Marketplace - American Public Media
In an interview with Marketplace's Kai Ryssdal, Secretary of Education Arne Duncan said new rules targeting vocational college programs that leave students with too much debt and too few job prospects were designed with "outcomes, not inputs" in mind.
"The worst-case scenario is when you go to college, accumulate debt, and then don't graduate," Duncan said.
When asked if he thought everyone should go to college, Duncan said he believed everyone needed additional education beyond high school: "If young people drop out of high school today, they are basically condemned to poverty and social failure. There are no good jobs out there... the economy has changed."
Duncan said the so-called "gainful employment rules" target middling-to-failing vocational education programs–most of which are offered by for-profit universities and community colleges–in order to provide meaningful post-secondary education across economic classes.
The final draft of the rules released on Thursday relaxed some earlier provisions, drawing criticism from some education groups and for-profit education providers, who say their programs may be the only option for thousands of low-income students. Duncan said no programs will be shut down without "time to improve."
"We invest $22 billion each year in these programs," Duncan said referring to the federal financial aid that pays tuition for most students in for-profit programs. "We want to see strong programs grow, and expand and serve more students. And we want to see programs that aren't doing a good job either improve or cease to exist... Shutting them down is not our goal, but we will have that ability. It's when training is leading to jobs that don't exist, or where debt is unmanageable... that's what we're pushing back against."
The debt-load requirements in the new rules target only vocational training programs and schools. Duncan says the Obama administration has expanded investment in Pell Grants, pushed for broader state-led initiatives and encouraged universities themselves to fight higher tuition overall. He - along with his boss - has also discussed a "more transparent" rating system, which, as one education official told the New York Times, should be a straightforward process, "like rating a blender."
"I don't know whether that's the right analogy or not, but let me say this: We as taxpayers... we invest $150 billion in grants and loans each year to make grants and loans accessible. That's the right thing to do, if we are focused on outcomes.
You can listen to the interview on this evening's Marketplace, or on the audio player at the top of the page.
In a classic "good news, bad news, good news" situation, the San Francisco Giants won the 2014 World Series, and pitcher Madison Bumgarner won the MVP award.
His prize was a 2015 Chevy Colorado truck, which was recalled a couple of weeks ago by GM for faulty airbags. GM caught most of them before they left the assembly plant.
So good news: Bumgarner is going to be fine.
Apple CEO Tim Cook became on Thursday the first Fortune 500 CEO to be out, in public, as gay.
"I'm proud to be gay," he wrote in a Bloomberg Businessweek op-ed, "and I consider being gay one of the greatest gifts God has given me."
"Part of social progress is understanding that a person is not defined only by one’s sexuality, race, or gender,” he continued.
But while we can see signs of that progress all around us, there's still a long way to go — especially when it comes to the C-suites of companies like Apple.
Tim Cook is, after all, a white man — like more than 90 percent of Fortune 500 CEOs and less than 35 percent of all Americans.
"It does not reflect at all the population," says Vanessa Cárdenas, who focuses on changing demographics at the liberal-leaning Center for American Progress.
By 2050, according to her projections, the majority of Americans will be people of color and the majority of the workforce will be women. Why don't we see that diversity among our corporate leadership?
"We’d all like to know that answer," says Donna Dabney, executive director of the Governance Center at the Conference Board. "I think we need to focus on what happens at the middle level: the middle management level."
Dabney says women make up 40 percent of the workforce, but only 15 percent of C-suite executives. One problem: "Men tend to get sponsored, and women get mentored," Dabney says.
Advice is nice, but having someone actively advocate for you is more critical for advancement.
Another problem is just getting on the ladder in the first place.
"We know that Fortune 500 companies often target their recruiting at elite colleges," says Alexandria Walton Radford, who directs the Transition to College program at RTI International. "And because we know that lower-income students are underrepresented at elite colleges as are Hispanic and African-American students, that just affects this pipeline."
The overriding theme is that altering the diversity picture requires stepping outside your comfort zone.
"What really plays into this whole equation, and why I think we have such a huge gap, is because of unconscious bias," says Dr. Shirley Davis, president of SDS Global Enterprises.
Even where explicit racism is absent, people tend to pick people like them--to hire and to help them advance. The vicious cycle has helped the top levels of corporations remain much less diverse than the country as a whole.
