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Silicon Valley's diversity issues highlighted in trial

Mon, 2015-03-02 13:52

There is a trial going on in San Francisco that has its roots down the road in Silicon Valley. Ellen Pao is suing her former employer Kleiner Perkins — the big-name venture capital firm — for gender discrimination and retaliation. 

The trial is offering a rare glimpse into the not-always-transparent side of Silicon Valley: who gets the money and how those decisions are made.

It's a landmark case, says Re/code reporter Liz Gannes, because it's surfacing some of the tech industry's long-time diversity problems.

"It's bringing together a whole bunch of issues around gender, around what happens at the highest echelon of the tech industry," Gannes says.

The case is far from over, but Gannes says it's clear Pao had to deal with some inappropriate workplace situations.

"I wouldn't say that they've really truly established a pattern of gender discrimination yet, but there's some pretty egregious stuff that's happened," says Gannes.

About 20 percent of venture capitalists who make investment decisions are women at Kleiner Perkins, Gannes says.

"These are the people who control who gets money, who builds products," she says, "and I think it would be a better situation if they were more representative."

Spirit Air: slashing prices at 30,000 feet

Mon, 2015-03-02 10:19

Spirit Airlines CEO Ben Baldanza isn't worried about providing passengers with free peanuts and complimentary hot towels. 

"When you talk to a lot of customers what you find is that most of them, when they think about what airline they want to fly, want the lowest price," he says.

Instead of pampering passengers with free drinks, Spirit charges customers for almost everything, including printing a boarding pass at the airport

How does Baldanza respond to criticism that his airline gets for being the only 'two star' rated carrier? "Economists call airlines an intermediate good, which means that you're not buying an airline trip because you want to be on the airplane, you want to be somewhere," says Baldanza. 

According to Baldanza, many of Spirit's customers are buying plane tickets for themselves, not for a business trip, so they're more worried about airfare. 

"We believe we have a totally different customer base than a Delta or an American or a United. The difference is that we target at Spirit customers who are paying for tickets themselves," he says.

But Baldanza says it's a pleasure to try to get his customers the lowest possible airfare.

"At Spirit it's really mind-opening and it's really rewarding to think about how can we make it cheaper to go tomorrow than today."

Jeep eyes international sales

Mon, 2015-03-02 08:46

Jeep, the iconic brand of rugged off-road vehicles, got its start internationally carrying soldiers and equipment across the battlefields of World War II. Now, Jeep is making another international push, but this time it’s hoping to drive sales in the white hot crossover SUV market, with the new Jeep Renegade.

Fiat-Chrysler, which owns the Jeep brand, sold over 1 million cars last year, and the company hopes to nearly double that figure to 1.9 million over the next five years as it adds production lines in Brazil, China and India.

Among CEOs, women are outnumbered by men named John

Mon, 2015-03-02 08:46

If your name is John, congratulations. If you've got a woman's name — literally any woman's name — well, here's the deal.

The New York Times' data journalism venture The Upshot reported Monday there are more CEO's named "John" at S&P 1500 companies than there are women CEOs.

If you toss the names Robert, William and James in the mix, you end up with four CEOs with those names for every female CEO. The Upshot has dubbed that measurement the "Glass Ceiling Index," and they spun it out to several other institutions and fields:

Courtesy:The New York Times

It's not a perfect measure of equality — the Times notes common names won't change at the same rate as gender representation — but it's a stark snapshot of women's standing in the boardroom.

Quiz: An econ lesson in open textbooks

Mon, 2015-03-02 07:34

College students spend more than $1,000, on average, for textbooks and supplies each year, according to the Student Public Interest Research Groups.

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Feds want fewer anti-psychotics prescribed to seniors

Mon, 2015-03-02 06:33

Some patients with dementia can behave in ways that caregivers find difficult: They hit, they yell. Sometimes, they get prescribed anti-psychotics.

The Food and Drug Administration says that such off-label uses are risky — people taking them are more likely to die.  A new report from the Government Accountability Office recommends steps for reducing their use.

Marketing efforts for these non-approved uses have drawn fire from federal prosecutors. In 2013, Johnson & Johnson paid more than a billion dollars in federal fines for improperly marketing its anti-psychotic drug Risperdal. In March of this year, a Chicago psychiatrist pleaded guilty to accepting $600,000 in kickbacks from another drug-maker.

Not all adoption is illicit, says Dan Mendolson, CEO of Avalere, a health-care consultancy.

"A lot of the demand is driven by the patients' families," he says. "These are effective drugs, and the reason why they’re so widely prescribed is because they work beautifully."

