• How to Leave Work on Time

    image from www.news.co.au

    We complain that we work too much and our health consultants tell us to lead a balanced life. But sometimes we get caught in a culture of over-working, and we need some help to change our habits. Here are some suggestions offered by Lea McLeod:

    • Begin the day with the end in mind. Having a plan to leave makes it at least possible.
    • Tell people when you have to leave. This means telling people that requests made after a certain time cannot be addressed until the next day.
    • Allow 20 minutes to transition. This will help you clean up and get organized for tomorrow.
    • Do the most important work. List important tasks for the day, and do them first. Less important tasks can be squeezed in or done later in the day.
    • Stop wasting time during the day. Distractions hurt productivity.
    • Pick up the phone. Avoid the messages that can kill time with call-backs and phone tag.
    • Use technology to help you focus. There are apps like Freedom that prevent you from internet surfing, and others that can help you stay on task in short time chunks.

    If you do value your time, and believe in life balance, creating good habits with respect to time management at work can be a life-saver.

    Source:   "7 Ways to (Always) Leave Work on Time," by Lea McLeod, The Daily Muse Employee Almanac, September 13, 2013.

    Follow up:

    • Does your workplace or circle of school friends overvalue working overtime? Are the number of hours spent working or studying more important than how effective they are? Do you judge people as "less than" if they work fewer hours than you do?
    • What one of these techniques might you implement?  What are your work habits with respect to managing your time?
  • Chipotle's "Scarecrow" ad: imaginative or manipulative?

    from YouTube: Chipotle video to accompany their Scarecrow game

    After you have watched the original video above, produced by Chipotle, check out the parody done by Funny or Die. Try to set aside your opinions about the food served up by Chipotle (if you are aware of the growing franchise). What is the over-arching feeling that you get from watching each video?

    In some ways this is a baffling marketing approach. A positive emotional response is usually sought by the advertiser. But that doesn't seem to be the case here. When I viewed the videos, I was reminded of the films done by Tim Burton, so perhaps my personal reaction was influenced by my previous experience.

    Like much of today's advertising, the Scarecrow suggests "facts" but does not substantiate them.  The viewer is presented with the partial truth rather than the whole truth. The lack of precision--and reliance on feelings rather than linear thought progressions--make the viewers' reactions hard to control The responses to the ad--both in the New Yorker article and in the parody, suggest that the Scarecrow has raised questions that may not have been intended by Chipotle.

    I can't wait to see the analysis of the reaction to this ad, and its effect on both sales and brand recognition.

    Sources:   "Funny or Die serves up an 'Honest' version of Chipotle's Scarecrow ad," by Joe Berkowitz, Fast Company, fastcocreate.com, September 19, 2013.

    "What does The Scarecrow tell us about Chipotle?" by Elizabeth Weiss, the New Yorker, September 23, 2013.

    Follow up:

    • What do you think about the "manipulation of feelings" that Funny or Die's parody attributes to the Chipotle video? What was the intent of the Chipotle ad? Was it effective?
    • Are you familiar with Chipotle restaurants? Does this ad influence you personally?
    • Do you think the Funny or Die parody is effective? With what thoughts does that video leave you?
  • Citibank Whistle-Blower Ignored and Fired

    image of Richard M Bowen III, originally from CBS interview,
    reproduced in the NYT article linked below.

    Richard M. Bowen III tried to tell his story on November 7, 2007, when he was a Citibank executive in charge of mortgage underwriting.   Bowen sent these words to top Citibank exectives:

    "The reason for this urgent e-mail concerns breakdowns of internal controls and resulting significant but possibly unrecognized financial losses existing within our organization."

    He detailed that the job he was doing--buying billions of dollars worth of "bad" mortgage loans, and packaging them into investments that would be resold--was creating serious problems for Citibank because they were over-valuing the investments. In other words, he described the crux of what would become the financial crisis that exploded in 2008. He was called the following week by Citibank attorneys and was told to keep quiet and wait to hear from them. They never contacted him. Bowen's  responsibilities were reduced and he was marginalized within the company.

    In April 2008, he filed a whistle-blowing complaint, under Sarbanes-Oxley, with the Securities and Exchange Commission. He testified before the SEC, and filed over 1,000 pages of supporting documents, but there was no follow-up investigation.

    Meanwhile, Citibank received $45 million in taxpayer bailout funds as part of the "Too Big To Fail" deal engineered by Henry Paulson. (The U.S. government later parlayed the government's ownership position as a part of this deal into a $12 million profit.)

    Bowen was fired from Citibank in January, 2009, and had to sign a confidentiality agreement in order to get a severance package.

    In February 2010, Bowen was called to testify before the Financial Crisis Inquiry Commission.  Although his later testimony on April 7 of that year is a part of the public record, the 4-hour testimony in February, with lawyers present, was sealed and cannot be accessed until 2016. Perhaps coincidentally, this would be after the five-year statute of limitations period for fraud has passed.