"The typical profile of a corporate executive, CEO or board of director is a white male in his late 40s or 50s that’s straight," says Davis.
On that last score, at least, Tim Cook just shifted the needle.
When it comes to the global smartphone market, everybody knows about Samsung and Apple. But do you know who number three is?
Xiaomi, an upstart Chinese company you’ve probably never heard of, has taken the smartphone bronze, based on sales this summer. It edged past players like LG on the way.
“So far, Samsung still remains number one. Number two is Apple. But now Xiaomi is number three,” says Linda Sui with the research and consulting firm Strategy Analytics.
Analysts say this growth is incredible, given that Xiaomi only sold its first phone three years ago. The Chinese company has passed Samsung and Apple in China, and sold between 17 and 18 million phones in Asia last quarter.
“Because it’s only within Asia, that’s a huge number,” says Ramon Llamas with IDC.
He adds that these phones are “feature-packed, easy to use and rather inexpensive. And that really appeals to millions and millions of users. And here’s the scary thing: It’s just getting started.”
Xiaomi is expanding in India, with an eye on Brazil, Mexico and more countries in Southeast Asia. But not the U.S. — yet.
“You cannot jump from the Chinese market straight to the U.S. markets,” says Boris Metodiev, a research manager with 451 Research.
Customers in emerging markets prioritize cost and value, he says, while customers in the U.S. tend to stay loyal to brands like Apple.
So Xiaomi has to keep growing.
“Conquering step by step the developing markets,” Metodiev says. “And once their name becomes more and more popular, then they will eventually move to the U.S. markets, to the West European markets, and so on and so forth.”
Even if Xiaomi continues to expand, it might not hold onto the number three spot. That’s because its competition just grew. Lenovo announced today it has completed its acquisition of Motorola Mobility.
For five years, John Eldridge and his team at Profectus Bioscience have developed and tested their Ebola vaccine. First it was on guinea pigs, then monkeys.
At that point, Eldridge realized monkeys weren't getting sick.
“When I saw those results, I realized that we had a real vaccine candidate which had the potential to make a real difference for mankind,” he says.
But before it can go to market, the vaccine must be tested on humans, a timely and expensive proposition for tiny start-ups like Profectus. And this is where things get tricky. Despite this year’s outbreak, there is virtually no commercial market for Eldridge’s vaccine. In other words, it’s financially difficult for a drug maker of any size to justify the expense of development and production with little payout in return.
That’s why the little agency no one has ever heard of – the Biomedical Advanced Research and Development Authority (BARDA) – is so important.
“They are investing in things that would die if they didn’t have additional funding,” says Boston University’s Kevin Outterson.
Outterson says getting any product from the lab to the market is called "crossing the valley of death." For products like Eldridge’s, which has little financial appeal but huge public health upside, that valley is deeper and longer.
“You can think of BARDA almost like a venture capital firm buried in the U.S. government,” he says.
To find an Ebola treatment, BARDA is investing in the most promising drugs and vaccines. That money, about $30 million just for vaccines so far, changes the equation so it makes better business sense for companies big and small to bring drugs to market. Unlike venture capitalists, BARDA won’t take a cut; in fact, more money may be on the way, with the President expected to seek additional funding from Congress.
“When we decided to put our pedal to the metal, everybody could accelerate and get to a finish line we are aiming for,” says Dr. Nicole Lurie, assistant secretary for preparedness and response at HHS, who oversees BARDA.
She says vaccine development would usually take up to 10 years. “We are moving forward in unprecedented speed.”
With this Ebola crisis, Lurie says Washington and industry are hand-in-glove. Lurie’s hoping to avoid mistakes from the 2009 H1N1 pandemic, when nearly 61 million Americans got sick and the virus killed more than 12,000 – all while the government, working with drug makers, couldn’t get enough flu vaccine manufactured.
“We learned that we needed much stronger relationships with our industry partners,” says Lurie.
She sees signs of a massive Ebola manufacturing mobilization, from giants like GlaxoSmithKline to the little guys like Profectus and John Eldridge, who says he’s actually been given enough money to do the work this time.
“We negotiated the contract. They came to us multiple times and said, ‘we need to supply you with adequate funding that you can move as rapidly as possible,’” he says.
