, quantity and consistency—of anywhere in our 182-resort analysis. If you’re looking for a great ski trip and you have four days or less, this is the only place.
The Cliff Lodge at Snowbird remains a model of what a ski hotel can become in the right designer’s hands: burly but refined, handsome, with not even a whiff of the trite log columns that adorn most mountain-side establishments. The self-serve ski lockers with built-in locks on the ground floor feature air tubes that dry your boots, helmet and gloves each night—a dandy feature reminiscent of some of the nicer ski hotels of Europe, like the Hotel Zürserhof in Zurs, Austria, a place that, after Chamonix, France, should rank high on your Continental hit list.
Bottom line: Snowbird is the second best ski resort in the United States—and it’s one of the easiest to get to. The airport code for Salt Lake City, by the way, is SLC.
Greg Wright's Celebrity Match: Metallica.
3. Alta, Utah - PAF: 88.6
That'll do. A lot of resorts have pictures of people skiing powder, but Alta can take one almost... [+] every day.
If you haven’t spotted a random Alta sticker on the back of a car or on a bike helmet at some point in your life, no matter where you live, then you’re just not paying attention. If we compiled an index that tracked the number of stickers distributed and used per skier day per resort, Alta would surely top the list with ease. There’s something visceral about this place, something that compels people to peel a glossy, epoxy-backed piece of paper and affix it to what is usually their most or second-most valuable asset, their car, be it an old Toyota truck or a brand new Lexus.
Why do people do this? Why does Alta pluck a chord that Snowbird, its next-door neighbor, doesn’t? Because if you had to pick—and we do—the overall skiing experience is better at Snowbird, whose more contiguous vertical more than makes up for Alta’s small advantage in snow. Perhaps it’s Alta’s lack of snowboarders that makes people leave the place in a cultish frenzy. Or perhaps it's the lift ticket prices that, at $79 for the highest-traffic days, are well below that of many other resorts—Vail’s price is $119. Or perhaps it's just the snow.
Alta receives the top snow score at ZRankings, which assigns points for snow quantity, quality, consistency and deducts for the relative probability of prolonged drought, defined as less than 30 inches of snow in a month. Your odds of hitting such a month at Alta: 2% — the lowest risk of drought of any of the 102 mountains for which Tony Crocker has compiled data. Skiers also stand a 22% chance of hitting a powder day and a 51% chance of skiing during a month where more than 90 inches of snow falls. With an incredibly consistent annual snowfall of 530 inches—much of which is within that perfect zone of 8% to 9% moisture—Alta is peerless when it comes to skiing precipitation.
So if it’s snow first and snow second that you’re after, this is your place. You can even get a sticker.
Greg Wright's Celebrity Match: Sid Vicious.
In Pictures: Top 10 Ski Resorts For 2014
4. Alyeska Resort, Alaska - PAF: 86.4
Big state, big mountain, big snow.
Alaska emits a perfect strangeness, from its towns unreachable by road, to its thousands of coastland miles that don’t see humans for decades at a time, to its north reaches, strictly the realm of oilmen and caribou. Alyeska captures some of this strangeness while still managing to resemble, just barely, a destination ski resort—essentially the only one in a state that has the terrain and snowfall for hundreds of them.
The PAF algorithm ranks Alyeska highly for its snow that falls at a rate of 650-inches per year, a large vertical drop and a wide variety of terrain. Getting to Alyeska—a vexing problem for any and all things related to Alaska—isn’t too bad of a chore, especially from the West Coast. The resort is only an easy and scenic 50-minute drive up the Cook Inlet from the Anchorage Airport. Flying to Anchorage isn’t as easy or cheap as flying to Denver, but it’s better—and cheaper—than flying into some of the regional airports that serve ski resorts in the Rocky Mountains.
The resort profits from a unique relationship with Chugach Powder Guides, which stage some of their operation right from the resort, getting their lucky clients 16,000 to 20,000 feet of vertical a day in Alaska’s Chugach range (the place where most of those funky, unbelievable lines get filmed for ski movies).
The place to stay: There’s multiple places to stay, but there is a clear, dominant property: Hotel Alyeska. With a chairlift out the back door, gorgeous rooms and a built-in registration desk for Chugach Powder Guides, this hotel offers luxury in the heart of Alaska’s snow belt.
Greg Wright's Celebrity Match: Jack Kerouac.
5. Squaw Valley, California - PAF: 86.2
We like trams. Squaw Valley's got one. Check out Lake Tahoe in the distance.
Squaw Valley is the best resort in the Lake Tahoe area. In fact, it’s the best resort in any of the three contiguous West Coast states—and that’s a big deal, as there are a lot of great ski hills between Los Angeles and the Canadian border.
Squaw has an vast diversity of terrain—and vast diversity within its skier base—that could be the greatest of any resort anywhere. On a weekend day, you can watch some of the greatest skiers in the world shoot big lines down the Palisades and, a mere 20 minutes later, you can be skiing amongst giant throngs of San Francisco weekenders who ski like people from Texas. But remember, this is the place that gave us Shane McConkey and Jonny Moseley. Squaw’s elite skiers can challenge those of any area—including Jackson Hole.
With that diversity of skier and terrain also comes diversity of ski lifts. Squaw has it all, from classic fixed grips, cranking detachables, Alp-like trams and the only funitel—like a gondola, but on two ropes, for faster and safer rides in high winds—in the United States. Squaw’s KT-22 is one of the more iconic ski lifts in the world, whisking skiers over cliff bands, steeps and gullies to a set of crags that offer cold snow when the bottom of the resort is skiing like crème brulee.
So, yes, Squaw can get crowded. It’s a great mountain, it’s not a secret, and it’s just inside an acceptable weekend-trip driving radius from the fourth largest metropolitan area in the United States. A metro area that happens to be known for its teeming young people with good jobs, lots of money and lots of free time. Many of these said young people may have contracted the scenester virus, a well-known affliction in Silicon Valley and San Francisco. And Squaw, for all its awesomeness, draws scenesters like quad-roasted coffee poured over organic donuts served with a side of smuggypants. That’s just the way it is. But you can deal with this and still ski Squaw. And you should.
Squaw gets tons of snow, nearly 500-inches a year. That annual dumping comes with a couple of caveats, however, one of them being the standard Sierra exception: the snow often carries a moisture content of more than 13%. That kind of heavy snow makes powder skiing harder and more laborious than the lighter stuff of Utah/Wyoming/Montana and Colorado. This high-moisture snow can also coagulate into a giant coal lump when just a breath of hot sun hits it. But there are cold dumps, too, in the Sierras and those can come in quantities—4 feet or more at once—that Rocky Mountain resorts just don’t see.
The other reason that Squaw’s giant snow totals don’t land it even higher in our rankings is the capricious nature of its snowfall. Squaw, like all of the Tahoe area, while it can get eight feet of snow in three days, can also go an entire winter month with nothing but a passing rain storm. A full quarter of Squaw’s winter months tally less than 30-inches of snow, drought material at a Western ski resort.
Greg Wright's Celebrity Match: Shane McConkey. Greg further comments: "I know it's obvious but that's just how it will forever be for me."
6. Vail, Colorado - PAF: 86.1
Vail's back bowls can be exquisite, so don't sleep in.
No resort has marketed itself better than Vail during the last 30 years. There was a time, not all that long ago, when Aspen was default ski resort people conjured when asked to describe vacationing in Colorado. That day has passed. We now live in the age of Vail—in more ways than one.
Vail’s hegemony traces to a number of things. For one, it’s got a great name. Vail. It just sounds like a place that’s wrapped in snow, castles and magic dust. It could be an elven village in a Tolkien novel where maladies disappear and everybody has a standing vertical jump of six feet. Alas, Vail didn't enhance our jumping ability.
But being in Vail can enhance a lot when you’re coming from New York, Chicago or, as so many do, Denver. Vail occupies the best stretch of developed resort terrain in central Colorado. At a relatively dependable 350 inches of snow a year, it does well with snow for this part of Colorado, unlike some of the resorts on the east side—the wrong side—of Vail Pass: Keystone and Copper Mountain.
There are a number of good fall lines at Vail, including the trees of Game Creek Bowl, a favorite stash of those who know about the good life. Also on the Game Creek lift: Lost Boy, a green cruiser that runs down a ridge line at the top of the resort with fantastic views of the surrounding range and Aspen forests falling away from the mountain. If you arrive at Vail and there hasn’t been snow for a period, cutting up Lost Boy’s corduroy first thing in the morning is good bet. Just watch out for meandering Texans.
If you haven’t already heard, and you probably have heard, from elves or somebody, Vail is huge. It’s a good destination for plane-trekking skiers simply because there’s so much to be explored. The cursory warning must be offered here: on weekends, you may find yourself ‘exploring’ with the better part of the Denver metro area. Success in the ski business, and nobody has had it like Vail, means other skiers.
The resort deserves a lot of credit for addressing choke points, like the old chair No. 5, whose lines on big days could send people hiking up to chair No. 17, which isn’t exactly close. Chair No. 5 is now a high-speed quad that moves multiples of what the old, two-seater fixed grip used to deliver. So if you ski fast, this means more powder as the slower skiers won’t be able to depend on that old back-bowl fixed grip to slow you down.
Vail is owned by Vail Resorts, the largest, by far, operator of ski resorts in North America. The company has been on an expansion binge during the last few years and its stable now includes three resorts in the Lake Tahoe area and, most recently, The Canyons of Park City, Utah. Vail even owns two ski hills in the Midwest, outside of Detroit and outside of Minneapolis. Underpinning all of this expansion is the Epic Pass, which gives users full access to all of these mountains plus even some in Europe, including the resorts of Frances Les 3 Vallées.
Vail Resorts wants to be the Netflix of skiing—and the Epic pass is your subscription fee. For people who can put enough days in their winter against skiing more than one mountain in more than one place, it’s a wonderful arrangement, like binge-watching Breaking Bad one week and blowing through a Mad Men marathon the next week all for one fixed price. The full blown Epic pass with no restrictions at any of Vail’s resorts, is $729—a good deal. If you can put up with a few restrictions at some of Vail’s more popular mountains, a cheaper $569 pass is the only ticket you need.
Where to stay: There are more high quality, big properties at Vail than perhaps anywhere else, but the Ritz-Carlton Residences stand out for Pure Awesomeness.
Greg Wright's Celebrity Match: Posh Spice (Victoria Beckham).
7. Mammoth Mountain, California - PAF: 84.5
Mammoth: hard to get to, but big and a legitimate PAF scorer
Mammoth Mountain doesn’t often make it onto the radars of destination skiers who aren’t originating from Southern California. But if people are willing to fly from the East Coast or the Midwest to Lake Tahoe—flying past Rocky Mountain resorts—then these same people should certainly consider Mammoth Mountain.
Mammoth’s name befits its skiing as the mountain takes days to learn and years to master. There’s good terrain everywhere. Mammoth sits in a snow pattern not dissimilar from that of the resorts around Lake Tahoe with one major, positive caveat: it’s higher. Way higher. Mammoth’s slopes don’t begin until 8,000 feet and top out over 11,000 feet—putting it as much as 2,000 feet above some of the Tahoe stalwarts, including Squaw Valley. The same kind of Pacific storm system that brings February rain to the bottom of Squaw’s KT-22 lift might offer plump flakes to the lower slopes of Mammoth Mountain. What’s more, about two-thirds of Mammoth’s terrain faces north, keeping it cool and dry when other aspects are turning to Slurpee in the sun.
Mammoth does suffer from the same risk of drought as Tahoe does, however, as 28% of its winter months are quite dry, with less than 30 inches of snow precipitation. It can get similar prolific bounties, however, as a third of its winter months have featured more than 90 inches of snow.
Looking at the map, it would figure that Mammoth would be a favorite of Bay Area skiers, but because the road through Yosemite closes in the winter, getting there via road from San Francisco requires driving to Lake Tahoe and then proceeding south another 175 miles through Nevada and then back into California to Mammoth Mountain. Because of this, few Bay drivers choose to almost double their drive compared with the trip to Tahoe’s mountains. Much of Mammoth’s traffic comes from Los Angeles, in fact, which is about the same kind of drive as that from San Francisco—and L.A. doesn’t have a option that’s as good as Tahoe closer at hand.
For destination skiers not coming from California, Mammoth is worth a shot for those who like to switch things up. Mammoth is part of the fabulous Mountain Collective, so holders of that pass get two days for free at Mammoth plus every additional day at 50% off.
Greg Wright's Celebrity Match: Jack Nicholson (that is awesome).
8. Grand Targhee, Wyoming - PAF: 83.8
Just another day at Targhee.
A lot of people know that the Park City ski areas—Deer Valley, Park City and Canyons—are inside of what’s known as a snow shadow of the areas just over the ridge on the other side of the Wasatch range—Alta, Snowbird, Solitude and Brighton. Storms hit that latter group first, and the teeth of the Wasatch shake clouds down for all of their big bills first. As storms cross the ridge into Park City, sometimes all they have left is spare change. Of course, when you’re starting with 500-plus inches of snow on West-facing side, it still means the Park City side gets 350 inches of snow a year.
What most people don’t realize, however, is that there’s a similar relationship between two resorts in Wyoming. The resort in the shadow—the resort getting less snow—is actually Jackson Hole, the No. 1 ranked resort as measured by the PAF algorithm. One reason for Jackson’s ranking is, yes, its snow: 450 inches a year, a big total that’s proven durable even during lean years for the rest of the West. The resort getting even more snow, on the other side of the range from Jackson, is Grand Targhee.
Although getting to Targhee from Jackson involves a drive across Teton Pass into Idaho through the towns of Victor and Driggs, the resort happens to be located in a Wyoming town befitting of its geographical situation and meteorological largesse: the town of Alta.
Targhee is often a quiet place. “Busy” means that a bunch of people showed up on a Saturday on a drive from the metropolis of Idaho Falls. People here, by the way, do not generally ski like Texans. They ski powder and a lot of it. They don’t, however, get the steeps and contiguous vertical that skiers at Jackson Hole enjoy. Targhee’s flaw is that it has a shape resembling half a swimming pool—a steep but short drop to a long run-out where vertical doesn’t count for as much. If Targhee had a more continuous fall line, it would not only be ranked even higher by the PAF, but it would also be a veritable training ground for pro skiers, much like Jackson and Squaw.
To be sure, there is great terrain at Targhee, it simply comes in smaller bites than the full entrees at Jackson and Snowbird.
Grand Targhee rates No. 3 in the Snow Scores at zRankings on the strength of its annual average of 500 inches of snow plus its Alta-like 20% chance of six inches of powder on a winter day. A robust 42% of winter months bring Targhee more than 90 inches of snow and only a minute 3% proffer less than 30 inches.
Greg Wright's Celebrity Match: Tom Hanks.
In Pictures: Top 10 Ski Resorts For 2014
9. Telluride, Colorado - PAF: 82.1
The terrain is as epic as the town.
For those who remember being amazed as a child on an initial trip to a theme park like Disneyland, or maybe a waterpark—an enthralled child asking, in her own head: how is the awesomeness of this place even possible!?—a first visit to Telluride elicits the same kind of inner response in adults.
So how is this place even possible? A coalescence of nature, tasteful planning and disciplined development make this place possible. It’s a place where cars are utterly unnecessary, where town and mountain meld into a complete ecosystem complete with an automated transportation system, where one of the best main streets in the Mountain West beckons with bars and a coterie of food, from barbecue and pub grub to elegant five star meals worthy of a major city.
That automated transportation system comes in the form of a gondola that’s free for all and runs from sun-up to midnight, easily ferrying people from historic Telluride in the valley below, up to Mountain Village, the independent town that anchors the upper resort and where much of the area’s lodging resides.
The town of Telluride barely looks real, with 14,000-foot peaks commanding the attention of a classic set of Italianate faux fronts on Main Street, which dead-ends in near a town park that stretches up a gulley that offers locals snowshoeing and more than a few ice-climbing pitches. On the ski town ambience front, Telluride has few peers. Among the best ski resorts in North America, Only Aspen and Park City are in the same league.
And what of the skiing? It’s good to great. Lift lines, except on the most peak of peak days at hubs and crux points of the resort, don’t exist. Plenty of cruisers for the family and plenty of long, isolated bump runs for those 20-year-olds who still don’t know or care about ligaments.
The steep terrain at Telluride has expanded a great deal in the last 10 years and includes some of the hairiest in-bounds stuff in the United States. A two-hour hike to the apex of Palmyra Peak, facilitated by nifty sets of steel steps navigating around sketchy sections of rock and ice gives skiers 2,000 vertical feet on the north side of the 13,320-foot mountain (That snow stays cold in all but summer-like weather).
A view that justifies the trip.
Other shots that don’t require skiers spend a third of their day hiking include the Gold Hill Chutes, which can be reached in 20 minutes of hiking and reward skiers with snow that doesn’t see much traffic. The great thing about a lot of this terrain is that it gives skiers something of a backcountry experience without much of the requisite avalanche danger. Because this terrain is technically in-bounds, Telluride’s elite patrol group uses ordnance to eliminate faulty snowpacks before allowing the public onto the terrain.
New for this year is more snowmaking, which will help ensure early season dry spells don't mess too much with peoples' vacations. Flying into Montrose has gotten easier, too, with more flights from L.A., Chicago, Dallas and Atlanta. Telluride looks like it's in the middle of nowhere and it feels like it, which is good, but the reality is that it can be easier getting in here than into a lot of resorts that are primarily serviced by Denver's airport.
Telluride doesn’t get as much snow as many of the other resorts in our Top 10. If it got Alta’s snow, it would be in play for No. 1; it’s that great a place in all other phases. The threat of a bad month is real as nearly a quarter of winter months see less than 30 inches of snow and only 5% of months get more than 90 inches. The good news is that half of Telluride’s terrain sits on a north-facing slope, which, combined with its altitude, keeps its snow well-preserved and chalky on most slopes.
Where to Stay: Amazing amount of top-end lodging, but we love Mountain Lodge for the ambience, the location (walk to Mountain Village’s Market) and the quiet.
Greg Wright's Celebrity Match: Butch Cassidy
10. Solitude, Utah - PAF: 81.7
Things are creeping toward world class at Solitude.
We make an effort to visit the resorts on our list at least once every three years. Solitude is a regular cog in that schedule and its location, like that of Alta and Snowbird, makes it easy: an easy 40 minutes from the Salt Lake Airport and skiers can be on the slope. Solitude is our Saturday mountain, especially when there’s a lot of new snow, a condition that exists about 20% of all winter days in Utah’s Little and Big Cottonwood Canyons. To be clear, on a Saturday, Solitude is elite among the best ski resorts in the United States -- or within the best ski resorts in North America.
People stream to Alta and Snowbird in big numbers on Saturdays; tourists, of course, but also a good sliver of the 1.2 million people who live in the Salt Lake metro area. Solitude remains far less affected by both tourist and local traffic. While a powder day at Alta can cause traffic backups for half a dozen miles, the same kind of snow fell at Solitude and skiers can usually coast right into the lot and up to a lift without getting a whiff of a queue.
Solitude is positioned on the north-facing wall of Big Cottonwood, one canyon north of Alta and Snowbird. The terrain here doesn’t drop away with the same severity as that of Little Cottonwood Canyon and it doesn’t have the same vertical as Snowbird, but there are great shots everywhere—and the same prolific snow pattern that’s bequeathed Little Cottonwood as sacred ground to most skiers. The only skiing nit with Solitude is the quantity of flatter run-out skiers must often traverse before reaching a chairlift.
But that extra travel is well worth skipping the elbow-to-elbow shoving match that a Saturday can be at Snowbird and Alta. In fact, on any big snow day during February, March and prime tourist weeks, Solitude is an excellent play for those uninterested in forging new scars of powder day battles one canyon south.
Solitude has improved its base area and lodging during the last 10 years, giving it more of a village-like destination feel rather than a sleepy local area. If you want the ambience of totally-off-the-radar in Utah, check out Powder Mountain.
Greg Wright's Celebrity Match: Santa Claus (yes!).
Gallery: Top 10 Ski Resorts For 2014 11 images View gallery
Christopher Steiner is the NYTimes Bestselling Author of Automate This and founder of Zrankings.com, home of the best ski resorts in North America. Follow him on Twitter!
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4e255554563a006b6859d62e4866866b | https://www.forbes.com/sites/christopherwalton/2018/07/20/amazon-and-alibaba-may-have-a-leg-up-in-shaping-the-future-but-walmart-will-refuse-to-lose/ | Walmart's New Microsoft Deal, Not Amazon Prime Day, Was The Most Important Event In Retail Last Week | Walmart's New Microsoft Deal, Not Amazon Prime Day, Was The Most Important Event In Retail Last Week
Shutterstock
Prime Day, Shmime Day.
Amazon dominated the headlines this week with its annual July holiday. But I, for one, did not give it much notice. It has become de rigueur for Amazon. In fact, whatever hiccups Amazon did encounter this week will only make it stronger in the long run and possibly better prepare Amazon for what I fear more than anything else in the world—a last-minute preemptive Prime Day a week or two before Black Friday somewhere down the line. Such a move would be the Death Star, planet-destroying blow to traditional holiday retail. Even a minuscule 0.000001% chance of this happening frightens the hell out of me.
So, until then, July is just an amuse-bouche and not a time to get overwhelmed with Amazon-related Prime Day shenanigans. It is far more important to keep one's eyes on the prize each week, to look past Prime Day, and to maintain focus on who (and who is not) planning ahead for the future and going after the next great innovation in retail—the personalized physical store—so as not to be left in a cloud (pun intended, as you will see) of dust ten years down the road.
The most important news of this past week was therefore not Prime Day, but Walmart's clear decision to throw its hat into the next-generation retail ring with its new long-term partnership with Microsoft.
As I wrote recently, Amazon and Alibaba have both been doing their damnedest to begin defining what the future world of retail looks like: Amazon with Amazon Go and Alibaba, most specifically, with its Hema grocery store in China. While the physical superstructures of these installations are almost irrelevant, the technical operating platforms for data capture atop which both of these concepts sit are vitally important.
Just as e-commerce debuted in the late 1990s, nearly 30 to 40 years after the last large-scale innovation in retail, quite soon a new technological operating system for retail will also emerge on the same time trajectory, sometime between 2020 and 2030. The race is on to see who cracks the code first and who then benefits from selling this system to the countless other retailers that could never develop something so advanced on their own.
Sound familiar? It should. It is the same mousetrap Amazon laid with its e-commerce browser at the turn of the century, when Amazon powered many retailers' e-commerce businesses. No one should be surprised that Amazon is at it again and that Alibaba is thinking the same way.
Enter Walmart.
Walmart smartly realizes that it cannot lay dormant while Amazon and Alibaba chase this Holy Grail, which is why the announcement of its partnership with Microsoft this week was so important.
Walmart inked a partnership with Microsoft for a five-year, full-suite cloud deal. According to Retail Dive, Walmart will "capitalize on Microsoft's artificial intelligence, machine learning and data solutions for cloud innovation projects, including building out its global IoT platform on Azure."
Effectively this statement means that the deal could begin to give Walmart the three legs to the stool it needs to compete effectively in the world of next-generation retail: cloud commerce, mobile applications and location analytics (aka the Holy Trinity).
The intersection of these three technological capabilities is what will give retailers an unprecedented level of data capture within a physical retail store. It is what will turn physical stores into the analytical equivalents of e-commerce browsers. It is what will enhance not only the science of physical retailing, but the artistic expression of it as well.
Harnessing these three technologies will give retailers, all things being equal, an almost regression-like understanding of the value or impact in real-time of every action and reaction within a store, meaning physical experiences will be able to be tailored uniquely to each individual who decides to enter a retailer's four walls.
The days of a "mass" experience will be over. Every experience from one individual to the next will be different.
Microsoft is a strong partner to help Walmart pull something off within this realm. Microsoft's Azure cloud services give Walmart the speed, scale and security to process the data required in real-time; Microsoft's stable of mobile application partners, often on display annually in Microsoft's booth at NRF, is incredibly formidable; Microsoft's recently announced Partner of the Year, AVA retail .AI, also happens to specialize in location analytics and visual recognition technology, which, for those scoring at home, happens to be similar to the components within Amazon's Go concept; and Microsoft, unlike other cloud providers not named Amazon, actually runs its own stores.
Everything within this potential partnership just passes the smell test.
But keep in mind, Walmart is only through mile one of the next-generation retail marathon.
While partnering with Microsoft is the right move by Walmart, Walmart's next-generation life will only take shape once the company pushes itself to the edge of its current comfort zone. Amazon and Alibaba likely both have a leg up in the race because of their lack of existing physical retail operational, technological, architectural and cultural debt, so Walmart will, in many ways, have to work harder than the next guy.
The greatest barriers to entry for new retailers are physical stores themselves. Physical stores are expensive for upstarts to build. What matters, then, is not so much the Walmart stores that people know today, but the Walmart stores that people will know 10 to 20 years from now.
Future Walmart stores will need to look vastly different, regardless of how ready the Baby Boomers and Generation X are for the eventual transformation. Transforming Walmart stores for future generations will require thinking similar to how Apple designs its products. Just as Apple removes features that customers love in nearly every new product release—things like disk drives, earphone jacks, etc.—so too must current aspects of Walmart's business go away in the aim of long-term generational progress.
Will Walmart have the grit and determination to keep at it?
Yes.
Doug McMillon has thus far shown that he is the right man for the job. The partnership with Microsoft signals that he is taking the right approach and will not go down without a fight. While many retailers find themselves in a position unable to fight or are even happy treading water in the hopes of riding out what is, in reality, an insurmountable storm, McMillon appears to be willing to make the tough choices required to move Walmart forward.
McMillon appears to be playing the long game—selling off assets to sharpen the company's focus (Asda), bringing in new talent and perspectives (Marc Lore, Valerie Casey and others), focusing more on R&D (Store No. 8), and finding the right partners that could be essential to survival (Microsoft).
2019 could be the watershed year for McMillon and for Walmart. It could be the year that the seeds of his hard work, firmly planted in the ground, take root, begin to sprout and give the public a glimpse of Walmart's own Amazon- and Alibaba-like vision of what the future could be.
Until now, the public has seen only small, incremental tidbits of what Walmart's store of the future could look like, but this new partnership with Microsoft likely portends that there is far more on the horizon, that Walmart too will dream the American dream of entrepreneurship and do all that it can to lead retail through the next great innovation cycle in retail.
The clock is ticking. Now is not the time to follow. Now is the time to lead. America needs Walmart to do exactly what it appears to be doing.
Disclosure: I was asked to speak at one Microsoft-sponsored event this year — the Retail Tomorrow Immersion Series. A complete transcript of my participation can be found here.
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24cb40502267552809b34cd6ba2d8fc8 | https://www.forbes.com/sites/christopherwalton/2018/08/16/kroger-decision-to-launch-brands-with-alibaba-is-pure-genius/ | Kroger's Decision To Launch Brands With Alibaba Is Pure Genius | Kroger's Decision To Launch Brands With Alibaba Is Pure Genius
(AP Photo/Rogelio V. Solis, File)
Kroger has upped the ante with its recent headlines. Earlier this year, Kroger invested in the UK-based direct-to-consumer grocer Ocado, hoping to bring Ocado's warehousing capabilities to the American market, and now this week Kroger has again looked overseas to expand its retail playbook even further.
This week Kroger looked to China and announced its plans to launch its owned brand Simple Truth on Alibaba's Tmall platform.
The move is a stroke of Val Kilmer Real Genius, a move that far more U.S. retailers should undertake. It is an easy, no-risk shot in the arm that could cure what ails American retailers, one that could give them a much needed boost in revenue and profit, and, for Kroger, as fellow Forbes contributor Brittain Ladd suggests, it may even signal further work with Alibaba down the road, as U.S. grocery continues to face intense competitive pressure.
But, for the sake of this piece, let's stay with Tmall and how other retailers should think about it.
Tmall is simple and straightforward. Tmall is Alibaba's B2C commerce platform. As I said last week, Tmall is an e-commerce marketplace, akin to Amazon but far more inspirational and discovery-based, that offers American retailers and brands easy access to the Chinese market.
Overall, there are six clear reasons why Kroger's recent decision to leverage Tmall is pure retail strategy gold and why every retailer should follow Kroger's lead as quickly possible.
1. The Chinese Market Is Huge. On pure math alone, the overseas selling of Simple Truth, America's largest national and organic brand, at over $2 billion in annual sales, is an absolute no-brainer. The size of the Chinese market is without compare.
It is insane for companies not to stand up stores on Tmall and to see what happens. The potential upside is just too big to ignore. If products sell well, the added consumer base and increase in revenue could be just what retailers need to fund other initiatives stateside.
Tmall could provide retailers a new source of funds to support the general increase in R&D expense across the industry that is desperately needed to keep pace with Amazon.
2. It Is Easy To Do. Think of setting up shop on Tmall like starting a website back in the 1990s or trying to set up shop on Amazon's marketplace today. It isn't difficult. It just takes a desire to do it. Heck, I even have a buddy who went to a one day seminar to learn how to do it on Amazon.
Alibaba knows how to make it easy too. Take one look at this link highlighting many of the retailers setting up shop on Tmall, and one sees clearly that Alibaba wants retailers to be successful and that many retailers are starting to get the punchline to the joke far ahead of others.
Net/net -- the people and resources needed within a retail organization are a small tiger team of people -- at best.
3. It Is Not Distracting. The common excuses businesses and retailers have for not doing something new is that they claim new initiatives will be too distracting to their mainline efforts.
Horse pucky.
Companies can easily be broad in priorities and narrow in focus at the same time (see Amazon).
A Tmall operation can exist wholly isolated from Kroger and any retailer's U.S. operations. Until a retailer knows what it has in China, the two sides do not even have to talk to each other. One has almost nothing to do with the other. If companies do get distracted from the effort, it is likely more the outgrowth of poor company culture and people butting their noses into places they shouldn't than the outcome of a bad decision.
Put it up on Tmall, see how the Chinese market responds, and stay in your lane. It is that simple.
4. It Offers New Economies Of Scale. Now this rationale might not apply as much to Kroger in terms of food production, but it might, and it definitely applies to retailers who source and manufacturer products directly from China.
Tmall could give retailers another outlet to sell their goods before they even have to ship them to the United States!
This opportunity means more economies of scale in the form of higher revenue and lower costs of transportation from one single point of production.
5. It Is An Experiment That Can Be Replicated. Once a retailer learns how to sell on Tmall, and given the likely proliferation of other e-commerce marketplaces throughout the world, it should then be easy for retailers to replicate the setup process and to tap into other global markets of opportunity.
India is likely the next hotbed of activity. Understanding China has to be of some benefit to that eventual effort as well, as it would be to capitalizing on growth from further markets like Latin America and others.
Starting business on Tmall then could be the kindergarten handwriting lessons that turn once-confined "America-only" brands into international brands of unprecedented size.
6. It Is Absolutely No-Risk. For the sake of argument, let's say Kroger puts Simple Truth® on Tmall, and it doesn't sell. What's the worst thing that could happen?
Absolutely nothing more than failure. Kroger will be no worse off for having tried the experiment than it was before, and at least it will have learned the ins and outs of doing something new. The extent of the downside is no more than a conversation of saying to the small tiger team, "We tried."
Failure in China will have no bearing on a retailer's American business performance or on American consumers' perceptions of any given brand.
It is the same no-risk approach that countless entrepeneurs who stand up long-tail direct-to-consumer brands take every day. If entrepreneurs can do it, any large corporation, and especially anyone near Kroger's size, should be able to make the same move without a moment's hesitation.
At the end of the day, I look at Tmall like dating. If you take a swing and ask somebody out, and the person says, "No," then you are no worse off than you were before. It is the same with Tmall.
Retailers should not be scared of rejection either.
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d02b3211e4f1a73fb8f6af3646028ea8 | https://www.forbes.com/sites/christopherwalton/2018/11/26/the-clear-winners-and-losers-of-black-friday-2018/ | The Clear Winners And Losers Of Black Friday 2018 | The Clear Winners And Losers Of Black Friday 2018
(AP Photo/Bebeto Matthews) ASSOCIATED PRESS
To say that anyone won Black Friday is almost a misnomer. Black Friday is an antiquated concept in many ways. Amazon could destroy the holiday forever if and when it decides preemptively to strike by way of a new Prime Day on or before November 21st. Or perhaps some other opportunistic retailer will try to beat Amazon to the punch, take a bite of the forbidden apple itself, and attempt to move all its promotional activity to the weekend before Thanksgiving, all under the guise that Thanksgiving should be a time for families.
Something new has to be done, but until that day comes, Black Friday is as much an American holiday tradition as chestnuts on an open fire.
So, there I was, bright and early Friday morning, when the Mall of America opened at 5 a.m. in Minnesota, with two of my favorite colleagues, to take it all in and to stoke the flames of the made-up holiday with as much yule tide cheer as three espressos could muster.
But, as we sat down to recap our trip for our weekly podcast, right in front of the largest Lego Transformer west of the Mississippi, I was utterly surprised by our collective discussion. The event was important to see with our own eyes because we came to conclusions we didn't expect, amid the perfect backdrop of America's mall, the Mall of America.
Not only were there clear winners and losers, but what we saw also gave us a stark reminder of where we are today and galvanized us to think differently about the future.
Winners
Youth
The shoppers were overwhelmingly...young. Teenagers packed the house before 8 a.m., going against every stereotype about Black Friday. Black Friday was supposed to be about moms, aunts named Annie and extended families getting together after a long day of cooking and eating the day before to shop until they dropped.
Not this year.
Throngs of teenagers hit up the mall. Instead of sleeping in, the mall served as a place to go to get away from the family and to get great deals on skimpy budgets.
Buy one, get one free? "Yes, please!" was the resounding cry of a demographic, often slighted for laziness, that was up early and ready to get their game on because they wanted a place to go and there was value to be had in the experience.
The Beauty Business
This year's Black Friday proved there isn't just something about Mary, but that there is also something about the beauty business, too. The beauty business, relative to everything else at the mall, is still "physical." Macy's was packed and so was Sephora and other storefronts as well.
There is just something about the try on, something about the social aspect of shopping for beauty products live and in the flesh that differentiates it from other categories. It is still tactile and experiential in a way that shopping at the specialty apparel shop right next door, at even greater discounts, no longer is.
Great Brands
Lululemon, anyone? More like, Lululemon, everyone.
Lululemon was packed as you can see from the photo below:
A packed Lululemon at the Mall of American on Black Friday 2018. Omni Talk
After three loops around the mall, including the cavernous fourth floor filled with movie theaters and comedy clubs, Lululemon was the only storefront with a line out the door and an employee playing the role of traffic cop. All of which goes to show that great brands, riding a great trend (athleisure), can still give people a big reason to leave their homes in the short run.
The Losers
Meaningless Retail
If a retailer throws up a huge sale sign on its windows for Black Friday, does it make a noise?
Clearly, no.
Big sales are not enough to differentiate one retailer from another. There has to be something else. The mall was littered with empty, mostly specialty apparel retailers whose employees all showed up dutifully for work bright and early with nothing to do. The lonely store employee at Club Monaco at 7 a.m. was eerily reminiscent of me wandering my house the night of junior prom. It was an utterly sad state of affairs.
And, Sears, there is no sense even going there, but this picture says it all:
A lonely storefront on Black Friday 2018. Omni Talk
Progress
Progress was the biggest loser of all. The industry simply has not evolved. It is like that scene in 2001: A Space Odyssey where the ape discovers a bone hammer, only instead of evolving as the apes did, the industry keeps pounding the same damn femur over and over again instead of learning how to do even more and better things with new tools.
Digital was not an integral part of the mall experience nor of the retail theater itself. Tools that could be used to make the experience more fun, to highlight the social aspect of shopping as large masses of people congregate, all in one space, similar to a sporting event or a concert, were absent.
It was just sale, sale more sale. And, the only ultimate winner in that world is you know who.
If Black Friday proved anything, it is that the current construct of the average mall is dead and that a "sale" just isn't enough to save it from cardiac arrest. Malls like the Mall of America will survive because daily they are tourist attractions in and of themselves, but the lesser malls haven't a hope in hell.
And, therein lies the answer: Retailers and mall operators can keep going all in on Black Friday, but it is a road to nowhere. Instead they need to turn their attention to reimagination and to the questions they should be asking like:
How do physical experiences behave and act like one commercial experience? What is the new physical experience that Millennials crave? That Generation X craves? That the Generation Z craves? Hell, even the Baby Boomers, too?
The "American Mall" does not act as one commercial experience, nor does it answer any one thing, for any generation. Malls, as my good friend and colleague Jim Hoar likes to say, are stuck in a "mucky middle." They are caught up trying to recapture the Springsteen glory days of the 1980s, in a world that doesn't care if it can stuff its red hat inside the back pocket of its tight blue jeans anymore.
It is time we think differently. It is time we build new indoor centers for seniors, stress-free distractions for 30- or 40-year-old parents, and whatever it is that today's youngest generations like to do outside of their homes (and when they are likely still on their cell phones). And, we need to do it in a way that redeploys technology and warehousing across the jointly shared goals of the commercial experiences that reside within them, with the word "anchor" forever stricken from the lexicon. The entity itself should be the anchor.
Like so many things in business, salvation comes down repurposing and segmentation. One size rarely fits all any more. Even at 50% off.
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04a109e3758aa91057fdaf2a74278693 | https://www.forbes.com/sites/christopherwalton/2019/02/11/retailers-should-pay-extra-special-attention-to-krogers-shelf-labeling-plans-with-microsoft/ | Retailers Should Pay Extra Special Attention To Kroger's Shelf Labeling Plans With Microsoft | Retailers Should Pay Extra Special Attention To Kroger's Shelf Labeling Plans With Microsoft
Let me get right to the point: Kroger’s recently announced digital shelf labeling tests, at one store in Ohio and one in Washington, and done in partnership with Microsoft, are cool. Really freaking cool.
Many share this sentiment. A few weeks ago at NRF’s Big Show 2019, the Kroger/Microsoft exhibit, where the digital shelving was on display, attracted standing-room-only crowds. Starbucks baristas passed by with trays of dark-roast coffee as business-professional-clad men and women gawked at what was on display. There, they were regaled with tales of personalization at shelf, in-the-moment marketing and interactive wayfinding.
NRF 2019: Kroger Digital Shelving Displays At Microsoft Boot Omni Talk
“So, wait, you mean you can help me locate the groceries I want to buy with personalized signals of where they are on a shelf as I walk by?” some asked. “And these personalized signals can be bananas, too? No way!”
Yes, way. And yes, maybe that second question was mine, too.
But peel back said banana (pun intended), and you will see that innovation and experimentation in digital shelving are far more important than for all the glitzy and glamorous reasons touted at the show and in the media of late.
While it is neat to see digital displays come to life within a store, and while the label shelving substrate alone is enough to make someone feel like they suddenly walked into an episode of Star Trek: The Next Generation, the "tech," even with all its flashing fruit, should not overshadow why digital pricing displays are so important.
The real value in digital price signage lies somewhere else entirely, in that digital price signs finally level the playing field with e-commerce. The issue is not talked about enough, but legacy bricks-and-mortar retailers have a decided strategic disadvantage when it comes to price.
Pricing operations and practices within stores are archaic. Just take a look at the steps involved in changing prices at a physical store:
Weekly prices are set at a headquarters level (the degrees to which data science is involved here can vary greatly too). Prices are then sent over to a label manufacturer for printing. The physical price labels are then sent out in large print batches to a retailer’s stores. Headquarters and store teams then assign payroll hours and schedule workers each week based on the size of the pricing label workload. Store-level teams then unpack, unbox and collate all said price labels at a store when they arrive (provided, too, that store workers can find the boxes of signs amid all the other boxes of mail they receive as well). Store employees then place the price labels on products and shelves throughout the store. Finally, the unending loop of death begins again from the top, week after week.
Here is what the process looks like for e-commerce:
Complex algorithms scrape and monitor competitor pricing across stores and online. Prices online update based on the results of said algorithms (oftentimes multiple times per day).
The above juxtaposition is ludicrous when one stops to think about it. No matter what whiz-bang innovations legacy bricks-and-mortar retailers try to put into their existing store operations, if they are not changing their prices digitally in store and in real time and instead are still using paper, they haven’t a hope in hell of keeping up with the competition.
It is like trying to beat the Golden State Warriors four on five, or, for you foodies out there, like being asked to compete on Chopped but not being able to use pots and pans. It is a no-win situation, even if you do get to meet Ted Allen.
As long as retailers continue to run actual physical print jobs to change their prices in-store, online retailers will always have a significant pricing arbitrage opportunity. Prices in-store will never be “marked to -market,” as they say, or, more importantly, possibly even to products on a retailer’s own website!
This last sentence is almost unfathomable to type, but the issue is quite real and continues to persist—industry-wide. Target just last week had to update its pricing practices after being flagged by a local Minneapolis news outlet for discrepancies in price between its online mobile apps and its in-store shelf labels, for example.
So while Kroger’s recent experiments may already be showing beneficial effects in terms of in-store conversion and basket size, the more important implications to Kroger’s tests are what they will ultimately mean for the company's consumer price transparency and the longer-term health of Kroger’s business model itself.
Kroger’s leadership will be able to sleep soundly at night because they can rest assured that their online prices will always match their in-store prices, that their prices will be competitive to their brand position within the market, and that their consumers will never be confused. All the while, their label-printing competition will continue to bring a knife to a gunfight in the ever-heating-up battle for digital and in-store grocery superiority.
Flashing bananas may be cool, but what is even cooler is knowing that every one of your customers can have the absolute confidence in the quality and competitiveness of the prices they see at shelf. While the tests in Ohio and Washington may not reveal Kroger's ultimate store-of-the-future plans, they sure as heck are the key parts of the required concept store work it will take for Kroger to one day get to the answers that lie years ahead.
Bravo, Kroger, for having the guts to go where others still have not dared!
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91b6b07733092b23a9253a376aa2f8df | https://www.forbes.com/sites/christopherwalton/2019/03/15/a-new-mathematical-equation-for-value-may-predict-a-not-so-glowing-future-for-walmart/ | A New Mathematical Equation For Value May Predict A Not So Glowing Future For Walmart | A New Mathematical Equation For Value May Predict A Not So Glowing Future For Walmart
Value is one of the most important terms in retail. Unfortunately, it is also misunderstood and often used in the wrong context. When used correctly, it can serve as one of the most powerful indicators of a retailer's long-term health prognosis.
Value Decoded
The most important aspect of value is that it is an output, not an input. Mathematically, it is the dependent variable in the equation. Not the independent variable.
Retailers, and especially retail executives, often confuse this fact. "We are going to win on value, price, convenience, and yada yada yada," they will exclaim on stages, in press releases, and within earnings reports. While statements like these could prove true, whenever value is set alongside a list of other variables, in equal measure, it should spark worry.
A retailer doesn't "win" (my quotes) on value per se. It wins on the components that make up value. The consumer determines value, and that determination is unique to each person.
In the modern age, retail and brand differentiation come from four main factors—brand, assortment, price and convenience. Value, defined mathematically, is the aggregate expression of these variables within an equation, like below:
Value = B0 + Brand * X1 + Assortment * X2 + Price * X3 + Convenience * X4
How consumers perceive a retailer is the composite of their thoughts and feelings surrounding these dimensions. The stronger a consumer feels about a particular dimension, the higher the coefficient of that dimension becomes and thereby raises the level of value that retailer provides for the consumer.
The Rubric As A Predictor
The equation above serves as a useful predictor of success as well.
Doug McMillon, CEO of Walmart, is famous for carrying around in his pocket a list of the top 10 retailers in the U.S. by decade. According to Lauren Thomas of CNBC, here is the ranking of the top U.S. retailers in 2017:
Walmart Kroger Amazon Costco Home Depot Walgreens CVS Target Lowe’s Albertsons
Now, a quick use of the value rubric sheds light on some interesting points about these companies’ relative strengths heading into the next decade.
Take, first, Walmart.
Imagining a five point scale (where 1 is high and 5 is low), Walmart, across the value determining variables above, would have, a decade ago, scored high on price, low to mid-range on assortment (because many other retailers carry what Walmart carries), low to mid-range on brand, and high on convenience (because of the one-stop shop desirability of Walmart’s grocery offering).
But, now ask yourself, “Is Walmart better positioned today than it was 10 or 20 years ago?”
Absolutely not.
Whatever scores Walmart did have, one has to believe, given the onslaught of Amazon and using the rubric, that the resulting value scores of Walmart have decreased for the following reasons. First, one could argue that Amazon is now the low price leader or has at least dented Walmart’s pricing coefficient. Second, Walmart’s assortment and brand haven’t changed all that much (despite their digitally native brand acquisition spree). Third, Amazon has also hit Walmart hard on the convenience side of the business via Prime.