    Several events transpired between the initial FCIC meeting in February and the later public testimony, but the bottom line was that Bowen was pressured by Bradley J. Bondi (FCIC's deputy general counsel) as well as Citibank's lawyers, to sanitize his statement. Bowen decided that "it’s better to get something on record than nothing.” He made the requested edits.  To him, the FCIC was clearly not functioning as an independent government investigatory commission, but was being strong-armed by Wall Street firms who had the power to affect the future careers of all parties concerned. As it happens, Bondi is now a partner in a Washington D.C. law firm and Citibank is one of its clients.

    Richard Bowen has this to say about the whole debacle:

    "It was devastating. It truly was. From my standpoint, the corruption extends to the highest levels of government. I feel absolutely, completely violated."

    Source:   "Was This Whistle-Blower Muzzled?" by William D. Cohan, New York Times, September 21, 2013.

    Follow up:

    •  Read, in the linked article, the detail of the events that transpired among Richard Bowen, the FCIC and Citibank's law firm of Paul, Weiss, Rifkind, Wharton & Garrison LLP. What do you think happened here? What alternative courses of action might have been taken, and what are the pros and cons of each--for Mr. Bowen, for Citibank, and for the American taxpayer?
  • Business, government and food dollars


    Jackie Speier makes the case in the video above for leveling the playing field with respect to government food payments. Her speech was in anticipation of a House of Representative vote to cut the food stamp program, which provides less than $5 per day to the hungry poor--many of whom are from families where adults are working at minimum wage.

    Meanwhile, notes Representative Speier, the government's 2013 "per diem" allowances for meal spending while on business travel (without requiring detailed receipts) ranges from $46 to $75 in California, depending on the city. These are considered the reasonable and necessary expenses. At the higher end, Speier notes more extravagant meals reimbursed in full for House of Representatives Members traveling internationally.

    This funding for business-people's food, while many times higher than that allotted to the poor, pales in comparison to the government subsidizing of corporate farmers. According the the Environmental Working Group, "The farm subsidy database tracks $256 billion in farm income support through commodity, crop insurance, and disaster programs and $39 billion in conservation support paid to farmers and landowners from 1995 through 2012." [The total cost of the food stamp program, according to government records, was under $75 billion last year.]

    An article in The Week notes: "About 75 percent of total subsidies go to the biggest 10 percent of farming companies, including Riceland Foods Inc., Pilgrims Pride Corp., and Archer Daniels Midland. Among the 'farmers' who get federal subsidies are Bruce Springsteen (who leases land to an organic farmer), Jon Bon Jovi (who owns bee colonies), former President Jimmy Carter, and billionaire media mogul Ted Turner." I was also surprised to find out that 10 Members of Congress who voted to reduce the food stamp program were recipients of agricultural subsidies themselves. One has received over $5 million over the years.

    From a business and sustainability standpoint, what makes sense? Should what is "necessary and reasonable" for the middle class business traveler be the standard?  Is there any analogy that could help us understand the place of farm subsidies in our economic system?

    In theory, rational revenue and expense streams are what we strive for in accounting for business.  We may be off track in accounting for our food systems.

    Sources:   "Food spending by government," speech from the House of Representatives floor by Jackie Speier, 14th District CA Congressperson, via CSPAN and YouTube, September 2013.

    "The U.S. has few farmers. So why does Congress love farm subsidies?" by Brad Plumer, The Washington Post, July 12, 2013.

    "10 Members of Congress who Receive Farm Subsidies Voted to Cut Food Stamps," by Noel Brinkerhoff, AllGov.com, from an article by Derek Pugh, September 24, 2013.

    Follow up:

    • What is a "per diem"?  What purpose does it serve for businesses?  How does it relate to how income and deductions are reported on a tax return?
    • How do you feel about the food stamp program?  If you oppose it, who should be allowed to go hungry? Is there any group that should be given food aid?  How do you feel about the farm subsidy program?
  • Whistle-blowers: risks and rewards

    cartoon by George Wills from www.thegentlewaybook.com


    Whistle-blowers have been in the news lately. Last year Julian Assange of Wiki-leaks made headlines, and his story is being revisited in this season's film, The Fifth Estate. More recently, Edward Snowden stole classified documents and outed the NSA for "spying" on a wide swath of law-abiding citizens via their telephone interactions.

    Both of these individuals are facing prosecution, as their "truth-telling" involved secrets held by the Federal government. But individuals in the private sector have to weigh the risks when they discover evidence that their employer or contact has committed a crime.  The downside of speaking up is explained clearly by Patrick Burns of the Taxpayers Against Fraud:

    “There is a 100 percent chance that you will be unemployed — the question is, Will you be forever unemployable?...The other 100 percent factor is the person who fired you, the person who designed and implemented the fraud, won’t be fired. He’ll probably be promoted again.”