Eldridge still doesn’t know if his vaccine works. But thanks to the tiny office no one has ever heard of, there’s a chance.
It has been a big year for the luxury department store chain Neiman Marcus.
The Dallas-based retailer announced earlier this year that they are building their first Neiman Marcus store in Manhattan, with doors set to open in 2018, joining Bergdorf Goodman the company’s only New York City outlet to date. They also launched a shopping app earlier this week called “Slyce," which lets users take pictures of any item they want to buy, and suggests something similar available at Neiman Marcus – the latest in a long line of technological experiments Neiman Marcus Group CEO, Karen Katz, has brought to the company.
Katz describes the company's customers: “She is very deliberate in how she is spending her money. There has to be a real value... pre-recession, I like to say, she was shopping with abandonment. She wasn’t looking at prices. If she liked something, she bought two of them... I think the world has changed post-recession. We’re much more in tune with how she wants to think about things.”
You can hear the full conversation on the Oct. 30 episode of Marketplace with Kai Ryssdal, or listen using the audio player at the top of the page. Here are some excepts from their conversation:
Impact of digital interaction: 24 percent of business at Neiman Marcus is now done online, and 70 percent of customers go to the website to research by category before going into the store.
On the risks of working in retail: Katz says, “That’s somewhat the thrill of the business.”
The Neiman Marcus Christmas Catalog item at the top of Kai’s wishlist? That would be the 100th anniversary Neiman Marcus limited edition Maserati Ghibli S Q4.
An earlier version of this story misspelled "Neiman Marcus." The text has been corrected.
The U.S. gross domestic product grew 3.5 percent in the third quarter, the Commerce Department announced Thursday, beating expectations and showing healthy growth after a wildly uneven first half of the year. Stocks rallied Thursday afternoon following the news, and the faster-than-expected growth stoked speculation about an interest rate hike.
Here are other stories we're reading, and numbers we're watching, Thursday:2009
That's when Blackberry's popular Bold line of smartphones first debuted. In the tech world, five years old qualifies as "Classic," and that's how Blackberry has branded a new line of phones with the tactile keyboards and trackpads that have defined the brand, the Wall Street Journal reported. Blackberry has struggled to adapt to the "black touchscreen slab" smartphone market, and the company hopes a return to its roots will draw customers back.83 percent
The portion of gay, lesbian and bisexual people who hide aspects of their identity at work, according to a report cited by the New York Times' Upshot. Apple CEO Tim Cook joined an extremely small group of openly gay executives by penning an op-ed for Bloomberg Businessweek. "We pave the sunlit path toward justice together, brick by brick," Cook wrote. "This is my brick."$20,000
That's how much a Pfizer political action committee donated to Missouri Attorney General Chris Koster, the New York Times reported in an investigation published Wednesday, donations that may have prompted the state to settle with the company in a fraud case for much less than other states. The PAC also reportedly invited Koster to speak at a breakfast days before the settlement. The attorney general is now facing an investigation by state lawmakers over the Pfizer case, and Koster's treatment of other campaign contributors.
North Dakota has always been a friendly, easy place to vote. It is the only state in the country without voter registration, and precincts are small enough that poll volunteers often recognize the people who come through the door.
"It’s kind of like a reunion," said Bonnie Fix, who has worked elections since 2001. "Kind of like a family picnic."
Running for office in North Dakota has historically been equally low-key – and low budget, with winning candidates for state offices raising less than a few thousand dollars each. But the oil boom has changed all that. The 2014 election cycle looks like it will be the most expensive ever in state history, with over $17 million in campaign contributions.
"It’s gotten ugly," said Jim Fuglie, the former head of the Democratic Party in North Dakota and a political commentator. "We’ve never had an industry this big, with this much money, have this much influence on an election."
Fuglie believes the tone of politics has changed, too, and points to negative campaign ads like the one calling the Democratic candidate for Agriculture Commissioner, Ryan Taylor, a "tree-hugger."
The ad, which ran on commercial radio stations leading up to the election, was paid for by a local political action committee or PAC, funded by the national Republican State Leadership Committee. Some of its top donors are oil and gas companies like Devon Energy and ExxonMobil.