However, they may eclipse other, safer alternatives, says Caleb Alexander, co-director of the Center for Drug Safety and Effectiveness at Johns Hopkins University.

"There are certainly some settings where clinicians and patients and family members are between a rock and a hard place," Alexander says. "But I don’t think it’s fair to say that there aren’t other options. And I don’t think it’s fair to say that patients are breaking down the doors, trying to access these therapies."

The Department of Health and Human Services has been attempting to reduce the use of these drugs in nursing homes. Today’s report looks at their use with patients in other settings.

PODCAST: What's in a tech name?

Mon, 2015-03-02 03:00

For the second month in a row, Americans spent less. More on that. Plus, Massive Open Online Courses [MOOCs] will be discussed in California today at the leading online course provider Coursera’s annual conference. A likely discussion on the agenda: the growth of corporate MOOCs. And many cities across the U.S. are trying to become the next Silicon Valley. The word "startup" is often thrown around as these towns try to compete in today's global economy. In Minneapolis, there's even an effort to attract young talent by pushing for a regional name change. 

What 5G means for you

Mon, 2015-03-02 02:00

The Mobile World Congress begins Monday in Barcelona, Spain. The agenda for the first day: 5G.

It’s still an emerging technology, but it’s got everyone excited because of what it promises. You can download movies in seconds, play your GIFs in milliseconds, and power the Internet of Things.

Even the FCC is excited: they announced late last year they they want to plan for 5G cellular networks.  

“This is one of the most exciting things, in my mind, that the FCC has done in a while,” says Ted Rappaport, director of NYU WIRELESS, and a professor at New York University's polytechnic school of engineering. “They have issued a notice of inquiry about how we could we use a vast new spectrum resource that has never been used before for mobile.”

If this happens, says Rappaport, cell phone frequency will at least increase to ten times of what it is now: “Going from 2 or 3 gigahertz to 28 or 38 or 60 or 72 gigahertz.”

Those speeds would bring “enormous”  bandwidth, he adds.

“Billions of dollars are being spent on the research and development for this 5G millimeter wave future,” says Rappaport.

 

Could 'North' become the new Silicon Valley?

Mon, 2015-03-02 02:00

Many cities across the U.S. are trying to become the next Silicon Valley. The word "startup" is often thrown around as these towns try to compete in today's global economy.

In Minneapolis, there's even an effort to attract young talent by pushing for a regional name change. That's right, a group of business leaders and academics think Minnesota should break away from the Midwest and establish a new region called the "North."

Tom Fisher is the dean of the College of Design at the University of Minnesota. He says this change wouldn't just include the land of ten-thousand lakes.

"The 'North' isn't just Minnesota. It also includes parts of Iowa, a big part of Wisconsin, parts of Michigan and parts of the Dakota's," Fisher said.

Fisher says this grassroots effort gives the region a chance to promote something it is often ridiculed for.

"In the 'North,' where we often apologize for being cold, at least in the winter, part of what we're talking is that there's a huge advantage to that," Fisher said.

Fisher says in a cold climate, people aren't as distracted during the winter months, allowing them to huddle up and be creative. He points to the innovative culture in places like Scandinavia. Fisher also says Minnesota and surrounding areas are overlooked for their contributions to the tech community, especially when it comes to health-care technology.

But Paul DeBettignies, a local tech recruiter, says a campaign centered around a name change won't do much to convince young innovators to flock here. He adds that bragging about being able to thrive in harsh winters might not be a good idea.

"I usually get asked four questions by candidates. The first one is: 'how cold is it?' And then: 'No really, how cold is it?' DeBettignies said.

DeBettignies says those behind the regional name-change should ditch their geography obsession. He says they will get more mileage out of simply promoting the good things that are happening in the startup community. He also says it wouldn't hurt to remind the rest of the world that it does get warm here during the summer.

MOOCs 2.0, the corporate edition

Mon, 2015-03-02 02:00

One of the top online course providers, Coursera, holds its annual conference Monday and Tuesday. Coursera offers a long list of mostly free, massive open online courses, or MOOCs.   

The latest trend? MOOCs designed for workers to sharpen their skills. Some corporations are now requiring them. 

About half of the people taking MOOCs on Coursera are trying to upgrade their job skills. Some corporations have started paying for Coursera’s certificate programs.

MOOCs are especially useful for new fields like analyzing big data for things like credit scoring.

“Since it’s a brand new field, nobody studied it in school," says Rick Levin, CEO of Coursera. "Anybody over 30 never even heard of it when they were in school.”

So, their employer tells them to take a MOOC.   

Jeanne Meister is founding partner of the consulting firm Future Workplace. She expects corporations to start demanding more.