    On the other hand, if the fraud discovered by the whistle-blower results in additional taxes paid to the Internal Revenue Service (IRS), then the whistle-blower could benefit from awards made by the Justice Department under the False Claims Act. Bradley C. Birkenfeld recently won a $104 million award for for information about the Swiss banking system. 

    Nevertheless, the process of making a whistle-blowing claim is time-consuming, expensive and highly stressful. Big corporations don't make life easy for whistle-blowers, and corporations fight claims even when they know they have committed crimes. Even whistle-blowers who win are emotionally drained by the process.  As observed by Patrick Burns:

    When people talk about the big whistle-blower payouts, I say, you don’t get it. You don’t see the train of pain I see every day. They can’t tell you their story without quivering and crying, even though they’re millionaires.”

    Additionally, 80% of claims made under the False Claims Act are not pursued by the Justice Department--but the process often exposes the employees making the whistle-blowing claims. Harassment and retaliation can result.

    Sometimes, then, the only reward for whistle-blowing is being able to live with yourself--knowing you did the right thing.

    Source:   "The Price Whistle-Blowers Pay for Secrets," by Paul Sullivan, New York Times, September 21, 2013.

    Follow up:

    • Have you ever witnessed a crime being committed in a work situation? Or a smaller disregard for company policy? What have you done about it?
    • What are the pros and cons of being a whistle-blower--short and long term?
  • Consumers slow to switch to electric cars even with incentives

    image taken by Monica Almeida, and published with the New York Times article

    The small city of Santa Monica has made it easy to own an electric car--there are dozens of charging stations throughout the city in parks and public parking areas...and those with a current electric vehicle HOV-lane sticker can park for free at city parking meters. Nevertheless, only 3.6% of vehicles registered in the city are electric.  But 15.5% of the registered vehicles are hybrids, so there is some "progress" being made toward reducing the carbon footprint.

    The survey by R. L Polk that produced that data could have been designed better, however. The "hybrids" category combines plug-in electrics--which operate on electricity ONLY until they run out of charge--with hybrids like the original Prius, which is really just a gasoline engine with a battery assist.

    RoseMary Regalbuto, a Ford C-Max Energi owner, who is featured in the NYT article linked below, drives a car that plugs-in.  I drive a Chevy Volt, which also plugs in.  Our driving habits keep us well within the range of our respective cars' electric driving radius, so we never use gas unless we are driving out of town. The gasoline engine is there to provide long-range flexibility and total freedom from "range anxiety."

    Nevertheless, I find that many people I run into have misconceptions about my car...and that might be the result of poor marketing by electric car manufacturers--and misunderstandings resulting from the failed launch of the electric cars in the 1990's (see Who Killed The Electric Car?).

    At any rate, electric cars have "failed to encourage mainstream consumers,” according to Jean François Tremblay, of Ernst & Young’s Global Automotive Center. Some of the reasons cited for this failure are:

    • high sticker price of the cars (although offset by $7500 in Federal tax credits and additional credits from states, still is daunting)
    • lack of a national network of charging stations (not really a factor for cars with a gasoline back-up)

    Recently there have been decreases in the sticker price for several models, but it remains to be seen whether the market for electric cars is responsive to price adjustments. Car dealers are finding that there is a lot of ignorance on the part of potential customers, which is more of a communication and marketing problem. And if this problem exists in Santa Monica, imagine the gulf in understanding that must exist in the Midwest or rural areas.

    I like saving the $200 per month in gas...and I like seeing my center post display screen register "250+ miles per gallon."

    Source:   "Santa Monica Bets on Electric Cars, but Consumers are Slow to Switch," by Jaclyn Trop, New York Times, September 20, 2013 (in print edition 9/21/13).

    Follow up:

    • What is "range anxiety"?
    • Would you ever consider owning an electric car? How would you improved the marketing of these vehicles?
  • Chinese "Steve Jobs" says his company is different from Apple

    image from alii.com

    Lei Jun, CEO of the Chinese company Xiaomi, is developing a reputation as the "Steve Jobs" of China.  Yes, he runs a company that markets smartphones. Yes, he is a strong and visionary leader. Yes, he wears jeans and dark shirts. Yes, his product announcements are delivered much like Apple's product announcements.

    But in a recent interview on CNN, Lei Jun tried to downplay and contradict the comparisons with Steve Jobs. Lei Jun sees Xiaomi as a very different company from Apple. And he sees his role as very different from the role of Steve Jobs. 

    image of CEO of Xiaomi, Lei Jun, from money.cnn.com:  see linked VIDEO INTERVIEW

    Lei Jun views Apple as a "group of geniuses" who develop products that they have conceived as being what is innovative and best for their customers.  Xiaomi, on the other hand, surveys its customers and potential markets, and then only designs and markets what their customers tell them they want.