Between PACs, trade groups and corporations, the oil and gas industry has spent $1.3 million on the 2014 election in North Dakota, according to data from the North Dakota Secretary of State. Some races matter more to the industry than others - like the Agriculture Commissioner race. While the title sounds irrelevant to oil and gas, as one of three officials who sit on the state's Industrial Commissin, the agriculture commissioner has a lot of power to regulate the oil and gas industry.
So far, the oil and gas industry has kicked in $73,000 to support Republican Doug Goehring - about a quarter of all the money he's raised. They're worried that if Taylor, the Democratic challenger, wins, he’ll slow the pace of development.
"The oil and gas industry has been somewhat successful in characterizing any questioning of the speed as potentially threatening everything," said Nicholas Kusnetz, a reporter with the Center for Public Integrity who’s written extensively on the industry’s influence on politics in North Dakota.
Another issue, however, has attracted even more money, both from the oil and gas industry and others: The North Dakota Clean Water, Wildlife and Parks Amendment, also known as Measure 5. Measure 5 would create a constitutional amendment setting aside five percent of the oil extraction tax for conservation projects. Even though it doesn’t create new taxes, the oil and gas industry strongly opposes it.
Ron Ness, president of the North Dakota Petroleum Council, said oil companies want to see as much money as possible go directly to the boomtowns, fixing roads and building schools and housing. "The more oil tax money going back to those communities helps to attract and retain workforce," he said.
The American Petroleum Institute has also weighed in, calling Measure 5 "a disservice to the state's economy and its residents." To help defeat it, API has spent over a million dollars on yard signs, magnets and a website. And it’s sponsoring phone calls. Carmen Miller is the director of public policy for Ducks Unlimited, a conservation group backing Measure 5. She knows about the anti-Measure 5 phone bank, because she received a call.
"If you’re calling the proponents of the measure, you must be calling just about every phone number in the state," she said.
But it's not just oil and gas companies that are spending heavily on this election. National conservation groups like Ducks Unlimited and The Nature Conservancy have kicked in a combined $4.8 million to support Measure 5. Miller wouldn't comment on whether proponents of Measure 5 had planned to spend that much initially, or if they had upped their spending in response to oil industry donations. But four days after American Petroleum Institute spent its million to defeat the measure, The Nature Conservancy chipped in $600,000.
Democrat Ryan Taylor has raised nearly $300,000 for his campaign to become Agriculture Commissioner -- about a quarter from out-of-state donors. That's more than twice as much as the winning candidate raised in 2006.
For Bob Harms, the chairman of the North Dakota Republican Party, the levels of spending are indicative of how much money is now flowing into state coffers. The state gets about $9 million every day in oil tax revenue.
"We have more money to fight over," he said, "and we have more money to fight with."
On Thursday, the U.S. Education Department issues new rules designed to address rising indebtedness and high default rates among graduates of for-profit vocational college programs. A new standard for graduates' loan-payments-to-income will penalize schools that fail to measure up, threatening them with exclusion from government student loan and grant programs, including Pell Grants for low-income students and education benefits under the GI bill.
The government provides $22 billion annually to support so-called ‘gainful employment’ post-secondary education programs, according to Secretary of Education Arne Duncan.
Kai Ryssdal will interview Secretary of Education Arne Duncan. Listen to the show, or check back here for the podcast later this afternoon.
This includes training in culinary arts, truck-driving, IT, health care, auto repair and the like. Under the new rules to be issued Thursday, schools will risk being cut off from government student-assistance programs unless a typical graduate’s loan payment is less than 20 percent of their discretionary income, or 8 percent of their total earnings.
An earlier draft rule also would have set a standard for graduates’ student-loan default rates; default rates for graduates of for-profit colleges are considered excessively high by education advocates and the Obama Administration. Default rates will be tracked and publicly reported under the new rules, but won’t be a criterion for punishing schools and excluding them from government loan and grant programs.
In a statement emailed to Marketplace, the Association of Private Sector Colleges and Universities, which represents for-profit higher-education providers, rejected the new regulations as a "bad-faith attempt to cut off access to education for millions of students who have been historically underserved by higher education," according to CEO Steve Gunderson.
"In this case, the Department favored public institutions that benefit from generous taxpayer operational subsidies, but have lower graduation rates and higher default rates, over programs at private sector institutions where graduates are achieving real earning gains and successfully repaying their loans," according to the statement.
The industry has been critical of the Education Department for allegedly favoring publicly-funded community colleges over for-profit colleges that specialize in career training.