It makes sense then why Walmart is going hard after the omnichannel grocery space. It is the variable of the value equation most in Walmart’s control. But, if Amazon does create its own expression of physical stores, with continued leadership in pricing, with likely as good if not better convenience than Walmart, and a more desirable brand expression and range of products than Walmart, then Amazon no doubt likely still has a decided leg up in the long-run.
Looking through the lens of the value equation, just maintaining par could prove incredibly difficult for Walmart.
Who Is Strong?
A further quick scan of the top retailer list also shows who is well-positioned and who is not. On the strong side, Amazon, Costco, Home Depot, and Target have all fortified their positions over the last decade according to the value equation.
There is no sense spending too much time on Amazon. Clearly, Amazon has fortified its position across every dimension in the value equation, which is why it should be no surprise that reports are that nearly half of all American households are Amazon Prime members. The value in the Prime program, across the four dimensions, is downright insane.
Turning to other retailers, Costco has held its brand reputation, holds a unique proposition when it comes to pricing, and its treasure hunt-like assortment is still beyond compare. Nothing at all on the horizon indicates Costco is in danger either (at least not yet anyway, though there may be some ideas out there that could thwart Costco’s position).
Home Depot could have slipped on the price and convenience coefficients against Amazon this last decade, but it too has smartly amplified its brand coefficient. Its stores and the service interactions within them are difficult to simulate online. Home Depot has also increased its convenience coefficient, via its investments in omnichannel capabilities and its large fleet of flatbed trucks, which are hard even for Amazon to duplicate.
Target, too, has carved out a nice niche over the last few years. As Walmart and Amazon engage in an all-time celebrity retail death match, Target has been quietly working in the corner, amplifying its brand and assortment coefficients to stay ahead of them both on these fronts and has also been fortifying its omnichannel capabilities to the table stakes needs of the new retail consumer.
Who Could Lose?
Kroger, CVS, and Walgreens are each in danger of paying the piper for treading water over the past decade.
Kroger has shown that it wants to take steps in the right direction to fortify its value equation—hiring its first outside marketing agency (brand), investing in Ocado (convenience), experimenting with digital shelving (pricing)—but it is too early to tell how these steps will move the needle, and Kroger still needs to fortify its assortment in some way shape or form against the one-stop shop appeal of Target, Walmart, and whatever Amazon conceives of next, or Kroger also risks losing on that dimension over time.
Mark it down now, Kroger will be the most interesting company to watch over the next decade because could it go either one way or the other.
CVS and Walgreens at this point are in a similar state of health, but for different reasons. Their value is held in the fact that prescriptions are a highly regulated business. Innovative business models for convenience and strong challengers have not yet entered the fray. So, while they each hold a strong value position in what they do, it is the dynamics of their industry more than anything else that give them the moats that they have.
Maintaining first-mover advantage at all costs across the dimensions of value is therefore an absolute must for both CVS and Walgreens or 2030 will look quite different than it does now – which is also what makes Amazon Go and Amazon’s potential entry into healthcare so scary for both.
Then, finally, there’s Lowe’s and Albertsons. Lowe’s has stayed nowhere close with Home Depot on the elements discussed above, and, while its recent experiments with micro-warehousing are admirable, Albertsons may also have started the experimentation process too late and still faces the same risks as Kroger.
Implications
At the end of the day, is anything above rocket science? No, absolutely not.
But, understanding the value equation, in the proper context, is a powerful way to look at the future.
It is a litmus test that points in two important directions:
It informs which media reports and press releases are real and which are just pure fluff. It raises important new questions beyond just the carving up of the top 10 retail pie.
The battle for retail supremacy will be intense, but rise above the aforementioned retailer vs. retailer discussion and one also begins to see why social commerce and digital marketplaces are so important.
Online marketplaces have the opportunity to carve out their own niches on the value spectrum high above the carnage, much the same way strip mall owners and shopping mall owners did for the past 50 to 60 years. Amazon is strong here, yes, but the foothold on the remainder of the online commercial real estate of the 21st century is just taking shape.
Will it be Facebook? Instagram? Farfetch?
Who emerges as the next marketplace royalty, i.e. as the players who win no matter who dukes it out at the retail level, is the concluding question worth asking. The pie is the pie. But who wins from the carving out of or in the aftermath of the battle for the pie, other than Amazon, is still an open question.
Who holds value as the place where commerce is conducted digitally is still up for grabs. The digital analogs of strip malls, convenience stores, shopping malls, outlet malls, etc. have yet to define their positions on the value equation spectrum, and, when they do, look out because it could be one hell of a big bang.
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f3fba795ffb5a0a85746f58530210f07 | https://www.forbes.com/sites/christopherwalton/2019/10/08/wsj-report-on-jetblack-is-further-proof-of-the-gross-ineffectiveness-of-marc-lores-innovation-record-at-walmart/ | Jetblack’s Struggles Are Further Proof Of Marc Lore’s Ineffective Innovation Record At Walmart | Jetblack’s Struggles Are Further Proof Of Marc Lore’s Ineffective Innovation Record At Walmart
Jet.com founder Marc Lore and Jetblack founder Jenny Fleiss. Getty Images for Jetblack
The Wall Street Journal last week reported some harrowing information surrounding Jetblack, Walmart’s concierge, text-based shopping service in New York City. According to the Wall Street Journal, the just barely one-year-old initiative is already on the selling block. The sell-off rumor alone should be enough to raise eyebrows, but what is even more alarming is how and why Walmart got to this point in the first place.
Jetblack is a clear case of innovation run amok.
Walmart had no business attempting the Jetblack initiative from the get-go. As I wrote back in June 2018, Jetblack was a doomed effort to start for four reasons:
Putting “black” at the end of something does not automatically make something cool. It is quite difficult to reach a high-end consumer when you still carry the Walmart stigma. Jetblack, in its original constitution, does nothing to support Walmart’s core customer and its overall business flywheel. Alexa and other services are years ahead and much better answers to the problems Jetblack is trying to solve.
It was easy to see how people could get swept up in the Jetblack hoopla though. Walmart spent a reported $3.3 billion to acquire Jet.com and, more importantly, Marc Lore, himself. Lore was supposed to be a digital messiah. At that price, it was normal to expect that anything Lore touched should turn to gold. So, it is no wonder the media and others were soothed by his siren song of digital acquisitions, VR plays, and concierge services for wealthy Manhattanites. They were all what Lore was supposed to do.
Unfortunately, Lore’s initiatives, when stacked up on their own merits, read more like a brochure for a timeshare than an honest to goodness path to Walmart salvation in the face of Amazon. Jetblack is just the latest in what is now a mounting list of failed and profligate Marc Lore initiatives.
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Drum roll, please . . .
First, there was Lore’s digitally-native brand spending spree, where Lore convinced Walmart to gobble up the likes of Bonobos, Modcloth, Moosejaw and others. Modcloth has now been sold to Go Global Retail after barely two years, Bonobos is now planning layoffs, Moosejaw hit a major roadblock with the Black Diamond fiasco, and then, in a recent interview with Jason Del Rey of Recode, Lore himself even claimed that the digital brand acquisition strategy has now “shifted” to grow more brands in-house vs. via acquisition, which, by the way, is a strategy Walmart’s competitors and Walmart itself have all done for decades prior to Lore’s arrival.
Next, there was Spatialand, a VR startup that, like Jetblack, was borne out of Lore’s Store No 8 incubation arm, but, also like Jetblack and the acquisition spending spree referenced above, it too has amounted to nothing more than parking lot PR gloss from back in February about how to train dragons. News ever since has been quieter than a church mouse, and, lo and behold, Spatialand’s CEO Katie Finnegan also exited stage left just four months later in June, after a mere hot minute on the job.
Then there was Lore’s video of grocery delivery directly to Walmart customers’ refrigerators, which debuted in and around the Walmart shareholders meeting in June. It was a video meant to excite and delight the media and shareholders alike, but watch the video for yourself and you will quickly see that the idea has a snowball’s chance in hell of working and that the use of Sam Walton’s pickup truck in the announcement would make even the man working behind the curtain in the Wizard of Oz squeamish.
Oh, and then there’s Jet.com too. Not much more needs to be said about that one though, as Walmart folded Jet.com into its mainline e-commerce operations this past summer, but, sure, lots of $3.0 billion plus brands get acquired and then never heard from again a mere three years later.
Happens all the time, right?
And, yet, despite the overwhelming laundry list above, it is Jetblack that is by far and away the most egregious case of all. The statistics reported by the Wall Street Journal, if true, are downright embarrassing.
First, the Wall Street Journal reports there are only 600 members active in the Jetblack service.
Seriously, only 600 members? 600 members is nothing. The neighbor kid likely mows more lawns on demand in the summer. And, if there’s only 600 members, why has Walmart also been so quick to repeat the refrain over the past year that there is an exclusive wait list, where “thousands” were at one point waiting to join the Jetbaclk service. Is all this reported wait list talk real? Or, is one man’s wait list just another person’s table for one?
Second, the Wall Street Journal also reports that Walmart is losing a whopping $15,000 per member and has budgeted $60 million for Jetblack annually.
These numbers are also insane.
I asked a Walmart spokesperson to comment on the reported statistics and the state of the wait list for this piece, but no additional comments or background was shared in time for publication.
Even if one goes against pragmatism and thinks that Jetblack is still a good business idea, Walmart still should not be spending $60 million per year on it.
One, the opportunity cost of that money is too high, for Walmart could reimagine itself for the same price tag! For $60 million, Walmart could create its own version of a Hema grocery store, and not just one, but maybe even two or three to boot. A reminagination of the Walmart grocery experience is needed far more for the long-term health of Walmart than the bourgeoisie pipe dream that is Jetblack.
Two, no startup of the size and scale of Jetblack should ever have $60 million allocated to it after nary a year of operations. Shame, shame, shame on Walmart and on the self-respecting leaders who asked for that much money so early on.
But, alas.
Now the Jetblack initiative finds itself on the chopping block, and, for any prospective buyer contemplating the purchase of Jetblack, there is nothing left to say but two words:
Caveat emptor.
Yes, buyer beware. Whoever buys this bag of chips will have no one to blame but him or herself when the jig is up. The writing is on the wall.
Rather than sell Jetblack to a rube, Walmart should instead take the high road and simply shut Jetblack down outright and admit defeat. For, while there are no lemon laws in retail, Jetblack clearly makes a case for them in this instance.
All kidding aside though — could Walmart even spot a lemon if it was squeezed right under its very nose?
After all, it did buy Lore and Jet.com.
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cf89bb84a4e1a4f901d3d7861646c4c6 | https://www.forbes.com/sites/christopherwalton/2019/11/21/why--how-disney-could-become-an-unrivaled-social-commerce-platform/ | Why & How Disney+ Could Become An Unrivaled Social Commerce Platform | Why & How Disney+ Could Become An Unrivaled Social Commerce Platform
WEST HOLLYWOOD, CALIFORNIA - OCTOBER 19: (L-R) Executive producers/writers Jon Favreau, Dave ... [+] Filoni, actors Pedro Pascal, Gina Carano and Carl Weathers of Lucasfilm's "The Mandalorian" at the Disney+ Global Press Day on October 19, 2019 in Los Angeles, California. "The Mandalorian" series will stream exclusively on Disney+ when the service launches on November 12. (Photo by Alberto E. Rodriguez/Getty Images for Disney) Getty Images for Disney
Mashups are fun, and no one has been better at mashups over the years than the Walt Disney Company. The great Mickey Mouse himself is in fact a mashup, one of human bipedalism and rodent cuteness, to say nothing of his ability to captain a steamboat. The company that has given the world everything from whistling while you work to letting it go amid German and Danish fairytale backdrops always finds new ways to regale its audience.
Disney+ is no different.
On the surface, it looks like a no-brainer move to claw back lost ground from streaming services like Netflix and others, but under the covers it is so much more. Disney+ could actually be the foundation of a new social commerce world for Disney, one in which Disney owns both the content and the distribution, not just of its movies, but of its toys too.
Put that in your Jiminy Cricket pipe and smoke it, Amazon Prime Video.
The horizontal line of social commerce
Social commerce is one of the biggest trends influencing retail right now. The best way to think about social commerce is as a horizontal line, like the ones depicted in the picture below:
The Shrinking World of Commerce carterjensen.com
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Social commerce is at its core a closed-line relationship between a network or community on one end and a marketplace on the other. The best way to think about this line is to imagine the social network capabilities of a Facebook or an Instagram on one end of the line and the commerce capabilities of Amazon on the other. Whoever controls such a line end-to-end ultimately has a tremendous data advantage when it comes to understanding its customers.
Facebook understands this fact. So does Amazon. It is why Facebook continues to fortify Instagram and its namesake marketplace, and also why Amazon is so hell bent on getting into our homes via Alexa. Search engines like Google or even Amazon’s own search bar know what consumers explicitly want, but social networks know what they implicitly want as well. It is this combination of explicit and implicit understanding of consumers that makes the connected line of social commerce so powerful.
Translation — it all ultimately leads to click-to-buy in the moment and in nanoseconds.
And, don’t look now but Disney+ is the start of one end of the line.
The Disney+ advantage
Early indications are that Disney+ subscriptions are rocketing northward faster than a Mandalorian rushing to protect a baby Yoda. Latest reports are that Disney+ already has over 10 million subscribers.
Said another way, Disney can now speak to a captive audience of 10 million people (and growing) whenever the hell it wants. Disney can track, monitor, serve up recommendations in the moment to whomever happens to be viewing everything from the latest Star Wars flick to the Son of Flubber. For Netflix, this same capability means serving up other movies or video content for consumers to watch, for Amazon it might mean trying to entice people to buy things from its marketplaces, but, for Disney, this concept opens up a whole new world of additional commerce potential.
All of which struck me like a thunderbolt from the Norse god Thor, when my nearly five-year-old son couldn’t take his eyes away from some dude in a mask made of Beskar steel (aka the Mandalorian) over the weekend.
What hit me the most was that Disney could mash up toy unboxing videos on YouTube with live-stream commerce in a way where Disney not only has control over the content, but also over the product too. The experience could come to life much in the same way an exclusive Nike sneaker drop happens on the Nike Sneakers app. Only this time, it could all happen right alongside anyone’s choose-your-own adventure favorite programming.
Amazon can’t do that.
Only Disney can create the exclusive Elsa doll with the special sequined dress or the exclusive Boba Fett with the rocket launcher. The best Amazon can hope for is to get the rights to sell the products elite companies create, and, if Nike’s stiff arm announcement to Amazon last week is any indication, the chance that exclusive content providers do that for Amazon going forward is probably smaller than Ant Man.
Disney then, should it want to, has the ability to close the line, to speak to its community of watchers, and to conduct and close commerce with them in the moment. All that remains for Disney is to parlay the Mandalorian fever and take the steps to get there.
The ultimate commerce mashup
The craziest thing? The blueprint to this ultimate closed end-to-end commerce mashup is already out there. Take a look at what Walmart is doing this year via its interactive Toy Lab with eko in the video below:
The technology showcased in the video works with all kinds of video content. It is interactive, one-to-one, and again comes at consumers right at the moment of inspiration, like when my five-year-old can’t stop staring at a baby Yoda’s oversized eyes. It is about creating experiences for kids (and adults) in a manner that is different than traditional retailing but still, over the long-run, brings with it all the aspects consumers love — inspiration, convenience, and confidence in what they purchase.
There is nothing to stop Disney from taking this very same type of technology and deploying interactive commerce to my five year-old and countless other kids like him right after or even during the latest episode of the Mandalorian. All it takes is an ability to stick with experiments in this vein and to refine them over time.
Albeit, now is too early for such experiments. There is no sense spoiling the uptrend with unnecessary add-ons right now. But, quietly and by way of small test groups, Disney can refine concepts like these until all the kinks are worked out and then unveil them to drive fervor over their new releases and toys, and thereby keep as much of the profits as they can either for themselves or for their chosen distribution partners.
It’s content that is unique. That is special. That is can’t find it anywhere else but Disney.
10 million Disney+ subscribers is strong out of the gates for sure, but what’s even stronger is what it all could signal in the long-run — the ultimate mashup of commerce and content.
Or, as I like to call it, the new Tomorrowland.
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a639b4b34526da0889c2ede8b82b221d | https://www.forbes.com/sites/christopherwalton/2020/04/07/store-traffic-limits-at-walmart--target-are-good-but-krogers-pick-up-only-store-is-an-even-better-idea/ | Store Traffic Limits At Walmart And Target Are Good, But Kroger’s Pick-Up Only Idea Is Even Better | Store Traffic Limits At Walmart And Target Are Good, But Kroger’s Pick-Up Only Idea Is Even Better
UNIONDALE, NEW YORK - APRIL 03: People wearing masks and gloves wait to checkout at Walmart on ... [+] April 03, 2020 in Uniondale, New York. The World Health Organization declared coronavirus (COVID-19) a global pandemic on March 11th. (Photo by Al Bello/Getty Images) Getty Images
In response to the coronavirus outbreak, numerous retailers over the last week, especially the big guys like Walmart and Target, have put traffic limits into place at their stores to protect their customers and employees.
The idea behind traffic limits is simple. The less people there are in the store, the less likely people are to interact with one another and, therefore, the less likely all involved are to contract the virus.
According to Walmart’s recent press release announcing the implementation of traffic limits, Walmart’s stores “will now allow no more than five customers for each 1,000 square feet at a given time, roughly 20 percent of a store’s capacity.” The release then went on to say that, once a given store reaches capacity, customers are to be let in on a “1-out-1-in basis.” Other retailers’ announcements, like those at Target, for example, flow in a similar vein.
However, traffic limits are also not the only public health steps retailers are taking either. Other initiatives of late have ranged from plexiglass windows to separate cashiers from customers to Walmart’s own plans to speed rush a contactless payment solution smartly to market so customers don’t have to touch the same screens to pay for their groceries that hundreds or even thousands of other people have touched as well.
As well-intentioned and as justified as all these ideas are though, there is still a better idea out there that deserves more attention — Kroger’s Pickup Only store.
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A little over one week ago Kroger converted one of its stores in the Mount Carmel area of Cincinnati to order-pickup only between the hours of 8 AM and 8 PM. The move is one that should be applauded and, frankly, one with which more retailers should experiment.
Here’s why:
#1 — Now is the time to experiment
If the coronavirus has done anything good, it is that it has given retailers a longer leash for experimentation. Nothing is perfect right now, and the primary concern for many consumers and employees is not to get sick, so if retailers can show their customers and store team members new and safer ways to shop, then both parties are much more likely to try something new now than they were just three or four weeks ago. The coronavirus has made customer adoption curves and internal company politics outdated concerns of the past.
A pickup-only store is a great example.
A few months ago, it would have been insane for Kroger to take one of its stores offline and to convert it to a mini-fulfillment center for the purposes of defraying last-mile shipping costs. Such a move would have angered the residents of Mount Carmel, jeopardized sales at the existing location, and possibly even ruffled a few feathers among corporate leadership (especially those tied politically to Kroger’s partnership with Ocado), even though such experimentation likely could have proved quite useful under normal conditions to learn how to compete for the long-run in the direct-to-consumer grocery business.
Now, with the coronavirus, these previous barriers to experimentation are gone. Kroger and any other retailer that attempts a pickup only store should be able to learn the ins and outs of localized order pickup and fulfillment in ways it never could have done under peacetime conditions.
#2 — A pickup-only store is safer for employees and customers
All the other solutions discussed above are also likely riskier than pickup only stores, and that’s even if one optimistically assumes all customers and employees follow prescribed social distancing guidelines as well, which numerous reports and videos on social media have already shown to be anything but a foregone conclusion.
Traffic metering, contactless payments, and plexiglass windows all slow the tide, but they also all still assume that people and store employees are walking through the same airspaces, just at a slower pace. A pickup-only store assumes none of that.
A pickup only store means that all essential grocery orders are placed digitally, either on a desktop or mobile solution, or the old fashioned way, i.e. by calling the store and talking to an actual human on the phone. The latter is hard to believe, but, yes, even the old fashioned ways still work too.
Lines then form outside the store with people contained inside their cars as opposed to out in the open and next to each other, and, most importantly, every day or every night the store only needs to be cleaned on account of the employees and not the customers. Add temperature checks into the mix before every shift and suddenly a pickup only store is a much safer place to work than a store that relies on traffic metering akin to going through TSA at the airport.
Contact is limited to employees with each other inside of the store or to employees and customers, by way of the opening and closing of trunks. And, finally, all those very same plexiglass window boxes mentioned above can also be set up for contactless payment outside of stores as well (think like enclosed drive up windows and pickup stations).
#3 — A pickup only store better prepares for the worst case scenario
Last week I interviewed Jeremy Neren, CEO of GrocerKey, a company that specializes in front-end e-commerce software and back-of-house fulfillment services for regional grocers, about everything he and his team are seeing on the front lines of grocery. You can see the interview in full below.
Neren broke down the issues facing grocery into three main buckets: labor availability, inventory availability, and inventory accuracy.
As more people get sick, whether in warehouses or in stores, as the strikes and “sick-outs” at Amazon and Whole Foods highlighted last week, labor becomes harder and harder to find. In addition, when inventory flows through actual physical stores, both for in-store shopping, delivery, and/or pickup, it can be hard to forecast inventory needs by location given the recent surges in online grocery demand, and all this activity can also wreak havoc on inventory accounting systems.
Said another way, the more people or things that touch or move toilet paper on and off a shelf in a given day, the harder it becomes for retailers to know how much toilet paper they really have and how much they will need in the future.
A pickup only store ameliorates these issues.
First, the pool of inventory at a given location is used expressly for order pickup or for e-commerce. That means inventory control is tighter. People aren’t coming into the store and mucking up slotting locations, and stores have more flexibility and real estate inside of their four walls to stage orders.
Second, from a labor standpoint, the environment, as already mentioned, is likely safer, and the roles within the stores also require less training. A pickup-only store just needs people to pick and pack orders, something Neren says can be trained in a matter of hours because retailers don’t need to screen for as many variables as they would for a typical grocery store operation. They just need people that can get the job done and a job description that can apply to almost anyone, like furloughed bar and restaurant employees, because there is no guarantee that the current labor force will still be there weeks from now.
For these reasons, Neren too predicts more retailers will opt to test a Kroger-style operation over the next few weeks. The pluses, according to Neren, are just too big to ignore in the face of the mounting challenges the grocery industry has in front of it.
And, therein lies the point — now is the time for action and for grocers to try new things.
Many grocers have multiple stores in multiple locales. Converting one store to order pickup doesn’t mean a grocer needs to take all its stores in a given area offline and make them pickup only. It just means a grocer needs to dedicate at least one store in a given geographic trade area to pickup and e-commerce. It just means a grocer needs to make one store ready to service customers if the trifecta of improbability from hell that is no fulfillment center workers, no store workers, and no delivery drivers ever comes to a head at the same time.
As Amy Acton, the Director of Public Health in Ohio, said recently, "On the front end of a pandemic, you look a little bit like an alarmist. You look a little bit like a Chicken Little. 'The sky is falling.' And on the back end of a pandemic, you didn't do enough."
A pickup only store not only prepares for the worst, but it also helps a retailer’s employees sleep better, its customers breathe easier, and its executives wrap their brains around the economics of hyperlocal e-commerce grocery fulfillment by way of one of the biggest experimentation hall passes in the history of mankind.
The pluses so far outweigh the minuses that not thinking along these lines in the coming months is a sign that a retailer may not have an innovation bone in its entire body, at a time when necessity, the mother of all invention, needs it the most.
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2fb617c632d6dae54a1cd2cc133774f1 | https://www.forbes.com/sites/christopherwalton/2021/04/22/reports-of-a-full-size-checkout-free-amazon-supermarket-should-be-taken-as-seriously-as-a-heart-attack/ | Why Reports Of A Full-Size Checkout-Free Amazon Supermarket Should Be Taken Seriously | Why Reports Of A Full-Size Checkout-Free Amazon Supermarket Should Be Taken Seriously
A man carries a reusable shopping bag as he shops at the Amazon.com Inc. Amazon Fresh cashierless ... [+] convenience store in the Ealing area of London, U.K., on Thursday, March 4, 2021. The store, like its U.S. counterparts, uses an array of cameras and other sensors to track shoppers as they pull items off the shelves, and charges a credit card on file after they exit. Photographer: Hollie Adams/Bloomberg © 2021 Bloomberg Finance LP
Today Bloomberg reported that Amazon AMZN plans to bring its Amazon Go AMZN -style “Just Walk Out” checkout-free technology to a planned full scale Amazon Fresh AMZN grocery store in Brookfield, Connecticut.
Here is what Bloomberg has reported thus far, according to its review of planning documents for the Brookfield site:
The store will be full service, replete with a butcher counter The store will have electronic gates for exit and entry (similar to Amazon Go) The store will have large-scale ceiling mounts for cameras (also similar to Amazon Go) The store will be about 34,000 square feet, with roughly 20,000 square feet of selling space And the store will still have traditional checkout counters
No mention, however, was made of when the store would open.
Amazon declined to comment on the speculation both for Bloomberg and for this article, but did confirm, for context, that Amazon currently has 22 Amazon Go stores, 2 Amazon Go Grocery stores, and 12 Amazon Fresh grocery stores currently in operation within the U.S., along with plans for another 4 Amazon Fresh stores in the near future.
This context and Bloomberg’s report today matter for one specific reason: Math.
What Bloomberg is highlighting here is no overnight sensation. Amazon’s Just Walk Out technology has been roughly 5 to 6 years in the making already.
Checkout the timeline:
November 2015 — Amazon opens its first physical bookstore January 2018 — Amazon opens its first Amazon Go store February 2020 — Amazon opens its first Amazon Go Grocery store September 2020 — Amazon opens its first Amazon Fresh full scale grocery store
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The multi-year experiment likely started with Amazon’s bookstores. At the time (and still today) many people questioned why Amazon would go into the business of physical bookstores, but it was never about the books and likely still isn’t.
In the early days of these bookstores, consumers could shop for books with Amazon’s visual search technology. It is the very same camera search technology everyone can use at home on their Amazon mobile apps today. The technology recognizes products in space and, once identified, serves items up for purchase within Amazon’s app. It is essentially the same core technology that underlies Amazon’s “Just Walk Out” shopping platform. The early experiments of how this technology could work at scale, therefore, likely began in Amazon’s bookstores.
For additional context, the only other retailer that has even publicly talked about using a similar technology at scale over this same period of time and in the same manner is Sam’s Club, and that is in one lab store, Sam’s Club Now, down in Texas.
All other retailers? A big fat zero.
Ever since it opened its first bookstore, Amazon has continued to make its computer vision AI technology even more powerful.
In January 2018, Amazon debuted Amazon Go in Seattle. For the first time, consumers could scan their phones to get into the store (just like they would to get on an airplane), take whatever they wanted off of the shelves, walk out, and pay electronically, similar to how one would pay for an Uber UBER or a Lyft LYFT .
The store was approximately 3,000 square feet and, for all intents and purposes, it worked and continues to operate like a garden variety convenience store, only it is fully checkout-free autonomous and powered by the very same visual search recognition found in Amazon’s bookstores, combined with sensor fusion, aka weight sensors in shelves.
Then in February 2020, Amazon launched Amazon Go Grocery in Seattle, Washington. Go Grocery has the same “Just Walk Out” design principles as its Amazon Go brethren. It is just a little bit bigger and more complex. Go Grocery sites are often larger (7,000 to 10,000 square feet) and also sell more core grocery items, like fresh fruits and vegetables.
For those keeping score at home — that’s already three times the square footage in roughly 2 years for Amazon’s “Just Walk Out” tech.
In September 2020, Amazon then launched its full scale Amazon Fresh grocery concept in California. Amazon Fresh stores are roughly 30,000 to 40,000 square feet and operate like traditional grocery stores but with a twist. They come with Amazon return and pickup counters, have voice activated wayfinding, and also, most importantly, they have two forms of checkout: traditional checklanes and Dash Carts.
The Dash Cart was likely Amazon’s first experiment to see if people would desire a checkout-free retail experience in a large scale, full size American grocery store. Similar to Amazon Go, people pair their phones to a Dash Cart, shop, place items in their carts, and then just walk out of the store and pay electronically. The whole experience is designed for small basket trips and people who just want to get in and out of a grocery store quickly.
Then, in 2021, irrespective of the Dash Cart, two more reports have surfaced that Amazon is testing its Just Walk Out technology for full scale grocery operations. The first, again reported by Bloomberg, says that “Just Walk Out” is already in operations for behind the scenes testing in a Naperville, Illinois Amazon Fresh store, and the second, today’s report, says the infrastructure is also being readied for Brookfield, Connecticut.
Given the timelines, it is entirely plausible that Bloomberg’s report today is as real as a heart attack.
For example, technology tends to speed up exponentially, and here everything thus far is still just linear.
Amazon Go happened in 2018 at 1,500 to 3,000 square feet. Go Grocery happened in 2020 at 7,000 to 10,000 square feet. “Go Fresh” (my quotes) sounds like it could happen in 2022, if it isn’t already in Illinois, at 20,000 to 30,000 square feet.
All told, that would be an approximate tripling of square footage every two years. Looking at everything in this way makes it almost a fool’s bet not to think that Amazon will try to deploy a 20,000 to 30,000 square foot “Just Walk Out” autonomous grocery store soon, and especially if said attempt also comes via a hybrid approach that still has traditional checklanes as an option too (which it sounds like Brookfield will have).
The better question though, if one agrees not to take the sucker bet against Amazon, is to ask what does this math all mean for the rest of the industry?
If the reports are true, the only other known pilot implementations of any real size and consequence at this point and that are similar to how Amazon Go’s “Just Walk Out” tech works are Tesco’s pilot in the U.K and Giant Eagle’s GetGo installation near Pittsburgh. Beyond that there is little else. Zip. Zero. Nada. Outside of a few smart cartish or small scale footprint and retailer plays.
All of which means that the majority of the grocery industry is minimally 4 years behind Amazon’s experimentation curve.
Combine this with the other news out of Amazon this week that it also now plans to open up hair salons to test out what it is calling “point-and-learn” technology, which sounds awfully like “Just Walk Out,” and the story gets even more interesting.
If history is any indication, Amazon’s announcement this week isn’t so much about hair care as it is about the next version of its bookstores, i.e. understanding gesture recognition, haptic sensing, and AR in experiential physical retail environments. Combine the lessons from this forthcoming experiment with all the ones learned from the past five to six years on Amazon Go computer vision technology, and quite soon the compounding effects of these experiments could leave grocers feeling more desperate than a famous 80s movie featuring Madonna playing a woman named Susan.
Paraphrasing omnichannel retail expert Anne Mezzenga on a podcast recently, “Beauty tends to be a part of grocery, convenience, and one-stop-shop mass merchant retail experiences, so why couldn’t and shouldn’t Amazon morph ‘point-and-learn’ with ‘Just Walk Out’ tech over time?”
Amazon can, and they likely will, which means everyone else is woefully behind. Until the retail industry wakes up and starts experimenting with the same no fear of failure approach as Amazon, the gap will only grow wider.
If Kroger KR , Walmart WMT , Target TGT , et al. don’t start having the guts to put their own versions of Amazon Go on the ground floors of the many apartment complexes springing up across the country and to start telling the world all about it in their next earnings calls, the battle over grocery convenience is already lost. Sleeping at the wheel is for autonomous driving, not autonomous grocery tech.
And it’s time for everyone to wake up.
Full scale Amazon Go grocery is coming. It is going to be real. And it is going to be spectacular.
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5d335270ae96f78b95bb7d8a3884a9b8 | https://www.forbes.com/sites/christopheryoung/2017/08/16/a-new-retirement-paradigm-the-encore-career/ | A New Retirement Paradigm: The Encore Career | A New Retirement Paradigm: The Encore Career
Whether it’s out of necessity or a desire to simply to stay active, intellectually engaged, or... [+] inspired, working in retirement is quickly becoming the norm. iStock
Advancements in modern medicine have substantially increased life expectancies, and as a result, people are living longer, healthier lives. Thus, there’s a good chance retirees will spend more time enjoying retirement. However, the definition of what retirement looks like is changing. While most retirees plan to spend their post-work years traveling, volunteering, spending time with grandchildren, or improving their golf game, many are energized by discussing their “next act” in terms of work – their encore career.
While the idea may seem counterintuitive, encore careers are becoming increasingly popular in retirement. According to a study by CareerBuilder, nearly 60 percent of workers who are age 60 or older anticipate looking for a new job after retiring. Whether it’s out of a necessity to supplement retirement income or a desire to simply to stay active, intellectually engaged, or inspired, working in retirement is quickly becoming the norm.
There are several reasons why retirees are choosing to pursue an encore career. Below are four reasons why these second acts are becoming more common:
Financial advantages - Continuing to earn an income may allow for a reduction or delay in withdrawals from your savings. By remaining invested longer, you can continue to take advantage of additional compound interest. Another benefit is the opportunity to delay Social Security income and add to your earnings record at the same time. In the years between retirement and age 70, there is an 8 percent annual increase in benefits for every year you postpone drawing Social Security. However, it's important to speak with a financial advisor who fully understands the pros and cons of the many options available in order to find the strategy that best fits your unique situation. Bridging the gap – If you are ready for a career change but not ready to fully retire, an encore career can allow for a gradual transition. It may also ease concerns and apprehension about not feeling fulfilled during your golden years or being unsure about how you will spend your free time. I always encourage clients to meet with a life coach to help paint the picture of what their future will look like. Learn more about why this is a critical component of retirement planning here: “Why A Comprehensive Financial Plan Should Include A Life Coach” Health benefits – Work is often beneficial for physical, emotional, and cognitive health. It offers a routine, a sense of purpose, and a reason for getting up in the morning. It’s is also an outlet for keeping you socially connected. According to several scholars attending the 2017 Age Boom Academy at Columbia University, work also keeps you mentally sharp by keeping your brain activated, which can lead to a longer, happier life in retirement. Intrinsic rewards – During your traditional working years, it’s common to set aside personal interests and focus on career demands, raising kids, and helping aging parents. Encore careers provide an opportunity to learn new skills, serve the community, or engage in activities that give you a greater sense of purpose and fulfillment. The rewards are often just as much psychological as they are financial. Encore careers can allow you to pursue a passion and obtain a sense of satisfaction you might not have been able to fulfill during your traditional career.
Retirement planning is one of the most important services a financial advisor provides, and helping individuals work through both the financial and lifestyle components is essential. The old view of retirement is being replaced by a new definition that’s far more active, engaging, and rewarding. Shouldn’t that be what retirement is all about?
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919b0b5c38122788cfe2b649f31c208b | https://www.forbes.com/sites/christophmeyereurope/2018/12/28/five-ways-2018-rewrote-the-future-of-transportation/?ss=logistics-transport | Five Ways 2018 Rewrote The Future of Transportation | Five Ways 2018 Rewrote The Future of Transportation
2018 was far from a forgettable year in defining the future of transportation. On positive notes, we saw Tesla reach profitability and an end to the Waymo-Uber lawsuit. But tragedy also unfolded: the first recorded death of a pedestrian (Elaine Herzberg) by an AV (Uber) and the killings of two Didi passengers. Leadership scandals were aplenty, with the firing of Zoox’s CEO Tim Kentley-Klay, Elon Musk stepping down as Tesla’s Chairman, and the jailing of Renault Nissan CEO Carlos Ghosn. While snapshots may have captured the headlines this year, they won’t define the industry’s future. Deeper, foundational shifts occurred. Among many developments, five trends will come to define the years ahead: the launch of micromobility, responding to AV complexity, unbundling, cooling AV hype, and the legitimization of ride-hailing.
Tesla posted its first quarterly profit in 2018 with help from the Model 3. (Photo: Bloomberg... [+] Finance/Patrick T. Fallon) © 2018 Bloomberg Finance LP
Launch of micromobility
The sharing of two-wheelers has long seemed to be a solution to the last-mile problem. But, what may have appeared a fringe service has turned into an integral component of the mobility service portfolio. 2018 put micromobility on the map and it’s here to stay.
The seeds of micromobility were planted long ago, in the form of bikeshare. While docked systems gained popularity mainly in Europe during the 2000’s (especially Paris’ Velib), the introduction of free-standing and/or electrified launched bikeshare 2.0. China, in particular, brought this into the mainstream, leading to a bikesharing frenzy (Ofo, Mobike) over the last few years. Finally, the U.S. took the baton to usher in micromobility as we now know it. Jump and LimeBike followed the trend of electrified dockless bikesharing before Scoot broadened the trend to vespa-style scooters. Bird, Spin, and Lime ushered in electric mini-scooters to bring the trend to peak virality and VC funding. European startups (Tier, Wind, VOI) have since followed suit, trying to fend off the the international expansion of the American juggernauts.
Bird raised $400M in 2018 (Photo: Bloomberg Finance/ Anthony Lanzilote) © 2018 Bloomberg Finance LP
Looking at funding rounds in the hundreds of millions and valuations in the billions, this may look like just another hyped space for VCs to dump money into. While the financials may be overblown, there is no doubt that micromobility has been firmly woven into the broader tapestry of mobility. Look no further than Uber buying Jump, Lyft acquiring Motivate, Ford snapping up Spin, and Meituan splurging $2.7B on Mobike… These companies see vertical expansion as fundamental to their growth and survival. Micromobility is not only a key service in their broader offering, but also a valuable source of data to understand broader transportation patterns. Both a substitute and a complement, it is a necessary link in the the door-to-door chain of Mobility as a Service (MaaS).
2019 will hold many of the answers as to how micromobility continues to evolve. The bundling of subscription services, improving of operations (thefts, vandalism, etc), and regulation will have come to define this incredible technological adoption.
Responding to AV complexity
2018 was not the year where people realized how complex launching self-driving vehicles is. However, it was the year where players acted accordingly. Companies began forming even deeper partnerships and allocating massive, yet realistic, amounts of capital.
Ever since autonomous vehicles became conceivable the industry has morphed into an untraceable web of partnerships. There was no end to this trend in 2018, with a flurry of investments, pilots, and projects. Yet, there was a different nature to them this year - partnerships that seemed “exclusive” at the outset, have started looking more open. One of the biggest tie-ups of the year points to this evolution: Honda investing $2.75B in Cruise to join GM in building purpose-built AVs. An OEM investing in the “startup” of another OEM to jointly build vehicles seems both peculiar and redundant. Yet, such is the complexity and cost of the task that these are the levels of partnerships we can expect going forward. More seem to be on the horizon, as the CEO of Argo.AI Bryan Salesky stated his openness to additional partners beyond Ford, which invested $1B and has leveraged the startup to develop its AV program. Ford isn’t sleeping at the wheel either, exploring opportunities to team up with VW. While it has been said for quite a while, companies are acting on the notion that “nobody will win this race on their own”.
Argo may partner beyond its major backer Ford (Photo: Bloomberg Finance/Justin Merriman) © 2018 Bloomberg Finance LP
In addition to deepening partnerships, companies are also digging deeper into their pocketbooks. AV technology is incredibly expensive: testing, simulation, sensors, and talent don’t come cheap. Ford announced early this year that autonomy and mobility would take $300M out of 2017 earnings. A huge number already, it is one that will only continue to increase. Other companies are finally being honest about just how big of investment this revolution will take. Toyota will pour $22B into R&D this fiscal year (35% towards autonomy) while VW will invest $50B towards autonomy and electrification by 2023. While there was never a dearth of investment, it seemed to come mostly from investors. In 2018, OEMs finally put their money where their mouth is.
Unbundling
In addition to investing greater amounts of capital, companies are also restructuring to facilitate this capital allocation. This has led to a number of spinoffs or carve outs for some of the biggest OEMs and Tier 1s in the industry to focus on future technologies, especially autonomy and electrification. Interestingly, this trend is happening in conjunction, rather than in opposition, of consolidation and acquisition. The competitive landscape is still very much in flux.
While hard to trace the origins of unbundling in the for future trends, Delphi was one of the first to do it on a major scale by splitting and forming Aptiv. Since, a few followed suit in 2018:
Continental: announced it will carve out its powertrain division to “be in charge of all business of the future involving hybrid and electric drive systems, as well as current battery activities” in July Ford: created a $4B unit for its self-driving car program in July Daimler: announced plans to split into three divisions: cars, trucks, and mobility in July
Daimler plans to split into three separate divisions (Photo: Bloomberg/Marlene Awaad) © 2018 Bloomberg Finance LP
Unbundling brings little to no downside. Carve outs excite the investment community: restructuring leads to greater “focus” and “transparency”, but above all better share prices. It facilitates external investment - as GM has done with Cruise. It improves image and helps attract employees, which is vital when engineering talent is scant. Employees want to focus on innovation and the cutting edge without the red tape and tired brand of a legacy OEM.
While all this might look good on paper, tangible success is no guarantee. Replicating Google’s morphing into Alphabet might seem like a no-brainer with many of these car companies having their own “other bets” to fund. But how well will this work when the mothership is a low margin, capital intensive business instead of an AdTech behemoth printing money?
Cooling hype
While the last few years have led to an onslaught of futuristic, science fiction visions of the future of mobility, 2018 may signal a shift to a more realistic tone. Whether a response to the complexity of the task at hand or a mainstream fatigue of futurism, the hype surrounding AVs has cooled. In reality, this may be exactly what the industry needs. Ongoing rumors and stressed timelines aren’t helping make any progress - especially when human lives are at risk.
It’s clear that the industry finds itself in the middle innings of the ballgame - a time less characterized by flashy unveilings and more by hard work and the nitty gritty. Indeed, even Waymo’s recent launch of their first commercial service in Arizona pales in comparison to previous demos or launches. Aurora, led by some of the best in the business, has diverged from previous startups, preferring understatement to limelight. Sterling Anderson has argued that “the entire industry needs to be more truthful about our capabilities” (Washington Post).
At the same time, companies focusing on specific use cases for autonomy such as community shuttles (May Mobility, Navya, ... ) or delivery (Nuro, Udelv, …) are making steady progress. By operating in confined environments, they can minimize complexity. While they may not offer the Brave New World vision of self-driving cars, they just may be our first taste of autonomy. The jury is out on how advantageous being first to market will be…
Ride-hailing legitimacy
Ride-hailing has come a long way in a short period of time. Long gone are the days of a niche bootleg industry characterized by a moustache logo and fist bumps. Uber and Lyft are household names and about to graduate from startup-land to public markets.
Uber and Lyft have both indicated IPOs in the near term (Photo: Associated Press/Richard Vogel)
As the two prepare for massive IPOs, they continue to bolt onto their business model. This year both launched subscription models and loyalty programs. This is likely just the start of their plans, with a keen focus on customer retention and differentiation needed to bolster their profitability and justify their immense valuations. If this is all starting to looking like the airline industry, that’s likely the point. These businesses are much more than a mobile application at this point - they are here to stay. 2019 will be a big year for ride-hailing, likely one that dictates the industry’s standing in the years to come. As public companies, Uber and Lyft will be forced into much greater transparency on everything from internal performance metrics to driver compensation. Who knows what else we might find under the hood?
There was no shortage of excitement in 2018 - these have been and remain exciting times in an industry undergoing big changes. Onward to 2019.
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4a2b1257d2292a0a01e3e7ba0b788df3 | https://www.forbes.com/sites/chrisversace/2014/01/22/2014s-hacking-pain-is-cyber-securitys-gain-for-symc-feye-pawn-keyw-csco-cuda-ftnt-impv/ | 2014's Hacking Pain is Cyber Security's Gain | 2014's Hacking Pain is Cyber Security's Gain
First it was Target that got hacked over the Christmas holiday and that has the company bracing for a fierce backlash after it disclosed that over 70 million credit cards and other customer data was “compromised.” That’s a pretty sour way to close out the year, particularly if you are Gregg Steinhafel the Chairman and CEO of Target, but to think Target was the only company to get hacked in 2013 would be naive. Some of the bigger hacks in during 2013 including LivingSocial, Washington state Administrative Office of the Courts, Evernote, Drupal.org, and one of the internal websites of the Federal Reserve.
Even back in 2012, American Express , Visa , Honda, MasterCard , Google , Yahoo !, Linkedin and Facebook among others were hacked. Soon after Target copped to being hacked and having consumer data “compromised”, retailer Nieman Marcus became the latest retailer to admit it was cyber attacked and thieves made off with customers' payment card information.