    Another major difference, according to Lei Jun, is that Apple is a manufacturer of a product that has to be "marked up" considerably in price to cover costs of development and profit. Xiaomi, on the other hand, only incidentally is manufacturing and selling smartphones. Primarily it is selling future services that are what the consumers want. That way, the price of the phone itself can reflect the true costs of the phone manufacture, with a fair but small mark-up.

    Xiaomi began selling phones in 2011, and has rapidly expanded its market share in China. Their phones are manufactured by Foxconn, which also manufactures iPhones. Recently, Xiaomi hired Hugo Barra as Vice President of Xiaomi Global.  Barra had previously headed Google's Android division. Although Xiaomi is currently privately held, it looks poised to be a major player in the world-wide smartphone market.

    Source:   "Xiaomi CEO tired of Steve Jobs Comparison," by David McKenzie and Charles Riley, @CNN Money Tech, September 13, 2013.

    Follow up:

    • Do you think that Lei Jun is being transparent when he contradicts the comparisons with Steve Jobs, or do you think he cultivates the similarities?
    • Why did Hugo Barra leave Google to work for Xiaomi?  What might this mean for the future?
  • "Mal-Employment Rate": College graduates in "high-school-graduate" jobs

    Do you dream of tending bar or driving a taxicab after you graduate from college? It probably wasn't your plan when you applied to college, but jobs that don't require degrees are increasingly sought by college graduates, according to a recent LA Times article.

    If one views a college education as an investment, that means that the investment "payback" on the degree is non-existent--in fact, it would calculate out to be negative. This "return on investment" aspect is exacerbated if there are student loans (accruing interest) to be repaid.

    Nevertheless, making $80,000-$90,000 a year as a bartender looks better than taking a $10/hr office job that would yield $20,000 of annual pay.

    Here are some of the trends, comparing available data from 1970 with data today:

    • then: 2% of firefighters had a college degree; now 18% do.
    • then: less than 1% of taxicab drivers had a college degree; now 15% do.
    • in the retail industry, about 25% of sales clerks now have college degrees.

    High school counselors might consider these facts as they advise high school seniors in planning their educational and life goals.

    Source:   "College-educated workers are taking jobs that don't require degrees ," by Alana Semuels, Los Angeles Times, September 20, 2013.

    Follow up:

    • What are the job prospects for you and your circle of friends? What is the salary range you are looking for?
    • Does training as a bartender or going to massage school look like a more lucrative option for the job market? If you plan to continue your education after you graduate, will you train for a specific job?  If so, what job?
    • Why do you think that high schools are emphasizing college admission and that "no child be left behind" when the job-search experience for college graduates in the U.S. is not great?
    • In what fields are the number of jobs increasing? Does this knowledge influence you in any way, or are you more interested in creating a career that suits your interests and natural skill-set?
  • Entrepreneurs try honesty out of desperation

    image from tech.co

    Dabble was at the end of its rope. Owners Jess Lybeck and Erin Hopmann had run out of their financing money and were facing the possibility of shutting down their operations. But they had built a small following of people who wanted to teach or take courses in subjects like "Chic cupcakes and cocktails," "Urban beekeeping," or "Introduction to Knitting," which they brokered through their site.

    They decided to blog for thirty days, coming clean with their community about their financial situation. The month is almost over, and co-owner Jess Lybeck reports this regarding the experience so far:

    "We have received hundreds of emails from people across the globe offering their words of encouragement. Doors have been opened. Help has been offered. Ideas have been shared. Who knows what might happen next, but we believe we are on track to turn around our business. That's a pretty big shift from a few weeks ago."

    The entrepreneurial lessons learned so far have included:

    • Honesty can open doors--since it connects people, and connecting people is an important aspect of a successful business.
    • A businessperson cannot control outcomes--goals might not be met, but facing reality in the company of others can allow new opportunities to evolve.
    • A businessperson can define their own success--and see the glass as half-full.

    Reading the daily blogs linked to this article is an eye-opener.

    Sources:   "What we hope to learn in 30 days of honesty," by Jess Lybeck and Erin Hopmann, via Good, August 26, 2013 through September 25, 2013.

    Follow up:

    • Do you think that the choice made by these two entrepreneurs was a good one? Why or why not?
    • What were their alternatives, and what would have been the consequences of those alternatives?
  • Unemployment numbers are still terrible for young adults in Southern California

    image from www.theatlantic.com

    Even though national labor statistics have improved, the reality for young adults and teenagers has not gotten better. A recent Los Angeles Times article told some individual stories, such as this:

    "For three years, Triana Williams has searched for a job. Between caring for her elderly grandmother and raising her young sister, the 24-year-old has filled out application after application at Ralphs, Rite Aid, Whole Foods, Ross, Payless and Starbucks."

    She hasn't been hired.