Consumer advocates also criticized the revised regulations that the Education Department has settled on.
“The final gainful employment regulation does not do enough to stop the fleecing of students and taxpayers," said Pauline Abernathy, vice president of The Institute for College Access & Success, in an emailed statement. “In particular, the final regulation lets programs where most students borrow but few graduate keep using taxpayer dollars to bury students in debt they can’t repay, so long as they limit the debt of the few students who complete.”
In five days, the polls will be open. And with gains for Republicans predicted but not assured, we turn to a person who tracks the future of the federal budget like a gearhead follows cars.
Stan Collender contributes to Forbes, and once upon a time was a staffer for both the House and Senate Budget Committees. He joined host David Brancaccio to discuss what a Republican majority would mean for budget cuts in Washington.
Click the media player above to hear Stan Collender in conversation with Marketplace Morning Report host David Brancaccio.
First, economic growth in America. GDP was quite solid as the summer wore on. More on that. And one of the most influential business tycoons in the world has come out publicly as gay: Tim Cook, the CEO of Apple. We spoke with actor and social justice advocate George Takei about the importance of Cook's Op-ed. Plus, passengers increasingly bring their own entertainment with them aboard flights...on their mobile devices. Now, airlines are responding, possibly with a policy of BYOD: bring your own device.
Signing bonuses for new college grads nearly disappeared after the recession but are slowly becoming more common, according to a Michigan State University survey of employers.What percentage of employers offer signing bonuses to new college graduates?
Heather Wolpert-Gawron has been teaching for eleven years at Jefferson Middle School in San Gabriel, Calif. During that time, she says, the school has had about ten principals.
“We had many years where the morale was low,” she says. “We just kind of felt abandoned.”
Some of those principals left on their own. Some were removed. According to a new report from the nonprofit School Leaders Network, half of new principals quit in their third year on the job.
The group, which provides training and support to principals, says the job has become too complex and isolating. Principals put in long hours overseeing teachers, meeting with parents and implementing one reform after another.
“It’s very demanding and you’re being pulled in different directions, so it really makes it difficult for you to focus on being an instructional leader,” says Connie Rodriguez, who left her position as a junior high school principal in San Antonio, Texas, after three years.
It costs about $75,000 to recruit and train each replacement, says Mariah Cone, vice president of knowledge with the School Leaders Network. The cost to student achievement is higher, she says, with studies showing that both math and English test scores drop when a principal leaves.
“It takes up to three to five years for the next principal to really be able to show gains,” Cone says.
If the next principal lasts that long. Cone says ongoing mentoring and training might help more of them stay longer.
Airlines have noticed that people increasingly bring their own entertainment with them onboard, on their mobile devices. That means the nature of in-flight entertainment is changing, too.
In fact, the future of in-flight entertainment could be BYOD: bring your own device.
Airline consultant Jay Sorensen sees a lot of people doing that already.
“Before they get on the airplane, they’re gonna load up their device,” says Sorensen, president of IdeaWorks Company. “They’ll get caught up on all the past episodes of House of Cards onboard the airplane.”
That’s why airlines like Delta and United have invested in systems that stream in-flight entertainment straight to your mobile device. They see economy class passengers bypassing their seat-back screens. And they’re not alone.
Doing away with seat-back screens altogether would be lighter and cheaper for airlines, which Henry Harteveldt of Atmosphere Research Group says already pay a lot for content.
“The movies and TV shows and music that we watch and listen to aren’t provided free,” he says. “Airlines license that. And it can cost them several millions of dollars a year, per airline.”
If all this TV-watching threatens to drain your battery, don’t worry. Harteveldt says airlines are also installing more plugs.
Former tennis star Andre Agassi has spent the last few years building schools. Recently, he has stopped doing it out of pure generosity. After years of raising money for charter schools, Agassi has had a conversion. He teamed up with investors and joined the growing ranks of education capitalists.
Agassi has been touring some of his schools this fall, including a recent in Nashville.
The second graders in this Rocketship classroom were barely born when Agassi hung up his tennis racket. So they don’t really know much about the guy with the shaved head touring their new school, other than they should be grateful to him.
“What made you want to play tennis?” one student asks. “I never really wanted to,” Agassi says, explaining that his dad made him.
But turns out, he was pretty good.