Let’s face it, cybercrime is an exploding pain point for many and it’s given rise to not only privacy concerns, but boosted demand for cybersecurity. In late 2012, Defense Secretary Leon Panetta warned the US would likely face a “cyber-Pearl Harbor” and the country was increasingly vulnerable to foreign computer hackers. Per Panetta, likely targets included the nation’s power grid, transportation system, financial networks and government. Cybersecurity provider McAfee, which is a wholly owned subsidiary of Intel , sees the pace of cyber attacks only accelerating in 2014 compared to 2013 and 2012. From mobile malware, especially on Google ’s Android platform, to the continued rise in cyber criminal gangs that will target enterprises and the likelihood that social media attacks on Facebook, LinkedIn , Google+, Twitter (TWTR) and others will be ubiquitous by the end of 2014 the McAfee Labs 2014 Threat Predictions report underscores Panetta’s 2012 warning.
From an investor perspective, cybersecurity is a growing pain point that will touch businesses, government, consumers and other institutions (schools and so on). As an investor, I love investing in companies that address pain points and in this instance that means companies like Symantec , Cisco Systems (which acquired Sourcefire last year), FireEye (FEYE), Palo Alto Networks , Fortinet , and of course Intel ’s McAfee business. At the same time, a number of cyber security companies are bulking up and acquiring other companies to round out their offering or fill a product gap for the challenges that lie ahead. Already in 2014, FireEye made a $1 billion offer to acquire Mandiant with the rationale that FireEye's cyber-attack protection solutions would mesh well with Mandiant's ability to respond to cyber-espionage. Palo Alto Networks agreed to acquire Morta Security, a company founded by former National Security Agency officials.
The two back-to-back buyouts led to a gap up in share prices for cyber security companies among the likes of Barracuda Networks (CUDA), Fortinet , Imperva and The KEYW Holding Company. While those and other share prices have climbed and valuation metrics have expanded, the latest round of news points to even more retailers being hacked over the holiday season. As that and similar news flow hits in the coming months, cyber security companies will only move higher.
Follow me here or find me at ChrisVersace.com.
Disclosure: On November 15, 2013 subscribers to PowerTrend Profits were alerted to the opportunity in The KEYW Holding Corp. at $11.62.
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7c9fbbfdc921456e6be3cd4c28857caa | https://www.forbes.com/sites/chrisversace/2016/02/05/call-martin-shkreli-whatever-you-want-but-not-a-pharma-ceo/ | Call Martin Shkreli Whatever You Want, But Not A Pharma CEO | Call Martin Shkreli Whatever You Want, But Not A Pharma CEO
Anyone who has watched the Simpsons knows of Mr. Burns, the evil head of the Springfield Nuclear Power plant. If you listen to the media, one would think that Martin Shkreli, the co-founder of the hedge fund MSMB Capital Management, is the pharmaceutical equivalent of Mr. Burns. Mr. Shkreli may be evil, but he is not, as portrayed in the media, a "pharmaceutical company CEO," at least in the traditional sense.
Entrepreneur and pharmaceutical executive Martin Shkreli (L) on Capitol Hill February 4, 2016 in... [+] Washington, DC. (BRENDAN SMIALOWSKI/AFP/Getty Images)
The 32 -year old Mr. Shkreli parlayed his position on Wall Street and his interest in chemistry making millions of dollars short selling biotech and pharmaceutical stocks. In 2011, Shkreli began to dabble in the pharmaceutical industry. His short selling of the industry brought the attention of federal regulators but it wasn't until he founded Turing Pharmaceuticals that Mr. Shkreli got the attention of the world.
Pharmaceutical companies spend billions of dollars every year in research and development. Companies seeking to profit have had to invest, innovate and develop thousands of miraculous cures and treatments amid an even larger pile of solutions that have gone nowhere. Polio, measles, malaria and other diseases, that were death sentences, are now cured thanks to science and innovation. Drugs like Enbrel have helped those with Rheumatoid arthritis. Sovaldi offers a cure for Hepatitis C. There are drugs in the works that look to extend life, and one day, cure cancer. Without expensive and successful research and development, the drug industry would fail.
Shkreli's Turing Pharmceuticals wasn't seeking to develop cures and treatments. It was essentially a cover to to corner the market on an out of patent pill approved by the Federal Drug Administration (FDA) since 1953. Turing acquired the US marketing rights for Daraprim, originally approved to treat malaria and being used to assist the treatment of AIDS patients, in 2015. Shkreli decided to limit distribution and increase the drug's price from $13.60 to $750. Other companies could eventually develop a more affordable generic version of the drug, but this would take time as entrants contended with the FDA's mountain of regulatory paper work. Shkreli opted to race against the clock betting he could squeeze millions from the drug before competitors came to market. It took just a few weeks for another company, Imprimis Pharmaceuticals (IMMY), to announce they would bring a compounded formula of the drug to market.
The response was harsh and swift, and the attention brought by the controversy appears to have led to Shkreli's downfall. In December, Shkreli was arrested by the Federal Bureau of Investigation (FBI) and charged with running a Ponzi scheme relating to his investments. In an attempt to defend the price hike, Shkreli said, "If there was a company that was selling an Aston Martin at the price of a bicycle, and we buy that company and we ask to charge Toyota prices, I don't think that that should be a crime."
Whatever you call Shkreli, and odds are many people are calling him a number of different things, you should not call him a Pharma CEO. Companies like Johnson & Johnson , Johnson & Johnson , Amgen and hundreds of other small companies, spend their days seeking cures to disease. Shkreli, on the other hand, appears to have used a pharmaceutical company as part of a pump and dump "strategy." Calling Shkreli a representative of the pharmaceutical industry is like calling Mr. Ponzi a certified financial investor.
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0f4167fa262c0520733d5b96f7926ba3 | https://www.forbes.com/sites/chriswestfall/2019/08/30/the-4-soft-skills-that-can-future-proof-your-career/ | The 4 Soft Skills That Can Future-Proof Your Career | The 4 Soft Skills That Can Future-Proof Your Career
According to this report from Prudential, 69% of American workers feel that they have the skills they need to compete today. Meanwhile, only 46% believe they have the skills to compete 10 years from now. When it comes to future-proofing your career, the secret to your success starts with emphasizing the human side of leadership - especially as technology becomes more and more prevalent.
Here's how to connect soft skills to your future success. Getty
As Big Data, AI and robotics become an even greater part of the workplace, soft skills (like leadership) will become more important than ever. Because the future of work exists at the intersection of humanity and technology. Looking forward, skills like collaboration, persuasion and innovation will be vital to your career trajectory.
Yet the Prudential survey points to a troubling statistic: 1 in 5 workers don’t believe they are receiving adequate training from their employer.
The reason? Because traditional training focuses on technical skills, and not the interpersonal skills that really matter. Curiously, in an age when information is everywhere, training programs focus more on the “how-to” than the “want-to.”
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Most people know how to do their jobs, wouldn’t you agree? I'm not saying that training and skills aren't important. However, looking to the future means looking past traditional instruction.
What if knowledge and know-how isn’t what’s missing?
The future of work will be created in a context of data, automation and technology. Knowledge (on how to do something, or execute a particular task) will be every more available. And even more likely to be automated in some way. That’s why it’s crucial to focus on the soft skills – the human side of the equation – to prepare for the future of work.
The First Skill: Stop Trying To Manage Your Mindset
Contrary to what you’ve heard, success isn’t about managing your mindset.
Success doesn’t come from making up some mantra and trying to believe it. Because our minds are never set – we have anywhere from 50,000 to 600,000 thoughts per day! Adaptability is the key to creating the future.
And, consider your own experience: results don’t come from mindset or mood. I’ve felt lousy and achieved great things and been in a great mood and then I fall flat on my face. How about you? So instead of trying to set what’s always changing, why not look at the soft skills that can build greater agreement, awareness and understanding from the people on your team?
Step Two: Stop Believing In Yourself – and Get Going
You’ve probably heard the phrase, “You’ve got to believe in yourself!” My question is, which self should you believe in?
The self that had too much to drink last Saturday, and drunk dialed your ex? Whoops! Or the self that wants to sit on the couch and watch Netflix? Or maybe the version of yourself that just dreams about success instead of taking action to go get it? Some of the most successful people I’ve ever met are riddled with insecurity and self-doubt. How is that possible? Results don’t come from your mood, or your self-image, or even your Meyers-Briggs profile. Results come from action. Here’s a soft skill, inside of a hardball question: What if mindset didn’t matter? Then what would you do?
Step Three: Connection
Think about it: if you want to get a job, get a raise, get promoted (or even just get a date), you’ve got to be able to connect and communicate in a powerful way. Technology tries to unite us, but leadership exists at the point of human connection.
Communication is the most important skill any leader can possess. Sir Richard Branson
Authentic persuasion is the goal of every leader. Focusing on helping others to get what they need is that fastest way to move forward and share your story without self-consciousness (because you’re not concentrating on yourself). When you have an opportunity to connect with the people that matter to you, look in the direction of service. How can you serve more powerfully and effectively? Consider the leaders you admire, the people who have made the greatest impact in your life: what’s the service they gave to you?
Pay it forward and pay attention: the service you provide is the source of your impact - regardless of the current state of technology. The service you offer is the source of your satisfaction, your contribution, and your paycheck. How can you serve your boss, your team, your board of directors in a more powerful way? The leaders who create the greatest impact are those who serve at a higher level. It’s counter-intuitive, but the more people you help, the more you’re helping yourself. Start serving, and you will future-proof your career.
Step Four: Put Down the Phone to Pick Up the Conversation
I was recently working with a coaching client, and she was frustrated with the lack of responses she was receiving via email. It’s easy to fall into the false belief that the keyboard is the key to communication. And nobody answers their phone anymore (thanks, Robocallers!) So what can you do? It's time for a different kind of Facetime.
Look, I’m not saying that email is bad – but if you’ve got something of real value to share, it’s best to have a conversation around your ideas. Email is a one-way dialogue – and that’s true for texting as well. Sure, sometimes it’s useful to IM or DM someone, and get a quick back-and-forth around simple issues. But what about the big stuff? What about your vision for the organization, or for your own career? Maybe that conversation starts with a keyboard, but don’t let it end there.
Get face to face (or face to screen) so you can see and share reactions. Yes, it might be unpredictable - but what part of innovation isn't?
Texting is tidy, while talking can be uncertain. Maybe that’s why Harvard Business Review says that 69% of managers are uncomfortable talking to employees for any reason. Hey, can we talk? That stat doesn't sound like being prepared for the future of work.
A vision’s just a vision if it’s only in your head. If no one gets to hear it you’re as good as dead. Stephen Sondheim, Sunday in the Park With George
Take time to recognize that the future of work is where business gets personal. Connection matters. No matter how much technology comes between us, we still have to work within our shared humanity in order to lead others to new results. There's no app for that, and there never will be. Advancing your career into the future starts when you realize that it’s our humanity that drives technology. Not the other way around.
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c9e0c353360f0da521995cdd65706537 | https://www.forbes.com/sites/chriswestfall/2020/02/10/the-4-trick-questions-every-job-interview-how-to-answer-them/ | The 4 Trick Questions In Every Job Interview And How To Answer Them | The 4 Trick Questions In Every Job Interview And How To Answer Them
We've got a few questions for you. Getty
Why do they ask questions in a job interview? On the surface, the answer seems simple: because the interviewer wants to know more about you, right? The company wants to know about your background, your experience, your thought processes—and the way you handle pressure. But not all interview questions are designed for your success. Some questions are designed to disqualify the unqualified. And if you aren’t skilled in the art of conversation, you’re immediately at a disadvantage. Because in the job interview process, whoever tells the best story wins. Here’s how to make sure you see a trick question when it shows up - and what you can do to make sure you don’t give the wrong answer - when the stakes are high.
“So, why don’t you tell me a little bit about yourself?” Surprisingly, this simple question is deceptively difficult, because it is cloaked in misdirection. On the surface, it seems like an invitation to begin speaking about yourself, right? But that’s why it’s a trick question. People ask about you, but what they want to know is: what can you do for me? And by extension: how does your story serve this company? If you take this trick question at face value, you might decide to wax on about your experience from birth until yesterday, winding through a narrative yarn that includes your college GPA as well as your latest work experience. Stop. Right. There. Don’t fall into a first-person trap where you are talking only about yourself. Make sure you connect your story to the most important person in the room—that’s your interviewer—because if you’re not talking about what you can do for them, and for this company, you’re not sharing the story that really matters. Concentrate on connection: what would happen if you could make the second person first? The second person is “you” (your interviewer, I mean). How could your experience impact the person right in front of you, and the company you want to hire you? Make that connection and it will pull you right out of this trick question trap. “What Can You Tell Me About Your Favorite Boss?” This warm fuzzy question is tricky, especially if you’ve been fortunate to work for a great boss. Here’s what most people don’t see coming: the follow up. What about your least-favorite boss? That question is on the way, and it’s a sucker punch if you aren’t ready. Why? Because you might be inclined to trash your worst boss, slinging mud in the direction of the clown you worked for at a painful employer. The problem is, when you sling mud in a job interview, you’re the only one who ends up getting dirty. There are certain characteristics that made your bad boss difficult. But this question doesn’t ask you for a dossier on his or her psychology, preferences or management style. Because talking about your bad boss (or your best one) is really revealing what it is that you will and won’t tolerate. You are talking about your working style, your values, your work ethic and your style as an employee. Not the good or bad of your last boss! Focus there, like a boss—because your last bad manager is probably still a jerk. The only way to move forward in the interview is to get clear on how you want to serve your next boss, now. “What is your greatest weakness?” Looks like this trick question is trying to get you to admit your faults and flaws, right? But actually that’s how the trick works. There’s a question behind the question—and you have to see that question if you’re going to answer in a way that serves you best. The question behind “What’s your greatest weakness?” is really: how self-aware are you? Once I was working with a client on his elevator pitch (a short introduction to a person, product or idea). He started off with, “I’m nine shades of awesome. Which color do you want first?” Everything has a front and a back. Every person has strengths and weaknesses. If you can’t admit that you’re not nine shades of awesome, that might be your biggest weakness right there. “Our policy on X is Y. How do you feel about that?” The trap in this trick question is incomplete information. If they really want to trip you up, they’ll ask you what you would change about the policy. Uh oh. If you rush in to answer immediately, you will be reminded of who rushes in: fools. Fools rush in. Do you fully understand the policy, and the potential impact? If you are presented with incomplete information, the trick is for you to remember to ask questions before you give your answers. Otherwise, you’ll answer a question that no one has asked—because you don’t know the full story! Get curious and do a little detective work; that way you won’t get tricked or trapped.
Remember, the job interview isn’t an interrogation. It’s a conversation. These trick questions aren’t designed to trip you up, but if you don’t look at the question behind the question you’ll stumble nonetheless. Concentrate on how your background can serve your next employer and don’t waste time trashing the personality differences between you and your bad boss. These kinds of questions give you a chance to demonstrate your work ethic, integrity and personal style—phrased in terms of your next opportunity. Share that story in a way that’s authentic and compelling, and you’ve mastered every trick in the book.
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6e207db4f3f5879901af4b909a109b3f | https://www.forbes.com/sites/chriswestfall/2020/03/21/fear-disruption-doubt-consequences-coronavirus/ | Dealing With Fear, Disruption And Doubt: Consequences Of Coronavirus | Dealing With Fear, Disruption And Doubt: Consequences Of Coronavirus
Protecting your emotional health. Getty
When you get right down to it, we are all feeling the effects of the coronavirus.
Have you seen the symptoms? I’m not talking about cough and fever. I’m talking about the mental impact of fear, disruption and doubt, as the world has changed before our eyes. We all feel the impacts of job loss, social isolation, rewired family dynamics and more. For those suffering from the virus, as well as those healthcare professionals who are trying to bring healing to this troubled time, the emotional hardship is even more acute.
The current pandemic has created a shared emotional crossroads, in addition to a biological one. Is there something you can do, right now, to better cope with whatever emotional symptoms you may be feeling?
Consider a man, lost in the desert, no cell phone and no GPS. Lost and looking, he wonders, “What if I get bit by a snake? What if I can’t find water? What if I get a severe sunburn?” These questions join 114 other fears running through his mind. All scenarios point towards a disastrous future.
I can hear you thinking, “But it’s a desert! He is lost! Sand and loneliness are his only companions! His demise is certain!”
Did I mention that the desert is the Sonoran Desert, just outside of Palm Springs? If he keeps walking he can hit the Dairy Queen in Cathedral City in about an hour (where the drive through is still open). What circumstances were you imagining?
“What if” isn’t the gateway to sanity and solutions; it’s a cauldron for fear and doubt. Get out of the guesswork business, there’s no future in it.
The only thing we’re ever up against is our own state of mind. Mary Schiller
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There’s Never Been A Greater Need for Leadership
Leaders understand that uncertainty always exists. Today, we face more uncertainty than ever before. Trying to figure out what the world will look like on June 11 isn’t going to help you in this moment. What’s the thing you can do, right now, based on “what is” — not “what if?” Does speculation help you, or help feed your fear?
“Dealing with what is” means understanding that circumstances are temporary. That’s true but only 100% of the time — nothing lasts forever.
Self-leadership is what’s needed, now more than ever before. Leadership language means taking a look at the story you are telling yourself: are you constructing a dangerous version of the future, filled with a narrative that fuels your anxiety? That kind of thinking isn’t helping you to move forward.
Change your story and you change your results. You don’t need to meditate, shift your mindset or engage in a six-step process. You just need to recognize that you’ve got some thinking around the current situation. Then get clear on the solution:
Just because a train of thought shows up doesn’t mean you have to ride that train. Getting onboard with wild speculation isn’t a journey that serves you.
Instead, get clear on what you can do, instead of focusing on what you can’t. Step away from speculation.
Drop the story of an uncertain future (it’s always uncertain, and always has been). Get out of the fiction business. Embrace the actions you can take in the present. Take a walk. Talk to your spouse. Call someone you care about.
Don’t make permanent decisions around a temporary circumstance. Slow down and start with what is, even if it’s not to your liking.
Like it or not, moving forward can only start from one place: where we are, right now. The journey is easier from a place of acceptance and understanding — I’m not asking you to like your circumstances but it is wise to acknowledge them. You don’t need more toilet paper, ammunition or water bottles. Take care of your emotional well-being: get clear on how leadership really works (from the inside out). We’re all feeling the symptoms of the pandemic. Accepting what is, and acting accordingly, might be the healthiest choice any of us can make, right now.
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5e229aa10f6afb9262db78068d977020 | https://www.forbes.com/sites/chriswestfall/2020/03/31/the-mark-of-true-leadership-3-things-we-need-right-now/ | The Mark Of True Leadership: 3 Things We Need Right Now | The Mark Of True Leadership: 3 Things We Need Right Now
Andrew Cuomo knows and it shows. Leadership: It's not about me. NurPhoto via Getty Images
What causes some leaders to rise to an occasion, while others struggle to find the words and actions that can create real results? Author Ryan Holiday points out where leadership gets toxic, as well as the kind of leadership we need right now. In his latest book, he explains what makes leaders the victims of their own success:
“It’s an unhealthy belief in our own importance. Arrogance. Self-centered ambition… The need to be better than, more than, recognized for, far past any reasonable utility — that’s ego. It’s the sense of superiority and certainty that exceeds the bounds of confidence and talent.”
His book, Ego is the Enemy (Portfolio, 2016) offers insight into the kind of leadership that’s needed, now more than ever, to navigate through change. In the prologue, he writes:
“I’ve found that history is made by individuals who fought their egos at every turn, who eschewed the spotlight, and who put their higher goals above their desire for recognition.”
The tireless and courageous heroes in our healthcare system are showing us the kind of cohesive leadership that’s needed, now more than ever. The current pandemic doesn’t acknowledge borders, titles, addresses or egos. It’s the kind of calm, clear-headed leadership of New York Governor, Andrew Cuomo, who says, “I wouldn’t ask you to do anything I wouldn’t do myself.”
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That’s selfless leadership.
But leadership isn’t just reserved for Governor Cuomo. Or for military leaders, captains of industry or entrepreneurs. Leadership isn’t a title. Leadership is a verb: demonstrated in action, in evidence all around us, wherever we see courage, caring and clear communication.
Here are the three leadership characteristics we need right now — because we are all in this together:
Dignity: praise, admiration and recognition don’t matter to the leader who knows what does. Today, executives, workers and customers are disconnected. Managing a remote workforce is challenging. Leaders that know what works are asking the team members, “What do you need, right now?” With layoffs and firings happening at record levels, it’s more important than ever to share respect for those impacted by this crisis. Leaders, listen: even when the news is bad, we can still be good to one another. Ultimately, leadership is service — and delivering your best begins by recognizing the value in others, right now. Separated and isolated, that human connection still hasn’t disappeared. Acknowledgement goes a long way, in the current climate. Empathy: it’s easy to empathize when you realize we are all in this together. While businesses restructure and scramble, people are doing the same things: juggling bored kids, managing small spaces and redefining what safety really looks like. Hundreds of thousands of retail workers are losing their jobs, and for those still working the future is uncertain at best. Isolation is a condition we all share — even for necessary workers, keeping your distance is everyone’s job. An ego trip that points to separation, elitism or entitlement isn’t just inappropriate, it’s wrong. It’s a curious paradox: the isolation is the source of our connection. Clarity: I remember hosting a business meeting where an executive was trying her best to talk her way into a real answer to a question. The senior leaders and entrepreneurs waited patiently for her to find it. Her response was long and meandering until finally she stopped and said, “I don’t know.” Those three words were the most honest thing that she could have possibly said. When we saw her stop trying to fake it, the conversation got real. The truth is, there’s a lot of uncertainty out there. But sharing what you know — even if it’s just what you know not to do, when you’re not sure what to do — can help. At times of disruption, offering platitudes or trying to talk yourself (or others) into an answer isn’t helping anyone. Guess what? If you don’t feel like you’ve got solid answers right now, you are not alone.
Connect with your teams and your customers, and let them know that you see where they are. You share where they are. You are here to serve. How can I help you, right now? That’s the question that our healthcare heroes are asking every day. And if this virus comes for me, or you, I know they’ll say the same. Meanwhile, we must all do what we can — to protect ourselves and to protect each other. Stay inside. Stay isolated. Don’t give in to ego. Alone and sequestered, we are more connected than ever.
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2754a1022e9a7f6052924c975e138eb9 | https://www.forbes.com/sites/chriswestfall/2020/04/27/how-to-stay-sane-healthy-grounded-during-quarantine-why-routine-isnt-the-answer/ | How To Stay Sane, Healthy And Grounded During Quarantine: Why Routine Isn’t The Answer | How To Stay Sane, Healthy And Grounded During Quarantine: Why Routine Isn’t The Answer
Build innovation into your schedule. Here's how. Getty
Trying to maintain a schedule during quarantine is an incomplete approach to the coronavirus pandemic. While schedules can create a certain degree of certainty, it’s critical to build habits that contribute to mental health. There’s a reason why we crave a schedule - but we also need a pattern interrupt. It’s the innovative break from the plan that can actually lead to greater clarity, sanity and productivity.
Human Nature Is Never Routine
There’s a characteristic we all share, in different ways and in different intensities, that captures an important aspect of human nature. On some level, we are all creators. We create friendships, partnerships, business opportunities, political campaigns, Instagram posts, careers, conflict, families, futures and legacies in some for or another. Yes, we also create schedules in order to create order. But there’s a healthier kind of creativity that’s best when it’s unplanned.
Sara Kimelman is a San Francisco-based Executive Life Coach, and she confirms what works and what doesn’t: “Wake up at the same time each day, set up the opportunity to create small wins through the week. Creating a consistent schedule can help you to feel productive. But you’ve also got to release what no longer serves you, and make room for what will.”
Building Healthy Habits
Unhealthy habits are built around fighting the feels - the thoughts that center on despair, fueled by boredom. What if feeling the feels is part of a healthy schedule? What if it’s ok to be uncertain, frustrated, angry, unsure, scared and whatever else you and I and everyone else is going through right now?
“Let it out,” Kimelman says, simply. Thoughts and feelings come and go. Have you had moments where you’ve actually been grateful for this time? Followed by moments of utter frustration? (I know I have). Create a journal and pump those feelings onto the page. FaceTime a friend. “Crank up the music and dance like that’s your job,” Sara says.
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Break a pattern and reach out to a friend for an unplanned virtual coffee date, Kimelman advises. “We are social creatures, both introverts and extroverts alike,” she reminds us. Sometimes reaching out and supporting someone else, just by listening, is the greatest gift you can give. Turns out, creating a conversation is really a good plan.
There’s Power in the Unexpected
Want to break out of a pattern? Maybe it’s time to check out some improv comedy online. How about trying a virtual online experience from AirBNB? Or maybe connect with a coach who can help you with your singing, your painting, or your photography? There’s online yoga, personal development courses, and the always-intriguing Houseparty app. The only thing required for finding new ideas? You have to get creative.
As Robert Frost said, “The best way forward is through.” Whatever it is you’re feeling, don’t keep it to yourself. If you’re struggling right now with depression, don’t be afraid to ask for help. Dance like no one is watching because, unless you keep zoom on 24x7, no one is. Create something new. Expand your horizons. Make time for an unexpected conversation. Because shaking up your routine might just be the most productive thing you can do right now.
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b5b1ef29f3706cedc0bc5eefb12527cc | https://www.forbes.com/sites/chriswestfall/2020/05/20/new-survey-shows-47-increase-in-productivity-3-things-you-must-do-when-working-from-home/?sh=b19319c80dc8 | New Survey Shows 47% Increase In Productivity: 3 Things You Must Do When Working From Home | New Survey Shows 47% Increase In Productivity: 3 Things You Must Do When Working From Home
Juggling responsibilities. And winning. Getty
Without using spyware or capturing keystrokes, a California-based company has tracked a 47% increase in worker productivity. Based on non-invasive technology that doesn’t grab user passwords, credit card info or other sensitive data, an eye-opening survey shows that smart companies are gaining ground by having workers work from home. What does the data tell us about how employees and team leaders can maximize output during the new normal?
Work life balance has been shattered for many, but savvy employees are putting the pieces back together in innovative and surprising ways. According to survey data compiled from 100 million data points across 30,000 users, here’s how team members are making the most out of their home office:
The average worker starts work at 8:32 a.m. and ends work at 5:38 p.m Tuesday, Wednesday and Thursday are the most productive days, in that order Telephone calls are up 230% CRM activity is up 176% Email is up 57% and chat is up 9%
“The common assumption is that remote workers are less productive than those who are in a traditional office. But our ability to capture, integrate, and analyze workplace data shows otherwise,” said Crisantos Hajibrahim, chief product officer at Prodoscore. Sam Naficy, the company’s CEO, spearheaded the work-from-home survey. He says, “Prodoscore is all about helping companies maximize the profit potential of their teams.” Based in Irvine, the company just closed series A funding last week. The round was led by Atom Factory Founder, Troy Carter (his investment plays include Uber, Lyft, Spotify and Warby Parker, to name a few).
What You Can Do To Maximize Your Productivity
If you want to match those productivity stats, or beat them, here are three things you can do right now to make an impact from your home office.
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Get Comfortable - Rachel is a twentysomething product manager living in East Williamsburg, Brooklyn. She leans forward and points at her back, just above her hip. “This is where the problem started. Sitting in a cheap dining room chair for nine hours a day was not a good idea,” she explains. “I had to figure out where to put my so-called ‘office’”, she tells me via ZOOM, gesturing at all 500 square feet of the studio apartment behind her. Virginia Woolf said that you need a room of one’s own to truly create something meaningful. “Did that room have a decent chair?” Rachel wonders, leaning forward even further to show me the high-quality seat at the table that she occupies now. If you are able, consider a sit/stand desk, as an added measure. That way, you’re getting some movement and exercise during that next video call. Build Boundaries - the study shows that working from home means setting a schedule. If you’re always on, your work is going to be off. Everyone needs to recharge, and whether that means stepping away for a Netflix break, a walk through the park or taking advantage of some of the social easing that’s taking place across the country, make sure you step away from your new office sometimes. As the saying goes, “Good fences make good neighbors”. Fencing off your work area - and the amount of time you spend at work - can help pump up your productivity. (For strategies on how to corral the kids when working from home, hit this Forbes article). Reconfigure the Water Cooler - interacting with other workers is deliberate now. Chatting by the water cooler or coffee machine is a thing of the past, when you’re working from home. So how can you stay engaged and relevant, while getting the input and visibility you need in order to do your job? Leaders need to set up times for team interaction and reach out via text or other tools - Slack, perhaps, or whatever your favorite flavor might be. The important thing about any tool is the way that you use it. Make sure you’re turning technology into the connections that matter, even if it means scheduling impromptu conversations. Team members: reach out more often, get input whenever you can. Being isolated doesn’t mean we can’t stay connected. And you don’t have to jump on a plane or shake someone’s hand to make an impact: the survey data shows us that.
When you set up a comfortable space, create a routine and make sure you’re staying connected, you’re giving yourself every opportunity to succeed. As companies like Twitter and others rediscover the power of working from home, you can too. Your career and your productivity don’t have to suffer in isolation - not when you find smart ways to continue making an impact.
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024491f368f6a762f9e5669dd39035f3 | https://www.forbes.com/sites/chriswestfall/2020/07/02/the-best-zoom-meeting-setup-5-strategies-for-successful-virtual-office-presentations/ | The Best Zoom Meeting Setup: 5 Strategies For Successful Virtual Office Presentations | The Best Zoom Meeting Setup: 5 Strategies For Successful Virtual Office Presentations
Take your virtual presentation to the next level. Getty
The honeymoon is over on working from home. How you show up online is a reflection of your professionalism, dedication and impact. It’s time to start moving your career forward, starting with how you present online. Zoom CEO, Eric Yuan, reports that there were over 300 million daily Zoom meeting participants in April - and that number is growing by the day. What can you do to improve your presence online, in virtual meetings? To really see what’s possible, I reached out to one of the best virtual presentation experts out there: Forbes contributor, Brant Pinvidic.
Brant is the producer of TV shows like The Biggest Loser, Bar Rescue and Extreme Makeover, as well as the author of the best-selling book, The 3-Minute Rule. He’s passionate about helping leaders to harness Hollywood secrets for a Zoom meeting or online pitch. He offered these five insider tips for delivering a powerful virtual presentation.
Invest In Your Studio - “What would you spend,” Brant asks, “on a traditional business trip, where you traveled on an airplane to meet with a client in another state, stayed in a hotel room, rented a car, whatever?” That’s the amount that Pinvidic says you should spend on your home office setup. If you rely on presentations to advance your career and connect with your customers, consider your camera, your background and your audio. If you want to stand out in a crowd, make sure your setup isn’t working against you. You don’t have to trick out your studio like Brant’s, but making a home office investment is typically something that most companies will support. Consider a second monitor, a separate webcam and a decent USB microphone if you want to be seen and heard at your best. Be “Deal Ready” - “In every pitch, you have to have something that is actionable,” Brant says, pointing out that you have to prepare for success by making sure it’s on the table. What’s the call to action you are offering? “When I pitch a show idea, I have to be ready for the next logical step, and if someone wants to put together a deal, I’ve got to be prepared.” So do you. What’s the outcome for the presentation? What’s the deal you’re prepared to make? What’s at stake in this presentation - for you, for your audience, for your company? If you aren’t sure, maybe your next Zoom meeting needs to be an email. Be Direct - and Be A Director - “Why are you doing this meeting on Zoom?” Brant asks, rhetorically. “When you get people online, they’re most likely coming from their home offices, where they’ve got tons of distractions.” Get straight to the point and be crystal-clear on what you hope to accomplish with the meeting. Brant says you’ve got to think like a director - edit out the extra slides, trim down the things you don’t need. Because that’s what people want in a virtual presentation: clarity. If you’re still delivering your same old PowerPoint from 2019, you’re making a huge mistake. The world has shifted: are you using yesterday’s tools to find tomorrow’s results? Prepare for the Competition - “When you’re cooking something, you always prepare the ingredients beforehand. You don’t create a great meal without planning and preparation,” Brant shares. “You have to prepare your presentation in the exact same way. You have to prepare for the competition. I’m not just talking about other businesses, I’m talking about the millions of distractions that compete for your audience’s mindset. You must dedicate more time and energy into the virtual presentation, because the stakes are higher.” You can’t show up for a one o’clock meeting at 12:59 and press the “Join Meeting” button - you need to put in some effort if you’re going to stand out and share your story. What would be one thing you could do to plan for smoother transitions, better Q&A or simplified delivery, in your next PowerPoint presentation? Consider Your Background - Brant isn’t talking about your LinkedIn profile. He means the pile of laundry next to the broken toys beside the cat box - that’s what everyone on the Zoom call sees when you come online. Don’t leave your career to chance - take a director’s view of your surroundings, and craft a backdrop that shows your professionalism. Virtual meetings are a window into your world - make sure the camera reveals a good representation of your professionalism, if you want to make an impact. “Be deliberate about your background, and make sure you’ve got decent lighting,” Brant says - that way, you show up at your absolute best.
Today, the connection point is a virtual platform, and communicating via Zoom is a brand new game. Working from home has made us all equal and, when it comes to Zoom meetings, seems that we’re all equally bad. These strategies, along with a small investment in your home office, will help you to stand out in your next presentation. “The confidence in the value of your information is key,” Brant says. So, don’t wing it. Don’t show up one minute before that big meeting and hope for the best. Hope is not a strategy. Take time to re-think what you can change, edit or cut inside your slides. What can you do or say or share so that your message comes across in a way that’s concise, clear and compelling? Take time to think it through. Planning builds confidence, especially in you next online meeting.
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31e3d5080d43031c22cd560b47ffafd2 | https://www.forbes.com/sites/chriswestfall/2020/10/08/mental-health-leadership-survey-reveals-80-of-remote-workers-would-quit-their-jobs-for-this/?sh=5bdbddd43a0f | Mental Health And Remote Work: Survey Reveals 80% Of Workers Would Quit Their Jobs For This | Mental Health And Remote Work: Survey Reveals 80% Of Workers Would Quit Their Jobs For This
Feeling the pressure of working from home. getty
Mental health matters, for today’s remote workforce: a vast majority of workers (80%) would consider quitting their current position for a job that focused more on employees’ mental health. That’s according to a recent survey of 1,000 Americans, published by TELUS International. Research indicates that 75% of U.S. workers have struggled at work due to anxiety caused by the COVID-19 pandemic and other recent world events. On the eve of World Mental Health Day, it seems that the coronavirus has created massive amounts of stress, anxiety and uncertainty for remote workers and leaders alike. Below you will find three things that companies can do, today, to help employees during this difficult time.
But first, consider other results and mental health responses from the survey:
4 out of 5 workers find it hard to “shut off” in the evenings Over half of respondents have taken a “mental health day” since they started working from home, due to the pandemic 97% say that vacation days while working from home are important for “recharging” - another way of saying “mental health” Half of the respondents cite that their sleep patterns have been interrupted due to COVID-19, and 45% say they feel less healthy mentally while working from home
Employers don’t have to let anxiety and stress ruin productivity, however. Nearly all of the respondents said that it was important that companies prioritize workers’ mental health. Marilyn Tyfting is Chief Corporate Officer at Telus, a 50,000 employee organization that’s navigating the challenges of leading a remote workforce. “We recognize that our responsibility as employers extends to modeling the healthy behaviors we want to inspire in our team members, such as taking days off to recharge and sharing our own feelings and the challenges we may be facing as fellow human beings so that they are comfortable approaching leadership for help,” she says. “Our approach has been, ‘out of sight, top of mind’, for our people leaders.”
Here’s what company leaders can do to create a culture that considers the mental health of employees:
Check In Before Employees Check Out: what are you doing to encourage interaction, outside of the day-to-day meetings and obligations? How do you invest in self-care, wellness and wellbeing initiatives for your remote employees? When people aren’t in the office, it may feel like your options are limited. But mental health initiatives don’t have to be quarantined. Consider creating (or accessing) thought leadership via videos and webinars, focused on self care, so that employees can beat back burnout.Virtual workshops and wellness classes are one way to set important priorities for your organization. Cover Me, I’m Working from Home: does your organization include benefits for therapy/counseling? How about providing one on one coaching for leaders, managers and supervisors? You may be wondering why coaching is such a powerful business tool, when it comes to self-care, stress management and mental clarity. Consider that an NFL football team has 53 players on the roster, and (on average) 21 coaches on staff. Why do these teams have a player to coach ratio of less than 3 to 1? Because they want to win. They want to know what to do to prevent a fumble or a bad tackle or a penalty before it happens - that’s the value of coaching. There’s value in learning to cope with anxiety, stress and other issues from a therapeutic standpoint, to be sure. The question is: when do you want to deal with anxiety - before or after it happens? Flex Past Stress: Flexible schedules are actually one of the benefits of working from home. Unfortunately, the work day has gotten longer. More meetings, not less, are driving zoom fatigue and pulling workers in multiple directions. Obligations are on the rise: are you keeping your cool around home school? A joint study by Harvard and NYU analyzed over 3 million responses since the coronavirus began. On average, the workday is nearly an hour longer because of the pandemic. How is your organization providing flexibility for scheduling, to help cope with the increase in meetings, emails and obligations? The misunderstanding around flex time is one held by most micromanagers, and it’s this: monitoring the journey is the only way to control the outcome. What happens when owning the outcome is the employee’s responsibility? Smart companies are flexing new ideas around ownership, responsibility, time management - and outcomes. How flexible is your organization?
People and teams can achieve surprising results, even when working from home. But the uncertainties of this virus have created spikes in anxiety, stress and mental health issues. The side effects of the virus, even for those who haven’t been infected, cannot be denied. Because we’re all dealing with added stress levels, whether we admit it or not.
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Adaptation is the only way forward. The companies and leaders that succeed, both now an in the future, will adapt to a deeper understanding of the human condition. Leaders must be clear: these days aren’t like any others that have gone before. Knowledge workers need to care for the mind as well as the body - because a healthy workforce is a productive workforce. That means a new approach to mental health is the key to your company’s vitality, impact and success. How is your organization going to adapt?
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6c368adc6019d93244e1ef38890c0ca6 | https://www.forbes.com/sites/chriswestfall/2020/10/09/what-remote-workers-miss-mostand-the-one-rule-43-of-execs-have-already-brokenduring-pandemic/?sh=25b796a51067 | What Remote Workers Miss Most - And The One Rule 43% Of Execs Have Already Broken - During Pandemic | What Remote Workers Miss Most - And The One Rule 43% Of Execs Have Already Broken - During Pandemic
Has trust been quarantined? getty
Employee productivity is management’s top concern during the pandemic, but remote workers don’t see it the same way. Adding to remote workers’ confusion, nearly half of C-Suite leaders have refused to play by their own rules when coping with the pandemic. That’s the story from a survey commissioned by Lucidspark, where remote workers tell it like it is. And C-suite executives are challenging transparency and trust by violating their own rules.
According to 75% of remote workers, leaders shouldn’t be concerned about productivity. There’s something more important - something that ranks higher as a concern when working from home. Can you guess what it is? And why are C-level execs willing to gamble with their own policies, at the risk of spreading mistrust within the remote workforce?
The Collapse of Collaboration - for 3/4 of remote employees, the ability to interact in a meaningful way has been a top concern while working from home. That’s right: collaboration is the chief concern for remote workers. Nearly one in four (23%) said that virtual meetings weren’t adequate, and nearly the same number expressed concern that working from home has hurt their creativity. 46% of respondents cite a lack of face to face interaction as the chief culprit. When asked what would be best about returning to the office, survey respondents mentioned camaraderie as the top perk, for nearly 40% of respondents. Zoom Fatigue Causing Teams to Tune Out - Livestream events are losing steam, according to a recent survey from AnyClip. While the stock price of Zoom jumped a whopping 88% in Q3, participants are less bullish on live events. In this survey, 74% of respondents reported watching less than 3/4 of streaming content, and 43% of attendees said they watch less than half. In contrast, attendance at virtual events is up by nearly 2/3 versus pre-COVID times. Attending more but watching less: why? Because online is the only game in town. Gil Becker is CEO at AnyClip, and he shares, “We are all multi-tasking, all the time. Virtual events, much like television programming in the early 2000’s, need to adapt to this reality.” The way workers are adapting? Asynchronously. And begrudgingly. Don’t Look Now, It’s The C-suite Shift - while 90% o C-level execs say that productivity is a top concern, nearly half have taken matters into their own hands regarding collaboration. In direct violation of pandemic protocols - the ones established by company leadership - 43% of remote C-Suite leaders report meeting with colleagues in person. Notably, the survey doesn’t describe what safety precautions were in place for such meetings. (Only 17% of remote workers report taking the same action). Nevertheless, what happens when leaders don’t abide by the rules they have established? The leadership challenge that’s created is one that you remember from your childhood. It’s called “Do as I say, not as I do.” Without transparency, leaders risk a fundamental aspect of collaboration: trust. More specifically, the ability to trust in the policies of the leaders who set them. Perhaps these leaders were socially distant and careful as they reversed their own policies, who knows? The US has adopted a “situational ethics” approach to science during the pandemic; is integrity a moving target as well? Are leaders concerned about creating a lack of trust? Is that something your organization wants to spread? Turn up the Trust - In the Netflix docuseries, The Last Dance, Michael Jordan explained why he was so hard on his teammates: he wanted to win. And sometimes that relentless desire caused a conflict. “Let’s not get it wrong,” former Bulls teammate, Will Perdue, says on camera. “He was an a-hole.” In his defense, Jordan says that anyone - anyone - knew he wouldn’t ask someone to do something he wasn’t willing to do. In effect, Jordan was saying, “I’ll do it. I’ll make the sacrifice. I’ll do what it takes. Will you?” Technology isn’t the only thing that impedes collaboration. What you ask of remote workers is what you have to ask of yourself, if you want more from your team.
For leaders and remote workers today, the challenges of working from home are many. It’s easy to see that too much screen time is driving people to distraction. We all crave collaboration - but at what cost? Beyond curtailed collaboration, there’s no quarantine on integrity. Making sure that you do what you say, and that you’re willing to do what you ask others to do, is a timeless leadership legacy. Don’t sacrifice trust to the coronavirus. Smart C-Suite leaders create collaboration based on transparency, no matter what the circumstances. Hopefully, our leadership values won’t be yet another casualty of these strange times.
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16f6a05f1b935f9908ba6ad2088fed54 | https://www.forbes.com/sites/chriswestfall/2021/03/11/texas-unmasked-mask-mandate-removal-presents-massive-leadership-challenge/ | Texas, Unmasked: Mask Mandate Removal Presents Massive Leadership Challenge | Texas, Unmasked: Mask Mandate Removal Presents Massive Leadership Challenge
Does this look like a good idea? getty
On Wednesday, Texas removed the mask mandate for 100% of businesses, opening the door to full crowds at bars, restaurants and concerts. The largest honky-tonk in Fort Worth, Billy Bob’s, hosted a sold-out concert this week - to a mostly maskless crowd. Images show a crowded dance floor, where people lined up to hear Koe Wetzel & Hardy play an acoustic set and party like it’s 2017. According to local reports, General Manager Marty Travis said that the honky-tonk agreed to increase capacity to 50%, without requiring masks. However, Travis was quick to point out that temperatures were being taken at the door, and social distancing was encouraged. He did not comment on how couples might two-step around the social distancing markers that lined the floor. For the nation’s second-most populated state (and bottom five for vaccines), Governor Greg Abbott’s removal of the mask mandate ban has created a deep leadership conflict for business owners, patrons and health care workers.
“There will be conflict,” Sylvester Turner says. “It makes no sense.” The mayor of Houston, Texas’ largest city, shared that businesses will be providing a potentially hostile environment, as many may not be able to fully embrace the freedom and liberty that Abbott has granted. And liberty really seems to be at the heart of the removal of the mandate - offering businesses what they want (the ability to operate at greater capacity) while providing people what they wish for (a world without the need for masks). Meanwhile, what if patrons feel threatened or unsafe, sharing a space with a full house of unmasked consumers? What happens when a business exposes or creates an unsafe environment? The real issue is one of timing, execution and consequence.
The leadership challenge presented is one that has played out far too often in politics and in business. Namely, making hope a strategy. According to a poll of 2,500 residents from Central Texas, 19.5% said they will stop wearing masks “as soon as it’s allowed”, which is right now. Meanwhile, 55% of respondents said they won’t stop wearing masks for a long time.
Trading desired outcomes and profitability for safety was a non-starter for Austin Mayor Steve Adler. The City of Austin decided to stick with science, and keep their mask ban on. Promptly, Texas Attorney General Ken Paxton filed a lawsuit to force the city to align with state policy.