    The outlook in general isn't any better, as delinated in the graph above, and in these statistics from the article:

    "New estimates from the U.S. Census Bureau reveal that last year, the unemployment rate for Angelenos ages 20 to 24 had stagnated at 19%. Joblessness was even higher for Angelenos between the ages of 16 and 19, with 41% of those in the labor force still unemployed, according to the new estimates from the American Community Survey."

    image from business.time.com

    Applicants report being told that it "takes a job history to get a job." But it is impossible to get that first job. Other factors, such as underemployed or laid-off older workers taking entry-level jobs have also made the search harder. Because strong political forces oppose government stimulus programs, there are no mandates to invest in the future by creating "first job" experiences. But the impact of delayed and then chronic unemployment will be felt at the individual level, and for all future taxpayers, who will bear the related costs.

    Source:   "Job Outlook Bleak for Southland teenagers," by Emily Alpert, Los Angeles Times, September 18, 2013.

    Follow up:

    • Why are jobs for young adults particularly important? Think about the "opportunity costs" of unemployment over a lifetime, as well as the factors in the present.
    • ere anything about this phone that seems exciting?  Is either model generating buzz among your friends or colleagues?
  • Twitter IPO announcement sparse on information

    Keeping with its image, Twitter's announcement that it would soon be offering its stock to the public for sale was short and sweet:

    image from Twitter's website via money.cnn.com

    The announcement made headlines, but it did not communicate any of the usual and expected information that financial analysts seek when they are studying an Initial Public Offering (IPO). It provided the public no information about expected revenue streams or stock price.

    This secrecy has caused others to speculate about what the magnitude of this public offering will be, and what it will mean. Marcus Wohlson, writing in WIRED, thinks it will not be good for the USERS of Twitter. According to Wohlson, here is the good news and the bad news:

    "Worldwide ad spending on social networks grew by more than one-third last year and is on track to grow at an even greater rate this year, according to digital marketing research firm eMarketer.  The social network seeing the greatest growth by far: Twitter.

    But once it goes public, Twitter will have no choice but to strive to maximize shareholder returns, which would appear to create a Catch-22. More ads on Twitter means more money for Twitter, which makes shareholders happy. But more ads on Twitter will make users less happy, which means fewer users. Fewer users mean lower ad rates, which makes shareholders unhappy--a vicious cycle."

    Other observers hope that an IPO success for Twitter will lead to more companies' successful public stock offerings, but that view looks only at the short term, and not at the underlying long term health of the enterprises.

    Sources:   "Why a Killer Twitter IPO Could End Up Killing Twitter," by Marcus Wohlson, Wired, September 16, 2013.

    Image of bird cartoon at top of page

    Follow up:

    • What is your relationship to Twitter?-- Avid user? Occasional tweeter? Disinterested observer? Opportunistic potential investor? Explain your position.
    • What is the best possible outcome for a Twitter IPO investor? On what do you base your opinion?
    • Do you agree with Wohlson about the probable impact on Twitter users?
  • Severe ethics reprimand for Big 4 public accounting firm

    image from daily mail

    The British take the ethical responsibilities of their public accountants seriously.  Deloitte LLP, one of the four largest international public accounting firms, was issued a severe reprimand and were fined the equivalent of $22 million for putting its own interests ahead of the public interest in the consulting work done for MG Rover. A retired Deloitte partner was also fined £250,000 and is not allowed to practice accountancy or financial consultancy for three years.

    According to the Financial Reporting Council tribunal that issued the penalties:

    "It has been put to us that in corporate finance work and tax work the only duty that a member owes is to his client, provided that he acts with integrity, and that the public interest is not a matter that needs to concern him. We do not accept this....They [Deloitte] placed their own interests ahead of that of the public and compromised their own objectivity. This was a flagrant disregard of the professional standards expected and required.”

    The debacle arose from the period of time when the "Phoenix Four," who were running MG Rover, were being given financial advice by Maghsoud Einollahi in his capacity as a partner at Deloitte.  This financial consulting role was at odds with the auditing role of Deloitte. The "consulting" arm of Deloitte only saw its responsibility to its client--the managers who were part of the "Phoenix Four." The "auditing" arm of Deloitte, in certifying the financial statements, had a responsibility to the general public.  The Financial Reporting Council tribunal cited Deloitte because the ethical responsibility should have extended to both arms of Deloitte.

    A historical note:  When I was working for what was then Coopers & Lybrand, in the late 1970's and early 1980's, there were only 3 "principals" in the consultancy division of the Detroit office, whereas there were about 25 tax and audit full-status partners. At that time, the consultants were not permitted to have full partnership status. Sometime in the intervening years, however, the consultancy arms of all public accounting firms grew--and became a larger percentage of their "revenue stream." Firms began admitting consultant professionals to full partnership status.

    Several legal issues have arisen as a result of the different goals of consultants and auditors within accounting firms--particularly with the former accounting firm of Arthur Andersen and its relationship with Enron. Probably more regulatory and punitive action will have to occur before the former ethical boundaries are clearly re-established.