“And then all of the sudden when I won, I had the chance to build my own school,” he says.
The irony is not lost on him, since Agassi dropped out of school himself. He has since raised $100 million to supplement public funding for a charter school in his hometown of Las Vegas.
But in the last few years, he teamed up with investors to start a hedge fund. They don’t run schools. They just buy the land, finance construction, then rent the school back to a charter, typically part of a national chain like KIPP Academy or Rocketship.
Critics of the charter movement have charged investors with lining their pockets on the backs of public education, and Agassi says he had his own hesitance before switching gears into profit-mode.
“I thought about it a thousand times going into this adventure,” Agassi says.
But given the struggle to finance his own charter school, Agassi says he’s decided charity has limitations.
“I don’t believe – personally – that philanthropy is scalable,” he says.
Agassi’s charter school real estate venture certainly satisfies a need. School founders almost universally struggle to find adequate facilities. Often school districts are reluctant to rent out vacant school buildings to charters, who are sometimes seen as competitors. They occasionally have to locate in less-than-ideal learning environments, like a renovated strip mall.
The pitch from Agassi’s investors is something like this: “Let us build you a school. You focus on teaching. And if you want to buy the building from us in a few years, great.”
Santa Monica-based investor Bobby Turner helped get Agassi on board.
“If you want to treat a problem in society, philanthropy is fine,” Turner says. “But if you want to cure – really cure – you need to harness market forces to create a sustainable solution. That means making money, because only then is it scalable. And by the way, there’s no rulebook that says you can’t make money and societal change at the same time. They’re symbiotic.”
But some parents don’t buy the sales pitch.
“It kind of makes my stomach turn,” says Brett Bymaster, a parent in San Jose where the Agassi-Turner fund has been active.
He’s taken it upon himself to dig into their business model, though one can only dig so far. While they’re building public charter schools, there’s very little disclosure, including what they charge tenants.
“We need to partner with people outside, but I don’t think the solutions to problems in my community are one-percenters getting filthy rich,” he says.
Bymaster wonders what happens to one of these buildings if the charter has to shut down, and many do. So far, all 39 schools built by the fund are still up and running. A spokesman says if one closed, the building could be rented to another charter operator.
Even among charter school advocates, there is some quiet suspicion of partnering with hedge funds. First, there’s cost. One charter founder said a deal with Agassi was 25 percent above any other option.
Jessica Johnson leads the Colorado-based Charter Schools Facilities Initiative and doesn’t take a position on for-profit investors.
“I mean, I know of many instances where it’s worked out really well. I know of others where there have been challenges,” Johnson says.
Johnson says plenty of charter schools have had trouble working with non-profits too. That’s why she cautions everyone to read the fine print, no matter who is helping build their school.
Seems like every election, some political analyst says the end is near for political ads on TV – that TV is dead. Well not this year. Candidates in the midterm elections are blasting voters with TV commercials.
Evan Tracey is on the front lines of the political ad wars. He's senior vice president at National Media Research, Planning and Placement, a Republican consulting firm, which offers candidates advice, makes TV ads and places them. What does he tell campaigns? Buy as much TV advertising time as you can.
“If the predictions of TV being dead are true then it’s being buried in money,” he says.
Tracey says, sure TV audiences are aging, but older people vote. And TV ads can work with online ads to catch younger voters, who watch TV with smartphones in hand.
“So if I can have my voice and pictures on your TV screen and have my digital ad on your smartphone, I’ve gotten you two ways now,” he says.
Plus TV can be targeted more than ever now. Cable set top boxes tell campaigns exactly what you’re watching. They figure out what your favorite shows are, and advertise on them. But Tracey says it’s still best to use TV as an old fashioned megaphone -- blanketing the airwaves, till there’s no escape.
“Some of these states right now – you know - they’re seeing thousands of ads a day,” he says.
States like Iowa.
“It’s been really hard to watch TV without being bombarded with advertisements,” says Barbara Trish, professor of political science at Grinnell College in Iowa.
But Trish doesn’t mind the ads. She loves them, even studies them at Grinnell. One of her favorites features a candidate who compares castrating hogs to cutting pork in Washington.
Trish agrees that TV is still king of campaign ads, but for a different reason. Candidates, parties and outside groups are pouring cash into the midterm election, and it needs a home.