Abbott has created a Catch-22 for business owners, who have a difficult choice to make. Consumers may cancel on going out, and stay home (in Latin, this is called the “status quo”). Meanwhile, in Fort Worth, 3,000 souls from Texas and other states embraced the newfound freedom. But at what cost? And I’m not talking about the cover charge. Will there be conflict among consumers, at restaurants, grocery stores and other local establishments? What kind of compliance is really best?
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Guardrails have been put in place for many industries - banking, for example, where predatory lending practices have been curtailed in the mortgage industry. Will removing the guardrails around masks and capacity lead to greater growth? Probably for health care facilities.
Once again, businesses must solve for governmental confusion. Billy Bob’s is doing their best to play within the rules - creating what they believe to be a safe space, under the letter of the law, for a much-needed break from the punishment of the pandemic. “People who are against this situation,” Billy Bob’s General Manager, Marty Travis, says, “probably should stay home anyway.” The challenge is when one person’s personal choice unknowingly invades another’s space - as asymptomatic carriers return from a maskless night at a honky-tonk, bringing potentially painful or even deadly consequences to those nearby.
Texas, a state that is larger than France, has lead the way in reopening. While residents in South Dakota may disagree with that statement (their state has never had a mask mandate) the Lone Star State has a strong appetite for reopening. Business owners are hurting. Consumers are hungry for a change. Unfortunately, wishing things were different won’t make them so.
Anxious to be in a safe space, where masks don’t matter, many consumers are drawn to Governor Abbott’s message that “Texans don’t need wranglers.” But, speaking as a fellow Texan, and wearing a pair of Wranglers, I wonder: what do we really need?
The pandemic is a thief. It’s taken something from all of us. For some, it’s taken everything. Those who are gone will never taste that cold Fort Worth beer at Billy Bob’s. Abbott and Texas businesses are simply trying to replace what they can, and restore what’s been taken: profitability. Connection. Business growth. What’s wrong with a night out on the town, many may wonder?
But some things can’t be replaced. The intention - of giving freedom and possibility to an ailing economy - is understandable. And many will embrace this newfound freedom, issued by decree, and based on hope. But there is always a price to be paid for freedom. Is everyone willing to go “all in” to pay it? Because you never know who’s going to get the bill, when it’s time to share the consequences.
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2b7edf916c76de47f5b17a5d1d8b1707 | https://www.forbes.com/sites/chriswestfall/2021/03/30/housing-prices-rise-at-fastest-pace-in-over-a-decade-while-consumer-confidence-soars/ | Housing Prices Rise At Fastest Pace In Over A Decade While Consumer Confidence Soars | Housing Prices Rise At Fastest Pace In Over A Decade While Consumer Confidence Soars
A reason to be optimistic? Only if you can afford it. getty
In March, U.S. consumer confidence rose to its highest level since the pandemic began, nearly 13 months ago. Based on reports from The Conference Board, the consumer confidence index rose to 109.7 this month - a 21% increase from February’s 90.4 figure. The government stimulus package, combined with vaccine rollouts, stalled fed rate hikes and widespread economic reopening, is creating a groundswell of positivity for consumers. Simultaneously, a shortage of supply in the housing market has caused median home prices to rise at a rate not seen for 15 years. The National Association of Realtors (NAR) reports that last month’s existing home prices are up 15.8% vs. February 2020.
“Consumers’ assessment of current conditions and their short-term outlook improved significantly, an indication that economic growth is likely to strengthen further in the coming months,” Lynn Franco, senior director of economic indicators at the Conference Board, told the Wall Street Journal.
In the housing market, unsold inventory of total existing homes is at a record low nationwide: 1.03 million, the same level as January, 2021. Meanwhile, springtime is when people begin to consider moving - but the inventory doesn’t necessarily support that intention. NAR reports that the number of homes available dropped nearly 30% year over year for the overall housing market. For the week of March 21st, new contracts outpaced listings. In February, home sold at an average of 20 days on market (the fastest pace since 2011).
Seasonally-adjusted home sales are at a 15-year high. National Association of Realtors
Consumer confidence has boosted purchasing intentions for high-ticket items, like autos, and homes. But where there’s a will, there’s not always a way. That’s especially true for many who are trying to change houses during this unprecedented time.
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While buyers, sellers and realtors scramble to capitalize on this unbridled optimism, some consumers have to stay put in their current home. Because, in a white-hot market, not everyone can afford to change. Sheila Smith, a realtor at Re/Max in Boise, Idaho, tells the Wall Street Journal that some of her potential clients are just staying where they are. “They can’t afford to buy anything. So they’re staying put, and remodeling.”
On March 24, 15% of the US population was fully vaccinated against the coronavirus. On average, just over 3 million doses of the COVID-19 vaccine are being delivered across the USA, according to the CDC. Claire Hannan, executive director of the Association of Immunization Managers, tells NPR, “We’ve turned a corner. We’re just getting the vaccine out, day in and day out, and we’re making progress.”
That progress translates into consumer confidence, an electrified housing market, and the distinct possibility that there are better days ahead. Just as long as you’re not trying to find a bargain on a new house right now.
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ecaea842798c7800d1ff2f7bbefddc38 | https://www.forbes.com/sites/chriswestfall/2021/04/06/survey-shows-massive-post-pandemic-shift-in-store-for-workers/?sh=737a8d8b632b | Survey Shows Massive Post-Pandemic Shift In Store For Workers | Survey Shows Massive Post-Pandemic Shift In Store For Workers
Nearly 34% of Millennials are considering this. Are you? getty
According to a new Pulse of the American Worker survey, a massive shift is coming for employees and employers. As the US adjusts to a post-pandemic economy, a large number of employees are considering changing jobs. In fact, over 25% of workers plan to search for a new employer, once the threat of the pandemic has subsided. For Millennials, the largest demographic in the workforce, the fight for flight lifts to 34%. That means that many are planning to look for a new job, as pandemic restrictions decrease. What are the implications for organizations - and for your career?
Employers considering return-to-work strategies are debating the “right” combination of working from home vs. in-the-office. Based on the survey, commissioned by Prudential, nearly 90% of American workers want to work remotely, at least one day a week. The implications for employers are significant: assuring flexibility is critical to retention. Axios notes that, as workplace expectations shift, most workers expect that pandemic adaptations won’t change.
Significant statistics have emerged regarding employee satisfaction, future plans and transitioning in the coming months:
Sheltering in Place, or Preparing for Departure? Three-quarters of workers who are planning to leave their jobs (72%) say that the pandemic caused them to rethink their skill sets (compared to just 46% of all workers overall) Growth Restricted by COVID: Nearly half (49%) of all workers are concerned about their career growth Remote Work Is Working: 73% of all workers say that employers should continue to offer and expand remote-work options, even after the pandemic is over. For the audience of remote workers in the survey, the number in favor of maintaining remote work jumps to 83% - and nearly 90% of workers want to work remotely at least one day per week Culture Matters to Making the Grade: 42% of workers who plan to leave their current employer would grade the company’s efforts to maintain culture during the pandemic as a “C” or lower
Why remote workers do things that way. PRUDENTIAL
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If you’re one of the movers and shakers mentioned in the survey, consider the following steps to maximize your opportunities inside of this shift:
Insight Over Experience: want to change industries? Consider the value of resourcefulness. The future isn’t created from the past. It’s created from the now. And, right now, your resourcefulness matters more than your experience. It’s great that you went to a fancy school, but hey - how good are you at figuring things out? Ever meet an MBA who had the street smarts of a box of hair? (I’m looking at you, Trevor, and wondering why you still can’t figure out how to go off “mute” in our group calls). Born to read books, these individuals boast about their GPAs, but in times of rapid change their experience isn’t going to help - unless they can turn knowledge into insight. The survey says it’s time to create the future, and stop reading about the past. Resourcefulness is the skill that is needed. What have you been able to figure out on your own, in a way that rises above and beyond your experience? That skill - the ability to create something new - is the insight that employers need. The Time for Leadership is Now: In times of market transitions, where movement increases for talented workers, it’s vital that you recognize that you are the CEO of a brand called “you”. As the saying goes, if not you, then who? If not now, then when? If you’re wondering if there’s a better place for you, there’s only one way to find out. If you’re ready to take the lead in your career, that exploration happens one conversation at a time. Sure, you can start pumping your resume at all the usual suspects (like everyone else - how smart is that, Gunga Din? Spray and pray is not a strategy). Remember the most vital, unique and powerful tool for any job search: the conversation. Taking the lead in your career means brokering conversations that bring new discoveries. Invest in Your Success: The war for talent is brewing for employers. An influx of migration means competition will increase. But market forces don’t have to keep you from becoming who you want to be. If you are serious about making a change, start by making an investment in yourself. Hiring a career coach can help you to beef up your LinkedIn profile, improve your interview skills, and more.
As the economy opens up, opportunities will open up as well. For employers, that means providing the kinds of opportunities (read: flexibilities) that workers want. And for employees, that means being prepared to step into the future of work. Ready to make a move? Make sure you’re ready to capitalize on the coming changes.
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0d00bd8c618f33b7fe9fe38602bddfee | https://www.forbes.com/sites/chriswright/2013/10/29/uk-islamic-bond-more-show-than-substance/ | UK Islamic Bond More Show Than Substance | UK Islamic Bond More Show Than Substance
David Cameron. (Photo credit: Wikipedia)
Today the British Prime Minister, David Cameron, confirmed that the UK will issue a sovereign sukuk - the Islamic equivalent of a bond. The announcement, at the World Islamic Economic Forum in London, was accompanied by some emotive language about inclusiveness for Britain's Muslim community, a call for further investment into the UK from the Islamic world, and some grand ambitions about London's role as a centre for this field of finance: "I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic Finance anywhere in the world."
A £200 million (US$321 million) sukuk is not going to get it to that lofty goal. But there are two ways one should look at this announcement: the practical difference it makes to the issuer or investor, and the symbolic importance.
By the first measure, this will scarcely make a difference at all. Britain has one of the most deep and liquid debt markets in the world right at home in London: the gilt market, which offers extremely long term funding. Britain is considered a safe haven issuer and its securities as a sovereign are sought out by investors worldwide looking for stability and reliability. It can fund all it wants with the tools it already has, and £200 million isn't going to make the slightest ripple in the national coffers.
From the investor point of view, this isn't particularly revolutionary either. Sukuk might be new to the British sovereign, but the market has been growing internationally for 10 years: according to Standard & Poor's, total sukuk issuance hit almost US$140 billion last year, the vast majority of it sovereign-related; in one instance, the state of Qatar raised US$4 billion in a single deal. In Malaysia alone, there were RM303.9 billion (US$96.59 billion) of outstanding corporate sukuk, quite apart from sovereign issuance, as of June 2013, according to Malaysia's Securities Commission; in fact, Malaysia typically accounts for about two thirds of total outstanding sukuk issuance worldwide. The world has developed a long way while the UK has been deciding whether or not to join the party.
Even investors who want the safety and familiarity of British issuers or venues have already had plenty of choice for a while. HSBC has issued in sukuk form, and so has Tesco . The London Stock Exchange has so far been the venue for US$34 billion of sukuk issuance from 49 issues; on the equity side it hosts seven Shariah-compliant ETFs, as well as the stock of several Islamic financial institutions. Elsewhere in Europe, Luxembourg welcomed its first listed sukuk over a decade ago in 2002, and has since attracted them from Malaysia, Pakistan, Saudi Arabia and the UAE.
So why does this matter? It is important as a statement of intent. The UK first said it would issue an Islamic bond back in 2007, and although its plans to do so were derailed by the global financial crisis and its impact on Shariah funding markets, the rationale then still stands today. London is, and wants to remain, a leading world financial centre. To do that, it must aim to be a centre of everything that is happening in world financial markets, most definitely including fast-expanding Islamic finance. And if a sovereign bond helps in some small way, whether through its creation of a benchmark for others to price against, or just through good old-fashioned PR, then that's a good enough reason to do it. There is an additional subtext, too, that it is meant as a gesture to the UK's Muslim communities that they are very much included in British society at every level.
London isn't a Muslim centre, but then again it isn't a Chinese centre either and is already making useful progress in becoming Europe's main centre for activity in the renminbi, China's currency. Its attempts to become a more potent centre in Islamic finance are sensible. It's just that this sovereign sukuk has come so late that it won't make much of a difference.
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c1ce4f2e1c098b39d4730614d5bae866 | https://www.forbes.com/sites/chriswright/2013/11/19/temaseks-africa-investment-a-sign-of-the-future-for-sovereign-wealth-funds/ | Temasek's Africa Investment A Sign Of The Future For Sovereign Wealth Funds | Temasek's Africa Investment A Sign Of The Future For Sovereign Wealth Funds
An LNG carrier. Singapore wants to be Asia's regional LNG hub (Photo credit: Wikipedia)
Last week Temasek, one of Singapore's two sovereign wealth funds, made a $1.3 billion investment in a liquified natural gas block in Tanzania. The deal illustrates a number of trends about the way that investments, particularly by state entities, are going to look in years ahead.
Temasek bought the 20% stake in three East African LNG blocks from the UK's Ophir Energy. There are two angles to the deal that are striking: one, where it is, and two, the type of energy it is pursuing.
First, the Africa angle. In its formative years, Temasek's investments were mainly in Singapore itself. Temasek started out largely as a vehicle for the state stakes in big entities like DBS bank, Singapore Telecommunications and Singapore Airlines once those companies were listed on the local stock exchange. Then, it steadily became more international, including stakes in a number of western businesses. But in the mid-2000s, it made a directional shift to focus on what it knew best: companies in emerging markets, with growth drivers that they, as Singaporeans at the hub of southeast Asian trade, understood and could quantify. The importance of this change of direction was underpinned by Singapore's disastrous investments in western banks during the global financial crisis - buying on the way down, selling at the bottom - and now Temasek operates under a target global allocation of 40:30:20:10. The 40 is emerging Asia ex-Singapore; the 30 is Singapore itself; 20 is OECD countries; and 10% is called "other".
The only 20% allocation to the developed world is the lowest of any publicly disclosed figure by a major sovereign wealth fund, but perhaps the more interesting point has been to look at this "other" bit. In theory, this could be Latin America, the Middle East, Eastern Europe or Africa. For many years, in practice it has chiefly meant Latin America: Temasek has built offices in Mexico and Brazil, and staffed them with some long-standing and respected executives. This investment in the Tanzania LNG blocks is interesting because it shows a considerable commitment to Africa, something that we have seen much more of from China than Singapore in the last 10 years.
The deal also illustrates the much-talked about idea of South-South trade, or investment patterns in between emerging markets around the world. HSBC describes south-south trading corridors as the engines of global growth, and says that linkages with the most striking growth today are pairs that once would have seemed very unlikely: Poland-Bangladesh, for example, or India-Mexico, or Malaysia-Brazil. Asia-Africa trade is going to be absolutely central to this growth.
Then there's the LNG side. Temasek made its investment through Pavilion Energy, which was set up in April as a wholly owned subsidiary of Temasek specifically to invest in the LNG supply chain worldwide. Its stated mandate is partly Singapore's energy security, and partly good investment. It will start out by acquiring strategic LNG assets, from gas supplies to liquefaction plants, shipping and regas facilities; then it will build its operational strength as a business in its own right, including LNG trading, sales and marketing; and thirdly, it will integrate it all.
To understand this, one has to appreciate how Singapore has made such a remarkable success of itself since the Second World War: a country with no significant natural resources, too small for many crops, with nothing of use to dig up and sell. It is a remarkable story that has been underpinned by the skill of putting itself at the centre of things. To capture trade, it made itself the region's best port. To capture investment flows, it made itself an accommodating financial centre, and is now the regional leader for areas such as foreign exchange and private banking. LNG is another area where Singapore sees an opportunity: it doesn't have any gas fields of its own, but it wants to be a centre for storage and shipment of the fuel. It also wants to make sure it is well established by the time Australia's LNG projects start to come onstream in 2015. So Singapore will build the infrastructure, combine it with good business practice, and so will become a hub for something of which it has nothing itself. The Tanzania acquisition is the first of what should be many across the LNG supply chain. The gas it produces will one day be traded through Singapore.
A great many investors, many of them sovereign, can see the opportunity in LNG. In the case of the Qatar Investment Authority, LNG is the source of the money in the first place; for others, it's something to be bought, the sooner the better, such as India's state-owned Oil and Natural Gas Corporation buying a 10% stake in an Anadarko gas field off Mozambique for $2.64 billion in August. When an investment theme combines emerging Africa with LNG, you can assume it is going to be active.
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78cae64353842136396907bc3d763ffd | https://www.forbes.com/sites/chriswright/2014/01/17/after-the-fragile-five-the-exposed-eight-the-bad-news-about-brics-and-mints/ | After The Fragile Five, The Exposed Eight: The Bad News About BRICS and MINTs | After The Fragile Five, The Exposed Eight: The Bad News About BRICS and MINTs
These are heady times for acronyms and catchy titles. We've had the BRICS. As I reported last week, we now have the MINTs too. Along the way we discovered the BIITS, the troubled group of emerging countries with rising deficits, which at some point became more commonly known as the Fragile Five. Get ready for another one: the Exposed Eight.
For some time, there has been concern about five emerging markets in particular: Brazil, India, Indonesia, Turkey and South Africa. These five are linked by vulnerability to current account and fiscal deficits. It's not just the deficit that is troubling, but the ability to service it and the availability of reserves.
This week, though, Schroders and the Financial Times announced new data looking at another important metric for emerging markets: the ability to repay short-term foreign currency borrowings. Viewed in that way, those five economies are joined by three more, two in Eastern Europe (Hungary and Poland), and one in Latin America (Chile).
Schroders' emerging markets economist Craig Botham has been arguing for some time that the focus of the markets is less on broader macroeconomics, and more on a specific fear: that capital flows into these countries can stop and reverse, with a considerable impact on countries that have a reliant on outside finance, the more so if there are short-term refinancing requirements. This threat then plays out at a sovereign, bank or corporate level, with each impacting the others.
Schroders points to a metric called the gross external financing requirement, which compares a country's foreign exchange reserves to its total short term external debt and current account deficit. This, they argue, gives a truer picture of how much money a country has, and how much it owes. Using this data, Turkey, South Africa, Chile, India and Indonesia only had enough reserves in the second half of last year to cover one year of these requirements, with Hungary, Brazil and Poland having two years' worth. (The FT also highlights Ukraine, Venezuela and Argentina, which are also exposed but for different reasons, chiefly around domestic politics and economics).
All of this matters because, as I have argued many times on this blog, the overhang of tapering has some potentially very bad ramifications for emerging markets. Last May, when just the hint that the US might begin tapering was uttered from the Fed, emerging markets went into free fall, whether measured by debt markets, equity markets, or foreign capital flows. The impact was so extraordinary that the Fed felt compelled to step back from its comments and delay tapering, but it's now underway, with a lot more to come. Sooner or later emerging markets will have to process this change in the nature of monetary supply, and it is almost certainly not going to be pretty. There is a case to be made that these Exposed Eight will be in the worst shape of all emerging markets to deal with it when it happens.
The World Bank raised exactly this concern this week when pondering the results of tapering on the markets. It said that if adjustments to tapering were, to use the World Bank's word, "disorderly", then financial flows to developing countries could decline by as much as 80% for several months. That clearly has big potential impacts on markets with short-term needs for foreign currency to meet repayments. And this is all magnified in countries whose own currencies have been in decline; South Africa, for example, still has a falling currency.
It might not come to that. The markets did, after all, digest the more recent first step of tapering without too much pain, so maybe they're already factoring it in. The World Bank did say its most likely scenario was a smooth adjustment leading to a modest reduction in capital inflows.
But it is striking that this group of exposed nations includes no less than five members of the fashionable economic groupings we have heard so much about in recent years. Three of the BRICS (Brazil, India and South Africa) are in there, plus two members of Jim O'Neill's newly-coined MINTs (specifically Indonesia and Turkey). All of which underlines an important point: look past the catchy acronym and judge each place on its merits.
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b18961da3556975616314eaeaf02f95f | https://www.forbes.com/sites/chriswright/2014/05/15/will-china-save-russia-with-investment/ | Will China Save Russia With Investment? | Will China Save Russia With Investment?
Western capital has shunned Russia - officially to the tune of at least $50 billion, according to Russia's own ministries, but anecdotally perhaps four times that much. And while Russia likes to think of itself as largely self-sufficient, it's not entirely true, not when there's infrastructure to be built, and a World Cup to host, and commodities to sell. It needs investment. So who can it go to when it's annoyed everyone else in the world through its behaviour in Ukraine? It can go to China.
Yesterday I interviewed Sean Glodek, Director of the Russian Direct Investment Fund; as revealed in my exclusive story for Emerging Markets this morning, he disclosed that Russia and China will announce four joint investments next week at the St Petersburg International Economic Forum. These four deals will be in Russia infrastructure, real estate and minerals, and will be made through a vehicle called the Russia-China Investment Fund.
This fund, seeded with $1 billion apiece from the RDIF and China's sovereign wealth fund, the China Investment Corporation and with the hope of further expansion to $4 billion of assets, actually dates back to 2012, and these deals have clearly been a long time coming together (only one previous deal has been done from this venture, a $200 million investment in Russia Forest Products, a forestry company in Siberia). But the timing, from Russia's point of view, could not be better: an illustration that capital will still come to Russia no matter how much it has riled the west.
Glodek said that so far 10% of the fund's capital had been deployed, and that "including the deals that we will be announcing, we would get to another 15% to 20%" of total assets being invested. This suggests up to $400 million of new investments will be announced next week. They are likely to focus on the Russian Far East, since that's the area with the closest geographical and infrastructure links to China, although CIC has also previously invested in Moscow Exchange, outside the joint venture structure.
China-Russia investment has actually been surprisingly modest to date. "It's actually more words than actions so far," says Vladimir Kolychev, chief economist for Russia at VTB Capital. "If you look at FDI it's been pretty small both ways: from China into Russia accounts for only $2 billion over the last five years, and Russia doesn't have any meaningful FDI into China."
But that's not the full picture, as cooperation between the two doesn't necessarily take the form of FDI. A huge deal was struck between Rosneft and China, for example, that involves a reported $70 billion upfront payment from China to Rosneft. RDIF told me, in written communication after my interview with Glodek, that trade volumes between China and Russia are expected to hit $100 billion in 2014, a year ahead of a target set by leaders from the two countries; and that China has promised to pump $20 billion of investment into domestic projects in Russia, focusing on transport infrastructure, highways, ports and airports. RDIF also said that China was aiming to increase investment in Russia four-fold by 2020.
Glodek said that co-operation between China and Russia through the venture and other co-investments dated back several years now, and that the timing of the deals, just as Russia is being starved of western capital, is a coincidence. "But I would agree there is more focus in Russia to explore opportunities with China, and with Asia in general," he says. In truth, Chinese investment is going to take a different form to the western investment that has left; the capital that has gone is in portfolio flows, which China, with a limited institutional investor base, won't replace; China instead will provide direct investment into projects.
Nevertheless, it's a useful reminder that the west does not hold a monopoly over investment, and that sanctions, though they will clearly hurt Russia, will not cripple it. RDIF is made up of over $10 billion in investment capital through various joint ventures and funds, the vast majority of it from the Middle East and Asia, not the west. "It's not all bad," Glodek says. "Russia is not as reliant on western Europe as some investing in public markets would expect."
Be that as it may, expect Russia to court China more than ever. "Given the strained Russia-west relations," says Kolychev, "this will be given even more priority by the government now."
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95272931132d6b632685d35e98ee8156 | https://www.forbes.com/sites/chriswright/2014/06/12/will-investors-in-brazil-see-a-world-cup-dividend/ | Will Brazil's World Cup Pay Off For Investors? | Will Brazil's World Cup Pay Off For Investors?
Tonight, the FIFA World Cup will finally get underway when Brazil kick off against Croatia in the Arena Corinthians in São Paulo. But what will the tournament's impact be on Brazil's economy and stock market?
If you take your cues from local sentiment, the answer appears to be profoundly negative. Events like the World Cup and the Olympics tend to be a drain for host countries at the best of times, due to their profound cost, and these are far from the best of times: Brazilians have been protesting the lavish expenditure on the World Cup for years now, and continue to do so on the eve of the opening match.
Euler Hermes, the trade credit insurance business, says in a new report that the World Cup and the Olympics (following in Rio in 2016) will between them add 0.2 percentage points to GDP growth in 2014 - making a 1.8% full-year total - while at the same time contribute half a percentage point to inflation, bringing it to 6.3%. One, it argues, cancels out the other, and while job creation is usually cited as a positive outcome of these events, it doesn't last for long. In World Cups and Olympics alike, costs are always, always, always underestimated, increasing public debt; and in Brazil's case the cost have spiralled even more than is commonplace, coupled with rumoured corruption, in a country that was beset by poverty in the first place. Brazil's GDP growth, when last reported, ducked expectations, growing just 0.2% quarter on quarter in the first three months of this year, and 1.9% year on year.
But what of the infrastructure gains, people say? There are some, for sure, but the biggest outcome of events like these is vast stadia that become white elephants. As John Oliver pointed out in his brilliant skewering of FIFA, the body in charge of World Cups, the stadium in Manaus - a city in the Amazon so remote that it cannot be reached by car - will cost $270 million, yet will be used for only four matches in the tournament, and then does not even have a local team to use it afterwards. Brazil is believed to have spent $11 billion getting ready for the World Cup.
How about Brazilian stocks, though? At the time of writing, Brazil's Bovespa index is up 7% so far this year, and up 10.71% in the last 12 months - but it's down 9.76% over the last three years and is considerably below the level it stood at in early 2012. The market lost 24% over the course of 2013, so this year's performance is in some sense just a recovery of some lost ground.
Individual stocks, however, can benefit from a tournament like this. Fund manager Bradesco Asset Management highlights companies related to entertainment and hospitality. Those might include breweries such as Ambev, although that has been hit by an increase in beverage taxes. Airlines will benefit - such as Gol, the second-biggest in Brazil - but only for a month or so. Retailer Lojas Americanas and payments group Cielo have also been mentioned as potential winners. For those who don't like stocks, Brazilian government bonds offer 6 to 7%, though obviously a yield like that is partly a reflection of considerable risk.
Instead, the bigger influence of the World Cup on Brazilian markets will be what it says about Brazil, and in particular its government. A well-run tournament will perhaps surprise those who doubt Brazilian efficiency, and improve momentum; more importantly, it may just have an impact on the country's election in October. A feelgood factor in Brazil will help President Dilma Rousseff if, as expected, she seeks re-election; a negative tournament, whether in terms of national sentiment towards it or even the performance of the national team, may count against her.
Euler Hermes argues that the biggest impact will be if the World Cup, by highlighting social unhappiness with Brazil's economy, triggers lasting structural change. "Deep structural reforms could thus be the real mega event for the Brazilian economy in 2014," it says. And if that's true, long term, that should be good for investors.
Chris Wright is the author of No More Worlds to Conquer, published by HarperCollins.
See also:
Gallery: Aerial Shots Of FIFA World Cup 2014 Stadiums 10 images View gallery
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1c4b7b379c2bc49aa244da0997900e30 | https://www.forbes.com/sites/chriswright/2014/09/23/cameron-and-rouhani-how-iran-and-the-west-will-become-uneasy-friends-again/ | Cameron And Rouhani: How Iran And The West Will Become Uneasy Friends Again | Cameron And Rouhani: How Iran And The West Will Become Uneasy Friends Again
British Prime Minister David Cameron is to meet his Iranian counterpart, Hassan Rouhani, over the next two days in New York - the first bilateral talks between the two sides at this level of seniority since the 1979 revolution. We should not be surprised. This is an era in which the west needs to be friends with Iran - unwillingly, probably, but with little other pragmatic choice.
I have just returned from Tehran where I wrote Euromoney's cover story for its September IMF/World Bank edition, looking at Iran, its banking system and economy. It is much the biggest story the magazine has run on Iran, and it has done so in recognition of a realigning of the geopolitical stars. My features run over 11 pages of interviews and analysis, but here's a digest of what I concluded:
ISIS changes everything. There is really only one thing that has prompted Cameron to speak with Rouhani in Washington: the issue of the rising Islamic State in Iraq and Syria. Iran, being Shia, unlike the Sunni Islamic State, will never be an ally of ISIS and is likely to be seen as a strong power against it. Rouhani himself has spoken out against ISIS - though he's also spoken out against western strikes in Syria and Iraq. So does Russia. Europe relies on Russia for natural gas in particular, and for energy more broadly; the issue of Russia's behaviour in Ukraine, and the consequent sanctions, makes it healthy to have other sources of energy than Russia. Iran could be such a source, and it has everything: not just oil and gas but a host of valuable mineral resources (including, problematically, uranium, but we'll come back to that). It has pipelines which reach at least as far as the Caucuses and could be straightforwardly linked into European supplies. None of this would make much difference if it didn't happen to have arisen at exactly the time when Iran has a reformist leader who wants to reach out to the west, and the US has a President who badly needs a peaceful foreign policy victory. Rouhani has risked a considerable amount of political capital to put his country on a friendlier path, and there is a sense that this is a once-in-a-generation opportunity for an improvement in relations. The two sides don't have to be best friends; there is a lot to be alarmed about in Iran and its behaviour in the world (although, on the ground, its people are friendly and welcoming.) But America needs a stable ally in the Middle East (or on the edge of it - Iranians, who are Persian not Arabic, tend to bridle at being bracketed with the region). And Iran needs... …an end to sanctions. Sanctions apply at the level of the UN, EU and the US, but the American ones are the ones that matter. That's because they go much further than the others, cover a wider range of business, cover any business transacted in US dollars, and because its regulator has been so strident in fining banks over sanction breaches (notably fining BNP almost $9 billion despite the fact that BNP is not American and did not commit its misdemeanours in America or for Americans) that it has scared off even those who are not directly affected by sanctions. Some sanctions were eased earlier this year in recognition of Iran's willingness to negotiate about its nuclear programme, but the truth is, the only sanction that really matters to the economy is financial services, because without it, nothing else can be financed. For example, several areas have always been exempted - so-called humanitarian goods, such as food and beverages and medicine - but many foreign banks still steer clear of being involved in financing their trade because of the broader stigma involved with Iran. So does this mean that we should expect sanctions to be lifted later this year? Not necessarily, and certainly not all of them, but there are certainly good reasons for the west to want to negotiate. Even a lifting of the ban on private sector banks would make a difference. And if sanctions do lift and it becomes OK to do business with Iran again, what will investors find there? This is the substance of the Euromoney article, but here's a few things you might not know: The economy's in a mess, but that's not just because of sanctions. It is in recession, faces huge unemployment, inflation, and bad asset quality in the banks. Its currency plunged earlier this year. Most of this has to do with the policies of the previous administration; sanctions have simply made it worse. The banking system is also in a mess. Official estimates of bad loans in the system range from 15 to 25%, but they may well be much worse than that; it's difficult to tell. The system is still reeling from a $3 billion scandal around fraudulent letters of credit, and it's not helped by weird practices like banks estimating their capital and solvency based on the huge amounts of property they own by virtue of having thousands of branches. It is arguably over-banked too, with at least 18 privately owned banks (partly or completely) alongside several state behemoths. But the potential is enormous. Iran has a young, exceptionally well educated population, and enviable riches of resources. For investors, when the day comes, there is a surprisingly vibrant and deep stock market, but no bond market to speak of beyond a few retail bonds and sukuk. And for direct investors, there's going to be a challenge: your joint venture partner may well be the Revolutionary Guards.
Really, there's so much to this story, and so much to be understood, and I urge you to seek out the longer article. In the meantime, watch closely to see what comes of Rouhani's talks with other world leaders in New York this week.
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a501361c71a523d844528a6e196b4e89 | https://www.forbes.com/sites/chriswright/2015/01/15/why-the-swiss-franc-shot-up-30-in-a-morning/ | Why The Swiss Franc Shot Up 30% In A Morning | Why The Swiss Franc Shot Up 30% In A Morning
"This," says James Stanton, head of foreign exchange at deVere Group, "is the biggest FX shocker in years."
He is referring to the extraordinary climb of 30% by the Swiss Franc, one of the world's most important safe haven currencies, against the euro this morning. At one stage, it was up 39% against both the euro and the dollar. Movements like this simply don't happen in big, widely held currencies like the Swiss franc. So what happened?
The answer is simple. Three years ago the Swiss central bank put in place a ceiling of Sfr1.20 per euro to stop the currency's appreciation, which was causing problems for Swiss exporters, among other things. This morning - to general surprise - it abandoned the ceiling. It appears to have done so because of an expected sovereign bond buying programme from the European Central Bank in the next few days. That, in turn, is expected to increase demand for safe haven currencies like the Swiss Franc, and the Swiss National Bank - the central bank - seems to have decided that it just would not be able to defend its self-imposed ceiling in the circumstances.
"A central bank does not act in such a dramatic way very often," says Stanton. "It's a once in a blue moon event and it has taken the currency markets by surprise."
What does it mean for investors? In the short term, volatility; in the longer term, the Swiss franc-euro pair will presumably settle. Stanton believes it will do so at about 1:1. For shareholders, it's not good news for Swiss exporters, who have just seen their goods become 30% more expensive to European buyers in the space of an hour or so; Swatch, for example, saw its shares fall 16%, and Switzerland's main equity benchmark, the SMI, fell 7% on the news. The big Swiss banks, UBS, Credit Suisse and Julius Baer, all tumbled too.
Indeed, for the moment, we leave the final word to Swatch and its chief executive, Nick Hayek, who released a statement this morning which captures the stunned mood of Swiss exporters. "Today's SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country."
Chris Wright is the author of No More Worlds to Conquer, published by HarperCollins.
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9246f3136b0580bf3d0ecdece55b769c | https://www.forbes.com/sites/chrystanpaul/2015/10/16/as-sydneys-nightlife-dwindles-justin-hemmes-is-building-an-empire/ | As Sydney's Nightlife Dwindles, Justin Hemmes Is Building An Empire | As Sydney's Nightlife Dwindles, Justin Hemmes Is Building An Empire
When Justin Hemmes first announced plans in 2007 to develop a Sydney CBD block into hospitality precinct, many labeled the A$160m project as overly ambitious. It was a bold undertaking for a then 34-year-old Hemmes, who had taken the reigns of the family business Merivale and steered it firmly into the hospitality industry.
Eight years on, the mega-venue known as ivy has become a staple to Sydney’s nightlife and is now among the most visited venues in the state, with 2.5 million patrons coming through its doors each year to frequent ivy’s 15 restaurant and bars, or what Hemmes refers to as “brands”.
“It’s become less nightclub and more hospitality” says Hemmes regarding ivy’s success which has helped cement Merivale as a leading owner/operator of venues in Australia.
Merivale, named after Hemmes’ mother, was originally established as a fashion house in 1955 by Hemmes’ parents. As the family business grew, a natural shift from fashion into hospitality followed and by 1993 the Hemmes family had closed its last retail store to focus solely on its growing portfolio of venues.
Today, Merivale’s portfolio caters to 10 million patrons annually and employs over 2,500 staff across its 62 restaurant, bars and hotels spread throughout Sydney. “They have built up a portfolio that is globally enviable for any operator” comments John Musca, JLL Hotels and Hospitality Group Director for Australia.
The total asset value of the portfolio is estimated to be A$1 billion – a figure that Hemmes refuses to confirm, “nobody is able to value the portfolio as we are private, a closely held family company” points out Hemmes who has largely been able to stay out of the local rich lists despite his implied wealth tied to Merivale’s property holdings.
In the last 12 months, Merivale has aggressively expanded its portfolio beyond Sydney’s city limits with the acquisition of four new properties:
The Beach Palace Hotel, now the Coogee Pavilion (A$37m) The Newport Arms Hotel in Sydney’s north beaches (A$46m) The Padding Arms Hotel on Oxford St (A$5.5m) The Queen Victoria Hotel in Enmore (A$11.1m)
This past August, Hemmes’ Coogee Pavilion property (formerly Beach Palace Hotel) was awarded the 2015 Business of the Year by the local municipal council, 12 months since opening its doors. The result echoes a seemingly common trend across the Hemmes’ portfolio, with a large number of Merivale properties consistently being ranked amongst Sydney’s best.
“The venues are world-class; Merivale has this unique ability to transform an ordinary venue into a Sydney icon” says Musca.
Despite spending A$100 million on acquisitions, Merivale and other Sydney operators are facing an increasingly difficult operating environment.
In a bid to curb alcohol-related violence across Sydney, the state government last year introduced a series of lockout laws that stipulate venues located within select areas cannot take in new patrons after 1.30am, while last drinks have to be served by 3am.
While the laws have led to a significant decrease in violence, it has had crippling effects on a number of Sydney’s nightclubs with the Kings Cross and Oxford St areas being the worst hit, forcing the closure of up to 6 high-profile venues.
“Something had to be done” admits Hemmes, referring to the prior rise of violence across Sydney’s clubbing districts.
Compared to cities like Melbourne, Sydney has become a less attractive option for visitors looking for a night out, prompting speculation that authorities may look to overturn such laws. Yet Hemmes isn’t relying on a change, “we have had to adapt, become more nimble as a business. Sydney’s culture will adapt too”.
Record high property prices have also added to the pressure, as operators cope with increased rents and thinner margins. Though unlike many of its competitors, Merivale owns the majority of its venues and the recent spike in property prices means the group is now sitting on a portfolio that has made considerable capital gains, with ivy representing the largest portion of the the group’s asset value given its size and CBD location.
Yet the journey to this point has been far from smooth sailing for Hemmes.
Prior to ivy, Merivale had launched another CBD venue in 2000 called the Establishment. Situated on Sydney’s main George Street, Hemmes remembers the struggle in convincing banks that the large-scale venue concept would work in an area typically reserved for corporate offices and five-star hotels.
While financing for the Establishment was eventually secured, its CBD location would soon create issues in securing financing for the proposed location of ivy, a mere 400 meters away. There were renewed concerns amongst the banks that having the Establishment and ivy within such close proximity would cannibalize one of the two venues and put mortgage repayments at risk.
Allegations and resulting lawsuits have also become commonplace for Hemmes and Merivale over the years. Most recently, a dispute took place relating to the sale of the Coogee property where the former landlord claimed Hemmes was in breach of agreement. The matter was settled out of court in July, with Hemmes finalizing the sale soon after.
2015 has been a rollercoaster for Hemmes personally. Earlier this year, Hemmes’ father and founder of Merivale, John Hemmes, passed away after a battle with cancer at age 83. Affectionately known as “Mr. John” after the chain of fashion stores that he founded with wife Merivale.
In a turn of events, Hemmes found out within 48 hours of his father’s passing that his partner was pregnant with their first child, “I’m going to be a proud doting Dad” proclaims Hemmes.
Looking ahead, Merivale’s 2015/16 summer season is set to be its busiest yet with the launch of several new venues, as well as the unveiling of the recently acquired Queen Victoria Hotel and Newport Arms Hotel. Placing increased emphasis on dining as opposed to nightclubs, the new venues will feature an array of international food concepts curated by the likes of American chef Danielle Alvarez, formerly of San Francisco’s famed Chez Panisse and Napa Valley’s French Laundry.
Commenting on the shift from clubs to food and beverage, Hemmes says the upcoming venues are a reflection of “more Australians dining out and being more social than ever before”.
Come years end, 2015 will have been the fastest period of growth in Merivale’s 61 year history. With an extensive Sydney portfolio, it raises the question whether the next phase of growth will come from inter-state or even international expansion; something the 43-year old is not opposed to, “I’m always looking” says Hemmes.
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eaabf86290a07b37e04d702f8b862eeb | https://www.forbes.com/sites/chuckbolotin/2018/08/14/how-living-in-mexico-increased-the-quality-of-our-lives/ | How Living In Mexico Increased The Quality Of Our Lives | How Living In Mexico Increased The Quality Of Our Lives
Author's wife Jet Metier in garden in Ajijic, Mexico Chuck Bolotin
When my wife and I decided to try living in Mexico for a while, we didn’t really know what to expect.
With only very, very rudimentary Spanish, the totality of our experience in Mexico consisted of a visit to the border area 50 miles from San Diego for a few days; a week in Cabo San Lucas on vacation; a week at a Club Med Ixtapa; and a three-hour cruise port stop.
In short, we were quite unprepared.
Yet, it was this very lack of experience which we hoped would add to our open-mindedness, intensify our overall experience, lead us to some fresh perspectives and perhaps even help us to recognize some new opportunities.
We were not disappointed.
The Mexico (and Mexicans) we met were very, very, different than what most Americans expect, an article I will leave for the future. For this article, I’ll discuss just four ways in which living in Mexico for the last two years (about one third of it spent traveling around Mexico on a road trip of adventure and discovery) increased the quality of our lives.
The Lower Cost for a Better Lifestyle
While it is a terrible idea to move to a place just for lower costs, if everything else works out, having a lower cost of living sure is nice. By my calculations in our circumstances, for about the same lifestyle, the cost to live in Mexico is easily 60% less than in the U.S. The reality of this doesn’t really hit you until you live it. And when it does, if you’re living in Mexico, it’s hard not to break out laughing or even go into a spontaneous happy dance. (I’ll admit, I did and do both regularly.) It’s like being transported to an alternate universe where you don’t have to worry about money.
Here’s our example. We live in a 3,000+ square foot home in the Ajijic / Lake Chapala area in the Mexican Highlands with near perfect weather on about a quarter acre in a gate-guarded community with about 15 tennis courts and a huge swimming pool, both of which we use for free. We have an awesome view of the lake, the volcano behind it and mountains directly behind us. Our rent includes a housekeeper and gardener (no more chores!), trash pickup and water. When we buy a home like this here, our property tax will be about $150 per year (that is not a typo—per year). All this, including food, going out to eat, health insurance, maintaining two cars, etc., could be had for about $2,000 to $2,500 per month, slightly more if you’re extravagant.
How does this compare with your lifestyle and cost of living? For me, it was a definite cost/quality improvement.
Very capable dental staff at Dr. Hector Haro, near Ajijic, Mexico Chuck Bolotin
The Superior Healthcare
While I was increasingly unhappy with the deterioration of the quality of healthcare combined with its seemingly infinitely increasing cost in the U.S., I was shocked by how much better it is here in Mexico for expats like my wife and me. My $10,000 deductible health insurance premium in the U.S. was scheduled to rise to over $1,200 per month, but here, I pay only $225 per month, for much better coverage.
The cost for an out of pocket visit to a physician here is about $30, so I don’t bother to file claims. On several occasions, the physicians here have spent an hour with me for this fee. Compare this with your 5-minute consultation in the U.S., with you trying desperately to get a word in edgewise while the physician is entering or leaving your exam room.
And it’s not like the quality suffers here. The larger cities in Mexico such as Guadalajara (for us, less than an hour away) provide a quality of healthcare meeting or exceeding what you would find in the U.S., with the exception of if you have some extremely rare condition that only a specialty hospital could cover well. For the remaining estimated 95%+ of cases, in the major hospitals here, in the healthcare system you’ll most likely use if you’re an expat, you’ll find great care. Dental care costs about 75% less for absolutely equal or better results. I just got a root canal on a back molar in state-of-the-art facility for about $300 out-of-pocket; no insurance. The aftermath: zero physical pain and, compared with the $1,000+ I would have paid in the U.S., greatly reduced financial discomfort.
This happy set of surprises enabled us to visit several doctors to get treated or just examined for issues we had put off in the U.S., because in the U.S. we didn’t want to pay a small fortune for that five-minute visit. Here, we don’t think twice about visiting the doctor or dentist— we just go.
Starting a Business
Two of the most common reasons startup businesses fail are 1) lack of money; and 2) lack of time to execute the plan, with 2) being a condition of 1). Both these reasons are lessened here in Mexico, first, because your personal cost of living is so much lower that you can afford to invest more time and money in your business, and secondly, because the cost of labor is so much lower here.
With more time to execute, fewer demands to get to profitability quicker and lower costs for everything from legal and accounting to hiring employees, your chances for success increase substantially. Also, there tends to be less competition here, because compared with the U.S., there are fewer people with an entrepreneurial mindset and experiences in Mexico. On a personal level, presently, I’m taking advantage of this to start a company to transport household goods for those moving to Mexico from the U.S. and Canada called Best Mexico Movers. I’m just starting out, and I’ll let you know in coming articles how it goes.