    Source:   "When Accountants Play Role of Bankers," by Floyd Norris, New York Times Economix, September 13, 2013.

    Follow up:

    •  In your opinion, does an audited financial statement indicate that everything in a set of financial  statements is true and accurate? What actually does a "perfect" audit report really mean?
    • Do you think that a CPA only has a duty to serve his or her client, or should the British ethical standard of protecting the public's interest also be a primary duty? Please explain the reasons behind your opinion.
  • The "sharing" economy: Google underwrites websites for new business model

    image from Rick Torben's blog

    The internet has brought many changes to our lives, and a new change is well underway: the "sharing economy." Using internet sites, those without the wherewithal or desire to own a car, for example, can still borrow a car when they need a set of wheels. Homeowners or renters hit hard by the recession have taken to offering rooms for rent to travelers through sites like Airbnb. James Surowiecki writes in The New Yorker about the opportunities and the hurdles of this new business model.

    From the buyer's side, the benefits to using assets without owning them are great--no upfront costs, no storage issues, a lot more variety.  The downside might be the availability of the asset you want when you need it...and there also may be issues about the quality of what you are getting, sight-unseen. Safety might also be a factor.

    From the seller's side, sharing assets can generate a revenue stream, for the small commission paid to the internet website. The downsides to the seller might be all of the usual hurdles to running a business--risk of asset damage or loss, unsavory customers, increased costs of insurance and maintenance.

    The upside to the economy as a whole, from a sustainability standpoint, is the much more efficient use of assets.  Cars might only be used an hour or two in any given day. Those assets can be income-producing in what would usually be their down-time.

    But when private property is used for business purposes, municipalities need to be involved to regulate the businesses--for the protection of the neighborhoods.  Also, sharing-economy entrepreneurs probably need some training on the basics of running a business--meeting tax obligations, getting the right insurance, etc.

    The real winners here, so far, seem to be the internet websites that have revenue coming in both from providers of assets, and from other advertisers on their websites. This revenue potential has spurred venture capital investment by the likes of Google--recently in Uber

    I wonder who will be making most of the money in this new "sharing economy," and who will be doing most of the work...

    Source:   "Uber Alles" by James Surowiecki, The New Yorker, September 16, 2013.

    Follow up:

    • Have you ever used Airbnb, Lyft, Sidecar or UberX? Any other sharing-economy product? What was your experience?
    • Do you think most of the providers of assets on the sharing networks think of themselves as "real" entrepreneurs? Do they deal with business licenses, insurance and other matters as a retail entrepreneur might, for example?
    • Are there city ordinances where you live that prohibit or limit these internet businesses?
  • The new iPhones: real options or just a superficial makeover?


    image of the color options for the iPhone 5C....photo by Justin Sullivan for Getty Images

    The new iPhones will be on sale next week--the 5S and the 5C.  The 5S is faster and supposedly more secure. The 5C (for "color"...or maybe for "China" since that is the presumed market for this model) is a little cheaper. 

    The overall reaction so far? "Meh."

    The 5S has fingerprint recognition for sign-in and iTunes purchases.  The 5C has a plastic case that comes in primary colors. Both phone models have female and male options for the voice of Siri. We'll have to wait and see if these new phones generate the kind of excitement previous iPhone upgrades have produced.

    Source:   "The new iPhone--more secure or more colors?," interview by Kai Ryssdal, Marketplace, American Public Media, September 10, 2013.

    Follow up:

    • Is there anything about this phone that seems exciting?  Is either model generating buzz among your friends or colleagues?
    • Read what the New York Times has to say about these new phone choices. What pricing mistake may Apple have made with the 5C?


  • Sustainable Accounting: the cost of "fixing" the future


    image from the sustainability accounting standards board

    "Sustainable Accounting" is a concept that includes all of the costs of any venture, in perpetuity.  This is not the usual way that businesses cost-out projects. Imagining and projecting all of the environmental, social and corporate costs are all a part of what would be considered "sustainable" accounting. All--and that means all of the costs--not only to the corporation but to the environment and to the users of the product--all must be considered in "sustainable accounting."

    The Obama administration has recently published the "Costs of Carbon."  This report delineates the future damage to the land and agriculture of using carbon-dioxide-forming products that contribute to global warming.

    So, what exactly IS the cost of using carbon-based fuels? The answer depends on who you ask.  The corporate answer is "$13.50 per ton," which is the same cost associated with other capital investments costs, on average.

    The government analysts who calculate the costs include all of the costs, including costs related to future damage (floods and related environmental destruction)...and their figure is $65 per ton of carbon dioxide (CO2) output.  This is 1.5 times the cost that was estimated three years ago.