“It’s just that there’s so much money out there," she says. "It seems like, they feel like it has to be spent on something. You’ve got to put it to use.”
There’s a lot of money sloshing around Colorado, too, where there are close Senate and gubernatorial races. And lots of ads, focused on women’s issues and big government.
Floyd Ciruli is a pollster in Denver and the head of Ciruli Associates. He’s getting sick of all the ads; in fact, he’s been predicting the dethroning of TV since the early 2000s. Banging the drum about how candidates will go digital, and look for other ways to reach voters.
But even he admits, when it comes to TV, "It’s still the king.”
Ciruli says blanket TV advertising can gain a campaign a few points in the polls. That could push a candidate over the top in Colorado.
“It’s going to be close," he says. "So a couple of percentage points can make the difference.”
Ciruli says TV’s crown will start to slip, eventually. But it’s firmly in place, for the foreseeable future.
Yancey Strickler was eating at a restaurant in Brooklyn where he had been a regular for many years. His waiter was Perry Chen.
"Perry was an artist and someone who had a lot of interesting ideas," says Strickler. "He had this thought about creating a system where he could propose an idea to the world, and people would support it if they wanted to, but no one would be charged unless everyone thought it was a good idea."
Thus, Kickstarter was born, Strickler is CEO and Chen is Chairman. But it didn’t happen overnight. They went around pitching the idea to big investors for four years, facing rejection after rejection.
"It was terrible," Strickler says. "One guy said, 'There’s already enough art in the world why does there need to be more?'"
Listen to the full conversation from Marketplace's live show in New York by clicking on the audio player above.
Facebook announced earnings on Tuesday, and the key word was "billion."
$3.2 billion: Revenue for this quarter.
One billion views: A new milestone for videos.
And, perhaps most importantly, 1 billion users.
It's a number Facebook itself has already exceeded, and it's also the number that Facebook CEO Mark Zuckerberg set as a goal for Facebook-owned products like Instagram, WhatsApp and Messenger before Facebook attempts to "aggressively" monetize them and turn them into "meaningful businesses in their own right."
"This may sound a little ridiculous to say, but for us products don’t really get that interesting to turn into business until they have about a billion people using them," said Zuckerberg.
"It sounds a little ridiculous to me as well," says Nate Elliott, analyst at Forrester Research.
"The reality is Facebook didn't turn its primary property - the Facebook business - until it had about a billion users," says Elliott. "And I wonder if they're not using that as the benchmark for everything else they do."
But to understand just how "ridiculous" that benchmark is, you have to appreciate the sheer size of one billion. To do that, I called up my high school math teacher, Don Smith.
"It’s an incomprehensible number, Stan, it really is," says Smith.
The only way to comprehend it is to use a device to shrink it to something more manageable. For instance, consider an inch.
"A billion inches is over 15,000 miles," says Smith. Or about five trips from New York City to Los Angeles.
A billion users--that’s 120 times the population of New York City. To get that many users, you usually have to look at whole industries, not individual companies.
"For example, the toilet paper market is pretty universal, but nonetheless, it’s not a single supplier," says Roger Kay at Endpoint Technologies Associates.
There are a handful of businesses that sell physical products to a billion people - Proctor & Gamble, Unilever, and so on. But Facebook has the advantage of a product it gives away for free, which it can do because its digital. "So how many accounts do you want to set up? As many as you want," says Kay.
The disadvantage of a free product is that you don't make money selling it--instead, you typically have to sell ads. This quarter, Facebook made about $2.37 in revenue for each of its 1.35 billion users.
So which companies would interest Mark Zuckerberg?
How many products actually have a billion users? It depends on how you measure.
- Facebook didn't pass the billion-user mark that long ago, and its biggest acquisitions, WhatsApp and Instagram, have a ways to go at 600 million and 200 million active users, respectively.
- PayPal claims to process 10 million transactions a day, or a billion every two years. But they only have 157 million active accounts. Snore.
- Amazon has inconceivably huge sales, but a piddly 244 million user accounts. Forget it.
- As mentioned above, there are several huge conglomerates that reach billions of consumers - Procter & Gamble claims to serve nearly 5 billion people - but it's unlikely that they produce a single product that serves a billion people.