Overall Peace of Mind
In Spanish, the word for “worried” is “preocupado," which us English-speakers can see bears a strong resemblance to “preoccupied.” This makes sense to me, because the more we are preoccupied about problems, the less happy we are and the less we can live in and enjoy the present; i.e., our lives.
With a substantially lower cost of living for a better lifestyle and massively reduced concerns about cost for quality healthcare, by living here in Mexico, my wife and I have removed two very large items that would otherwise preoccupy us. We live in near perfect weather almost all year round and are very optimistic about the future. As such, things are working out pretty well.
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bc1d5f989667ad39a00413727847bacb | https://www.forbes.com/sites/chuckbrooks/2021/03/02/alarming-cybersecurity-stats-------what-you-need-to-know-for-2021/?sh=7a222e5358d3 | Alarming Cybersecurity Stats: What You Need To Know For 2021 | Alarming Cybersecurity Stats: What You Need To Know For 2021
An abstract design of a terminal display, warning about a cyber attack. Multiple rows of hexadecimal ... [+] code are interrupted by red glowing warnings and single character exclamation marks. The image can represent a variety of threats in the digital world: data theft, data leak, security breach, intrusion, anti-virus failure, etc... getty
The year 2020 broke all records when it came to data lost in breaches and sheer numbers of cyber-attacks on companies, government, and individuals. In addition, the sophistication of threats increased from the application of emerging technologies such as machine learning, artificial intelligence, and 5G, and especially from greater tactical cooperation among hacker groups and state actors. The recent Solar Winds attack, among others, highlighted both the threat and sophistication of those realities.
The following informational links are compiled from recent statistics pulled from a variety of articles and blogs. As we head deeper into 2021, it is worth exploring these statistics and their potential cybersecurity implications in our changing digital landscape.
To make the information more useable, I have broken down the cybersecurity statistics in several categories, including Top Resources for Cybersecurity Stats, The State of Cybersecurity Readiness, Types of Cyber-threats, The Economics of Cybersecurity, and Data at Risk.
There are many other categories of cybersecurity that do need a deeper dive, including perspectives on The Cloud, Internet of Things, Open Source, Deep Fakes, the lack of qualified Cyber workers, and stats on many other types of cyber-attacks. The resources below help cover those various categories.
Top Resources for Cybersecurity Stats:
If you are interested in seeing comprehensive and timely updates on cybersecurity statistics, I highly recommend you bookmark these aggregation sites:
300+ Terrifying Cybercrime and Cybersecurity Statistics & Trends (2021 EDITION) 300+ Terrifying Cybercrime & Cybersecurity Statistics [2021 EDITION] (comparitech.com)·
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134 Cybersecurity Statistics and Trends for 2021 134 Cybersecurity Statistics and Trends for 2021 | Varonis
2019/2020 Cybersecurity Almanac: 100 Facts, Figures, Predictions and Statistics (cybersecurityventures.com)
Cyber security abstract concept. 3D contour of shield icon on digital background. Computer safety ... [+] symbol 3D illustration. getty
The State of Cybersecurity Readiness:
Despite all the warnings and high-profile breaches, that state of readiness for most when it comes to cybersecurity is dismal. The need for better cyber-hygiene is evident from using stronger passwords, patching software, employing multi-factor authentication and many other important security steps. The reality is reflected in the stats below.
78% Lack Confidence in Their Company’s Cybersecurity Posture 78% Lack Confidence in Their Company’s Cybersecurity Posture, Prompting 91% to Increase 2021 Budgets (yahoo.com)
On average, only 5% of companies’ folders are properly protected. 2019 Global Data Risk Report | Varonis
Cyber Attacks More Likely to Bring Down F-35 Jets Than Missiles “In our ever-increasing digitalized world of cybersecurity, threats keep growing.Take the F-35 fighter jet, for instance. It's been called the "flying computer" thanks to its myriad new contraptions that include AI-like sensor fusion, 360-degree camera views, improved data links, a database of threat information at-the-ready, and a highly advanced computerized logistics systems.” Cyber Attacks More Likely to Bring Down an F-35 Than Missiles | IE (interestingengineering.com)
Nearly 80% of senior IT and IT security leaders believe their organizations lack sufficient protection against cyberattacks despite increased IT security investments made in 2020 to deal with distributed IT and work-from-home challenges, according to a new IDG Research Services survey commissioned by Insight Enterprises “Just 57% conducted a data security risk assessment in 2020.” 78% Lack Confidence in Their Company’s Cybersecurity Posture, Prompting 91% to Increase 2021 Budgets (yahoo.com)
Data breaches have lasting financial effects on hospitals, report suggests “More than 90 percent of all healthcare organizations reported at least one security breach in the last three years. Data breaches have lasting financial effects on hospitals, report suggests (beckershospitalreview.com)
Identity theft spikes amid pandemic “The US Federal Trade Commission received 1.4 million reports of identity theft last year, double the number from 2019” Identity theft spikes amid pandemic | WeLiveSecurity
The Economics of Cybersecurity “Cost of breaches have been consistently rising in the last few years. The new vulnerabilities that emerged from shifting to a remote workforce greatly expanded the cyber-attack surface and added many vulnerabilities for hackers to exploit from home offices. Also, automated attacks by hackers and the ability to convert cryptocurrencies via ransomware has added to the cost of cybercrime.”
Cybercrime To Cost The World $10.5 Trillion Annually By 2025 Cybercrime To Cost The World $10.5 Trillion Annually By 2025 (cybersecurityventures.com)
Evil Internet Minute 2019 “Every minute, $2,900,000 is lost to cybercrime and top companies pay $25 per minute due to cyber security breaches” The Evil Internet Minute 2019 | RiskIQ
The average cost of a data breach is $3.86 million as of 2020 Data Breach Costs: Calculating the Losses for Security and IT Pros (dice.com)
Cybersecurity Market Forecasted To Be Worth $403B by 2027 “Over a 5-year period, the cybersecurity market is forecasted to experience a compound annual growth rate (CAGR) of 12.5%. Cybersecurity Market Forecasted To Be Worth $403B by 2027 - CE Pro
Dark network with glowing red node targeting a hacker information security 3D illustration getty
Types of Cyber-Threats:
Phishing still ranks as a “go to” by most hackers because it is easy to do and it often works. The malware just keeps on coming...
Malware increased by 358% in 2020 “A research study conducted by Deep Instinct reports on the hundreds of millions of attempted cyberattacks that occurred every day throughout 2020 showing malware increased by 358% overall and ransomware increased by 435% as compared with 2019.”Malware increased by 358% in 2020 - Help Net Security
Check Point Software´s Security Report Reveals Extent of Global Cyber Pandemic, and Shows How Organizations Can Develop Immunity in 2021 “The world faces over 100,000 malicious websites and 10,000 malicious files daily. 87% of organizations have experienced an attempted exploit of an already-known, existing vulnerability” Check Point Software´s Security Report Reveals Extent of Global Cyber Pandemic, and Shows How Organizations Can Develop Immunity in 2021 Nasdaq:CHKP (globenewswire.com)
Phishing attacks account for more than 80% of reported security incidents. Top cybersecurity facts, figures and statistics | CSO Online
Google has registered 2,145,013 phishing sites as of Jan 17, 2021. “This is up from 1,690,000 on Jan 19, 2020 (up 27% over 12 months)”. Phishing Statistics (Updated 2021) | 50+ Important Phishing Stats | Tessian
Ransomware Victim Every 10 Seconds in 2020 One Ransomware Victim Every 10 Seconds in 2020 - Infosecurity Magazine (infosecurity-magazine.com)
Terrifying Statistics: 1 in 5 Americans Victim of Ransomware “According to data gathered by Anomali and The Harris Poll, ransomware attacks 1 in 5 Americans. The survey was based on responses from more than 2,000 American citizens.” Terrifying Statistics: 1 in 5 Americans Victim of Ransomware (sensorstechforum.com)
Attackers disrupting COVID-19 efforts and critical supply chains “Cyberattacks evolved in 2020 as threat actors sought to profit from the unprecedented socioeconomic, business and political challenges brought on by the COVID-19 pandemic, IBM Security reveals.” Attackers disrupting COVID-19 efforts and critical supply chains - Help Net Security Cybercriminals are quick to find ways to get around strengthened security “next gen” supply chain attacks grew 420% in just 12 months” State of the Software Supply Chain 2020 Report | Download (sonatype.com)
Ransomware, Phishing Will Remain Primary Risks in 2021 “Attackers have doubled down on ransomware and phishing — with some tweaks — while deepfakes and disinformation will become more major threats in the future, according to a trio of threat reports.” Ransomware, Phishing Will Remain Primary Risks in 2021 (darkreading.com)
Netscout Threat Intelligence saw 4.83 million DDoS attacks in 1H 2020. “This is roughly 26,000 attacks a day or 18 attacks per minute.” NETSCOUT Threat Intelligence Report Findings from 1H 2020
Dragos: ICS security threats grew threefold in 2020 “A new report highlights the challenges facing ICS vendors today, including practices that are geared toward traditional IT and not designed for ICS security.” Dragos: ICS security threats grew threefold in 2020 (techtarget.com)
12-top-cybersecurity-threats-against-organisations-2019-statistics-e1556643214683.jpg (980×585) (comparitech.com)
Digital background depicting innovative technologies in security systems, data protection Internet ... [+] technologies getty
The Data at Risk:
Cybercrime To Cost The World $10.5 Trillion Annually By 2025 “The world will store 200 zettabytes of data by 2025, according to Cybersecurity Ventures. This includes data stored on private and public IT infrastructures, on utility infrastructures, on private and public cloud data centers, on personal computing devices — PCs, laptops, tablets, and smartphones — and on IoT (Internet-of-Things) devices.” Cybercrime To Cost The World $10.5 Trillion Annually By 2025 (cybersecurityventures.com)
The number of Internet connected devices is expected to increase from 31 billion in 2020 to 35 billion in 2021 and 75 billion in 2025. Security Today’s The IoT Rundown for 2020
Cybersecurity statistics do have a heuristic value in that they can point to gaps, growing threats, and alert to trends. The challenge is adapting the data into a functional and agile risk management strategy to be able to better protect ourselves. The alarming cybersecurity statistics for 2021 are a call to take the risk management mission more seriously.
Chuck Brooks LinkedIn
Chuck Brooks, President of Brooks Consulting International, is a globally recognized thought leader and evangelist for Cybersecurity and Emerging Technologies. LinkedIn named Chuck as one of “The Top 5 Tech Experts to Follow on LinkedIn.” Chuck was named as a 2020 top leader and influencer in “Who’s Who in Cybersecurity” by Onalytica. He was named by Thompson Reuters as a “Top 50 Global Influencer in Risk, Compliance,” and by IFSEC as the “#2 Global Cybersecurity Influencer.” He was named by The Potomac Officers Club and Executive Mosaic and GovCon as at “One of The Top Five Executives to Watch in GovCon Cybersecurity. Chuck is a two-time Presidential appointee who was an original member of the Department of Homeland Security. Chuck has been a featured speaker at numerous conferences and events including presenting before the G20 country meeting on energy cybersecurity.
Chuck is on the Faculty of Georgetown University where he teaches in the Graduate Applied Intelligence and Cybersecurity Programs. In addition to his FORBES Contributor role, Chuck is also a Cybersecurity Expert for “The Network” at the Washington Post, and a Visiting Editor at Homeland Security Today.
LinkedinChuck Brooks - Adjunct Faculty - Georgetown University | LinkedIn
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1b354afa3ffb79b6af645ebc03b23c24 | https://www.forbes.com/sites/chuckbrooks/2021/03/21/the-emerging-paths-of-quantum-computing/?sh=7399990c6613 | The Emerging Paths Of Quantum Computing | The Emerging Paths Of Quantum Computing
Quantum Computing getty
The world of computing has witnessed seismic advancements since the invention of the electronic calculator in the 1960s. The past few years in information processing have been especially transformational. What were once thought of as science fiction fantasies are now technological realties. Classical computing has become more exponentially faster and more capable and our enabling devices smaller and more adaptable.
We are beginning to evolve beyond classical computing into a new data era called quantum computing. It is envisioned that quantum computing will accelerate us into the future by impacting the landscape of artificial intelligence and data analytics. The quantum computing power and speed will help us solve some of the biggest and most complex challenges we face as humans.
The research firm Gartner succinctly describes quantum computing as: “[T]the use of atomic quantum states to effect computation. Data is held in qubits (quantum bits), which could hold all possible states simultaneously. Data held in qubits is affected by data held in other qubits, even when physically separated. This effect is known as entanglement.” In a simplified description, quantum computers use quantum bits or qubits instead of using binary traditional bits of ones and zeros for digital communications. Definition of Quantum Computing - Gartner Information Technology Glossary
A more detailed explanation of the elements involved in quantum computing was originally published in the Princeton University’s annual research magazine Discovery: Research at Princeton: Quantum computing opens new realms of possibilities – Discovery: Research at Princeton
Qubit zoo: Quantum vocabulary and terminology
Following is a brief primer of quantum computing concepts and terms.
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Qubits not bits. Quantum computers do calculations with quantum bits, or qubits, rather than the digital bits in traditional computers. Qubits allow quantum computers to consider previously unimaginable amounts of information.
Superposition. Quantum objects can be in more than one state at the same time, a situation depicted by Schrödinger’s cat, a fictional feline that is simultaneously alive and dead. For example, a qubit can represent the values 0 and 1 simultaneously, whereas classical bits can only be either a 0 or a 1.
Entanglement. When qubits are entangled, they form a connection to each other that survives no matter the distance between them. A change to one qubit will alter its entangled twin, a finding that baffled even Einstein, who called entanglement “spooky action at a distance.”
Types of qubits. At the core of the quantum computer is the qubit, a quantum bit of information typically made from a particle so small that it exhibits quantum properties rather than obeying the classical laws of physics that govern our everyday lives. Several types of qubits are in development:
Superconducting qubits, or transmons. Already in use in prototype computers made by Google, IBM and others, these qubits are made from superconducting electrical circuits. Trapped atoms. Atoms trapped in place by lasers can behave as qubits. Trapped ions (charged atoms) can also act as qubits. Silicon spin qubits. An up-and-coming technology involves trapping electrons in silicon chambers to manipulate a quantum property known as spin. Topological qubits. Still quite early in development, quasi-particles called Majorana fermions, which exist in certain materials, have the potential for use as qubits. Quantum computing: Opening new realms of possibilities (princeton.edu)
Blue glowing qubit fractal, computer generated abstract background, 3D rendering getty
Even with these definitions, conceptualizing the notion quantum computing and entanglement is a difficult task as it is encompasses an enigmatic world of sub-atomic physics. David Awschalom, a senior scientist at Argonne and professor at the University of Chicago’s Pritzker School of Molecular Engineering, explains that in the quantum world nature “behaves very differently — In this quantum world, particles can exist in multiple states at the same time, like on and off but simultaneously. And they can be entangled, that is, they can share information with one another—even over long distances and even without a physical connection.” Argonne and UChicago scientists take important step in developing national quantum internet | Argonne National Laboratory (anl.gov)
Like other areas of science, there are competing theories on what constitutes quantum proof. But there are several very recent and exciting developments in this evolution that have created a pathway for this new era of quantum computing. This includes quantum breakthroughs from using light signals from networks of photons and quantum coding in silicon microchips.
A discovery made by the research team from the Quantum Photonics Laboratory at RMIT in Melbourne, Australia demonstrated for the first time the perfect state transfer of an entangled quantum bit (qubit) on an integrated photonic device. Quantum Photonics Laboratory Director Dr Alberto Peruzzo noted that it is a “breakthrough that has the potential to open up quantum computing in the near future." Quantum computing closer as scientists drive towards first quantum data bus: Researchers trialling a quantum processor capable of routing information from different locations have found a pathway towards the quantum data bus — ScienceDaily
2019, Google’s quantum computer did a calculation in less than four minutes that would take the world’s most powerful computer 10,000 years to do and is About 158 Million Times Faster Than the World’s Fastest Supercomputer. Google’s Quantum Computer Is About 158 Million Times Faster Than the World’s Fastest Supercomputer | by Vidar | Predict | Feb, 2021 | Medium New computing in scale, speed and capability are continually achieving new milestones.
Close view of Quantum Components getty
Public private cooperation is significantly expanding in the quest for quantum understanding. Five new National Quantum Information Science Research centers were created by the U.S. Department of Energy researchers from academia, U.S. national labs and industry will be working together to help catalyze quantum information science research. The companies involved in the research centers include projects IBM, Microsoft, Intel, Applied Materials and Lockheed Martin. The funds came from the $1.2 billion allocated by the National Quantum Initiative Act.
Scientific AmericanQuantum Computing May Be Closer Than You Think
Quantum computers represent a paradigm shift in computation. We are entering a fascinating period in the development of quantum computers. Quantum systems are scaling up in both size and reliability and are getting close to showing a real advantage over classical computers. As this technology is still in such an early phase, it may be that its true impact is not even fully understood yet. This makes this field even more fascinating to follow.
The potential benefits and applications of quantum computing for society have many use cases. A good summary is below.”
Quantum Computers will deliver enormous speed for specific problems. Researchers are working to build algorithms to find out and solve the problems suitable for quantum speed-ups. The speed of quantum computers will improve many of our technologies that need immense computation power like Machine Learning, 5G (and even faster internet speeds), bullet trains (and many other transport methods), and many more. Quantum computing is important in the current age of Big Data, as we need efficient computers to process the huge amount of data we are producing daily. Despite being computational, Quantum computers can reduce power consumption from 100 to 1000 times they use Quantum tunneling.
Source: Quantum Computing: Benefits And Applications (autome.me)
The science categories that will be directly impacted by quantum include physics, chemistry, mathematics, and biology. Applications for industry will impact industry verticals such as healthcare, finance, commerce, communications, security, cybersecurity & cryptography, energy, space exploration, and numerous other disciplines. Basically, any industry where data is an ingredient.
Quantum Computing Use Cases Gartner
These breakthroughs are just the tip of the iceberg as there are dozens of other notable developments in the field. A great deal of research, development, and prototyping still needs to be done. Many experts, still see quantum computing is still theoretical, but some say we appear to be nearing the transformational quantum gate that will allow us to enter the new computing era.
Governments, academia, and many technology leaders in industry, are all now investing with heightened intensity in research & development and are contributing to the quest to develop functional quantum computing. We certainly are on the pathway to the new era, quantum computing is still in a nascent stage, but we may arrive there sooner than we imagined.
About Chuck Brooks:
Chuck Brooks, President of Brooks Consulting International, is a globally recognized thought leader and evangelist for Cybersecurity and Emerging Technologies. LinkedIn named Chuck as one of “The Top 5 Tech Experts to Follow on LinkedIn.” Chuck was named as a 2020 top leader and influencer in “Who’s Who in Cybersecurity” by Onalytica. He was named by Thompson Reuters as a “Top 50 Global Influencer in Risk, Compliance,” and by IFSEC as the “#2 Global Cybersecurity Influencer.” He was named by The Potomac Officers Club and Executive Mosaic and GovCon as at “One of The Top Five Executives to Watch in GovCon Cybersecurity. Chuck is a two-time Presidential appointee who was an original member of the Department of Homeland Security. Chuck has been a featured speaker at numerous conferences and events including presenting before the G20 country meeting on energy cybersecurity.
Chuck is on the Faculty of Georgetown University where he teaches in the Graduate Applied Intelligence and Cybersecurity Programs. He is also a Cybersecurity Expert for “The Network” at the Washington Post, Visiting Editor at Homeland Security Today, and a Contributor to FORBES. He has also been featured speaker, author on technology and cybersecurity topics by IBM, AT&T, Microsoft, General Dynamics, Xerox, Checkpoint, Cylance, Malwarebytes, and many others.
He is also an advisor to Cognitive World Think Tank — COGNITIVE WORLD and has a leadership role in the Quantum Security Alliance. Welcome to Quantum Security Alliance
Chuck Brooks LinkedIn Profile:
Chuck Brooks on Twitter: @ChuckDBrooks
LinkedinChuck Brooks - Adjunct Faculty - Georgetown University | LinkedIn
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9bfcbb0c0edd4f16555dc473145ee4c6 | https://www.forbes.com/sites/chuckcohn/2015/01/23/how-to-properly-use-social-media-to-fit-your-business-strategy/ | How to Properly Use Social Media to Fit Your Business Strategy | How to Properly Use Social Media to Fit Your Business Strategy
In our increasingly connected society, building a social media presence is as commonplace as getting a driver’s license. Personal Facebook profiles, LinkedIn accounts, and Twitter handles are common among students and professionals alike. However, frequently updating your Pinterest boards does not necessarily equip you with the tools and experience that you need when crafting a social media strategy for your budding business.
Whether you are operating a brick-and-mortar company, or a more tech-heavy startup such as my business, thoughtfully employing social media can help you increase your visibility, profits, and number of customers. One key is carefully linking your social media activity to your business strategy. How can you do so? Here are three pieces of advice:
1. Choose the right platforms and practices
It might be tempting to follow the social media trends that are considered “hot” in popular culture and jump on whatever platform is being talked about the most. Maximizing your social media use means choosing those platforms and practices that suit your core business strategy. For instance, it may or may not make sense for your company to update its Twitter account every hour; what works for another company may not have the same effects for yours.
One strategy could be to first determine which platforms your customers and leads use, and then build your social media presence with those outlets in mind so as to achieve predetermined and measurable business objectives. Even if revenue impact is hard to measure, you should have specific key performance indicators in place that will help you evaluate the extent to which you are doing a good job and generating meaningful value for your company.
In many cases, the objective of a social media strategy is to increase the reach and visibility of your company. Therefore, it would make sense to consider fostering a social media presence on most – if not all – of the major platforms to maximize those reach results. For instance, Facebook may be the largest social media platform, but Pinterest, Tumblr, and Instagram have the highest growth rates. Which outlets are likely to benefit your business most, both in terms of the users you’ll reach and how you do business? Twitter users, for example, often expect near-immediate responses when they mention a company. If you do not have the resources to answer quickly, Twitter (and other similar platforms) may not be ideal for your company’s social media strategy.
2. Set goals for your social media use
The location, purpose, and size of your business will naturally affect your social media goals. However, many companies use social platforms to:
Increase referral traffic to their website Drive lead generation or e-commerce purchases Increase company credibility Demonstrate a corporate identity and culture that makes people more likely to want to work with as consumers or employees Increase the quantity of feedback that they receive from customers and leads. Offer an additional avenue for customer service interactions. Your clients may find it more convenient to compose a Tweet or write a Facebook post than to call or email you. It may even help them like you more. One survey found that 43% of customers are likely to recommend a product or service to others when that brand responds in a timely manner on social media outlets. Media outlets may even consider your online presence when deciding whether to feature your company in a piece. The stories that you portray of an exciting company through social media may help you connect with reporters and writers who are looking for interesting businesses to profile.
Whenever possible, track how your social media use influences your lead flow and customer conversion rate. Ultimately, good use of these platforms should be impacting your revenue and profit figures.
3. Take a systemized approach to content
Once you decide which social media outlets best fit your business strategy, you should develop a comprehensive plan for the content you will be posting. A systemized approach is key when developing your content plan, as this will allow you to maintain organization and consistency when sharing across your various social channels. Try to determine how frequently you will post, how you will quantify the results of your postings, and how you will attain maximum reach with your strategy.
To start, for instance, you should look into social media management tools, such as Hootsuite. These resources can be incredibly helpful for social media managers of any company, as they allow you to plan posts in advance and select only the specific channels through which you would like a particular message to be shared. This helps to keep your content plan less erratic and ultimately should assist you in engaging your target audience at the times of highest potential reach across all cohesive channels.
It is also highly recommended to create and maintain an ongoing editorial calendar for your content. Ideally, you should be able to look at the month or week ahead (depending on your business and particular social strategy) and have a clear view of when certain pieces of content will be published, as well as when you will share them on social media. Taking it day by day is not always wise, even if you are planning your posts one day in advance. That may help you for the short-term, but establishing and following an editorial calendar that stretches over a longer period of time can subsequently help your social strategy for the long-term.
Moreover, it is important to remember that you should present engaging content on social media. If you are only posting messages such as, “Check out our latest deals,” people will quickly tune out. Try to curate posts that are applicable to your product or service and that are interesting. The best content also encourages people to interact with your brand again. Take a company that sells shoes – it could post a behind-the-scenes glimpse into the design process for its latest model. Even content from other sources can work as long as it is relevant to your business strategy.
Whether your business relies on Facebook, Snapchat, Twitter, or some combination of these or other outlets, the four words above – relevant to your business strategy – are key to a successful social campaign. By choosing the correct platforms and practices, identifying key goals, and planning your approach to content, you can ensure your use of social media supports your core business strategy.
Chuck Cohn is the CEO and founder of Varsity Tutors, a technology platform for private academic tutoring and test prep designed to help students at all levels of education achieve academic excellence.
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460a111759e9f395a9fc23d75bdfad09 | https://www.forbes.com/sites/chuckcohn/2015/03/19/strategic-ways-to-outsource-and-when-to-do-it/?sh=46ca7cc92fcb | Strategic Ways To Outsource, And When To Do It | Strategic Ways To Outsource, And When To Do It
Few companies function completely independently. Instead, businesses form partnerships with suppliers as well as with contractors. Working with outside contractors, or outsourcing, can allow companies to do business more efficiently and effectively.
However, knowing how and when to outsource can be complicated. Even describing outsourcing can be complicated. Companies generally outsource in one of two ways: they outsource a single component of their daily operations, or they establish outsourcing as a strategic part of their business. Apple, as an example of the latter, relies on outsourcing to fulfill their operations model. They design their products internally, and then their contractors operate a complex supply and manufacturing chain on their behalf. In contrast, outsourcing the printing of advertising fliers for your company is simply outsourcing a portion of your daily operations.
Outsourcing is also different from offshoring, which involves contracting work overseas. Any project that you opt against completing in-house falls into the realm of outsourcing. So – how can you strategically build outsourcing into your business plans? The guide below can help you decide how and when to outsource for best results.
1. What should you outsource?
The tasks that you choose to outsource may vary depending on your industry. In general, there are two broad types of tasks that lend themselves particularly well to outsourcing:
A. Tasks that are critical to your operations, and not a vital component of your strategy.
Pretend, for a moment, that your company manufactures organic fruit snacks. While you need to deliver your product to grocery stores and other outlets, how you choose to do so is unlikely to impact the people who ultimately buy your snacks. Given that there is little strategic advantage to shipping the product yourself, this might be a task that you outsource. If you can ensure that your deliveries will be cost-effective and timely – thus avoiding unnecessary extra delivery and storage fees – outsourcing may be able to help you more efficiently complete this task.
B. Commodity tasks. Commodity tasks are also well suited to outsourcing. For instance, many printing companies offer an array of services that come with overnight shipping. In order for you to quickly produce business cards of the same quality as one of these companies, you would have to invest upfront in commercial-grade inks and printers. Or take janitorial services – you can hire full-time team members to clean your office building, or you can leverage the economies of scale that a full-service facilities business offers. The funds that you save on full-time staff can thus be redirected to other areas of your company. Customer service call centers are another example of this kind of outsourcing.
2. When should you outsource?
One of the best ways to decide whether or not to outsource a task is to perform a cost/time calculation. You may have tasks that you could conceivably do in-house with the right amount of time and money – for example, perhaps you eventually plan to hire in-house developers to increase your software design flexibility. But in the meantime, you still need to update your website and your back-end systems. In the short-term, you can outsource this work to a contractor, with the long-term goal of recruiting in-house developers.
One-time events also work hand-in-hand with outsourcing. Unless you rebrand, chances are you will only create your company logo once. If you have current team members with experience in graphic design, you might decide to develop your logo in-house. Otherwise, it may be more cost-effective to take this project to a third party that has expertise and can deliver a professional-looking logo in a timely manner.
As you conduct a cost/time analysis, keep in mind that outsourcing requires you to clearly establish goals and a timeline with your contractors. While you may experience base cost savings if you outsource your development work to a contractor, whether they be in another state or another country, you will also need to factor in the need for clear communication. Getting your point across via phone calls, emails, and other media is different than being able to go back-and-forth in-person with an in-house team. Technology has greatly increased the efficiency of managing a project that you outsource. At the same time, you have to be cognizant of differences in culture and language. For example, contractors may not be aware of the “lingo” you use within your own company, and you should take the time to make sure that you are truly on the same page with regards to goals and milestones, or something as simple as using the same phrases and terms to describe things.
When properly utilized, outsourcing can enable you to streamline your business operations. It can help you more strategically utilize your resources, maximize your time, and move forward with key growth initiatives now.
Gallery: Best Small Companies: Tips And Advice From Top CEOs 14 images View gallery
Chuck Cohn is the CEO and founder of Varsity Tutors, a technology platform for private academic tutoring and test prep designed to help students at all levels of education achieve academic excellence.
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a5a8b6af05e74139502b1bbc407c6df1 | https://www.forbes.com/sites/chuckcohn/2015/04/28/how-to-find-the-right-partners-for-your-business/ | How To Find The Right Partners For Your Business | How To Find The Right Partners For Your Business
The classic adage, “Two heads are better than one,” is famous for good reason – it is true in many situations, including in the business world. Of course, if you are looking for a partner for your company, finding the right mind (or minds) is crucial. Though time-consuming and often complex, this partner-seeking process can be divided into two main questions. These questions, and the answers that Varsity Tutors has taught me, are:
Where can I find potential business partners?
Business partnerships are almost always formed as a result of strategic networking. For most CEOs, their goal is to find a partner who has been highly successful in the same or a related industry, ideally at a company that was similar in purpose or structure. Take Henry Wells and William Fargo – rather than compete against one another in the highly competitive mail express industry, they joined forces in 1852 to create a stronger unified organization. Today, that organization is known as Wells Fargo & Company, the largest bank in the U.S. as measured by market capital.
There are a number of ways to find your own world-class partner for your business. One great idea is to reach out to members of the industry-specific and professional organizations to which you belong. You can also conduct initial research on social media platforms such as LinkedIn, or turn to your academic networks (i.e. your business school colleagues or college classmates). If you have a mentor, ask him or her to introduce you to any promising candidates who fall outside your immediate network.
How can I evaluate potential business partners?
Whether you identify one or ten prospects, your next step is to vet each person. Doing so is less about separating the “bad” prospects from the “good,” and more about selecting a phenomenal candidate who is a perfect fit for your business and you personally – and vice versa. To facilitate this process, you can:
1. Outline your expectations before you begin your search
It can be tempting to start a search with the simple-minded intention of “seeing what’s out there,” but your attempts will likely be far more productive if you first take the time to define your ideal candidate. Consider, for example, how you would like the relationship to function. Your expectations may evolve over time, and you can certainly refine your outlook as you meet with potential partners. The advantage in having even a brief sense of your preferences is that it can streamline and shorten your search. By defining your expectations you give yourself a more subjective set of metrics by which to evaluate candidates, rather than arbitrarily deciding whether you “like” the person or not.
Remember too that your prospects will ask you questions such as, “What’s your company vision? How do you work and manage? What do you expect out of a business partner?” Thus, both parties can benefit from your thinking about and answering these questions in advance.
2. Assess whether your entrepreneurial and financial goals align
According to one survey, the primary reason that B2B partnerships fail is differing business priorities. This can also be true of company co-founders or partners. For instance, are you and your candidate both committed to slowly growing a sustainable company, or are you or the candidate interested in more immediate gains? If your business priorities differ from those of your prospective partner, you may ultimately end up working toward separate goals, and this makes any partnership difficult to sustain. It is beneficial to define your business goals ahead of time, just as you would define what you expect of a business partner.
3. Seek third-party opinions of your prospects
Speaking with candidates is an invaluable way to gauge their work ethic and work habits, as well as whether your personalities and professional goals complement one another. In addition to your personal assessment, do a little more research and ask your prospects’ colleagues for their opinion of the potential partnership. People who have first-hand experience working with the candidate can frequently share insights that a short conversation over coffee simply cannot provide. Similarly, you can also ask your colleagues and mentors for their opinions to provide another set of eyes and opinions about the candidates you have in mind.
When you are selecting your soon-to-be business partner, take the time to get to know the candidates in-depth personally and professionally. It is critical to not rush into a decision and give yourself opportunities to find a great fit. You may have heard before that the relationship between business partners has been likened to a marriage. If this is to be a long and fruitful relationship, both parties must take the time to sustain and grow the collaboration. This successful partnership starts by carefully selecting with whom you partner.
Gallery: Biggest Startup Mistakes And How To Avoid Them 6 images View gallery
Chuck Cohn is the CEO and founder of Varsity Tutors, a technology platform for private academic tutoring and test prep designed to help students at all levels of education achieve academic excellence.
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579f32812569e38528531dcf09fd1ede | https://www.forbes.com/sites/chuckcohn/2015/07/02/should-you-consider-a-freemium-model-for-your-business-pros-cons/ | Should You Consider A Freemium Model For Your Business? | Should You Consider A Freemium Model For Your Business?
In this digital era, the freemium business model has become an increasingly popular way to sell a product or service. “Freemium” refers to a system by which a company offers a basic product or service free of charge, and presents its consumers with the option to upgrade to a premium version for a fee.
Pandora is one example of a freemium service. Its users can stream music for free, or they can upgrade to Pandora One for $4.99 a month. With Pandora One’s monthly subscription, customers can bypass ads.
Perhaps this model sounds ideal for your organization. Like most pricing strategies, there are pros and cons to the freemium path. As you consider whether or not a freemium model is right for your business, keep these three attributes of a successful freemium strategy in mind:
1. Marginal costs
A freemium model is profitable and sustainable when the lifetime value of your paying customers is larger than the sum cost of acquiring users and producing your goods. Most companies have a conversion rate from free to premium of 2-5%. Suppose you plan to generate $1 million a year in revenue: with a premium fee that is $100 per year per customer, you will need 10,000 paying users. Assuming a 5% conversion rate, your total customer base for the year is 200,000. Put another way, you will need to provide goods or services to 200,000 people just to generate $1 million in revenue!
This is why considering your marginal costs, or your costs to provide your product or service to one additional customer, is critical. If your marginal costs are high, then your operational costs to support those 200,000 people will also be high. For instance, the marginal costs in the automobile industry are relatively steep (the average sticker price of a car is more than $30,000). This, along with other factors, prevents car dealers from using the freemium model. In contrast, the file-sharing service Dropbox has marginal costs between $2-3. If the freemium model interests you, determine the marginal costs for your business, and calculate the conversion rate and price points your business will need to be profitable.
2. Product strength
In order to offer a successful freemium model, your product or service must first be fundamentally sound. A sub-par free model is unlikely to encourage your customers to upgrade to the premium model, even if the premium model works flawlessly. In fact, by offering a sub-par model, you may ultimately turn away users, thus decreasing your pool of total customers.
3. Clear value
“Value” here refers not to cost value, but instead to the value of upgrading to the premium model. For example, Pandora and Spotify offer ad-free versions of their music streaming services. Dropbox offers additional storage space. In both cases, the value-add is straightforward and easy to understand.
If you decide to operate according to a freemium model, ensure that the value proposition of becoming a premium user is clear and convincing. If your free version already provides everything your customers want, what will prompt them to upgrade? If your premium model is challenging to understand and use, you may have to reconsider your strategy – just as you would for a free version that is too satisfying.
Take Chargify. Chargify’s freemium model was unsustainable because it provided a free version of its billing software to anyone who billed fewer than 50 customers a month. For the majority of its small business users, the free model was more than sufficient. There was no reason to upgrade.
The freemium business model is not for all companies. At the same time, if you have a strong product or service with low marginal costs and a clear strategy to add value for premium users, this model may enable you to reach more consumers and enhance your bottom line.
Chuck Cohn is the CEO and founder of Varsity Tutors.
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25c43e21e4a9cd1129369cc8b8007283 | https://www.forbes.com/sites/chuckcohn/2015/07/17/basics-of-software-development-every-ceo-should-know/ | Basics of Software Development Every CEO Should Know | Basics of Software Development Every CEO Should Know
What is AWS? What is iOS, or Ruby on Rails? These three terms are just a few examples of the software development concepts that every CEO should know. For some leaders, words like hotfix or website wireframe are understandably foreign, and no matter your industry, a basic grounding in software development can help you identify, implement, and achieve company goals. More than hardware, software has increasingly become the driving force of many aspects of business.
As with any new endeavor, you may have questions about how to educate yourself on software development. What material should you focus on first, and why should you make the time? Here are the answers that Varsity Tutors has taught me to those questions:
Why should I learn this?
Software development is as much a language as is English or Mandarin Chinese. When you consider that software development is an integral part of almost any business plan, it can be far easier to understand how and where to improve your company if you are familiar with its basics. This allows you to, in essence, speak the same language as your developers. CEOs with a combination of technical and managerial skills are much more likely to maximize the chances of success for their company. Consider the failed launch of healthcare.gov – its leaders did not have a fundamental understanding of technology and how software is developed. Instead of implementing an iterative process to develop the health care coverage website, the government decided to simply publish a laundry list of required features, and then wait till the end to test how everything would fit together.
Whenever possible, try to balance managing your business plan with software development time. You do not need to be a master coder. Instead, aim to learn the basic terminology so you can efficiently converse with developers, as well as effectively convey your vision for your website, database, front- and back-ends, etc.
How can I learn these basics?
There are several ways to familiarize yourself with software development, including attending a coding boot camp or utilizing MOOCs to learn at a pace that suits your schedule. You can also purchase a guide, such as either of these recommended titles. Ultimately, it is best to learn by doing some coding yourself, even if it is creating a rudimentary webpage or making a java program that simply outputs, “hello, world!”
What content should I prioritize in my learning?
The field of software development is broad, with a vast number of applications. As you explore it, consider focusing on these items:
Wireframe sketches. Wireframe sketches can help you mock up user interfaces (or UIs), as visuals are a much better tool than a list of features when speaking with developers. Ticket-tracking systems. Programs like Asana, Basecamp, and JIRA enable you to manage internal and external software development issues. Back-end and front-end operations. One especially useful thing to know is the difference between back-end and front-end operations. It is also crucial to learn to recognize which features are most important to your core business strategy. There will always be features that you can add on to the back- and/or front-end, and not all of them will be mission-critical. Consider implementing a priority system to help you manage this aspect of software development. Basic UI design. In our digital era, it is also crucial to understand the central tenets of UI design for different platforms – for instance, desktops, laptops, smartphones, and tablets. Different screen sizes and different user experiences (i.e. keyboard and mouse vs. touchscreen alone) dictate different navigation systems and visual layouts. Basic web development. Back-end code determines the front-end functionality and visual layout of a website, which can make learning it a valuable endeavor.
Whether you prefer to learn in-person, remotely, or through the independent aid of a book, choose the method that works best for you and your schedule, and focus on the above areas. This basic mastery of software development will ultimately assist your company in any number of areas – in advertising and marketing, in lead generation and tracking, in product development, in recruitment, etc.
Chuck Cohn is the CEO and founder of Varsity Tutors, the leading curated marketplace for private tutors. The company also builds mobile learning apps, online tutoring environments, and other technologies focused on tutoring and test prep.
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6831281e632ef6dbbd2244bb51fdb658 | https://www.forbes.com/sites/chuckcohn/2016/04/06/how-to-decide-on-management-styles-for-your-company/ | How to Decide on Management Styles for Your Company | How to Decide on Management Styles for Your Company
A leader’s management style is sometimes thought of as inherent, but in truth, it is partially dictated by circumstance. There is no one approach that works for all people and all tasks in all situations. The most successful managers are flexible and use a wide range of styles appropriately. But what does “appropriately” mean?
Different people will respond uniquely to different management styles
The level of relevant experience and personality type of a given staff member can affect the management style you use with him or her. For instance, if your team has little or no experience, and if you do not yet know your staff members’ strengths, weaknesses, and how they prefer to operate, you may need to provide close coaching to facilitate learning. Alternatively, at one extreme, you may need to utilize an autocratic approach where you are the sole decision maker. Margaret Thatcher, former Prime Minister of the United Kingdom, is a prime example of an autocratic leader. While some individuals in government disliked her, she often worked efficiently because she did not seek others’ opinions when making decisions. She was thus able to make swift change during a difficult time in the United Kingdom’s history.
As you become familiar with your team, you can delegate managerial responsibilities to others. If your team has ample experience, you can opt for a democratic style, soliciting each person’s opinion and making decisions as a group. The visionary approach—where you outline a vision and allow your team to work toward it with minimal oversight, intervening only to remove any obstacles that present themselves—is a third option.
A personality test, such as the Myers-Briggs Type Indicator, can help you understand how each personality on your team (including your own) is perceived by others. As industrial psychology has suggested, personality can affect how you interact with and motivate your staff—if you are an ENTJ (one of several extroverted personality types) and your team member is an INTJ (an introverted personality type), he or she may not be as vocal as you are when brainstorming or sharing opinions, but this does not mean that he or she is not engaged and participating.
Different situations will require different management styles
Trust is also a factor when selecting a management style. If you are still establishing credibility with your team, it may be wise to make a concerted effort to share your knowledge, to solicit opinions, and to take on more work to demonstrate that you are a team player. If your team trusts you, you can provide more direction with less explanation and staff buy-in. If team morale is low—if you are struggling to meet performance/sales targets or to retain clients, working long hours, or facing layoffs—it may be helpful to adopt a style where you guide your team more closely, making decisions, but with everyone's interests in mind. When using such a style, be sure to explain decisions to your staff members and to obtain their support. This can, in turn, raise the morale of your team.
Does your team consist of direct reports or peers? If you are managing direct reports, you can, again, provide more direction with less explanation and staff buy-in. If you are overseeing a team of peers, a participative approach is often superior to an authoritative or directive approach. With a participative approach, you can demonstrate that you understand that you are all peers, and that you plan to carry your weight like everyone else. For example, in the wake of September 11, the former CEO of Southwest Airlines, James Parker, distinguished his company from others in the industry by recommitting to all of his staff members and avoiding layoffs. Their needs were equal to his own.
Different tasks will require different management styles
When a task is critical, and must be completed immediately or correctly the first time, an autocratic or directive style may be necessary. A.M. Rosenthal, former editor of the New York Times, exercised an autocratic approach in part to meet the many pressing deadlines of the newspaper industry. Such an approach, or any other approach that emphasizes close supervision, may also be necessary when a task is completely new to your team.
As your company’s goals and your immediate team’s composition evolve, your management style should too. When in doubt about which approach to take, consider the people, situations, and tasks involved, and then act accordingly.
Chuck Cohn is the CEO and founder of Varsity Tutors, a live learning platform that connects students with personalized instruction to accelerate academic achievement.
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5ccb1f5bbaaf6d4d305dd8fc2414ae0d | https://www.forbes.com/sites/chuckdevore/2015/06/19/government-regulations-boost-housing-costs-and-poverty/ | Government Regulations Boost Housing Costs And Poverty | Government Regulations Boost Housing Costs And Poverty
“ The rent is too damn high ,” but, not to worry, your government is on the case, seeking to remedy problems largely of its own making with more market distorting rules that will drive housing costs even higher.
But expecting government to make housing affordable is akin to expecting government to make college affordable—how’d that turn out?
A pending U.S. Supreme Court decision on the federal Fair Housing Act of 1968 (Texas Dept. of Housing and Community Affairs v. The Inclusive Communities Project) may collide with a vigorous new push from Pres. Obama’s Department of Housing and Urban Development (HUD) to increase its central planning powers over America’s housing market. Specifically, HUD is compelling wealthy neighborhoods to build subsidized housing for poor minorities and then ensure the poor move in, whether they want to or not.
Marin County, California is of the communities targeted by HUD for its lack of minority housing. Marin, a wealthy, largely liberal county just north and across the Golden Gate Bridge from San Francisco, is known for its rolling hills and green space. But, much of this green space exists because political power prevents property owners from developing their own land. This is textbook NIMBYism (Not In My Back Yard) where residents who already have their slice of heaven engage government power to infringe on the property rights of their neighbors who own land and would like to develop it.
HUD isn’t the only party clashing with Marin—Darth Vader’s father, George Lucas, is as well. In 1987, Lucas wanted to expand his studios adjacent to his Marin ranch (walking to work beats flying 400 miles down to Hollywood). But, for 25 years, Marin County elected officials blocked Lucas’ construction plans at the behest of outraged community activists who somehow thought that they had a right to tell Lucas what to do with his land. But Lucas wasn’t done. In 2012, he lined up a developer who wanted the land to build affordable housing. But, this project has stalled as well. Now Lucas has decided to finance the 224-unit affordable housing development himself, saying, “We’ve got enough millionaires here.” If Lucas wins the right to build on his land, the affordable housing could be in place by 2019, some 32 years after Lucas’ original development plans were launched.