    So, if there was a gas tax added so the the users of fuel would be paying for the costs of CO2 related damage (rather than coming out of the general taxes paid by everyone), the rate based on the corporate assumptions would be $0.12 per gallon of gas...and the rate based on the environmentalists' assumptions would be $0.59 per gallon. This could really add up.

    According to the article, "
    The typical passenger car emits a ton of CO2 in about two and a half months of driving."

    Professor William Nordhaus, an economist from Yale University, writes in his 2008 book, "A Question of Balance," that the investments in CO2 abatement have to be "competitive" with other high yield investments.  If they aren't competitive, he advises investing in other high-yield investments instead and using the proceeds to pay for global warming damage (coastal flooding, etc.).

    His approach takes a purely economic view, not valuing the less tangible human costs of displacement or coastal beauty, which would be at least partially addressed in the environmental model.

    Source:   "Counting the Cost of Fixing the Future," by Eduardo Porto, New York Times, September 10, 2013.

    Follow up:

    • Think about the concept of "Sustainable Accounting." Do you think that business decisions are based on the total costs in perpetuity of a decision? Or are they usually based on the immediate costs and consequences that are measurable and actionable?
    • If "sustainable accounting" included all the costs in perpetuity of any business venture, do you think that the outcome of , say, a nuclear power plant, would include all of the costs that may be borne in the future? How about a high-rise hotel on the ocean? Or a football arena? Who do you think should "pay" the costs of these ventures? The potential users? The corporations? The corporate stockholders? Are you willing to pay an extra gas tax to cover the costs of future problems? Please delineate the pros and cons.
  • What jobs can put you in the top 1%?

    image from NYT and IPUMS

    This chart from the New York Times shows what jobs are most likely to land you in the top 1% of income earners.  It looks as though private physicians have the easiest path to top income. Some of the professions (like teachers) are not as low as one might think they'd be...possibly because teachers might be part of 1% households, even if their income doesn't put them there.

    Source:   "The Top 1%: What Jobs Do They Have?," by Jeremy White, Robert Gebeloff, Ford Fessenden and Shawn Carter, New York Times, January 15, 2012.

    Follow up:

    Do you want a job that will put you in the top 1%? Or do you want to work in an area that will give you less money but satisfy other needs?

  • Soft Skills: advice from from a 20-year-old

    image from prblonde.com

    There have been several stories lately giving advice to 20-year-olds...but Marketplace recently reversed the set-up, and offered advice from a 20-something to 30-somethings--who may have forgotten what might be important as they got caught up in the rat race.

    Here are a few of the highlights, but you might consider reading them all:

    • Change your concept of what is "old"
    • Don't settle
    • Be helpful...but also be open to BEING helped
    • Don't be afraid of technology (yes, it will always be changing...so will you)
    • Do something that scares you
    • It's OK to still feel awkward
    • Get enough sleep
    • Splurge on yourself...and continue to pursue your passions.

    This is good advice for any working person who wants business success.

    Source:   "20 things 30-year-olds should remember," by Daryl Paranada, Marketplace, American Public Media, July 30, 2013.

    Follow up:

    • What advice would you give those who are 10 years older than you are?
    • Do you have any advice for those 5-10 years younger than you are?
    • Any advice for people your parents' age?
  • Using Miley to increase "clicks" and lower "bounce rate"

    image from the Onion's Twitter logo


    The Onion published a fake editorial piece which was NOT written by CNN managing editor, Meredith Artley, although it says she wrote it. The piece--made-up though it is--is a concise and straightforward explanation of the use of social media and internet marketing for revenue maximization.

    In case you missed the event that started things off--Miley Cyrus did a song-and-dance number at the recently televised MTV Video Music Awards ceremony. By many accounts, it was in pretty poor taste, and generated "viral" attention on the internet. The attention it generated was a "news story" covered by many mainstream media outlets.  This prompted the satire by The Onion, supposedly in the voice of CNN's managing editor, explaining why the story was played as a top news headline: 

    "...boy oh boy did it get us some web traffic...Those of us watching on Google Analytics saw the number of homepage visits skyrocket the second we put up that salacious image of Miley Cyrus dancing half nude on the VMA stage. But here’s where it gets great: We don’t just do a top story on the VMA performance and call it a day. No, no. We also throw in a slideshow called 'Evolution of Miley,' which, for those of you who don’t know, is just a way for you to mindlessly click through 13 more photos of Miley Cyrus. And if we get 500,000 of you to do that, well, 500,000 multiplied by 13 means we can get 6.5 million page views on that slideshow alone...

    Now, let's get back to why we put the story in the most coveted spot on our website, thereby saying, essentially, that Miley Cyrus’ suggestive dancing is the most important thing going on in the world right now. If you clicked on the story, and all the slideshows, and all the other VMA coverage, that means you’ve probably been on CNN.com for more than seven minutes, which lowers our overall bounce rate. Do you know what that is? Sorry for getting a little technical here. The bounce rate is the percentage of visitors to a particular website who navigate away from the site after viewing only one page. If we can keep that bounce rate low, and show companies that people don’t just go to CNN.com but stay there, then we can go to Ford or McDonald’s or Samsonite or whatever big company you can think of and ask for the big bucks."