- Google, one of Facebook's biggest rivals, is a contender. It was one of the first sites to reach a billion monthly unique visitors, and YouTube is there too, but it's not clear how many individual products would interest Zuckerberg. For example: Gmail had only 416 million users the last time Google reported those numbers, in 2012. Google Drive only has 240 million users.
- Apple is close too. There are 800 million iTunes accounts, a decent measure of unique Apple users across their product line. The app store alone has clocked 75 billion downloads, and Apple just sold their 500 millionth iPhone.
There's one company we're fairly certain meets Zuckerberg's billion-user requirement by any measure: Coca-Cola. The company moves up to 1.9 billion servings a day, and its namesake beverage has been around for 128 years.
At press time, it wasn't clear if Zuckerberg would be interested in turning Coca-Cola into a meaningful business in its own right just yet.
The American fossil-fuel boom has spawned debates on what to do with this wealth. Ohio finds itself in the middle of one right now. The state’s Republican governor, John Kasich, is proposing to raise oil and gas taxes, to ensure the riches don’t all go to workers and companies based out of state.
“His view is, this is some sort of a rip-off,” says Ohio State economist Mark Partridge. “That these energy resources are transported out of the state of Ohio, used and refined in other places. And all the profit and wealth goes to these other places and it leaves Ohio.”
By most measures, Ohio’s taxes on energy production are low. They’re less than 1 percent, compared to 7 percent in Texas, 11 percent in Wyoming, and 25 percent in Alaska.
Kasich wants to raise state taxes to 2.75 percent or even higher. Drilling companies threaten to leave and go to low-tax states. But that hasn’t happened historically. A study by Headwaters Economics notes “the academic literature generally disagrees that tax competition is important to oil production.”
“The decisions on where to drill are not going to be determined by comparing different states,” says Michael Levi of the Council on Foreign Relations and author of "The Power Surge: Energy, Opportunity, and the Battle for America's Future." “They’re going to be determined on a location-by-location basis, on whether a profit can be made."
Governments that tax oil and gas taxes use the money in different ways. Some, like Norway, store it away for future generations in sovereign wealth funds. Other spend it on roads damaged by drilling, or invest in education.
Governor Kasich of Ohio wants to cut taxes, which spreads the energy wealth. But Mark Haggerty at Headwaters Economics worries that makes the state budget more dependent on taxes from fossil fuels – a boom and bust sector.
“In fact, what you’re doing is actually creating a less stable tax base for the state going forward into the future,” Haggerty says.
And the future is the whole question: how to take today’s riches and plant them in the right place.
An unmanned rocket that was supposed to ferry supplies to the International Space Station exploded just after liftoff Tuesday. That has drawn attention to NASA’s growing reliance on private space companies to do its legwork.
In 2008, NASA was preparing to retire the space shuttle. So it hired two private companies to resupply the space station: Orbital Sciences Corp., whose rocket just exploded, and Space Exploration Technologies (also known as SpaceX).
The initial price tag was $3.5 billion. The idea was to both to achieve the space agency’s goals at a lower cost to taxpayers, and to help foster the growth of the commercial space industry.
To do that, NASA wasn’t buying a new space shuttle.
“What they actually bought was cargo delivery services, just like you would buy services on Fed Ex or something like that,” says Frank Slazer, vice president for space systems at the Aerospace Industries Association.
Tuesday’s explosion may prompt concern over the increasing privatization of space. But industry watchers are quick to remind that NASA has always relied on the private sector.
“NASA’s never built a rocket,” says John Logsdon, who founded the Space Policy Institute at the George Washington University. “Rockets that NASA and the Air Force use have always been built by private companies.”
He doesn’t think the explosion says anything profound about this model of business.
“What it says is launching things into space is hard. And there will be unfortunately failures along the way,” he says.
The stakes are going to rise, though.
NASA recently hired Boeing and SpaceX to ferry astronauts to the space station in a few years. (Of course Boeing, and its heritage units, played an integral role in building the Apollo spacecraft.)
Meanwhile, the commercial space industry has grown globally. It’s now worth about $225 billion, according to Carissa Christensen, managing partner of the Tauri Group. That figure includes commercial satellite launches and operation.
“Putting that in context,” she says, “the total amount that governments spend globally is about $75 billion.”
NASA is getting ready to spend more. It’s now in the process of awarding the next round of cargo contracts.