California employs a wide arsenal to fight development: fees, taxes, environmental restrictions, water permits, restrictive zoning, carbon dioxide emission considerations, union pressure, and property owners who use political connections to restrict the supply of new product for the market so as to drive up the value of their own property.
Developers who do business in both states said that getting permission to build a strip mall in Texas takes about four to five months while permission to build a similarly-sized development in California takes four to five years.
This red tape comes at a cost: California’s housing market is inelastic, as developers can’t build supply as quickly nor as responsively to meet demand. This is reflected in the latest first quarter 2015 cost of living index from the Council for Community and Economic Research which shows California’s housing index at 203 percent of the national average, a big jump from 176 in 2014.
And this resistance to allowing the market to meet demand doesn’t just affect housing; it can force business to consider out of state options as well. In Bee Cave, Texas, a suburb of Austin, consistently America’s fastest growing large city, a developer is following through on plans to build the largest movie studio west of the Mississippi outside of Hollywood. What George Lucas tried to build in his backyard in 1987 and gave up trying a quarter century later, was presented to the city council and approved in 13 months in Texas.
Inflated costs for homes, offices, and factories driven by government regulations hurt the middle class and the working poor the most. High prices for shelter rob families of discretionary income, shrink the rest of the economy, and drive up poverty.
There is a pattern to housing costs: states with heavier regulatory burdens tend to have higher housing costs than do states with lighter regulations. The Fraser Institute’s annual Economic Freedom of North America study ranks states for their economic freedom. Fraser’s report details taxation, spending, and regulatory burdens, among others, with the data showing a strong correlation between housing prices and heavy regulation in a state.
Ironically, high housing costs caused by layers of government rules that make it difficult for developers to respond to market demand lead to, you guessed it, calls for more government rules—and so on in a vicious circle.
California’s response to high housing costs mirrors the federal response and is typical of the hyperstate model: more rules and more subsidies to address the lack of housing supply caused by the rules in the first place. But government rules and subsidies can only provide a tiny fraction of the demand for affordable housing with governments across America holding lotteries to select those lucky enough to live in below market rate housing.
If California epitomizes the hyperstate model, Texas’ embrace of freedom is the antipode.
Housing costs more than twice the national average in California, the third-highest in the nation. But the average cost for shelter in Texas was 86 percent of the national average in the first quarter of this year.
Houston, America’s fourth-largest city, and, by some measures, the nation’s most diverse city, doesn’t even use zoning.
The vastly different approaches to land use regulations in the two biggest states where one in five Americans call home greatly affect the poverty rates.
The traditional official poverty measure is unaffected by housing costs—in fact, the nation’s official poverty gauge ignores the reality of the cost of living and sets the poverty threshold at the same level in the 48 contiguous states, treating San Francisco (average rent: $3,803) the same as Houston (average rent: $1,752). This is ridiculous, of course, but, it’s government.
The U.S. Census Bureau’s new Supplemental Poverty Measure takes housing costs into account, as well as a wider array of government benefits, costs and taxes. Under this more comprehensive measure, California has the nation’s highest poverty rate, 23.4 percent, giving urgent meaning to the phrase “house poor.” Texas, meanwhile, had a poverty rate of 15.9 percent, matching the national rate.
California and Texas are two of America’s four majority-minority states (Hawaii and New Mexico being the others). California renters, mostly minorities, are likely paying a premium of at least 30 percent above California’s so-called “good weather tax”—the extra price people might be willing to pay for living in a temperate climate. If California’s jobs recovery continues, it is likely that the percentage of poor in the state will remain relatively unchanged, or even rise, as the demand for housing remains unmet in the face of a regulatory thicket.
The best thing the bureaucrats at HUD—or local elected officials for that matter—can do to improve the quantity of affordable housing is to allow the market to work while resisting the urge to play the part of real estate developer.
As a wise economist once said, “…striving for equality by means of a directed economy can result only in an officially enforced inequality…” –Friedrich Hayek
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dca136c6cf03bc82a9d8b2f6a68f9e4e | https://www.forbes.com/sites/chuckdevore/2015/06/30/which-of-the-five-most-populous-states-do-best-in-k-12-education/ | Which Of The Five Most-Populous States Do Best In K-12 Education? | Which Of The Five Most-Populous States Do Best In K-12 Education?
Discussion about America’s K-12 education system is fraught with politics and misinformation. Teachers unions seek to boost salaries and benefits. Highly-paid administrators and the large and growing cadre of non-teaching support staff have their own agenda. Politicians and pundits look to score points on the thinnest of reeds.
The high stakes—$545 billion of tax money, and growing, spent every year on pre-K to 12th grade education—encourage textbook examples of hyperbole and demagoguery.
In February, 2011, New York Times columnist Paul Krugman wrote, “How… can (Texas) prosper in the long run with a future work force blighted by… lack of education.”
While in August 2011, U.S. Secretary of Education Arne Duncan said of Texas, “I feel very, very badly for the children there.” The highest-ranking federal education official went on to say, “Texas may have the lowest high school graduation rate in the country,” noting that the education system in Texas “has really struggled” under then-Governor Rick Perry.
President Obama’s former spokesman, Robert Gibbs, said a few days later, “…Texas has one of the worst education systems.”
The great thing about statements on education is that there is an abundance of fact checking data out there.
After checking the facts, Krugman, Duncan, and Gibbs earn an “F.”
In the height on irony, Secretary Duncan’s own cabinet department issued a report in 2013 on education in America’s five largest states showing that Texas did best while California fared the worst. In “Mega-States: An Analysis of Student Performance in the Five Most Heavily Populated States in the Nation,” the U.S. Department of Education compared educational performance in California, Florida, Illinois, New York and Texas. The report’s findings: California’s math, reading, and science standardized test scores fell below the national average for both fourth and eighth graders while Texas scored the strongest, with fourth graders meeting the national average in the three basic topics while eighth graders scored above average in math and science and below average in reading.
But, this federal report covered the National Assessment of Educational Progress (NAEP) standardized tests given in 2009 and 2011, might Texas’ superior performance have been an aberration? The latest Department of Education data suggests otherwise.
Nationwide 2013 test scores for math and reading continue to show Texas leading its diverse, big state peers.
Fourth-grade mathematics test results for 2013 show Texas and Florida students at the national average with New York and Illinois below the national average and California significantly below average.
Average scores in NAEP mathematics for fourth-grade public and nonpublic school students, by state/jurisdiction: 2013 U.S. 242 California 234 Florida 242 Illinois 239 New York 240 Texas 242
So, Texas and Florida led the pack in fourth-grade math scores. However, America’s largest states, diverse as they are, not all are equally diverse. Only two of the largest states are majority-minority among their overall population: California and Texas. But diversity is even greater among fourth graders, with white, non-Hispanic test takers only totaling 26 percent in California and 30 percent in Texas.
Percentage distribution of fourth-grade public school students assessed in NAEP mathematics, by race/ethnicity and state/jurisdiction: 2013 White, non-Hispanic Black, non-Hispanic Hispanic Asian/Pacific Islander U.S. 52 15 24 5 California 26 6 54 11 Florida 40 22 31 3 Illinois 48 17 27 5 New York 48 18 23 10 Texas 30 14 51 4
Since English language learners and children in poverty tend to have greater challenges in education, it would be instructive to see how the five big states test scores stack up to each other by race and ethnicity. This table shows that Texas fourth graders in three of four of the nation’s largest racial or ethnic groups outperformed their big state peers, with Hispanic students in Florida edging out Texans. Texas and Florida students were the only ones to perform above the national average across the board.
Average scores and achievement-level results in NAEP mathematics for fourth-grade public and nonpublic school students, by race/ethnicity and state/jurisdiction: 2013 White, non-Hispanic Black, non-Hispanic Hispanic Asian/Pacific Islander U.S. 250 224 231 258 California 249 221 224 254 Florida 251 228 238 264 Illinois 248 220 229 266 New York 248 225 229 259 Texas 255 231 235 272
What about eighth-grade mathematics? Overall, Texas is tops among the five big states and is the sole big state to beat the national average. California is last.
Average scores in NAEP mathematics for eighth-grade public and nonpublic school students, by state/jurisdiction: 2013 U.S. 285 California 276 Florida 281 Illinois 285 New York 282 Texas 288
In addition, Texas has the best scores among all four demographic groups, higher than the other four large states and better than the national average. California has the weakest scores.
Sense a trend here? Don’t hold your breath for criticism of California, it’s a blue state through and through so, by definition, their intentions cannot be questioned meaning that their results must not be mentioned.
Average scores and achievement-level results in NAEP mathematics for eighth-grade public and nonpublic school students, by race/ethnicity and state/jurisdiction: 2013 White, non-Hispanic Black, non-Hispanic Hispanic Asian/Pacific Islander Nation 294 263 272 306 California 291 258 263 305 Florida 291 264 274 310 Illinois 296 260 272 313 New York 294 262 265 305 Texas 300 273 281 319
Moving on to reading, the effect of large numbers of English learners can be seen, with California having the lowest average scores.
Average scores in NAEP reading for fourth-grade public and nonpublic school students, by state/jurisdiction: Various years: 2013 U.S. 222 California 213 Florida 227 Illinois 219 New York 224 Texas 217
Breaking the results down by the four largest demographic groups allows a comparison among like groups with New York and Florida scoring above the national average in fourth-grade reading in all four categories and Texas scoring above average in three of the four categories.
Average scores and achievement-level results in NAEP reading for fourth-grade public and nonpublic school students, by race/ethnicity and state/jurisdiction: 2013 White, non-Hispanic Black, non-Hispanic Hispanic Asian/Pacific Islander U.S. 232 206 207 235 California 232 202 201 227 Florida 236 212 225 249 Illinois 231 199 204 242 New York 233 211 210 236 Texas 233 209 206 252
As was the case for fourth-grade reading, California brings up the rear for eighth grade reading as well.
Average scores in NAEP reading for eighth-grade public and nonpublic school students, by state/jurisdiction: Various years: 2013 U.S. 268 California 262 Florida 266 Illinois 267 New York 266 Texas 264
Looking at the results by demographic group shows is instructive. Florida and Texas score above the national average in three of the four groups. California is last again.
Average scores and achievement-level results in NAEP reading for eighth-grade public and nonpublic school students, by race/ethnicity and state/jurisdiction: 2013 White, non-Hispanic Black, non-Hispanic Hispanic Asian/Pacific Islander U.S. 276 250 256 280 California 275 247 252 279 Florida 274 254 260 282 Illinois 276 246 257 285 New York 277 252 252 278 Texas 279 253 255 285
The table below recaps the 2013 mathematics and reading test results among the four largest racial and ethnic groups in the U.S. for the fourth and eighth-grades in the five most-populous states, showing Florida and Texas at the top, scoring above the national average in 14 of 16 categories and California at the bottom, scoring above average in none of the 16 comparisons.
Scores Above U.S. Average Scores at U.S. Average Score Below U.S. Average Florida 14 0 2 Texas 14 0 2 New York 8 1 7 Illinois 5 2 9 California 0 1 15
Now, to be fair, Texas did have the lowest percentage of adults with a high school degree back in 2009 according to the U.S. Census Bureau (California was third-lowest then and within the margin of error of Mississippi). But, this oft-quoted and frequently misused statistic is driven by immigration—young adults moving to Texas and California from mainly south of the border. And, as the U.S. Census Bureau is wont to do, they updated this statistic, showing that in the most recent year, California, not Texas, has the lowest percentage of adults with a high school degree.
Rather than cite data that largely measures the pull of immigration to a state, it would be more instructive to gauge the state’s K-12 educational system. The national standardized test scores from the U.S. Department of Education show Texas and Florida doing well, but how many students in the large states actually graduate from high school?
The National Center for Education Statistics within the Department of Education released a report detailing high school graduation rates in the 2011 to 2012 school year. Their data shows that Texas tied with Nebraska and Wisconsin for the second-highest graduation rate in the nation, 88 percent. Iowa was the nation’s leader at 89 percent. The national average was 80 percent.
Emphasizing what a remarkable achievement Texas’ graduation rate really is, among the top states, Texas’ general population is almost 50 percent more diverse than the national average, with more than triple the share of minorities than live in Nebraska and quadruple that of Wisconsin or Iowa.
Among the big states, California’s four year graduation rate was 78 percent, Florida, 75 percent, Illinois, 82 percent, and in New York, 77 percent of high school students graduate.
The bottom line for K-12 education results is clear: among the five biggest states where more than one in three Americans call home, Texas has the best K-12 education system. Further, Texas does far better than its big state peers in preparing students of all races and ethnicities for success.
Texas must do even better, of course, and it can by following Nevada’s lead in bringing true choice to public education by passing a universal education savings account program.
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6dd23719b46c3c9e601ae278145b4a00 | https://www.forbes.com/sites/chuckdevore/2015/10/23/kasich-kill-the-federal-gas-tax-shift-transportation-power-to-states/ | Kasich: Kill The Federal Gas Tax, Shift Transportation Power To States | Kasich: Kill The Federal Gas Tax, Shift Transportation Power To States
Ohio Governor and presidential candidate John Kasich called for the elimination of the federal gas tax yesterday at a New Hampshire town hall event. This is exactly the sort of serious policy discussion that ought to occur during a presidential campaign.
In criticizing long-standing D.C. practices that enhance federal power at the expense of the states, Kasich said, “Here’s how it works in Washington: You take your gas money, you send it to Washington, the politicians divide it up, come up with a bunch of pork and then they send less back to us. What do we need them to send it for? Let’s just keep (in the states) and we can tax ourselves and pay for our roads.”
The federal government taxes $0.184 on a gallon of gasoline and $0.244 for diesel with about 40 percent of the $50 billion spent annually going to programs earmarked by Congress, such as urban rail systems. But the fuel taxes only generate 68 percent of the Highway Trust Fund’s expenditures, with the remainder coming from general federal revenue, much of it borrowed.
Groups interested in the billions of dollars it takes to pour more concrete for roads and bridges or build mass transit systems don’t like the idea of the federal government stepping out of the transportation funding business for a few reasons. First, they benefit from having a centralized power center to lobby for funds and rules and restrictions that benefit their industry. Second, they benefit from the general revenue subsidy of about $16 billion per year on top of fuel tax revenue of $34 billion—money that states with more limited borrowing authority would be hard-pressed to make up.
Gov. Kasich, an 18-year veteran of the House of Representatives, aimed his comments at Congress as it works against next Thursday’s deadline to reauthorize the federal Highway Trust Fund.
In suggesting returning transportation policy and funding to the states, Kasich noted that federal involvement in a road’s financing and maintenance prevents states from tolling. Other federal restrictions mandate one-size-fits-all rules on things such as bike lanes, designs and materials, limiting flexibility and innovation.
The Congressional wrangling over reauthorizing the six more years of federal transportation funding comes at a time of shifting habits for American drivers who are driving fewer miles (see graph). Through 2006, the overall number of miles Americans put in on the roads steadily increased, only showing downturns during WWII when gasoline was rationed, and again during the oil embargo shocks of the 1970s. Many analysts believe that we may be seeing a sustained downward trend in driving habits as younger Americans use the Internet more and their cars less.
Adding to the pressure of federal and state lawmakers to find ways to pay for transportation, improved fuel efficiency and growing use of vehicles that aren't powered by traditional fuels are reducing the amount of gas tax revenue compared to miles driven. Further, the sharing economy, with Uber, Lyft and innovations such as Ford’s program to help its truck owners generate some cash by renting out their vehicles, may result in a lower share of vehicle ownership, further cutting into vehicle-related taxes that many states use to fund transportation. Lastly, automated vehicles promise to revolutionize transportation, potentially making roads safer and far more efficient.
Disruptive and beneficial change is coming to the transportation sector. Federal involvement serves to resist change with vested interests redoubling their efforts in Washington to preserve the status quo. Devolving transportation authority to the states will allow 50 laboratories of democracy a chance to experiment in providing the best mix of transportation options to their constituents.
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323bb7765dc65d0e26c77439f47526dd | https://www.forbes.com/sites/chuckdevore/2017/02/23/californias-wrecking-the-western-electric-grid-now-755-mostly-native-american-jobs-are-at-risk/ | California's Wrecking The Western Electric Grid - Now 755 Mostly Native American Jobs Are At Risk | California's Wrecking The Western Electric Grid - Now 755 Mostly Native American Jobs Are At Risk
California is an energy policy bully. Using market share and political willpower, global warming-fearing Golden State politicians are reshaping the electric market far beyond their 39 million constituents to 46 million others living in 13 states, Western Canada and portions of Mexico.
The main plant facility at the Navajo Generating Station, as seen from Lake Powell in Page, Ariz.... [+] The plant faces closure under pressure from Obama-era regulations and California's green energy policies. (AP Photo/Ross D. Franklin, File)
As with most things connected to California’s progressive politics, the bad unintended consequences of this effort to create a brave new energy market will outweigh the good intentions.
The first high-profile victim of California’s energy policies could well be 755 mostly Navajo workers at the large, coal-fired Navajo Generating Station in northern Arizona and the Kayenta Coal Mine 100 miles to the east that supplies it.
Climate-change concerns have been the main driver of California’s energy policies since 2006. That year saw then-Gov. Arnold Schwarzenegger sign two bills, AB 32 and SB 1368, which radically remade California’s electric markets. In turn, these policies are disrupting the power grid from British Columbia and Alberta in Canada to Baja California and Ciudad Juarez in Mexico, an area serving more than 85 million people.
AB 32, known as the Global Warming Solutions Act of 2006, aims to reduce California’s carbon dioxide and other greenhouse gas emissions.
SB 1368, the lesser known of the two bills, packs the bigger regional punch. Its author, former California State Senator Don Perata, explained the purpose of his bill in March 2007 before U.S. Senate Environment and Public Works Committee and its then-Chairman, former Sen. Barbara Boxer,
“First, California can serve as a model for federal efforts to combat global warming and its impacts. Last year we passed (a law) prohibiting utilities from entering into long-term contracts for power produced by dirty coal-burning plants… California enacted SB 1368 to send a strong signal to the western energy markets. Our energy must be clean – we won’t buy power from coal plants spewing greenhouse gases by the ton.”
Were California self-sufficient in electrical generation, the negative effects of its policies would largely be contained within its borders. However, that is not the case, making Sen. Perata’s coal power ban a very real problem.
California dominates the Western Interconnection, the name for the electric grid in America’s West, using about a 34% of the power consumed among the 11 states wholly or mostly (Montana and New Mexico) in the grid. More importantly, California is the biggest electric importer in the nation, with about 32% of the electricity it uses coming from eight states and Canada.
The biggest Western power exporters in recent years are Arizona, Wyoming, Montana, Washington, Oregon, Utah and New Mexico. The plurality of the power exported to California comes from coal. Occasionally, as much as half of the power consumed in Southern California comes from coal-fired plants in Arizona, New Mexico and Utah.
Nevertheless, as much as it can, California pretends that the energy entering its grid from out of state comes from clean energy sources. This wishful electron laundering allows Californians to transform “dirty” coal and nuclear power into wind and hydropower by laying claim to the “green” portion of another state’s electric generation portfolio.
If unrestrained, California’s green energy policies will eventually destroy the reliable coal base load generation that provides the West with a large degree of its grid stability and affordability, at least outside of California where the cost of electricity is about 62% higher than its Western neighbors.
Which brings us back to the Navajo Generating Station (NGS). NGS is a 2,250-megawatt power plant with three units that has operated since 1976. Ironically, it owes its existence to environmentalists who blocked additional hydroelectric dams slated for the Colorado River—environmentalists preferred nuclear power to meet Arizona burgeoning needs for power, among other things, to pump vast amounts of water around the state.
Arizona’s Salt River Project, a public utility, water provider and NGS’ operator and 42.9 % owner, recently cited a study by the National Renewable Energy Laboratory that claimed that less expensive power could be purchased on the open market, thus, undermining the economic case to keep NGS operating.
But, there are a few issues with the federally-funded agency’s report, not the least of which is the implicit bias in the name of the organization, the National Renewable Energy Laboratory. Expecting a federal agency whose purpose is the promotion of renewable energy to produce a fair report about a coal power plant is to strain credulity.
Then, there is the matter of the report itself. The authors’ state that “…in the near term, generating electricity at NGS is likely to be more expensive than the cost of purchasing power on the wholesale market…” The challenge here is that they compared the all-in costs of operating NGS with the wholesale electric market—it’s an apples-to-oranges comparison. The market itself would be profoundly changed without the reliable base load power NGS provides.
Further, the report’s lead author, David Hurlbut, is an active donor to the left at the federal level. This isn’t altogether unusual at the National Renewable Energy Laboratory where 91% of the staff’s federal political donations favor liberal causes. Given the left’s campaign against reliable and affordable energy (aka, fossil fuels), is it at all a mystery that the NREL’s reports vilify fossil fuels while promoting wind and solar power?
Mark Lewis is a water and power expert and an elected board member of the Central Arizona Project. Lewis notes that natural gas power is slower to be dispatched in the Phoenix area because the region has a large and reliable coal and nuclear base load. However, he predicts that added solar power arising from California’s anti-carbon regulations will heighten energy pricing volatility as has been seen in Germany and Australia. This occurs because California now frequently generates more solar power than it can use midday, causing it to export subsidized solar and natural gas generated electricity into Arizona and neighboring states, thus depressing prices on the wholesale market.
In response to Pres. Trump’s energy plans, California Gov. Jerry Brown said in December, “Whatever Washington thinks they are doing, California is the future.”
That might have been the case with a non-disruptive President with no intention to “drain the swamp.” Instead, with former Texas governor Rick Perry soon to take charge at the Department of Energy and Pres. Trump about to fill three vacancies on the five-member Federal Energy Regulatory Commission (FERC), the new administration will have many opportunities to stop California from upending electricity throughout the West. Doing so will likely push California’s electricity rates even higher while protecting the rest of the West from being forced to participate in California’s green costly green policies.
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89bde1bf9b91e6fa0552b9335cdf03d5 | https://www.forbes.com/sites/chuckdevore/2018/05/22/texas-laps-california-in-job-and-population-growth/ | Texas Laps California In Job And Population Growth | Texas Laps California In Job And Population Growth
Texas Tops California Growth Texas Public Policy Foundation
California’s bigger, population-wise, but Texas delivers the growth.
California, with 39.5 million people, is some 40 percent more populous than Texas, at 28.3 million. Yet, in spite of California’s large advantage in residents, the Golden State generated 356,800 new nonfarm jobs in the past 12 months through April, a rate of 2.1 percent, compared to 332,300 jobs in Texas, clocking in at 2.7 percent growth.
Texas’ strong job market sustains the state’s vibrant population growth as well. Since the 2010 census, Texas has added 12.6 percent more people, double California’s growth rate of 6.1 percent, America added 5.5 percent to its numbers from 2010 to 2017.
Every year, the U.S. Census Bureau estimates the number of people who move across state lines. In the five years from 2012 to 2016, a net of 521,052 Californians moved out. Their most popular destination was Texas, with a net of 114,413 Californians moving 1,300 miles east to Texas. California lost about 1.4 percent of its population to other states over five years.
Over the same five year period an estimated 542,432 more Americans moved to Texas than moved out, growing Texas’ population by 2.1 percent.
For more than a decade, California has consistently lost residents to other states, with the middle class and entrepreneurs alike driven out by the nation’s highest marginal income tax rate (13.3 percent), a heavy regulatory burden, and high housing costs inflated by restrictive zoning, environmental rules, and development fees that add about $200,000 to the price of a typical new home.
However, compared to most nations around the globe, even California remains a strongly desirable destination. Foreign immigration to both California and Texas are strong. From 2012 to 2016, new foreign arrivals added 4 percent to California’s numbers and 3.9 percent to Texas’ population.
Tax Reform’s Role in Job Growth
Of particular interest on the employment front are the emerging implications of the wide-ranging federal tax cut and reform measure signed into law by President Trump in late December 2017. The new tax law capped state and local tax (SALT) deductions at $10,000 per household that, when combined with state tax law, resulted in what amounts to be a change to the tax code in all 50 states at once. Since the tax cut passed, Texas, a low-tax state with no individual income tax, added 150,500 nonfarm private jobs through April amounting to 1.4 percent growth rate. California, one of the highest-taxed states in the nation, added jobs at half the pace, 0.7 percent, for 104,400 nonfarm private sector jobs.
Nationally, the five most-populous states high-tax states—California, Illinois, New York, New Jersey and Massachusetts—where high-earning taxpayers will see little savings from the federal tax cut with some even seeing a tax hike due to the limitation on the SALT deduction, saw private sector nonfarm job growth of 0.57 percent in the first four months of 2018. In the ten largest low-tax states, led by Texas and Florida, private job growth through April was 0.91 percent, 58.5 percent higher than in the high-tax states.
Should these job trends sparked by federal tax reform continue, look for California’s domestic outmigration to pick up, with Texas foremost among the beneficiaries of Californians bringing their enthusiasm, knowhow and capital to work in the Lone Star State.
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c7273c880feaf1ec69bab5f35b044487 | https://www.forbes.com/sites/chuckdevore/2018/08/27/of-the-5-big-states-texas-1-for-growth-california-1-for-poverty/ | Of The 5 Big States, Texas #1 For Growth, California #1 For Poverty | Of The 5 Big States, Texas #1 For Growth, California #1 For Poverty
Texas #1 for Growth, California #1 for Poverty Texas Public Policy Foundation
USA Today published a piece from 24/7 Wall St. on the best and worst state economies. The Drudge Report linked to the piece, likely multiplying its readership manifold. Unfortunately, the ranking is fundamentally flawed for two key reasons which will be explained below.
Colorado, Utah, Massachusetts, New Hampshire and Washington captured the top-5 in the ranking. Among the five most-populous and diverse states, California came in at #8 overall, followed by Florida (#13), Texas (#21), New York (#31) and Illinois (#32). Bringing up the bottom of the roster were New Mexico (#46), Mississippi (#47), Louisiana (#48), Alaska (#49), and West Virginia (#50).
The ranking, by 24/7 Wall St. senior editor Michael B. Sauter and analysts Samuel Stebbins and Evan Comen, used five factors to score states’ economic performance: economic growth from 2012 to 2017, the official poverty rate in 2016, the official unemployment rate in June 2018, employment growth from 2012 to 2017, and the share of adults with bachelor’s degrees.
Of their survey, the authors’ write:
The best ranked states tend to have fast-growing economies, low poverty and unemployment rates, high job growth, and a relatively well-educated workforce, while the opposite is generally the case among states with the worst ranked economies.
The challenge with any rankings is the data included, the data left out, and the weighting of the data used.
In their ranking the authors’ use economic growth from the last five years. But the issue with that data is that the Great Recession hit some states far harder than others. For instance, California’s housing bubble was particularly large compared to Texas’ due to a variety of factors, including state law and the effect of California’s restrictive regulations which artificially reduced new supply thus inflating the value of existing housing. As a result, from 2007 at the onset of the last recession to 2009, California’s real economic output declined 4.4% vs. 3.2% for the U.S. as a whole while the Texas economy contracted an imperceptible 0.01%. Thus, as the economic recovery took hold, California was initially slow to recover, but then it outpaced most of its rivals for a few years with its economic growth only recently slowing.
A better gauge of consistent, sustained growth is a 10-year window, beginning in 2007 before the recession and continuing until 2017, the last year for which data from the U.S. Bureau of Economic Analysis is available.
Over the past decade, the top states by GDP growth are: North Dakota, Texas, Nebraska, Washington, and Oregon. The slowest growing states are: New Jersey, Louisiana, Wyoming, Nevada, and Connecticut with the latter two seeing a decline in real GDP of 2.2% and 9.1%, respectively.
The other factors used in the USA Today ranking have issues as well. The greatest determiner of poverty is employment, not government benefits. People with jobs are far less likely to be in poverty. Further, job growth is closely linked to economic growth and is inversely related to unemployment—the more job growth, the lower unemployment generally is. Thus, of the five factors used in the survey, four are largely redundant with economic growth having a high correlation to both the unemployment and job growth while poverty is closely correlated with the unemployment rate. The share of adults with bachelor degrees has little statistical correlation to economic growth or poverty but is predictive of demographics as well as the kind of industry in a state.
Lastly, the use of the U.S. Census Bureau’s Official Poverty Measure is itself highly problematic because the official poverty measure, in use for more than 50 years, does not account for the large variations in states’ cost of living—it assumes rents in New York are the same as rents in Mississippi. As a result, the Official Poverty Measure significantly understates real poverty in high cost of living states such as California and New York while overstating poverty in low cost states such as Texas and most of the Midwest and South.
To remedy the shortfalls of the old Official Poverty Measure, the U.S. Census Bureau developed the Supplemental Poverty Measure, which does look at the cost of housing from state-to-state as well as a wider array of benefits for the poor and costs incurred by the poor. Further, unlike the Official Poverty Measure, the Supplemental Poverty Measure accounts for the value of noncash government assistance such as food stamps (now called Supplemental Nutrition Assistance Program or SNAP) and housing vouchers, as well as other common expenses, such as out-of-pocket medical costs. Thus, states that have a more robust safety net have more of that assistance measured, though data would suggest that employment has a stronger effect on reducing poverty than welfare alone.
When using Supplemental Poverty Measure, the states with the highest poverty as averaged from 2014 to 2016, are: California (20.4%); Florida (18.8%); Louisiana (18.4%), Arizona (17.8%) and Mississippi (16.9%). The national average Supplemental Poverty rate over the last three years reported was 14.7%. Texas’ poverty rate was at the national average.
The states with the lowest Supplemental Poverty rate were: Minnesota (8.0%); Vermont (8.6%); New Hampshire (8.8%), Iowa (8.8%) and Utah (9.4%). These states are among the least diverse in the nation, however, with the minority population of Vermont (6.5%) the second-lowest in the nation, followed by the 4th-least diverse, New Hampshire (8.7%); #5 Iowa (12.9%); #13 Minnesota (18.6%); and #18 Utah (20.7%). The most populous states are very diverse, with just under 40% of Illinois’ population being minority while both California and Texas are majority-minority.
Combining two key factors, economic growth from 2007 to 2017 and the Supplemental Poverty Measure from 2014 to 2016, provides a better look at a state’s economic wellbeing. By these two measures, each equally weighted using the percentage departure above or below the national average for both measurements, we see: North Dakota (#1), Nebraska (#2), Texas (#3), Utah (#4) and Washington (#5). The bottom five are: New Jersey (#46); Arizona (#47); Louisiana (#48); Nevada (#49); and Connecticut (#50).
Among the five big states, the results show:
State 10-year Real GDP 2007-2017 Supplemental Poverty Rate Texas 30.4% 14.7% California 19.4% 20.4% New York 12.7% 16.0% Illinois 5.1% 13.4% Florida 4.6% 18.8%
The 50-state ranking for economic vitality follows:
1 North Dakota 2 Nebraska 3 Texas 4 Utah 5 Washington 6 Minnesota 7 Colorado 8 Oregon 9 Iowa 10 South Dakota 11 Oklahoma 12 New Hampshire 13 Idaho 14 Montana 15 Pennsylvania 16 Tennessee 17 Vermont 18 Massachusetts 19 Wisconsin 20 Maryland 21 California 22 Kansas 23 South Carolina 24 Ohio 25 Indiana 26 Hawaii 27 North Carolina 28 New York 29 Arkansas 30 Delaware 31 West Virginia 32 Georgia 33 Missouri 34 Michigan 35 Virginia 36 Rhode Island 37 Kentucky 38 Wyoming 39 New Mexico 40 Illinois 41 Alaska 42 Maine 43 Alabama 44 Florida 45 Mississippi 46 New Jersey 47 Arizona 48 Louisiana 49 Nevada 50 Connecticut
The most effective policy remedy to reduce poverty is robust job growth and a strong economy. Nationally, we see that in work with the cutting and reforming of federal taxes along with the reduction of regulations by the Trump administration and the Republican-controlled Congress, under which America is now seeing record low unemployment for minorities. As the new U.S. Census income surveys come in this year and next, America should see a long-welcome decline in its poverty rate.
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95ee19f445121a69affef1d66a5dff1f | https://www.forbes.com/sites/chuckdevore/2018/12/17/texas-taxpayers-pay-for-political-virtue-signaling-with-costly-renewable-energy/ | Texas Taxpayers Pay For Political Virtue Signaling With Costly Renewable Energy | Texas Taxpayers Pay For Political Virtue Signaling With Costly Renewable Energy
Claims of 100% renewable power in Georgetown, Texas don't add up, but have cost consumers there... [+] millions of dollars. Getty
The City of Georgetown, Texas, and its mayor, Dale Ross, have become known internationally over the past couple of years due to the city’s claim that its municipal electricity utility uses 100% renewable energy.
But as recent developments show, Georgetown’s proverbial 15 minutes of fame came at great cost to taxpayers and electricity ratepayers. Mayor Ross can get on television. But can he fix a pothole?
Georgetown, home to about 71,000 people, is 25 miles north of Austin, Texas.
Praised by former Vice President Al Gore and featured on a popular German television program, Mayor Ross introduced Gore in 2017 at a renewable energy conference held in Georgetown for the second time. Ross appeared with Gore earlier that year at a renewable energy convention in Las Vegas. Ross, a self-described “conservative Republican” has also appeared in environmental documentaries through which he estimates he’s been seen by more than 500 million people around the world.
Politicians contend with many challenges. Foremost is getting elected. Winning votes is often a process of making promises and, once in office, keeping promises.
Yet there is a multitude of things that may distract an elected official from attending to local voters’ concerns. Unelected staff may have their own agendas that they seek to impose upon the elected officials for whom they ostensibly work. Outside special interests may appeal to them. Popular issues that have little or nothing to do with their office may command their attention—for instance, city councilmembers passing foreign policy resolutions or environmental ordinances that aren’t within their scope of responsibility.
In the City of Georgetown’s case, the distraction from the basic services came in the form of a virtue signaling energy policy cloaked in the guise of responsible fiscal policy.
First, some background about Texas’ electricity market. In 2002, the Texas electricity market moved from a heavily regulated system to a market based system. Most electric customers, except for El Paso and parts of the Panhandle and East Texas, can choose their energy supplier. As a result, millions of consumers have shopped for lower prices, and Texans pay less for the electricity they use than the national average. There are exceptions though: consumers served by electric cooperatives and municipal utilities can’t choose their electric providers.
Residents of Georgetown are captive to the city’s municipal electric utility, with Georgetown Utility Systems providing electricity, water, sewer, and garbage services. As a result, what consumers pay for these services isn’t simply a matter of supply and demand—public policy decisions also factor heavily.
Enter Mayor Ross and Georgetown’s 100% renewable electricity policy.
In justifying making his city 100% renewable (it’s really not, but more on that later), Ross has said, “This is a fact-based decision we made in Georgetown, and first and foremost it was an economic decision…” Ross went on to tout to the German television show, “…we are paying the same amount per kilowatt hour in year one than we are in year 25 with no cost escalation, so that meets the objective of cost certainty. And then in terms of regulatory risk — the knuckleheads in D.C. — what’s there to regulate with wind and solar? It’s clean energy. So this as the perfect solution for the citizens we were elected to serve.”
But there are two big problems with Ross’ statements.
First, Georgetown just announced that it is renegotiating its wind and solar energy contracts after energy costs came in about $23.1 million over budget in 2016 and 2017. This year, the city—meaning the city’s taxpayers—paid $8.6 million more for electricity than expected due to falling electricity prices. The city made up $1.8 million of the shortfall by not spending as much as budgeted on investments in electric infrastructure. So much for getting a good deal for the taxpayer.
Second, wind and solar aren’t without risk from government policy, regulatory or otherwise. In fact, a huge part of the renewable market is entirely artificial—propped up by government subsidies and mandates as well as policies that allow periodic renewable power sources to send electricity to the grid whenever they produce it while the cost of maintaining the grid’s reliability are levied upon others: consumers and reliable baseload generators that pay for fuel in exchange for being able to produce power whenever it’s needed.
Ross went on to boast to the German television crew that, “I make decisions based on facts… unlike the president,” noting that “It was a huge mistake to withdraw from the Paris climate accords…”
Meanwhile, Paris has suffered from weeks of violent unrest, initially triggered by anger over high fuel prices about to be made more unaffordable by a proposed climate change tax of 25 cents per gallon, since rescinded by French President Macron.
As for Georgetown’s claim of 100% renewable electricity, Charles McConnell, executive director of the Energy and Environment Initiative at Rice University, told the Austin American-Statesman in 2017, “It’s not kind of misleading, it’s very misleading, and it is for political gain.”
Bill Peacock, the Vice President for Research at the Texas Public Policy Foundation (and a colleague of the author), told the Austin American-Statesman last week that what Georgetown did to make the 100% renewable claim “…was (to buy) more electricity than they could use almost any day of the year.” The city’s policymakers had to buy far more wind and solar energy because those sources are so unreliable. For instance, on days with high electric demand with little wind generation, the city may fall short of power, but, because it’s hooked up to the larger Texas grid, reliable power produced by natural gas, coal or even nuclear plants fill the gap and keep the lights on.
The flip side of 100% renewable claim is that on low demand days with plenty of wind, Georgetown’s contracted wind and solar energy suppliers generate a surplus, selling that power at very low cost into the larger Texas market.
As Peacock observed of the practice of trading electricity on the market, “They knew they would have to buy this and sell it, and that’s not the way most people work. It’s more evidence they are wanting to portray themselves as a green city rather than doing something for their consumers.”
As of today, residents of Georgetown who aren’t pleased with paying more for their electricity for the privilege of making the dubious claim to 100% renewable power have three options: vote in a new set of elected officials who promise to focus on the basics of local governance, convince the legislature to end the electric monopoly extended to municipal government, or move out of town.
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eef51ff9dd9e07dd9eb185569ab3c6a0 | https://www.forbes.com/sites/chuckdevore/2019/12/03/america-goes-back-to-work-a-key-measure-of-unemployment-hits-a-record-low/?sh=655cded07c67 | America Goes Back To Work: A Key Measure Of Unemployment Hits A Record Low | America Goes Back To Work: A Key Measure Of Unemployment Hits A Record Low
In this Nov. 4, 2019, photo a worker prepares a piece of Cat construction equipment made by ... [+] Caterpillar to be lifted off a trailer at the Port of Tacoma in Tacoma, Wash. On Wednesday, Nov. 6, the Labor Department issues revised data on productivity in the second quarter. (AP Photo/Ted S. Warren) ASSOCIATED PRESS
The numbers are good—and suggest our nation’s economic expansion continues apace.
The U.S. Bureau of Labor Statistics (BLS) reported today that the number of people who were unemployed at any time in 2018 as a proportion of the number of persons who worked or looked for work—called the “work-experience unemployment rate”—was 7.8%, down by 0.8% and the lowest on record since the government began tracking these data in 1958.
The BLS also reported that the number of people who were unemployed at any time in 2018 declined by 1.3 million to 13.2 million, a drop of 9%.
Approximately 166.4 million persons worked at some point during 2018, with 64.4% of the working age population employed in 2018, up slightly from 64.2% in 2017. The share of men in the workforce was little changed at 69.7% but the proportion of employed women was up 0.6% to 59.4%.
Of note, the share of people working full time increased 0.4% to 80.8% in 2018. The share of men working full time was little changed at 86.7% while the percentage of women working full time was up 0.9% to 74.4%.
The typical time spent looking for work before finding a job was three months and one week.
The BLS derived these data from the U.S. Census Bureau’s Annual Social and Economic Supplement (ASEC) to the Current Population Survey (CPS).
The unemployment rate was reported at 3.6% in October with November’s update expected to be released this Friday. That the U.S. labor market remains strong, along with the annualized increase in the Consumer Price Index (CPI) last reported at 1.8% in October, suggests that the economic expansion still has room to continue. Compensation costs for civilian workers were up 2.8% in the 12 months ending September 2019.
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Ongoing trade friction with the People’s Republic of China has led to widespread predictions that tariffs and supply chain decoupling could cause higher inflation. But the unadjusted 12-month change in the CPI for All Urban Consumers was -2.3% for apparel and 0.3% for commodities, less food and energy—two categories heavily influenced by imports from China.
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0e4032fce1016bf87306bd5c39c33a70 | https://www.forbes.com/sites/chuckdevore/2020/01/08/florida-and-texas-take-first-and-second-in-the-2019-u-haul-trophy-as-people-flee-illinois-and-california/ | Florida And Texas Take First And Second In The 2019 U-Haul Trophy As People Flee Illinois And California | Florida And Texas Take First And Second In The 2019 U-Haul Trophy As People Flee Illinois And California
PALM SPRINGS, CALIFORNIA - FEBRUARY 27, 2019: A U-Haul moves another family out of California. ... [+] (Photo by Robert Alexander/Getty Images) Getty Images
The 2019 U-Haul state migration index is out, and the top states Americans are moving to are no surprise—Florida, Texas, North Carolina, South Carolina and Washington. These are states with light state and local tax burdens. Conversely, four of the top five states people are fleeing—Illinois, California, Michigan, Massachusetts and Pennsylvania—feature high taxes (though Michigan’s tax burden falls close to the national average).
In 2018, Texas was No. 1 and Florida was No. 2.
U-Haul publishes its index annually by calculating the flow of one-way truck traffic between its 22,000-plus locations (excluding Hawaii, for practical reasons) as people move to greener pastures.
For U-Haul, the implications of people heading more in one direction than another means that most of its fleet would end up in Florida and Texas in a few years. To avoid spending employee time and money to drive empty trucks back to states losing residents to out-migration, U-Haul discounts trucks heading to states losing residents. Thus, renting a tiny 10-foot truck, suitable for a person renting an apartment, from Fresno, California to Austin, Texas would set the mover back $1,957, while heading from Texas to California would only cost $626—one-third as much.
Of course U-Haul only captures a portion of the moving population—those willing to do-it-yourself—but its annual data usually lines up nicely with federal surveys and other reports. For instance, U-Haul’s top five in 2019 are projected by the U.S. Census Bureau to be in line to gain six U.S. House seats as the result of the 2020 census and the congressional apportionment that will follow. U-Haul’s bottom five states are estimated to be on track to lose four U.S. House seats.
Moving isn’t usually a vacation—a lot of work can go into it and it can be expensive. And, while high taxes may not be the proximate cause of many people’s decision to move, moving for a good career opportunity often is. People follow jobs. And job creators, small businesses and large corporations, do pay close attention to the bottom line, and often their investment decisions are influenced by their expected tax burden.
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The concern for the state and local tax load was heightened, especially for sole proprietorships, after passage of the Tax Cut and Jobs Act of 2017. The big tax cut and tax code reform bill signed into law by President Trump in December of that year limited the deduction for state and local taxes (SALT) to $10,000 per household. Since then, job growth in the 27 states with average SALT deductions of less than $10,000 in 2016 for taxpayers who itemized has been running at almost twice the rate as in the high tax states with average SALT deductions in excess of $10,000.
In fact, of U-Haul’s top 10 performing states, Florida, Texas, North Carolina, South Carolina, Washington, Alabama, Ohio, Utah, Indiana, and Vermont, only two, Ohio and Vermont featured average SALT deductions greater than $10,000 in 2016. And in both cases, they likely benefited from migration from higher taxed neighboring states, Pennsylvania, in Ohio’s case, and New York, in Vermont’s case.
Of U-Haul’s 10 biggest losing states in 2019, Illinois, California, Michigan, Massachusetts, Pennsylvania, Maryland, New Jersey, New York, Colorado, and Wisconsin, only in Colorado did the average taxpayer who itemized deductions claim less than $10,000 in state and local taxes.
The pattern is fairly clear to see: low taxes attract jobs and people.
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f4cc47ae9873f8e2852eea46c7d9d469 | https://www.forbes.com/sites/chuckjones/2012/11/29/what-do-people-use-their-cell-phones-for-beside-phone-calls/ | What Do People Use Their Cell Phones For Beside Phone Calls? | What Do People Use Their Cell Phones For Beside Phone Calls?
When you see people with their cell phones walking down the street or sitting at a restaurant they are typically not making a phone call. The Pew Internet & American Life Project surveyed over 2,500 people to determine what they used them for. After phone calls the highest activity at 82% was taking photos which was a small increase from 76% in 2010.
Below are the eight most common activities that a cell phone is used for after making phone calls.