    The description provided in the quote--of internet reaction to the video--probably describes, with a fair amount of accuracy, the behavior of many net surfers following this "story," and the possible motivations of the news organizations who promoted the story. What makes this "funny" is that, when stated plainly, the revenue-chasing seems out-of-place for a news organization. Perhaps the mission of a news organization is no longer to deliver unbiased news to a broad population (and secondarily to make a profit). Rather, news organizations, like other corporations, may now be putting revenue generation as the number one priority.

    Source:   "Let Me Explain Why Miley Cyrus’ VMA Performance Was Our Top Story This Morning," a PARODY by the Onion staff, August 26, 2013.

    Follow up:

    • Read up on "parody." How can The Onion get away with putting words in someone's mouth that they did not say? 
    • What message is communicated by this "editorial piece"?  Is it effective?
    • Consider viewing the first and second seasons of The Newsroom.
  • Worst nightmare: foreign factory inspections a fraud

    image from ecowatch.com

    When one eats food or buys prescription medications in the United States, is there not a general belief that the products are safe, and subject to Food and Drug Administration (FDA) inspections and oversight?  At this point in time, that would not be a reasonable assumption.  U.S. corporations delegate the manufacture and inspection to other entities, and recent reports indicate that the inspections of foreign factories cannot be relied upon.

    A recent audit of a factory making $2 million in items Walmart in Guangdong Province, China is one example:

    "...unknown to the inspectors, none of the playful items, including reindeer suits and Mrs. Claus dresses for dogs, that were supplied to Walmart had been manufactured at the factory. Instead, Chinese workers sewed the goods — which had been ordered by the Quaker Pet Group, a company based in New Jersey — at a rogue factory that had not gone through the certification process set by Walmart for labor, worker safety or quality, according to documents and interviews with officials involved."

    The Chinese government and American manufacturers both try to create an image of high-quality, inspected and monitored factory manufacturing facilities. So, Walmart might think that the factories they hire are subject to scrutiny, but the rogue manufacturers might be actually manufacturing items instead.

    This graphic does not guarantee that the manufactured goods are actually
    made by the factories that are subject to the audits.
    image from chinese PR.

    But the reality may be quite different than what all of us want to believe.  Greg Gardner, the CEO of Arche Advisors, said that while some American companies (Levi's, Patagonia), opt for expensive and rigorous audits, many other companies go for cheap and limited audits:

    "Audits can be very brief. A single inspector might visit a 1,000-employee factory for six to eight hours to review all types of manufacturing issues, like wages, child labor or toxic chemicals. Some auditors receive only five days of training, whereas the federal Occupational Safety and Health Administration requires three years of training and experience assisting inspectors before employees can lead an inspection of a sizable factory in the United States."

    We are not getting the service from foreign factories that we might expect from American factories. The question is, are we getting what we pay for?

    Source:   "Fast and Flawed Inspections of Factories Abroad," by Stephanie Clifford and Steven Greenhouse, New York Times, September 1, 2013.

    Follow up:

    • What products do you use that you wish were manufactured in, and inspected in, the United States?
    • What actions could be taken against the corporations that take advantage of lax foreign inspections?
    • Are we getting what we pay for? Who is doing the paying when it comes to pharmaceuticals? Does the insured consumer have a say?
  • Entrepreneurial bonanza springs from rubber band craft toy

    image from www.etsy.com


    From a living room in Michigan, a mechanical engineer invented and began production of a craft toy that is becoming all the rage. It is a special loom that can make bracelets from rubber bands, called "Rainbow Loom."

    The entrepreneur's name is Cheong Choon Ng. He is Chinese, but from Malaysia, and he developed his toy to impress his daughters. He only had $10,000 of his own cash to invest in the project, so he found an overseas manufacturer. He struggled to market his product at first, but then he stumbled upon two key factors:

    1. To educate potential customers, Mr. Ng and his daughters posted instructional videos on YouTube, and
    2. Ng bought Google ads to help spread the word.

    Once Learning Express Toys store, a 130-store chain, placed an order in 2012, the Rainbow Loom business took off.  Now, the issue is: will other copycat products cut into market share?  The key to preventing this occurrence is to maintain something "special" about Rainbow Loom's product. Nevertheless, the product life cycle of toy items tends to be limited.

    Source:   "Rainbow Loom's Success, from 2,000 Pounds of Rubber Bands," by Claire Martin, New York Times Prototype, August 31, 2013.

    Follow up:

    • Have you seen ads for Rainbow Loom or a competing product? What were your reactions, positive and negative?
    • How could Rainbow Loom improve its market potential?