When looking at the trend for these activities over the past few years there have been significant increases for the other seven activities (note the various starting dates):
Texting 58% in 2007 to 80% in 2012
Internet access 25% in 2008 to 56% “ “
Email 19% in 2007 to 50% “ “
Record video 18% in 2007 to 44% “ “
Download apps 22% in 2009 to 43% “ “
Health and medical information 17% in 2010 to 31% “ “
On-line banking 18% in 2011 to 29% “ “
It will be these and future applications that will be the battlegrounds for smartphone companies and carriers to differentiate themselves. An example is Nokia’s 41 megapixel camera which could step up the ante for high-quality pictures since it allows for them to be taken in lower light settings.
Other applications such as NFC (Near Field Communications) have been slow to gain traction as it is reliant on the card reader infrastructure being upgraded. While the EMV (Europay, MasterCard and Visa) consortium looks to have a new system implemented in the US by October 2015, there are a number of hurdles with cost probably being the largest one to overcome.
A complete copy of the November 25 Pew Research report by Maeve Duggan and Lee Rainie can be found at:
http://pewinternet.org/~/media//Files/Reports/2012/PIP_CellActivities_11.25.pdf
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503b6c136e99ed53effaf3b24805d352 | https://www.forbes.com/sites/chuckjones/2013/01/29/super-bowl-ad-spending-hits-new-heights/ | Super Bowl Ad Spending Hits New Heights | Super Bowl Ad Spending Hits New Heights
While it is always fun to watch Super Bowl commercials due to their production and sometimes uniqueness, they can take on even more importance if it is a lopsided game. My father who was one of the broadcasters for Super Bowl I (it was called the First AFL-NFL World Championship Game and tickets costs $12 vs. the minimum of $850 for this Sunday’s game), III (the first time it was called The Super Bowl) and IX always said the best game was when the home team won in the final minute.
Kantar Media has analyzed the past ten Super Bowls and determined that $1.85 billion has been spent on advertising. The top five advertisers have spent $683 million or 37% of the total with Anheuser-Busch InBev being the largest spender.
According to the New York Times the average 30 second spot is going for $3.7 to $3.8 million with a some of the spots priced over $4 million. As you can see in the following table ad rates tend to stay flat for three or four years and then take a jump. It appears that this is the second year in a row for a significant jump in Super Bowl commercial costs.
The variability in the pricing can depend on factors such as when the ad runs, how many ads the advertiser bought and did they buy any pre or post-game ads.
While the number of ads have decreased over the past two years the amount of time they took has essentially stayed the same meaning there are more longer format ads. Also the total ad time is significantly more than just five years ago.
The number of first time advertisers who spend more than 10% of their budget tends to fluctuate. In 2012 CareerBuilder and Teleflora each spent more than 30% of their full year ad budget. It will be interesting to see if they re-up for this years game. This year’s newcomers include RIM, SodaStream and Gildan Activewear.
Kantar also has additional information on:
Spending on the Super Bowl vs. the World Series vs. March Madness Final Four games Auto manufacturers vs. Motion Pictures vs. dot com Number of first timers Ads over 60 seconds
Lastly here is a website with commercials going back to the 1960’s.
http://www.superbowl-commercials.org/
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74fa320074cbc66bd50a02610a25fd76 | https://www.forbes.com/sites/chuckjones/2013/02/13/apple-generated-400-million-in-app-revenue-in-just-over-a-month/ | Apple Generated $400 Million in App Revenue in Just Over a Month | Apple Generated $400 Million in App Revenue in Just Over a Month
At the Goldman Sachs conference on Tuesday Tim Cook, Apple’s CEO, said that the company has paid over $8 billion to app developers. The previous number Apple had given was $7 billion on January 7. Since Apple takes a 30% cut from the gross revenue that means $1.42 in revenue is generated for every $1 that a developer receives.
Revenue $1.43
Developers 70% $1.00
Apple 30% $0.43
While it is not possible to determine exactly how much Apple has paid developers over the past five weeks since the numbers the company has provided was over $7 billion and over $8 billion, if the difference was approximately $1 billion then Apple has generated about $430 million in app revenue in just over a month.
With about $13 billion in pre-tax income estimated for the March quarter the $430 million would be just over 3% of the total and if it approaches $1 billion in app revenue for Apple it would be over 7% of pre-tax income. While there are costs ranging from managing the applications and the capital equipment to run them this should be higher margin revenue then the hardware side of the business.
Disclosure: My family and I own Apple shares
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e61284f14b03c6bec1a7b88ad37d76c8 | https://www.forbes.com/sites/chuckjones/2013/03/04/ipad-dominates-consumer-tablet-purchase-intentions/?partner=yahootix | iPad Dominates Consumer Tablet Purchase Intentions | iPad Dominates Consumer Tablet Purchase Intentions
Yankee Group surveyed 506 people and almost half of them (47%) plan to buy an Apple iPad. Amazon and Samsung were second and third respectively of named companies garnering 7% and 6% of purchase intentions. Almost everyone else: HP, Dell, Sony, Blackberry, Acer, Asus, Google, Microsoft and Motorola were essentially noise in the survey. Unsure/Don’t know represented almost a quarter of potential buyers so it is possible that one or two of the companies could break from the pack.
Samsung probably has the best opportunity in the consumer space due to the success of its smartphones and the Galaxy Note 2 and 10.1. It is planning to double its tablet sales to about 40 million units in 2013 so expect to see a lot of advertising from Samsung in this space.
I believe Microsoft has the most viable hope of making inroads with corporate customers due to its huge install base, third-party developer relationships and strong financial position (read lots of cash).
While the Asian tablet manufacturers have very low readings in this survey I do believe that the quality of their tablets has markedly improved over the past year. One of them could make inroads in the consumer space based on low prices.
Apple also derives revenue from users downloading apps and clicking on ads. Chitika Insights measured tablet web traffic during the week of January 19 to 25 in the US and Canada and the iPad had by far the highest usage at 81% with the Kindle Fire at 7.7%.
Disclosure: My family and I own Apple shares
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6a9e089fb82502e83efa2a5dbf39c5f8 | https://www.forbes.com/sites/chuckjones/2013/03/07/iphones-continue-to-take-share-while-android-has-back-to-back-monthly-drops/?partner=yahootix | iPhones Continue to Take Share While Android Has Back to Back Monthly Drops | iPhones Continue to Take Share While Android Has Back to Back Monthly Drops
comScore released its January survey of US smartphones and Apple had its twelfth month of increased market share when tabulated on a three month rolling average. Apple had a 37.8% smartphone market share for the November to January timeframe and increased its share by 8.3 percentage points over the past year. Android maintains the number one position at 52.3% and it appears that Microsoft has stabilized at just over 3%.
US Smartphone Jan. '12 Apr. '12 July '12 Oct. '12 Jan. '13 Jan-Jan Year Android 48.6% 50.8% 52.2% 53.6% 52.3% 3.7% Apple 29.5% 31.4% 33.4% 34.3% 37.8% 8.3% BlackBerry 15.2% 11.6% 9.5% 7.8% 5.9% (9.3)% Microsoft 4.4% 4.0% 3.6% 3.2% 3.1% (1.3)% Symbian 1.5% 1.3% 0.8% 0.6% 0.5% (1.0)% Other 0.8% 0.9% 0.5% 0.5% 0.4% (0.4)% Total 100.0% 100.0% 100.0% 100.0% 100.0%
Source: comScore
Apple’s iPhone market share was flat in the September and October timeframes due to consumers pausing before the iPhone 5 was released but the company has experienced strong gains (not surprisingly) in the November to January months. Since BlackBerry continues to shed market share and there isn’t much share to gain from Microsoft or the other marginal players Apple also gained some share from Google/Android in the past two months. It is not too surprising to see some ebb and flow of share between the top two platforms given the strength of sales of new models when they launch. With the Samsung Galaxy S4 looking to be launched next month Google/Android could take some share back from Apple.
Mth to Mth Aug. '12 Sept. '12 Oct. '12 Nov. '12 Dec. '12 Jan. '13 Google 0.4% (0.1)% 1.1% 0.1% (0.3)% (1.1)% Apple 0.9% 0.0% 0.0% 0.7% 1.3% 1.5% BlackBerry (1.2)% 0.1% (0.6)% (0.5)% (0.9)% (0.5)% Microsoft 0.0% 0.0% (0.4)% (0.2)% (0.1)% 0.2% Symbian (0.1)% (0.1)% 0.0% (0.1)% 0.1% (0.1)% Other (0.0)% 0.1% (0.1)% 0.0% (0.1)% 0.0% Total 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Source: comScore
There were 129.4 million people who owned smartphones on average during the November to January quarter which was about 55% of the mobile market. When viewed on a quarter to quarter basis Apple is the only platform to have gained share every quarter over the past fifteen months.
Qtr to Qtr Jan. '12 Apr. '12 July '12 Oct. '12 Jan. '13 Android 2.3% 2.2% 1.4% 1.4% (1.3)% Apple 1.4% 1.9% 2.0% 0.9% 3.5% BlackBerry (2.0)% (3.6)% (2.1)% (1.7)% (1.9)% Microsoft (1.0)% (0.4)% (0.4)% (0.4)% (0.1)% Symbian (0.1)% (0.2)% (0.5)% (0.2)% (0.1)% Other (0.6)% 0.1% (0.4)% (0.0)% (0.1)% Total 0.0% 0.0% 0.0% 0.0% 0.0%
Source: comScore
Disclosure: My family and I own Apple shares
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1c77caeea60fa9a6324565ab4a558e13 | https://www.forbes.com/sites/chuckjones/2013/03/28/digitimes-reporting-apple-cutting-ipad-mini-for-june-qtr-end-of-qtr-window-dressing-also-a-cause-for-stock-weakness/ | DigiTimes Reporting Apple Cutting iPad Mini for June Qtr. End of Qtr. Window Dressing Also a Cause for Stock Weakness. | DigiTimes Reporting Apple Cutting iPad Mini for June Qtr. End of Qtr. Window Dressing Also a Cause for Stock Weakness.
DigiTimes is reporting that the iPad’s Mini shipments are being cut to between 10 and 12 million units for the June quarter based on information from multiple component suppliers.
Key Takeaway: While these types of datapoints can be inaccurate or may indicate new product transition it could be one of the reasons the stock has been weak today in a positive market.
Key Takeaway: End of the quarter window dressing by portfolio managers could be another reason for the weakness since this is the last trading day of the quarter. If the stock remains weak on Thursday then how it trades early next week will be important to watch to see if PMs decide to get back into the shares before it reports later in the month.
Apple sold 17 million iPads in the June quarter last year, and Pacific Crest cut its June quarter iPad estimate to 15 million this week. If Apple is planning for 10-12 million iPad Mini’s in the quarter (shipments do not necessarily translate to sales due to timing but lets use these numbers for now) then for total iPad sales to be flat year over year at 17 million regular iPads sales would be between 5 and 7 million. This seems to be a fairly doable number.
While competition is increasing another way to estimate June quarter shipments is to look at a June quarter vs. the previous December quarter (takes out the seasonal March quarter downturn). I currently have 18 million in my model which would be a 21% decline from the December 2012 quarter vs. the two previous years when there were 26% and 10% increases, respectively. The reason for iPads to decline is due to the strength of the iPad Mini as holiday gifts in the first quarter it was available.
(thousands) Dec. Qtr. June Qtr. % Change 2010/2011 7,331 9,246 26% 2011/2012 15,434 17,042 10% 2012/2013 22,860 18,000 (21)%
Disclosure: My family and I own Apple shares.
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1e2ddd94e06c27b1e5f0d02a251f9e13 | https://www.forbes.com/sites/chuckjones/2013/04/05/gartner-survey-showing-declining-pcs-increasing-mobile-devices-through-2017/ | Gartner Survey Showing Declining PCs, Increasing Mobile Devices Through 2017 | Gartner Survey Showing Declining PCs, Increasing Mobile Devices Through 2017
Gartner’s latest forecast has PC shipments in secular decline with mobile devices in strong uptrends though 2017. Gartner forecast desktop and laptop PC shipments to decline 7.6% in 2013.
CJ Takeaway: It is no surprise the mobile devices are having an impact on PC shipments. Mobile devices are at least elongating PC replacement cycles if not outright replacing them. This is negative for the large PC players such as Dell and HP and positive for companies such as Apple, Google and Samsung. A number of semiconductor companies such as Broadcom and Qualcomm benefit from this trend.
Worldwide tablet shipments are estimated to grow 70% in 2013 to 197 million units and increase by over 300% over a five year time from 2012 to 2017. Mobile phones will show nice 80% growth over the same five years and smartphones will capture a greater share of the market. PC shipments are forecasted to decline by 20% over five years.
Android devices are expected to almost triple over five years while iOS/Mac OS could grow about 140%. Windows will have to navigate a successful implementation of mobile devices (which is still too early to call) and RIM/BlackBerry has to start to gain traction or become irrelevant.
Disclosure: My family and I own Apple shares
Follow me @sandhillinsight
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9911306eb4fdf4958adb667fb875b5cd | https://www.forbes.com/sites/chuckjones/2013/04/08/iphone-estimates-range-from-32-5-to-42-5-million/ | iPhone Estimates Range from 32.5 to 42.5 Million | iPhone Estimates Range from 32.5 to 42.5 Million
Fortune reporter Philip Elmer-DeWitt compiles forecasts on Apple from sell-side and independent analysts. For the March quarter the 48 analysts (30 Wall Street professionals and 18 Independents) have a range of 32.5 million to 42.5 million with an average of 36.94 million and a median of 37 million (which is also my projection).
CJ Takeaway: The 10 million iPhone range is half of December quarter's (43 million to 63 million) which I believe is largely driven by Apple's new guidance philosophy of giving a range for revenue vs. a single point. This has obtained one of the company's objectives of not having expectations get so high that they could not be achieved let alone exceeded.
Source: Fortune magazine Philip Elmer-DeWitt
As always there are a number of factors effecting iPhone sales.
The iPhone 5 launched in September 2012 vs. the 4S in October 2011 so there was probably less pent up demand for the 5 in the March 2013 quarter. China Telecom and China Unicom had the iPhone 5 available in December 2012 so they were able to sell between 3 to 5 million in the December quarter vs. the 4S wasn’t available until the March 2012 quarter (China Unicom in January and China Telecom in March). This could lead to lower sales in China vs. a year ago or at least mute the sales growth. Samsung announced the Galaxy S4 phone which impacted iPhone sales. RIM/BlackBerry announced its new phones which could have impacted iPhone sales (but not as much as Samsung probably did). There has been a decent amount of speculation regarding an iPhone 5S (same form factor as the 5 but with a bump up of internal components), a low cost iPhone and a large screen iPhone. These could have a dampening effect on iPhone sales.
I am at 37 million iPhones, which would be a 6% growth rate from the prior years 35.1 million. My estimate matches the median, is towards the high-end of the Street analysts and the low-end of the independents. With an average selling price (ASP) of $625 (vs. $642 in the December quarter) the iPhone represents 54% of my total revenue projection of $42.5 billion (guidance is a range of $41 billion to $43 billion and the Street's $42.7 billion).
Source: Fortune magazine Philip Elmer-DeWitt
Disclaimer: My family and I own Apple shares
Follow me @sandhillinsight
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4c7b5d26ab42d6fb2ccac9e84376b739 | https://www.forbes.com/sites/chuckjones/2013/04/18/apples-ios-mobile-ad-metrics-dominates-android/ | Apple's iOS Mobile Ad Metrics Dominates Android | Apple's iOS Mobile Ad Metrics Dominates Android
MoPub is an ad-serving platform for mobile applications that allows advertisers to bid on ad inventory from thousands of iOS and Android smartphone application providers/suppliers. Over 230 Tier 1 brand advertisers (up from 180 last quarter) and 58 of the top 100 largest advertisers use MoPub. The application providers come from the US, Europe, Asia and Latin America with 45 billion monthly ad impressions (up from 30 billion last quarter) across two dozen verticals.
CJ Takeaway #1: As Apple extends its lead in mobile advertising app developers should prioritize new features and applications on iOS over Android. Note that Android tablets account for less than 1% of all mobile ad spend.
CJ Takeaway #2: It could become more difficult for other platforms such as Windows and BlackBerry to gain traction with app developers.
Daily ad spending exhibited its typical weakness at the beginning of the year and took longer than typical to rebound. This was probably due to economic weakness, elongated ad agency review cycles by advertisers and businesses holding back due to inaction by the U.S. Federal government. While mobile ad spending’s ramp was slow through the first two months of the quarter ‘it exploded’ in the last two weeks of March with some days exceeding the peaks in the December quarter according to MoPub. Despite an extended down cycle, significant ad spend growth at the end of the quarter led to quarter over quarter growth.
Source: MoPub
Apple’s iOS products all exhibited a rebound in CPM (cost per thousand impressions) in March while Android was flat in March vs. February and lower than January. MoPub believes the trail-off for Android devices was due to their poor conversion rate.
Source: MoPub
Click Through Rate (CTR) was significantly higher for all Apple platforms vs. Android. Not surprisingly the iPad had the highest CTR with the iPod touch in second. All the iOS devices had better CTR’s than Android devices.
Source: MoPub
Mobile ad spend share for all iOS devices increased slightly to over 75% in March. Monthly ad spending on iPhones increased 12% quarter over quarter and now accounts for just over 50% of all mobile ad spending. The iPad’s share decreased to 19% and the iPod fell to 6%. Android was just under one-quarter at 24%.
Source: MoPub
The CPM premium on impressions in March for iOS in total over Android was 39%. The CPM premium for iPads over iPhones was 32%, iPhone over Android was 76% and interestingly iPods over iPhone was 11%.
Source: MoPub
Not surprisingly iPads had better conversion rates than iPhones with a 42% premium, iPhones were very strong against Android phones with a 53% premium and iPods had a 28% premium over iPhones.
Source: MoPub
Disclosure: My family and I own Apple shares
Follow me on Twitter @sandhillinsight
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a58da5d4ddecef35fedb12cbc6642050 | https://www.forbes.com/sites/chuckjones/2013/08/12/apple-is-the-leader-in-the-personal-computing-market/ | Apple Is The Leader In The Personal Computing Market | Apple Is The Leader In The Personal Computing Market
Canalys combines traditional PC and Tablet shipments to determine which vendors are tops in the Personal Computing market. Due to the impact tablets have on desktop and notebook PCs I believe this is an appropriate way to analyze the computing market. While smartphones also have a large amount of compute power, due to their screen size and lower impact on the traditional PC market they are best left to their own segment. Note that my family and I own Apple shares.
While the total PC market was essentially flat year over year with 109 million units being shipped in the June quarter the dynamics of the tablet and traditional PC market (down 11% in the June quarter per Gartner and IDC) are creating a change in leadership. One impact is tablets are elongating traditional PC replacement cycles, have the potential to tap into other revenue streams such as advertising and develop their own self-reinforcing ecosystem. Canalys expects tablets to out-ship notebooks in the fourth quarter this year and tablets could out-ship traditional PCs next year.
Some of the key takeaways are:
Apple is the number one vendor when tablets are included vs. in a traditional PC analysis it does not show up in Gartner’s or IDC’s top 5 vendors Apple lost about 2 points of market share but this is dramatically lower than the almost 30 point of share loss when the tablet only market is used Lenovo shipped approximately 12.65 million PCs and about 1.5 million tablets putting it in second place HP shipped about 300,000 tablets and has a tenuous hold on third place as Samsung is coming on strong Samsung is by far the leading top 5 vendor in growth, up 106% year over year, as its tablet business gains momentum Dell moves from third place in a traditonal PC market share analysis to fifth Android’s share has increased from 6% to 17% of the market in the past year The People’s Republic of China accounted for almost 45% of shipments and had about a 6% decline in the quarter
Follow me on Twitter @sandhillinsight. Find my other Forbes posts here.
Related on Forbes:
Gallery: Top 11 Tablets 11 images View gallery
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c87f9c6491441abd6f6733812ae869cd | https://www.forbes.com/sites/chuckjones/2013/12/19/google-play-catching-up-to-apples-app-store/ | Google Play Catching Up To Apple's App Store | Google Play Catching Up To Apple's App Store
There are now over 1 million apps available on Apple’s App Store according to 148apps.biz and there are about 950,000 Android apps available according to AppBrain. Distimo has published its 2013 in review comparing various metrics between the two App stores and found that while Apple ’s App Store is still in the lead that Google ’s Play is catching up. (Note that my family and I own Apple shares).
Daily revenue of $30 million for the top 200 grossing apps
On a typical day in November 2013 Distimo estimates the global revenues for the top 200 grossing apps in the Apple App Store is over $18 million (up 20% year over year from $15 million) while for Google Play it is about $12 million (up over 240% from $3.5 million). Over the past six months (June to November) the slower growth rate in Apple’s App Store is even more pronounced with an increase of 12% compared to Google’s Play at 51%.
Based on app revenue from 34 countries Distimo estimates that Apple’s App Store revenue share has decreased from 70% to 63% while Google Play has moved from 30% to 37%.
Note that at $18 million per day in revenue Apple is generating $2 billion in revenue on a yearly basis. While this is only just over 1% of total company revenue, the incremental revenue above Apple’s cost to maintain the App Store is high margin revenue and strengthens its ecosystem so that its customers are less likely to switch to Android or another platform.
Also as Google catches up the same argument can be made in Google’s favor and between the two it will make it that much harder for a third platform, such as what Microsoft is attempting to do, to become established.
Source: Distimo
U.S. just passed by Japan as the largest app revenue country
App Annie estimates that Japan passed the U.S. in app revenue in October. An explosion of games revenue, up 290%, which now dwarfs all other apps has driven Japan to number one. Games also are in all top 10 positions on Apple’s App Store that generate revenue worldwide.
Source: AppAnnie
South Korea, which is the third largest app revenue generating country in 2013, has been generating the highest app revenue growth rate over the first eleven months this year at 759% with China and Japan showing strong growth at 280% and 245%, respectively. Not surprisingly the more developed countries such as the U.S. and the U.K. have much lower growth rates at 81% and 64%, respectively.
While the Android handset makers (beside Samsung) may not be making money it appears that they are significantly helping Google increase its share of the app revenue pie. If current trends stay in place for a few years Google Play’s revenue should surpass Apple’s App Store.
Source: Distimo
There is a continued shift to freemium apps
Free apps with in-app purchases have become the dominant form of generating revenue vs. paid apps. Over the past year on Apple’s App Store the top 200 grossing apps embraced the freemium model increasing from 77% a year ago to 92% in November. There is an even more pronounced shift to the freemium model in Google Play going from 89% to 98%.
Source: Distimo
Keep an eye on Amazon’s Appstore
While this is from a very limited sample of one app, Disney’s Where’s My Water? 2, in November the percentage of downloads was 33% on Amazon’s Appstore vs. 67% on Apple’s App Store.
Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.
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aceee90361044970da955bca9229a624 | https://www.forbes.com/sites/chuckjones/2014/03/12/pacific-crest-upgraded-apple-based-on-299-4-7-iphone-6/ | Pacific Crest Upgraded Apple Based On $299 4.7" iPhone 6 | Pacific Crest Upgraded Apple Based On $299 4.7" iPhone 6
Pacific Crest’s Apple analyst, Andy Hargreaves, raised his rating on Apple from Sector Perform to Outperform based on the iPhone 6 having a 4.7 inch screen and selling for a subsidized price of $299. He also believes that given the low valuation of the shares at 6.5x Enterprise Value/Earnings Before Interest Taxes Depreciation and Amortization (EV/EBITDA) and the “optionality” of new categories that there is limited downside to the shares. Hargreaves also expects only one new iPhone form factor this year and that it will be launched in September or October. Given the lost sales Apple has incurred by not having a larger screen iPhone I lean to two new form factors and bringing at least one to market in the spring/early summer. (Note that my family and I own Apple shares and have sold put options, a bullish position).
Replacement and loyalty are key factors favoring Apple
WDS, a Xerox company, published a report last month that indicated 76% of Apple customers upgrade from one iPhone to the next and had the highest retention rate of any smartphone vendor. Apple lost 15% of its users to Samsung and then it dramatically fell to 2% or less for any other smartphone provider.
Samsung had the second highest retention rate at 58% and lost 16% to Apple. It then lost 6% to LG, 5% to Nokia, 4% to HTC, 2% to Motorola and 1% to Blackberry. Samsung does lead in getting 34% of all switching customers to switch with Apple in second place at 24%. By clicking on this link you can get to the press release and there is information for Nokia, HTC, LG, Sony, Motorola and Blackberry.
Source: WDS
Hargreaves upgrade is based on realistic assumptions
Hargreaves is assuming that 35% of iPhone upgrades will chose the larger screen iPhone and capture 10% of the large format Android market. These seem to be reasonable estimates given users loyalty to Apple and the hammering it has taken by Android smartphones by not having a large screen version.
He is projecting that replacement sales will account for 70% of total iPhone sales in fiscal 2014 and 80% in fiscal 2015. This would add $4 to his fiscal 2015 EPS estimate of $40.92 (note that it is substantially below the Street’s $46.22 projection).
Valuation and new opportunities mean limited downside
Apple’s $142 billion net cash position (20% of market cap when you set aside $20 billion to run the business and fully tax the overseas cash) is well known as is its PE multiple of 12.5 on fiscal 2014 earnings. Hargreaves is not projecting much from China Mobile’s LTE rollout or revenue or profit from new product categories so there would be more upside to his estimates if either were to materialize in a meaningful way.
His target price of $635 is based on his new iPhone assumption, iPad shipments remaining flat at 70 million per year and the valuation remaining constant. He has a bull case with a target price of $700 based on increased iPhone and iPad shipments and profits along with new categories being launched and an increase of the EV/EBITDA multiple from 6.5x to 7.5x. His bear case is $465 with increased competition, the iPhone 6 selling for $199 and the multiple falling to 5.0x.
Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.
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f4af45448b2246edd8d921b31332791b | https://www.forbes.com/sites/chuckjones/2014/04/02/google-stock-split-in-larry-and-sergey-we-trust/ | Google Stock Split: In Larry And Sergey We Trust | Google Stock Split: In Larry And Sergey We Trust
In anticipation of Google ’s stock dropping by 50% on Wednesday (due to its 2 for 1 stock split) it is worthwhile to understand what this means to shareholders. (Update: The new non-voting Class C shares symbol is the original GOOG and is trading about $1 less than the original one vote per share Class A shares with symbol GOOGL. Both shares are up about $15 or 2.7% this morning).
Stock splits have historically been used to decrease the amount an investor would have to spend in order to buy a “round lot” or 100 shares. This was important when brokerage firms made it more expensive to buy fewer than 100 shares or an odd lot. However, since it essentially costs $8.95 or less from most on-line brokerage firms whether you buy one share at $1,135 or 100 shares at $11.35 the investor doesn’t need a stock split to invest $1,135 in Google and get the same return when the shares increase.
Another reason stock splits have been done is for management to show they believe the company will do well in the future. Overall these don’t change the financials (except EPS will be half of what it was) and in theory the overall value of a company is not affected except when investors are willing to place a higher valuation metric on future earnings. It makes everyone “feel good”.
English: Left to right, Eric E. Schmidt, Sergey Brin and Larry Page of Google Polski: Od lewej do... [+] prawej: Eric E. Schmidt, Sergey Brin i Larry Page z firmy Google (Photo credit: Wikipedia)
This isn’t why Google is splitting its shares
I believe this stock split is largely being done so that Sergey Brin and Larry Page can maintain voting control over everyone else.
Maybe it’s a good thing that the two people who had the vision and technical expertise will be able to do whatever they want and since they have such huge wealth tied up in the company you would expect that they would run it for the long-term benefit of the other shareholders. However if they don’t execute well they can’t be “forced” to change by everyone else.
Currently everyone except Brin, Page, Eric Schmidt, Google’s ex-CEO and Executive Chairman, and a few other people own Class A shares (Symbol GOOGL). Class A shares get one vote for each share. There were 279,883,488 Class A shares outstanding on January 30, 2014. Their trading symbol will be GOOGL after the split.
Class B shares are largely owned by Brin (23.2 million), Page (23.6 million) and Schmidt (4.6 million) and they get 10 votes per share. In total there were 56,167,343 Class B shares outstanding on January 30, 2014.
Class C shares (Symbol GOOG) will be given to the Class A and B shareholders but receive no votes on stockholder resolutions. Their trading symbol will be the historical GOOG after the split. These are the shares that the company will probably issue going forward for acquisitions or stock awards.
This means that Brin and Sergey have 468 million votes compared to the 280 million Class A shareholders, essentially complete control of the company as they have just over 55% of the total votes. Maybe the Board could exert enough pressure on either Brin or Page to step down if they thought it was being taken in such a wrong direction that it warranted action but otherwise the founders have complete control.
You can just sell your Google stock
One option is to sell your shares if you don’t agree with their decisions. If you don’t think they should be buying robot companies (such as Boston Dynamics) or funding research into using high altitude balloons to connect people in remote areas to the Internet (Project Loon) you can sell your shares and not have to worry about what they are doing. Note that it doesn’t seem that they are spending a lot of money in these areas (at least yet) but it does diffuse their focus on the core business.
Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.
Also on Forbes:
Gallery: Fast Tech 25 2013 26 images View gallery
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3ca2991d68e26ecca1377f34344991bb | https://www.forbes.com/sites/chuckjones/2014/04/23/apple-analysts-expect-almost-no-revenue-or-eps-growth-and-soft-guidance/ | Apple Analysts Expect Almost No Revenue Or EPS Growth And Soft Guidance | Apple Analysts Expect Almost No Revenue Or EPS Growth And Soft Guidance
Sell-side analysts are projecting that Apple ’s revenue will be almost flat year over year at $43.53 billion vs. $43.6 billion a year ago and towards the high-end of management’s guidance of $42 to $44 billion when Apple reports results after the close on Wednesday. EPS is expected to increase less than 1% from $10.09 to $10.18 but due to a lower share count operating income should be down about 6% year over year. Gross margin is estimated to decrease slightly from December quarter’s 37.9% to 37.7% and be within guidance of 37% to 38%.
When you use the various guidance inputs Apple gave in January with a share count of 896 million shares (6 million less than the December quarter) the range for EPS guidance is $9.42 to $10.31. If you then assume that the share count could be down by about 28 million since Apple spent $14 billion in late January/early February the high-end of EPS guidance becomes $10.31.
With little surprise expected from the March quarter results investors will be focused on guidance and an update to the company’s dividend and capital return policies. Going into the conference call analysts are expecting June quarter revenue of $37.87 billion (which is down almost $1 billion in the past three weeks) but still up 7% year over year. EPS has also trended down over the past month from $8.60 to $8.46 which would be a 13% increase year over year.
Investors will also be hanging on any management comments about new products but as usual don’t expect anything even close to wet cement.
Andy Hargreaves believes investors have taken into account soft June guidance
Andy Hargreaves at Pacific Crest expects solid iPhone sales will support the March quarter results and June quarter guidance will be in-line with what investors are expecting. For the March quarter he is estimating revenue of $43.9 billion, gross margin of 37.7% and EPS of $10.22.
Hargreaves is expecting Apple to provide June quarter revenue guidance of $36 to $38 billion (last years revenue was $35.3 billion), gross margin of 36.5% to 37.5% and implied EPS of $7.50 to $8.35 (last years EPS was $7.47).
Katy Huberty in-line with March consensus but below June Street estimates
Katy Huberty at Morgan Stanley is projecting March quarter revenue of $43.3 billion, gross margin of 37.9% and EPS of $10.16. She is modeling 38 million iPhones compared to her AlphaWise tracker of 40.6 million, which is down from 42.3 million in the mid-March survey.
She is expecting June quarter guidance to be below consensus with revenue of $35.7 billion, gross margin of 37.7% and EPS of $7.75 driven by 31.5 million iPhones and 16 million iPads.
Brian Marshall is below Street estimates due to consumers waiting for the iPhone 6
Brian Marshall at ISI is expecting March quarter revenue of $42.7 billion and EPS of $9.75, both a decent amount below the Street due to weaker iPhone sales as consumers wait for the iPhone 6. Note that his share count estimate of 896.5 million is only 5 million less than the December quarter even though Apple bought back about 28 million shares in the late January/early February timeframe.
He is also conservative with his June quarter estimates with revenue of $36.6 billion and EPS of $7.85. However he believes investors will give the company a “pass” if iPhone sales are soft in the first half of calendar 2014 believing that the iPhone 6 will be very strong in the second half.
Gene Munster in-line with March consensus and expecting additional $20-$30 billion in capital return
Gene Munster at Piper Jaffray is expecting March quarter results towards the high-end of guidance with $43.6 billion for revenue and $10.09 in EPS. However he believes June quarter revenue guidance will show 5% growth at the high-end vs. the Street’s 7% since he doesn’t expect any new products in the quarter.
Munster believes Apple will increase its share buyback program and dividend with the potential to increase the combined program by 20%-30% ($20 to $30 billion). He is expecting the iPhone 6 to launch in September, an iWatch in the back half of 2014 and he is still hanging onto a 2014 launch for a TV but his conviction is waiving as he is not hearing any credible feedback from the supply chain that it is in the pipeline.
Steve Milunovich above March consensus with $7 billion additional capital return
Steve Milunovich from UBS has March quarter revenue and gross margin coming in at the high-end of guidance at $43.9 billion and 37.9%, respectively. With a share count of 887.3 million, down 14.2 million shares from the December quarter, he expects EPS to come in at $10.35.
He has decreased his June quarter estimates with revenue moving from $38.1 billion to $36.6 billion and EPS falling from $8.69 to $8.20 but raised his gross margin estimate from 37.9% to 38.2%. These were driven by his iPhone estimate falling from 35 million to 32.5 million and iPads from 16 million to 15.5 million.
Milunovich is only looking for a $7 billion increase to Apple's dividend and buyback program beyond the authorized $24 billion.
Bill Power is slightly lower then consensus for March and a bit more for the June quarter
Bill Power from Baird is projecting March quarter revenue of $43.2 billion, gross margin of 37.8% and EPS of $10.14. For the June quarter he is estimating revenue of $37.1 billion, gross margin to remain constant at 37.8% and EPS of $8.19.
Aaron Rakers lowered March estimates but EPS above consensus
On Monday Aaron Rakers at Stifel lowered his revenue estimate from $43.95 billion to $42.86 billion and cut his EPS from $10.37 to $10.31. He lowered his iPhone, iPad and Mac estimates, which was offset some by decreasing his share count by 28 million vs. 10 million previously. He has lowered his June quarter projection due to the iPhone 6 expected launch in September and a more back-end loaded China Mobile rollout.
Ben Reitzes is a bit below consensus
Ben Reitzes at Barclay’s is expecting revenue of $43.3 billion to be helped by channel fill but offset by some weakness in iPads, Macs and iPods. His EPS estimate of $10.00 has some upside from product mix and a lower share count.
For the June quarter he believes revenue guidance could be a few billion below the Street with his projection coming in at $37.1 billion and EPS of $8.25. He wouldn’t be surprised to see EPS guidance come in the $7.50 to $8.00 range as demand pauses before the iPhone 6. He also expects gross margin guidance to be around 37.0%.
Apple's shares closed at $531.70 on Tuesday and are down 5% for the year.
The company will be hosting a conference call at 2 pm Pacific time/5 pm Eastern time. Expect the incoming CFO, Luca Maestri, to take a more prominent role in the call. Mark Rogowsky will be following the conference call with a live blog.
You can follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.
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1d116a205389bb46cf83d147ce632e9b | https://www.forbes.com/sites/chuckjones/2014/07/01/analysis-of-apples-iphone-market-share-seasonal-decline/ | Analysis of Apple's iPhone Market Share Seasonal Decline | Analysis of Apple's iPhone Market Share Seasonal Decline
Kantar measures smartphone market shares around the world. In its latest survey for the three months ending in May Apple ’s iPhone continues to lose share to Google ’s Android platform but is no worse than what it has experienced the past two years. (I have developed a Google Doc with data going back to August 2011 via this link).
From the Kantar press release it said “May was the first full month of Galaxy S5 sales since its European release. Despite its blockbuster launch, the Galaxy S5 was only the third highest selling smartphone in Britain behind the iPhone 5s and 5c. However, among those who did buy the Galaxy S5 across the five largest European markets, 17% switched from Apple. Over half, 58%, of European Galaxy S5 buyers were existing Samsung owners.”
iPhone’s U.S. market share the lowest since October 2011
Kantar has Apple’s iPhone market share at 32.5% in May vs. its recent high of 43.9% in December and 41.9% a year ago. The last time that Kantar had the iPhone share being lower was October 2011 at 22.4%. While Apple shouldn’t see it sink that low again it should continue to decline until the iPhone 6 is shipping. Google’s Android share was at 61.9% in May while Microsoft ’s Windows share has declined for the past two surveys from 5.3% in March to 3.8% in May.
Source: Kantar Worldpanel ComTech
The 11.4% or 1,140 basis point decrease in the iPhone’s share from its high of 43.9% is similar to the declines it experienced in the past two cycles from its high to the May surveys. Two cycles ago (January 2012 to May 2012) the iPhone’s market share dropped 12.2% points and a year ago (November 2012 to May 2013) it decreased 11.4% points.
In both previous cycles Apple’s share continued to decline until September when new iPhones were launched. From January 2012 to September 2012 the iPhones share dropped 16.7% points (50.6% to 33.9%) and from November 2012 to September 2013 it declined 17.4% points (53.3% to 35.9%). Note that the iPhone’s share is currently below the past two cycles lows and if Apple doesn’t ship the iPhone 6 until September its share should continue to decline.
iPhone’s EU5 market share down a bit
Kantar had the iPhone’s market share at 16.6% in May, which is down from 19.2% in March. The drop isn’t as big as the U.S. share since its share doesn’t increase as much when new iPhones are announced and its high point is much lower than the U.S.’.
A year ago the iPhone experienced a larger seasonal decline dropping from 25.6% in December 2012 to 15.8% in May or a drop of 9.8% points. In the December 2011 to May 2012 timeframe the drop was 6.2% points (25.4% to 19.2%).
Android’s share was at 73.3% in the survey and Windows has trended down from its high of 10.2% in October last year to 8.1% in May.
iPhone’s China market share back down to the mid-teens
Apple’s smartphone market share almost hit 25% March 2013 (24.6%) and June 2013 (24.7%) however its most recent high was 19.0% in December. It held between 17.4% and 17.9% between January and April until it fell to 14.7% in Kantar’s survey. While China Mobile is ramping sales it doesn’t seem to have had a huge impact on the iPhone’s market share which is surprising. Possibly the market is growing fast enough that the absolute number of iPhones sold is solid and that it isn’t holding its share due to the number of lower priced Android phones.
Google’s Android share broke through the 70% level in November 2012 and 80% in January this year. It hit 82.7% in May and could creep a bit higher as users wait for new iPhones to be available. Microsoft’s Windows share was under 1% for the second month in a row.
iPhone’s Japan share only a bit higher than a year ago
Apple enjoys its highest market share in Japan at 51.7% vs. the U.S. in second at 32.5%. From its high point of 69.1% in November last year its share has declined 17.5% points which is similar to a years ago drop of 16.6% points from December 2012’s 66.2% to May 2013’s 49.6%.
It is interesting that Apple’s share is only a bit higher than a year ago since NTT DoCoMo was not selling iPhones a year ago. With the Japanese smartphone market being mature either competition is heating up or the sales tax increase that went into effect on April 1 caused a large number of iPhones to be sold by March and demand was pulled ahead.
Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.
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4b2ef1a7f0f82e969d28c5b81af12531 | https://www.forbes.com/sites/chuckjones/2014/08/18/how-much-could-teslas-infinite-mile-warranty-cost-the-company/ | How Much Could Tesla's 'Infinite Mile Warranty' Cost The Company? | How Much Could Tesla's 'Infinite Mile Warranty' Cost The Company?
Tesla announced that it would extend the warranty on the drive unit of its Model S cars to match the battery pack’s 8 years and unlimited miles with no limit on the number of owners. This will apply to new Model S models and all ever produced.
Elon Musk, Tesla’s CEO, wrote in the press release “If we truly believe that electric motors are fundamentally more reliable than gasoline engines, with far fewer moving parts and no oily residue or combustion byproducts to gum up the works, then our warranty policy should reflect that.”
Tesla accrued about $2,900 in warranty costs for the Model S’ it built in 2013 and $2,850 for the first half of 2014 from its various SEC filings.
A one-time charge and on-going cost
Tesla had been charging $4,000 to extend the warranty 4 years and 50,000 miles. Since the upgraded warranty doesn’t cover the entire car (Consumer reports recently reported some minor problems after it had its Model S’ for 15,743 miles) we will have to use an analysis with an estimate for how much the extended warranty will cost Tesla.
Tesla Model S Prototype at the 2009 Frankfurt Motor Show (Photo credit: Wikipedia)
As Musk noted there are far fewer moving parts in a Model S then an internal combustion engine so the drive unit may be a decent part of the $4,000 additional cost. However as the latest Consumer Reports article noted (which is limited information since it is a sample size of one) problems in their car include the center screen going blank, the auto-retracting door handles not working and a broken buckle in the third row of seats which Tesla replaced the whole row with an upgraded version (which does seem like overkill, may be a smart move but must be very expensive).
From a Yahoo ! Finance article citing Deutsche Bank ’s Tesla analyst Rod Lache he estimates that the all Model S’ will be recalled for a $2 zip tie to be installed and that the total cost per vehicle will be $200 (or 5% of the $4,000 additional warranty cost).
While Lache has probably talked with the company a $2 zip tie seems like it could only be part of the cost of extending the warranty since it is now for unlimited miles and owners.
For this analysis lets assume 20% of the $4,000 additional warranty will be what Tesla will have to absorb over the long run or $800. Since the company has sold about 40,000 Model S’ the one-time charge would be $32 million before tax and $29.9 million after-tax assuming the June quarter’s 6.7% tax rate. The EPS impact would be a $0.21 one-time hit.
The Street is currently expecting Tesla to generate $0.04 in EPS (I am at a loss of $0.09 before the additional warranty charge) so this could create a loss for the company in the September quarter. However since it is a one-time charge investors will probably give the company a pass on it.
Assuming the June quarter’s $113,000 average selling price of a Model S the $800 additional warranty accrual would be a 0.7% impact to gross margin. For every 10,000 Model S’ Tesla sales it would negatively impact EPS by $0.05.
The charges are non-cash until Tesla has to do repairs associated with it. However they could occur much faster than a typical car company, which sometimes makes you jump through multiple layers of their organization to get some warranty repairs done.
Will this affect management’s performance based stock options?
In the March and June 2013 10-Q’s there is a section titled “Performance-based Stock Option Grant”. There are 782,500 stock option shares for certain employees that have four performance milestones one of which is the company getting to 30% gross margins in any three years. It will be interesting to see if this goal is adjusted due to the new warranty policy.
It does burnish the image of a car company that cares
When you read the responses to the additional warranty you can get a feeling how much enjoyment Model S owners have for their cars. It should help with word of mouth advertising and get some buyers who were sitting on the fence worrying about electric cars to buy a Model S.
Follow me on Twitter @sandhillinsight. You can find my other Forbes posts here.
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6b9e1135df2116d7a9144647a3544718 | https://www.forbes.com/sites/chuckjones/2014/09/10/sell-side-analysts-thoughts-of-apples-announcements/?utm_campaign=techtwittersf&utm_source=twitter&utm_medium=social | Sell-Side Analysts Thoughts Of Apple's Announcements | Sell-Side Analysts Thoughts Of Apple's Announcements
I have summarized a dozen sell-side analysts notes regarding Apple’s iPhone 6, Apple Watch and Apple Pay announcements. From my review of the announcements I give Apple an A- grade and keep in mind as you read the summaries below that analysts tend to skew their writings and thoughts to their rating. In a lot of ways that makes sense but it can create an anchor until a big enough event, usually an earnings announcement, comes along.
One thought on the Apple Watch and its early 2015 availability. While you won’t be able to give it as a gift or receive it on Christmas day, I think it makes sense for Apple to sell a cool looking gift certificate during the holidays. Yes one challenge is that there are multiple price points and we only know the $349 entry model but overall it makes sense to me.
Tim Arcuri at Cowen (Outperform with $106 target)
Arcuri believes overall Apple’s announcements met his expectations with the Apple Watch a bit later availability but higher priced. He would be a buyer on weakness given the stock’s relatively inexpensive valuation, wearables and new services could become meaningful in the long term and iPhone 6 sales should drive record results in the medium term.
Arcuri estimates that Apple could sell 20 million Watch’s in fiscal 2015 and that its Taptics functionality could migrate to other Apple devices. He views Apple Pay as a way to differentiate Apple’s devices vs. Android and generate higher device sales.
Keith Bachman at BMO (Outperform with $106 target)
Bachman didn’t change his estimates but believes the new iPhones will do well and drive a multi-quarter upgrade cycle. It could cannibalize the iPad Mini but that would be positive for margins.
He was impressed by the Watch’s design, user interface, and features, though pricing was modestly higher than he initially thought. While missing the holiday season is unfortunate, the Watch's availability keeps investors in the shares by creating a pending product launch. Bachman believes his 30 million unit projection in the first year is likely high but he hasn’t lowered it yet.
Apple Pay is a feature that should help sell Apple products and provide some small help to the bottom line. Apple is initially focused on payments, but thinks the company will do more with the mobile wallet longer term.
Kulbinder Garcha at Credit Suisse (Neutral with $96 target)
Garcha believes Apple’s new products and services were solid and met expectations (except for an updated iPad which I believe very few were expecting) but that the best case of $8 in calendar 2015 EPS is largely priced into the shares. He lowered his calendar 2014 EPS slightly from $6.39 to $6.35 but significantly raised his calendar 2015 EPS from $7.12 to $7.92. His $96 price target is based on 11x his fiscal 2015 EPS of $7.77 and adding in $11 for net cash.
Garcha wrote ‘from a fundamental perspective, we acknowledge that the new offerings are welcome additions to the portfolio that will strengthen not only the competitiveness of each product category but also the wider ecosystem and the increasing developer effort behind Apple Pay, HealthKit and WatchKit highlight this. In turn, we believe this drives resilience in its hardware sales through industry leading retention rates.’
His two main reasons for not having an Outperform rating are due to gross margins essentially remaining flat and EPS growth being suspect due to the product cycle driven nature of Apple’s business and mature high-end smartphone market.
Rod Hall at JP Morgan (Overweight with $112 target)
Hall’s note was shorter than most but he thought the iPhone’s availability was better than expected and the A8 processor is truly a desktop class processor. Apple Pay will have little earnings impact but could help sales of devices.
Hall thought Apple’s Watch was very good including haptic feedback, an innovative and easy to user interface, and integrated health tracking capabilities including pulse. He also thought the videos didn’t do it justice (which is quite a statement since they looked very impressive to me when I rewatched the webcast last night).
Andy Hargreaves at Pacific Crest (Downgraded to Sector Perform with $100 target)
As previewed last week Hargreaves downgraded Apple from Outperform to Sector Perform since the announcements did not provide upside to his estimates (I'm not sure Apple could have done much more).
He was impressed with the iPhone 6s but believes their potential is largely priced into the shares at the current price and that it will be difficult to develop new iPhone users so the company will be dependent on upgrades.
Hargreaves views Apple Pay as increasing stickiness to the company’s ecosystem but not a financial driver. He points out that Tim Cook started off his presentation of by saying that others had tried and failed due to being ‘focused on creating a business model centered on self interest instead of focusing on user experience’.
Hargreaves sees the Apple Watch as attractive, but the need for phone tethering, short battery life, and lack of compelling features for people who do not want a watch will limit the market. He does estimate that Apple could sell 30 million in calendar 2015 which does increase his fiscal 2015 EPS estimate from $7.58 to $7.96 and fiscal 2016 from $7.29 to $7.88. It is interesting that a $0.38 and $0.59 EPS increase in fiscal 2015 and 2016, respectively, isn’t incremental to his target price.
Hargreaves does point out in his note a relative investor (funds and not retail investors) should be equal weight Apple in their portfolios. Since overall funds are underweight Apple that should lead to a higher price based on his recommendation.
Katie Huberty at Morgan Stanley (Overweight with $110 target)
Huberty believes that the iPhone 6 & 6 Plus are priced right with features that will drive share gains, Apple Pay is another sign of Apple’s ability to solve complex problems and partner with an existing ecosystem (like iTunes and App Store), and Apple Watch is a first step toward unlocking the wearables market opportunity.
Her US and Australia surveys indicate that Apple can increase its share by 11 to 15 points with larger screen iPhones and believes ASPs could increase due to increased functionality and larger NAND memory content. She is bullish on Apple Watch (expecting 30 to 60 million in the first year) but has some concern that there isn’t a killer app since it seems like there was a “Swiss Army Knife” approach to the demos. Apple Pay leverages and could accelerate the growth of services and lead to multiple expansion for the shares.
Stuart Jeffrey at Nomura (Neutral with $104.00 target)
Jeffrey titled his note “6 Plus 6 equals zero” to indicate that Apple’s announcements almost matched everything as expected and he did not change his estimates. He expects the iPhone 6 to outsell the 6 Plus by 2.7x with a decline in high-storage iPhone models from 39% to 25% of sales. Jeffrey is forecasting iPads to have no growth due to cannibalization from the larger screen iPhones and the iPhone gross margins could fall up to 250 basis points in fiscal 2015. Jeffrey expects robust iPhone sales in the December quarter but that ecosystem stickiness could dampen the number of Android users who will migrate to iPhones.
Jeffrey views the Apple Watch as clearly very capable from current smartwatches but mostly replicates the iPhone with no killer feature which will restrict adoption. I agree with him that it won’t drive a meaningful amount of revenue for Apple in the near term but his description of a mechanical watches crown being difficult to turn I don’t think will apply in this case (he didn’t get to test drive the Watch and neither have I).
He views Apple Pay as a mature and strong mobile payment solution with lower barriers of adoption since the company isn’t storing any user or merchant data. Jeffrey views the solution more as a way to drive device sales vs. services revenue.
Steve Milunovich at UBS (Buy with $115 target)
Milunovich has revised his estimates to incorporate a new iPhone storage mix, a push-out of the Apple Watch to early next year, better-than-expected Apple Watch pricing, and a more cautious view on longer-term iPad unit growth. He has raised his fiscal 2015 and 2016 revenue estimates by about 2% while his fiscal 2015 EPS estimate jumps from $7.50 to $7.80 and fiscal 2016 goes from $8.33 to $8.75.
He expects the shares to move on the next two Mondays from either pre-order or first weekend sales being announced. Having two larger form factors could dampen initial pre-orders since some buyers may want to check out the two sizes before they make a decision.
Milunovich believes Apple Watch’s sales could trend similar to the iPad’s. He is estimating 24 million could be sold in fiscal 2015 (about 10% of eligible iPhone users) and 40 million in fiscal 2016. While there was no information on battery life Apple did say they expect people to wear them all day and recharge every evening.
He believes that Apple Pay mostly supports device sales with some potential for additional revenue. The company took the path of least resistance by leveraging the current payment structure and players.
Gene Munster at Piper Jaffray (Overweight with $120 target)
Munster described Apple’s announcements as the iPhone 6 as an appetizer, Apple Pay as the main course, and the Apple Watch as dessert which left him feeling incrementally better about the company's product offering leading into December 2014. While he is concerned that there are tough compares for the iPhone in the September quarter due to the 5c’s channel fill last year overall (but shouldn’t there be channel fill for the 6 and 6 Plus?) it sounds like his December quarter iPhone unit estimate of 52 million is exposed upwards (sell-side about 55 million and buy-side about 60 million).
While Munster believes Apple’s Watch is light years ahead of the competition (but doesn’t have a significant use case) he estimates Apple could sell closer to the 10 million of his 5-10 million estimate for the Watch since there are three different versions (Watch, Sport and Edition).
After testing Apple Pay Munster believes that the company has an inherent advantage vs. other NFC based offerings due to the consistency it can provide across its iPhones and Watches along with the number and breadth of partners it has and should continue to increase. It could help hardware sales initially as the company ramps revenue from services.
Aaron Rakers at Stifel (Buy with $110 target)
Rakers expects iPhone sales in the September and December quarters to total 96.3 million which would be a 13.6% increase year over year with China Mobile being a positive wild card. Apple Pay is a positive expansion of the company’s ecosystem and leverages its TouchID capability and new NFC feature. Apple Watch is a big unknown so his initial guess is 10 million units which add $0.10 to $0.20 per year in EPS (he is at $6.95 for fiscal 2015).
Ben Reitzes at Barclay’s (Overweight with $116 target, was $110)
Reitzes increased his price target from $110 to $116 with a small increase in his fiscal 2015 EPS from $7.10 to $7.20. One key point in his view is the ASPs on new products strike a fine balance of protecting margins while maintaining prices relatively close to levels consumers have been comfortable paying in the past.
He didn’t change his iPhone estimates but believes the combination of Apple Pay and Apple Watch along with potential share gains in China and India could create upside to his projections.
Reitzes believes Apple Pay could reshape the payments industry but has a lot of questions about how it will be monetized, rationale for not collecting retail information and is there an advertising opportunity associated with it.
He was impressed with the Apple Watch as a good job engineering an elegant yet functional solution. He tried them on and believes the high-end ones, especially the gold versions will be strong sellers.
Brian White at Cantor (Buy with $123 target)
White believes Apple outdid itself with the introduction of the iPhone 6 with a 4.7-inch screen and a 5.5-inch iPhone 6 Plus that provides Apple with entry into the fast growing “phablet” device category. After the event he had the opportunity to take both new iPhones for a test drive and felt there is simply no comparison with the iPhone 5s.
He believes Apple Pay provides another attractive service to users of Apple products, adding more stickiness to the company’s digital matrix that includes over 800 million store accounts.
Apple Watch has a beautiful display and handsome design aesthetics that provide for a clean, smart look. From his interactions with many companies showing off smartwatches White believes Apple has clearly taken this category to an entirely new level.
In some aspects White’s assumptions for the Watch are conservative ($349 ASP) and others aggressive (20% quarterly iPhone conversion rate, way to high in my mind) which leads him to projecting 37 million units in the first year with $12.8 billion in revenue and $0.60 to $0.70 in EPS.
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5216196bdae534707bcbfc487dbc9954 | https://www.forbes.com/sites/chuckjones/2014/09/26/how-much-could-bendgate-cost-apple/ | How Much Could Bendgate Cost Apple? | How Much Could Bendgate Cost Apple?
There are various ways that ‘Bendgate’ could affect Apple financially. These range from consumers putting off buying an iPhone, buying an iPhone 6 vs. a 6 Plus, returning a bent iPhone and getting another one, redesigning the iPhone or higher warranty costs.
Apple has come out and said through the media that its iPhones go through rigorous testing and that only 9 people have complained so far about the issue. For analysis purposes I am going to use 100,000 iPhones or 1% of the first weekend’s 10 million unit sales. Hopefully this is way too many since Apple could consider this a damage issue vs. mechanical defect but is a stake in the ground that other estimates can be calculated off of (if you want to assume 10,000 then decrease my results by 10x).
People putting off or not buying an iPhone
Due to all the publicity about bendgate there are probably a number of people who will put off or maybe not even buy an iPhone (I’d give this very low odds overall). If someone decides to wait there won’t be much of a financial impact since they probably would not be able to buy it by Saturday, the end of Apple’s fiscal year. It would only be a problem if this lingers through the holiday season and people wait until next year.
If 100,000 people decide to not buy an iPhone it would decrease Apple’s revenue by about $80 million (assuming $799 per iPhone which is the average of an iPhone 6 and 6 Plus 64GB models and I’m not including accessories). With the Street estimating $62 billion in December quarter revenue it would decrease revenue by about 0.13%.
People buying an iPhone 6 vs. 6 Plus
If people decide to opt for the smaller of the two screen sizes then the revenue hit is much smaller at $10 million (100,000 units times $100 delta of the two models) or 0.016% of December quarter’s projected revenue.
14 day return policy
Apple has a policy that you can return a product, if you bought it directly from Apple, within 14 days. Since the iPhone 6 and 6 Plus only went on sale last Friday everyone who has one should be able to return it.
I don’t believe Apple would wind up trying to refurbish, repackage and resell an iPhone that was the slightest bent. It would create too much negative publicity if they tried to (and I’m sure it would be caught and new videos on YouTube would be uploaded) so it would have to eat the cost of the iPhone which is estimated to be $252 for the 64GB iPhone 6 and $267.50 for the 6 Plus.
I am estimating that Apple will make $10.5 billion in operating income in the September quarter and over $17 billion in the December quarter. If you take the average cost of the 64GB models and assume that 100,000 iPhones are returned and scrapped in each quarter then it would cost Apple $52 million combined. It translates to a 0.25% and 0.15% hit to margins in the September and December quarters, respectively.
Redesigning the iPhone
This one is harder to get a feeling for since there is potentially a lot more costs than R&D. Apple has purchased a large amount of equipment for its suppliers to use to build products, the bulk going to iPhones. In the June 2014 quarter Apple had $5.6 billion in off-balance sheet obligations per its 10-Q ‘which were comprised mainly of commitments to acquire capital assets, including product tooling and manufacturing process equipment, and commitments related to advertising, research and development, Internet and telecommunications services and other obligations’.
While not all of this is related to tooling and capital assets it was only $2.8 billion in the prior quarter, which shows the ramp of new products and the financial investment Apple makes. Any redesign could increase the company’s capital commitment, which can be easily handled but could be in the tens if not hundreds of millions of dollars.
How will Apple’s new CFO respond?
While he has been on the earnings call for a few quarters, Luca Maestri, Apple’s new CFO, is fully taking the reins with Peter Oppenheimer leaving as of the end of September. While we probably won’t be able to tell what financial levers he pulls it will be interesting to see if he increases warranty accruals by an additional amount to make sure any impact is taken care of in one fell swoop vs. having to address it down the road.
Warranty costs increase when new versions of iPhones are introduced but I suspect that Apple is not planning on having a large number of iPhones to be replaced by them bending too much. However, if there are 100,000 units that have to be replaced the $26 million cost ($260 average cost of the 64GB iPhone 6 and 6 Plus) would be 0.065% of September’s $40 billion estimated quarter revenue.
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3c08c83674d0e8919781e4b399848e2b | https://www.forbes.com/sites/chuckjones/2014/10/09/apples-iphone-6-china-lead-times-are-better-than-the-us-and-europe/ | Apple's iPhone 6 China Lead-Times Are Better Than The US And Europe | Apple's iPhone 6 China Lead-Times Are Better Than The US And Europe
I have been monitoring Apple's iPhone 6 and 6 Plus lead-times since consumers could start ordering them for the first wave of countries on Friday, September 12, three days after they were announced. The official start date for ordering Apple's new iPhones in China started today, Friday, October 10, which was Thursday afternoon, October 9 in the US. I have developed a Google Doc with the information I have seen along with the number of Chinese iPhone 6 reservations that have been entered.
Approximately 10 million reservations were placed
JD.com is a website that was monitoring consumers placing reservations on the three wireless Chinese carriers along with some other distributors and channels which started about a week ago. When the numbers first came to light on October 3rd there were just under 3 million reservations for Apple's iPhone 6 and 6 Plus on its site and there were approximately another 1 million that it was not monitoring.
Source: Pablo Blazquez Dominguez/Getty Images
Reservations in China really took off on Saturday, October 4, when JP.com’s site saw 4 million iPhone 6s and 6 Pluses get ordered taking the reservation number from 2.8 million to 6.8 million. The last time that I saw numbers on the website was Thursday morning Pacific time which was early Friday morning in China and there were over 8.6 million reservations.
As a side note the split between the 6 and 6 Plus was almost equal the six days I monitored it at 49% for the 6 and 51% for the 6 Plus. I believe we can pretty much ignore the websites that are tracking which iPhone models that are in use to get a feeling for what people want until Apple can supply enough of the 6 Pluses to catch up to demand.
China iPhone 6 lead-times are better than the US or Europe
It is still probably too early to see if these lead-times hold but initially 8 of the 9 iPhone 6 models are showing October 17, which is the first day that Apple will make them available with the Silver 64GB at 1-2 weeks.
For the 6 Plus 5 of the 9 are showing October 17 with all three color 64GB models at 2-3 weeks and the Space Gray 128GB model at 1-2 weeks. This is another indication along with the data I have found on a site that tracks Japanese smartphone demand that indicates the 64GB models are the most in demand which will help Apple’s average selling price for the iPhone.
The US lead-times have remained the same for both the 6 and 6 Plus since the first weekend they became available on Friday, September 19. The 6 is at 7-10 business days and the 6 Plus is at 3-4 weeks. I believe they are being delivered faster than this but if supply was robust enough (and Apple may be waiting to see how strong China’s demand is) it would start dropping the lead-times.
Europe’s and Australia’s lead-times pretty much match the US and of the countries that I follow Hong Kong and Singapore are showing Currently Unavailable but I believe they can be reserved and picked up.
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24c2042de5c39b91ec5cdfc159a95638 | https://www.forbes.com/sites/chuckjones/2015/08/24/buy-apple-tim-cook-says-everything-is-ok-in-china/ | Buy Apple: Tim Cook Says Everything Is OK In China | Buy Apple: Tim Cook Says Everything Is OK In China
Tim Cook, Apple’s CEO, sent an email to Jim Cramer at CNBC with a very rare mid-quarter comment on the company’s business. Cook addressed investors concerns about Apple’s iPhone sales in China with comments that sales remain strong through July and August. I believe that Apple’s stock has become oversold and with it trading at less than a 10x PE multiple when you remove $17 in net cash per share this is a very good entry point. (Note that I own Apple shares).
Investors are worried about China
Over the past two months investors have become very worried about the severe downturn in China’s stock market and what it could mean for Apple’s business. The Bears on the stock have used this to reinforce their position that iPhone sales could falter even more than they estimate without any data points to back up their position. I would note that in a lot of situations there isn’t hard information and at the margin the weakness in the Chinese stock market should at best be neutral and negative to some degree.
However there is some information that is positive for Apple’s China business besides Tim Cook’s statements. The first is the strong increase in 4G subscribers that China Mobile and China Unicom experienced in July. Second UBS’ Steve Milunovich’s Evidence Lab survey points to 50 million or more iPhones being sold in the September quarter and lastly Bernstein’s Toni Sacconaghi put together a number of thoughts on how Apple could sell more iPhones in 2016 than 2015.
Apple’s Tim Cook during a promo event to celebrate China Mobile’s iPhone launch in 2014. (AP... [+] Photo/Alexander F. Yuan)
Tim Cook wrote that Apple’s China business is in good shape
CNBC’s Jim Cramer emailed Tim Cook over the weekend and Cook replied saying that “we have continued to experience strong growth for our business in China through July and August. Growth in iPhone activations has actually accelerated over the past few weeks.”
He also added “I continue to believe that China represents an unprecedented opportunity over the long term as LTE penetration is very low and most importantly the growth of the middle class over the next several years will be huge."
Stock is trading below a 10x multiple
Apple has about $17 in net cash per share when you take into account its debt and additional taxes it would have to pay on overseas cash if it brought it back to the US. While the shares traded down to $92 at $106 it is trading at 9.1x fiscal 2016’s EPS estimate of $9.78. Also per a Morgan Stanley analysis Apple’s shares are underweighted to the S&P 500 benchmark by the largest 100 shareholders.
Along with the overall market Apple’s shares have rebounded today. The stock is outperforming the market since it is up slightly while the S&P 500 is down 2%. While the stock could move lower for long-term investors with the shares being oversold and such a low valuation I believe it is a good time to buy them.
Source: StockCharts.com
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cbc19a9b0c7edd67234dd5ce0e1c4ab6 | https://www.forbes.com/sites/chuckjones/2016/01/19/trump-could-cost-us-consumers-6-billion-per-year-by-imposing-a-35-tariff-on-apples-iphones/ | Trump Could Cost US Consumers $6 Billion Per Year By Imposing a 35% Tariff On Apple's iPhones | Trump Could Cost US Consumers $6 Billion Per Year By Imposing a 35% Tariff On Apple's iPhones
In a speech yesterday Donald Trump said he would impose an import tax of 35% on goods such as Apple’s iPhones. Without getting into the politics of this lets examine this from two angles: the increased price of an iPhone and the logistics of building iPhones in the US. (Note that I own Apple shares).
An iPhone could cost $65 more
IHS estimates that there are $231.50 worth of components in Apple’s iPhone and that it costs $4.50 to build one. While some of the components are built in the US lets assume that 80% are supplied from non-US sources. A 35% tariff on those would increase the costs of a 16GB iPhone by $65.
There are a number of articles on the Internet including Bloomberg and Fortune that it would only cost 5% more to manufacture goods in the US vs. China. With the labor costs to build an iPhone at less than $5 lets assume that the added labor cost to a US built iPhone is essentially $0 so that this is a non-factor in the decision on where to build them.
Assuming that 40% of the 231 million iPhones that Apple sold in fiscal 2015 went to US consumers it would have cost them $6 billion more per year than what they paid if there was a 35% tariff and the iPhones were made overseas (231 million times 40% times $65).
Gallery: Donald Trump's 10 Best Stock Market Bets 10 images View gallery
The US doesn’t have the infrastructure to support building iPhones
One of the main challenges to bringing Apple’s iPhone production to the US is the sheer number of people required to assemble them, manage the processes and supply the components.
I believe Hon Hai has 1 million people in China dedicated to building iPhones. While Apple would probably develop a much more automated production line in the US (and is probably working on that in China) I believe it would be very difficult to find the number of people required to do this in the US. There probably are not enough people willing to do the tedious work required and the US doesn’t have enough engineers to manage such a large manufacturing process.
The other challenge is the supply chain needed to provide the parts for the iPhone. Unfortunately there isn’t the manufacturing base of people and equipment in the US to scale to the millions of units and billions of parts required to build iPhones.
Source: IHS
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59a495d80ac30b123c1ea855034daa46 | https://www.forbes.com/sites/chuckjones/2017/06/02/apples-app-store-could-generate-over-10-billion-in-revenue-this-year/ | Apple's App Store Could Generate Over $10 Billion In Revenue This Year | Apple's App Store Could Generate Over $10 Billion In Revenue This Year
This past week Apple announced that total payments to developers since the App Store was started in 2008 had passed $70 billion. This is $10 billion more than what the company announced on January 5th this year. When you annualize the $10 billion developers could earn $24 billion this year, up 140% in four years but an increase of only about 14% year over year.
People queue outside the Apple store in Singapore. Photo credit:ROSLAN RAHMAN/AFP/Getty Images
While there are concerns about the iPhone’s market share another reason it should remain successful is due to developers receiving a large revenue stream. While Google Play should also remain strong between the two of them it will be difficult if not impossible for another platform to ever take hold in the smartphone arena.
To determine how much revenue the App Store generates for Apple what you do is divide the amount received by developers by 70% or the percentage they receive. For the past five months the $10 billion to developers means that a total of $14.3 billion as spent by users. Therefore the company received $4.3 billion and when this is annualized it is just over $10 billion.
Apple's App Store revenue Source: Statista
Below is a recap of Apple’s announcements regarding the financial impact of the App Store since 2014. Note that when I use words such as over or nearly they are from the press releases and when I use about or approximately they are based on calculations I have done from the numbers in the press releases.
Calendar 2014
Total spending in the App Store was approximately $15 billion Developers received over $10 billion in revenue Apple’s revenue was about $4.5 billion The first week of January generated nearly $500 million in billings January 1st was the largest day
Calendar 2015
Total spending in the App Store was over $20 billion Cumulative developer revenue reached nearly $40 billion since 2008 with over one-third in 2015 Developers received about $14 billion in revenue, up approximately 35% year over year Apple’s revenue was about $6 billion, up about 33% year over year The two weeks ending on January 3, 2016, generated $1.1 billion in spending January 1st saw $144 million in total spending
Calendar 2016
Total spending in the App Store was just shy of $30 billion Developers received over $20 billion for the year and now over $60 billion since 2008 Apple’s revenue was about $8.8 billion, up 49% year over year Developer’s and Apple’s revenue have both almost doubled in two years January 1st had nearly $240 million spent that day ($72 million to Apple)
June 1, 2017
Developers have received over $70 billion since the App Store launched This is about $10 billion since the beginning of the year Apple would have received about $4.3 billion in the first five months this year When annualized the App Store could generate about $10 billion in revenue for Apple The growth rate has slowed to about 14% year over year
I have created a Google Doc with information on the number of apps downloaded, how much has been paid to developers and other information that is available via this link.
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f2bd9a2c482ab5abe3a569e2b3d9c850 | https://www.forbes.com/sites/chuckjones/2017/11/10/carl-icahn-sold-apple-too-soon-it-cost-him-3-7b/ | Carl Icahn Sold Apple Too Soon & It Cost Him $3.7B | Carl Icahn Sold Apple Too Soon & It Cost Him $3.7B
Carl Icahn was very visible when he owned Apple shares. He met with Tim Cook, Apple’s CEO, and wrote letters and analysis that he posted on his website. His first public announcement was on August 13, 2013 with two tweets saying he had a large position in Apple, had talked with Cook and that a large buyback should be done now since he believed that the stock was extremely undervalued. While Icahn said his profit was “within a few bucks” of $2 billion when he sold in April last year he left a lot on the table. (Note that I own Apple shares and have sold Put options).
Carl Icahn speaks at the World Business Forum in New York. Donald Trump. (AP Photo/Mark Lennihan,... [+] File)
In a letter dated October 24, 2013, Icahn said that he owned 4.73 million shares (pre-split) and reiterated his proposal that Apple should spend $150 billion to buy back its shares with a tender price of $525 ($75 post-split which is what it was trading for). At that time the company had $146.6 billion in cash and investments and only $17 billion in debt. It was also in the early stages of buying back shares (just under $18 billion had been spent) with a cumulative authorization of $60 billion.
On October 9, 2014, just after the launch of the iPhone 6 and 6 Plus Icahn published another letter titled “Sale: Apple Shares at Half Price”. While he was widely optimistic with his forecasts for the Apple Watch and an UltraHD television (which has never been announced) leading to a revenue estimate of over $271 billion in fiscal 2016 (actual was $215.6 billion) and EPS of $12.49 (actual was $8.31) and even higher numbers in fiscal 2017 of $328 billion in revenue (actual was $229 billion) and EPS of $16.28 (actual was $9.21) he wasn’t too far off regarding the title of his letter. On October 8, 2014, Apple’s shares closed at $100.80 and today they closed at $174.67 or an increase of 73%. While it has been three years and wasn’t a double there are few investors that wouldn’t say this is a very good rate of return.
On February 11, 2015, Icahn updated his forecast and reiterated his belief that the shares were worth $216 while the day before they had closed at $122.02. His price target used a 20x PE multiple on his $9.70 fiscal 2015 EPS projection and $22 in net cash.
On May 18, 2015, Icahn lowered his EPS estimates for fiscal 2016 to $12.00 (actual was $8.31) and fiscal 2017 to $15.54 (actual of $9.21) but increased his price target to $240. He got to it by using an 18x PE multiple and $24 in net cash. The stock closed at $128.77 the day before.
Then on April 28, 2016, Icahn announced that he had sold all of his 52 million plus shares making about a $2 billion profit. He said he sold based on concerns regarding China which I delved into. From my calculations on the 52 million plus shares he sold them for about $105.
Icahn was right but left a lot on the table
Icahn was right that Apple should buy back a lot of its shares. He had recommended the company should spend $150 billion in 2013 with a tender price of $75 post-split. Instead Tim Cook and Apple’s Board decided to go on a multi-year program (which they are still doing) and reached $150 billion in the March quarter of this year. If Apple had been able to borrow enough to do that large of a buyback in 2013 it would have wound up buying back a lot more shares than it has.
Apple stock buyback and dividend history Apple
Unfortunately for Icahn he sold a year plus too early. While the stock traded down to the $90’s just after he sold, the shares have been on an upward move since then as can be seen on the StockCharts.com chart below.
If Icahn had held onto all his shares the difference between what he sold them for, about $5.5 billion, would now be worth $9.2 billion or $3.7 billion in additional profit. The $3.7 billion is a return of 66% over the additional 20 months or about 40% on an annualized basis.
Apple price chart for three years StockCharts.com
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70e516222c56e88970292db2c4d96e1c | https://www.forbes.com/sites/chuckjones/2018/02/23/bitcoin-debate-warren-buffett-bear-vs-winklevoss-twins-bull/ | Bitcoin Debate: Warren Buffett Bear Vs. Winklevoss Twins Bull | Bitcoin Debate: Warren Buffett Bear Vs. Winklevoss Twins Bull
There are two distinct views on Bitcoin and cryptocurrencies. One view is that they will flame out and most, if not all, will become worthless . The other side is that at least some are destined to become much more valuable and become engrained in not just the world’s financial markets but potentially everyday life. Investors and executives who believe cryptocurrencies “won’t end well” or are a fraud include Warren Buffett and Jamie Dimon, respectively. The Winklevoss twins and Fundstrat’s Head of Research Tom Lee believe that Bitcoin can reach $300,000 and $125,000, respectively.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
A visual representation of the digital Cryptocurrency, Bitcoin. Photo by Chesnot/Getty Images
There are multiple reasons that Bitcoin could fall to $1,000 or less or rise to $100,000 or more. It is worthwhile to know what experienced investors believe could happen along with those that are deeply involved. However, one must keep in mind that any of them could be “talking their book”, meaning they own the asset and are only presenting their bullish view or could be short and touting the negatives.
It may turn out that Bitcoin and other cryptocurrencies will be “productive”. There could be killer applications, besides illegal activities, that will drive their eventual adoption. This probably won’t be known for a couple of years. However, there are over 1,500 CCs so at some point in time there will be a shakeout, which will be very ugly.
Warren Buffett doesn’t believe in assets that are unproductive
Warren Buffett doesn’t invest in gold because it has two significant shortcomings. From Berkshire Hathaway’s 2011 investor letter he wrote, “gold has some industrial and decorative utility, but the demand for these purposes is both limited and incapable of soaking up new production. Meanwhile, if you own one ounce of gold for an eternity, you will still own one ounce at its end.”
He went on to add that gold is an “asset that will never produce anything, but that are purchased in the buyer’s hope that someone else – who also knows that the assets will be forever unproductive – will pay more for them in the future. Tulips, of all things, briefly became a favorite of such buyers in the 17th century. This type of investment requires an expanding pool of buyers, who, in turn, are enticed because they believe the buying pool will expand still further. Owners are not inspired by what the asset itself can produce – it will remain lifeless forever – but rather by the belief that others will desire it even more avidly in the future.” This is the greater fools theory of investing.
Investor Warren Buffett. AP Photo/Nati Harnik
Many investors believe that Bitcoin and other cryptocurrencies are a store of value, similar to gold. Buffett has said, 'I can say almost with certainty that they will come to a bad ending.”
Buffett’s partner, Charles Munger, described the digital currency as “noxious poison”. He added that “the Bitcoin craze to be “totally asinine”.” You can really tell how he feels about it by these comments, “I detested it the moment it was raised. It’s just disgusting’ and “Our government’s more lax approach (vs. China) to it is wrong. The right answer to something like that is to step on it hard.”
Jamie Dimon backed off his negative comment about Blockchain, not Bitcoin
Jamie Dimon, JPMorgan’s CEO, raised some eyebrows in September last year when he talked about the hype around Bitcoin. He said, “It's worse than tulip bulbs. It won't end well. Someone is going to get killed." Dimon added that "Currencies have legal support. Bitcoin will blow up."
You can tell he was on a roll as he went on to say, "It's just not a real thing, eventually it will be closed," and called it a “fraud.” He also said that he would “fire in a second” any JP Morgan trader who was trading it since “It’s against our rules and they are stupid.”
Dimon spoke in January this year saying that he regretted saying Bitcoin is a fraud, but in reality, his positive comments were reserved for Blockchain. He said Blockchain “is real”, especially since JPMorgan is implementing a Blockchain based system with two other banks to reduce payment transaction speeds from weeks to hours.
Winklevoss twins: Investors have a “Failure of Imagination”
The Winklevoss twins made a very fortuitous investment in 2013 by buying $11 million worth of Bitcoins. Its price back then was in the $100 to $300 range so if they have held onto all of their tokens they would be worth over $500 million. At Bitcoin’s December high of almost $20,000, they had over $1 billion in Bitcoins.
In an interview on CNBC earlier this month one of the twins said, "Taking Bitcoin in isolation … we believe Bitcoin disrupts gold. We think it's a better gold if you look at the properties of money. And what makes gold gold? Scarcity. Bitcoin is actually fixed in supply so it's better than scarce … it's more portable, it's fungible and it's more durable. It's sort of equals a better gold across the board."
He added, "So if you look at a $100 billion market cap today, now last week it might have been more like 200, so it's actually a buying opportunity, we think that there's a potential appreciation of 30 to 40 times because you look at the gold market today, it's a $7 trillion market. And so a lot of people are starting to see that, they recognize the store of value properties. So we think regardless of the price moves in the last few weeks, it's still a very underappreciated asset."
The twins said that the criticisms of Bitcoin are a “failure of imagination.” They may be right, but they also have a personal interest in Bitcoin’s price increasing and seeing cryptocurrencies becoming accepted. They started Gemini, a digital currency exchange, which is similar to Coinbase. If Bitcoin and other digital currencies can grow their usage, besides being a store of wealth, then more trading would need to be done.
Cameron (L) and Tyler Winklevoss, discuss Gemini Trust Company, their new bitcoin exchange. Photo... [+] by: Adam Jeffery/CNBC/NBCU Photo Bank via Getty Images
Tom Lee is a believer but at least one assumption seems aggressive
Tom Lee was JPMorgan’s chief equity strategist and is now the Head of Research at Fundstrat. He believes that Bitcoin could hit $25,000 this year and $125,000 by 2022.
Lee’s Bitcoin valuation calculation is derived from money supply growth, the ratio of alternatives including gold to the money supply and Bitcoin’s share of the alternatives. I believe he is using the amount of money supply vs. its growth as the first variable. Per Y Charts M0 money supply is currently $1.54 billion, which essentially matches Lee’s assumption. I’ll update this note if I learn more.
Using the ratio of alternative assets to money supply seems reasonable but he is assuming that Bitcoin’s percentage of alternative assets will grow from 3.5% to 20% in 2022. The increase to 20% seems to be very much on the high side to get to a $125,000 price.
Fundstrat's Tom Lee Bitcoin $125,000 calculation Fundstrat, Bloomberg
Old guard vs. the upstarts
One aspect to these divergent views is the age of the participants. In one corner are the Warren Buffett’s and Jamie Dimon’s who are the old guard. While they have decades of experience that may be keeping them from seeing what may be possible.
The other corner is younger and more “in-tune” with new technologies and what they can do. Even Jamie Dimon said in his September remarks that his daughter had bought some Bitcoin.
I believe there will be more applications for digital currencies, but they need to be more than just a store of wealth and facilitate illegal transactions. We are in the early innings, and probably just the first inning, of what they can do . However, since there are more than 1,500 different cryptocurrencies out in the ether, I believe there will be a shakeout and most of them will disappear.
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27333fe1e63e573321fbb0522b872dae | https://www.forbes.com/sites/chuckjones/2018/06/10/bitcoin-bitcoin-cash-ethereum-ripple-other-ccs-fall-5-or-more-as-south-korea-exchange-hacked/ | Bitcoin, Bitcoin Cash, Ethereum, Ripple & Other CCs Fall 5% Or More As South Korea Exchange Hacked | Bitcoin, Bitcoin Cash, Ethereum, Ripple & Other CCs Fall 5% Or More As South Korea Exchange Hacked
Coinrail is a cryptocurrency exchange in South Korea, and it announced on Sunday, June 10, that there had been a hacking attempt. According to its website, “70% of its total coin/total reserves were safe,” and “Two-thirds of the coins confirmed to have been leaked are covered by freezing / recalling through consultation with each coach and related exchanges.”
A woman shows her t-shirt with different cryptocurrency logos including Bitcoin, Ethereum, Ripple... [+] and Litecoin. Photo by Chesnot/Getty Images
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
[Author’s note: There is no official price for Bitcoin, so I use round numbers. I use CCs as an acronym for cryptocurrencies.]
This hack has led to Bitcoin, Bitcoin Cash, Ethereum, Ripple and other cryptocurrencies falling 5% or more and ending two weeks of relatively low volatility. Bitcoin had been trading around $7,600 when in the space of 30 minutes it fell to less than $7,300 and has been trading in a $100 range over the past 15 hours.
Bitcoin 24 hour price chart Coindesk.com
In checking coinmarketcap.com over the past 24 hours, Bitcoin is the least impacted with a fall of just under 5%. The next nine largest cryptocurrencies by market cap have dropped by 5% to 11%.
Top 10 cryptocurrencies by market cap Coinmarketcap.com
At least the third hack of a South Korean exchange in the past year
In July last year, Bithumb, South Korea’s largest cryptocurrency exchange and the world’s fifth largest at the time, was hacked. Information on 31,800 customers was compromised. While there wasn’t direct access to customer accounts, the hackers gleaned enough personal information to “voice phish” additional details from customers to transfer cryptocurrencies out of them.
In December last year, Youbit, a South Korean Bitcoin exchange, was attacked. Almost 4,000 Bitcoins, or 17% of its assets worth about $48 million, were stolen. A Reuters article said that all customers CC assets would be marked down by 25%, but Youbit wound up filing for bankruptcy.
Coinrail is the latest South Korean cryptocurrency exchange to be compromised. While it isn't known if North Korea is responsible for these incidents, it is widely believed they are very active to obtain cryptocurrencies so that they can be exchanged into hard currencies.
Technical rebound tripped up by hack
Last week Robert Sluymer, managing director and technical strategist at Fundstrat Global Advisors, published a report detailing what he believed could be positive technical developments suggesting the first stage of a three-stage bottoming process is developing. Short-term momentum indicators are beginning to bottom.
While he added that this could be premature, I don’t think another hacking incident was on his mind about Bitcoin’s price movement. These types of incidents are a major obstacle for Bitcoin and other cryptocurrencies to become widely accepted.
Bitcoin 1 year price chart StockCharts.com
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368482cacb741b83957779f9d6e979f3 | https://www.forbes.com/sites/chuckjones/2018/07/27/trumps-economic-scorecard-18-months-into-his-presidency/ | Trump's Economic Scorecard: 18 Months Into His Presidency | Trump's Economic Scorecard: 18 Months Into His Presidency
The first estimate for June quarter’s GDP growth was released Friday morning, showing growth of 4.1%. This was a solid increase from the 2.2% first quarter print, but a little short of most projections. To smooth out any one quarter’s spike or drop, the U.S. economy grew 2.9% on a trailing four quarter basis, matching 2015’s result. This Forbes article does an analysis of the quarter's growth.
One short-term unknown: How much of the increase is due to tax cuts? And could they be a sugar rush that will wear off? The resulting yearly Federal deficit to $1 trillion (or more starting next year) could have significant negative long-term consequences.
Trump’s tariff wars could impact the economy not just in the short-term but also in the long-term, as countries may adjust their domestic policies if they think the U.S. is not a reliable trading partner. For example, think of China becoming more focused on increasing soybean production and therefore having a long-term impact on U.S. farmers.
I have developed a publicly available Google document, which tracks over 100 indicators to help evaluate the progress and potential of “Make America Great Again.”
Below are a few of those indicators that I think are worth highlighting.
U.S. GDP growth Design: Nick DeSantis, Forbes Staff
GDP growth helped by exports but hurt by inventories
A couple of items from the GDP report to keep in mind: In any given quarter, the major components (personal consumption, private domestic investment, inventory changes and imports & exports) can fluctuate significantly, as they did this quarter. One key swing factor this quarter was inventory declines subtracting 1% from the result, but this was offset by exports adding 1.1%. Companies trying to adjust to the tariffs may have impacted these two items.
Note that the Bureau of Economic Analysis has revised its historical figures. The trailing four-quarter GDP growth was 2.845%, but has been rounded up to 2.9% in the graph.
S&P 500 Design: Nick DeSantis, Forbes Staff
The S&P 500 is being buffeted by tariffs and higher interest rates
The S&P 500 is up 32% since Trump was elected and is just under 6% for the year. July’s increase of 4% accounts for over two-thirds of this year's gain. The implementation of tariffs and an increase in interest rates have caused the stock market to be more volatile this year and could offset the tax cut benefits.
U.S. Unemployment rate Design: Nick DeSantis, Forbes Staff
Unemployment rate is getting about as low as it can go
The unemployment rate hit a high of 10% in October 2009 around the depth of the Great Recession, and it declined seven consectutive years during Obama’s presidency. It has continued this downtrend trend and hit a low of 3.8% in May this year before inching up to 4% in June.
U.S. Number of Jobs Added Design: Nick DeSantis, Forbes Staff
Job growth continues its five year trend
With 1.29 million jobs added in the first six months this year, the country is on pace to exceed 2016 and 2017 figures. It could be difficult to exceed 2015’s 2.71 million due to the challenges companies have finding people with the right skills. Additionally, the administration’s tightening immigration policy could put a damper on not just having enough people for organizations to hire, but also having the people with the right talents and expertise.
U.S. Hourly Wages Design: Nick DeSantis, Forbes Staff
Hourly wages trending up but still below expectations
Hourly wages have moved up from the 2% zone during 2009- 2014 to the 2.5% to 2.9% range the past three-plus years. One reason they haven’t moved higher (as many have expected they should due to the tight labor market) may be due to higher paid individuals leaving the workforce who are then replaced by newer entrants at lower wages.
U.S. Manufacturing Jobs Design: Nick DeSantis, Forbes Staff
Manufacturing jobs are on the rebound
In the first half of this year, there have been 174,000 manufacturing jobs added. This is almost as many as any full year over the past decade and should easily surpass any added during Obama’s administration as the economy recovered from the Great Recession.
U.S. Coal Jobs Design: Nick DeSantis, Forbes Staff
Coal jobs have halted their downward trend
At its recent peak in 2011, there were 89,400 people employed in the coal industry, declining to 49,700 in 2016. There are now over 162 million people employed in the civilian labor force and almost 3.5 million jobs have been created since 2016. Over the same 18-month time-frame, the coal industry has added 3,500 jobs for a total of 53,200, making up 0.033% of the U.S. total workforce.
U.S. Federal Deficit Design: Nick DeSantis, Forbes Staff
Federal deficit shooting above $1 trillion a year
The federal deficit peaked at $1.4 trillion in 2009 due to the Great Recession and fell to a low of $438 billion in 2015. It increased to $666 billion in fiscal 2017 (Obama’s last budget), but due to the Republican and Trump’s tax cuts it looks to hit $1 trillion in fiscal 2019. Unless the economy can consistently generate 3% or greater growth the deficits will likely remain above $1 trillion. This is a tall order because the economy will slow or contract (historically we are overdue for this) and the deficit will balloon even higher.
U.S. Trade Deficit President Trump's Economic Scorecard
U.S. trade deficit has increased under Trump’s watch
After hovering around $500 billion during the last three years of Obama’s presidency, it rose to $552 billion in 2017 and was $570 billion over the past twelve months. While Trump rails on trade deficits, the larger deficit is being driven by the strength of the U.S. economy (a good thing). He is correct that certain industries and citizens are negatively impacted by other countries trade practices. However, he overlooks that U.S. consumer’s benefit from products being sourced from other countries.
Core CPI Design: Nick DeSantis, Forbes Staff
Core CPI
The Consumer Price Index, or CPI, has moved above the Fed’s 2% target. The all items CPI increased 2.9% year over year as of June, however, energy increased at a 12% rate. When food and energy are removed, since they can be volatile, the Core CPI in June rose at a 2.3% rate. If Core CPI remains above 2%, this is another reason that the Fed will continue to increase interest rates.
WTI Oil Prices Design: Nick DeSantis, Forbes Staff
Oil prices have risen significantly but not too surprising
Oil prices have increased 65% since Trump took office. Except for a drop to about $30 in early 2016, oil prices in the mid-$40’s had been the norm for about two years after falling from over $100 in 2014. It took a few years for supply and demand to get back in balance. Prices have increased as U.S. and global economies rebound and OPEC holding pretty well to production quotas.
U.S. Housing Prices Design: Nick DeSantis, Forbes Staff
Housing prices have risen over the past 6 years
Housing prices fell and then were flat from 2008 to 2012 as the Great Recession hit this segment of the economy very hard. Since March 2012, per the Case-Schiller 20-city composite index, it has been on a steady upwards climb. This has continued during Trump’s time in office with the latest reading showing a 6.5% year-over-year increase.
Mortgage Rates Design: Nick DeSantis, Forbes Staff
Mortgage rates are tracking the 10 year U.S. Treasury interest rate
Mortgage rates have increased over one full percentage point since Trump took office. As the Fed has raised rates and started to shrink its balance sheet, the 10-year Treasury interest rate has also increased by a full percentage point. Since 30-year mortgage rates are closely tied to the 10-year Treasury, it makes sense that buyers and refinancers are having to pay a higher rate.
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