“Custom MOOCs to fill particular skill gaps," she says. "That’s where it’s going.”

Meister surveyed 195 HR executives about MOOCs a year and a half ago. 

70 percent wanted to use MOOCs for training. But there weren’t enough MOOCs on the subjects they wanted. 

Their complaint now? Too many MOOCs to choose from.

MOOCs 2.0, the corporate edition

Mon, 2015-03-02 02:00

One of the top online course providers, Coursera, holds its annual conference Monday and Tuesday. Coursera offers a long list of mostly free, massive open online courses, or MOOCs.   

The latest trend? MOOCs designed for workers to sharpen their skills. Some corporations are now requiring them. 

About half of the people taking MOOCs on Coursera are trying to upgrade their job skills. Some corporations have started paying for Coursera’s certificate programs.

MOOCs are especially useful for new fields like analyzing big data for things like credit scoring.

“Since it’s a brand new field, nobody studied it in school," says Rick Levin, CEO of Coursera. "Anybody over 30 never even heard of it when they were in school.”

So, their employer tells them to take a MOOC.   

Jeanne Meister is founding partner of the consulting firm Future Workplace. She expects corporations to start demanding more.

“Custom MOOCs to fill particular skill gaps," she says. "That’s where it’s going.”

Meister surveyed 195 HR executives about MOOCs a year and a half ago. 

70 percent wanted to use MOOCs for training. But there weren’t enough MOOCs on the subjects they wanted. 

Their complaint now? Too many MOOCs to choose from.

Advertising is built into 'House of Cards'

Mon, 2015-03-02 02:00

Netflix has released the new season of “House of Cards." If there’s been one criticism of the show, it’s that it’s too heavy on product placement.

One plus for brands: viewers can’t fast -forward through product placement, says John Murphy, who teaches advertising at the University of Texas at Austin.

“It’s part of the story line, and therefore it’s potentially much more valuable exposure than a traditional 30-second spot,” he says.

The brands are definitely making money. But the shows? Unlikely, says Abram Sauer, founder of the Annual Product Placement Awards at Brandchannel.com.

“I would be shocked, personally, to learn that any money was paid to Netflix in any form,” he says. 

Sauer says a lot of times brands pay with props instead of cash. Like, if there’s a bar scene, the brewer will bring in everything needed to make it look like a real bar. For a show, that can add up to hundreds of thousands of dollars.

 

What's pushing family homelessness to record levels?

Mon, 2015-03-02 02:00

Jenny Blahowski is trying to be a normal mom. On a recent afternoon she fetched two of her boys at a bus stop in a Minneapolis suburb.

"How was school?" she asked, cheerfully.

But things are not normal. The kids pile into her minivan, which is filled with stuff you’d probably keep in your home, if you had a home. Blahowski and her kids have been homeless since December. Blankets, clothes and toys fill the back of the minivan. 

Jenny Blahowski greets her boys Leon, 6, and Daniel, 9 at a bus stop outside the emergency shelter they stayed at for nearly three months in the Minneapolis suburb Shakopee.

Annie Baxter/Marketplace

They’ve been staying at an emergency shelter run by the nonprofit Beacon Interfaith Housing Collaborative. Blahowski says that's helped a lot. But her six year-old, Leon, has been way more emotional lately. Crouched in his car seat, he peers out from under a purple ski cap with the word “LUCKY” emblazoned on it, and he begins to wail. His mom's not sure why. His crying jag lasts about half an hour.

There are now 2.5 million homeless kids in America today, according to the National Center for Family Homelessness at the American Institutes for Research or AIR.

“These are the highest numbers on record. It's truly epidemic levels that we've reached,” says John McGah, senior associate at AIR.

AIR came up with its number based on data from the U.S. Census and the Department of Education. The latter counts kids as homeless if they're on the street; in a car or a shelter; or if they're doubled up temporarily with friends or relatives. It’s a broader definition of homelessness than the one used by the U.S. Department of Housing and Urban Development. Experts say even doubling up can have bad consequences for kids. Wilder Research in St. Paul, Minn. has found that kids who are doubled up miss more school than kids in shelters, as shelters may provide transportation to school.

McGah and other experts say efforts to reduce homelessness among veterans and the chronically homeless have been successful in bringing their ranks down. But McGah says homeless kids and their families haven't gotten the same political attention.

At the same time, rents are rising. A lot of people are priced out of the rental market. And HUD’s Section 8 housing voucher program, its largest housing subsidy program for low-income people, isn't keeping up with demand.

“Everywhere you go, it's either there's a long, long wait-list or you can't even get on the wait-list because there are so many people on the wait-list,” says Steve Berg, vice president for programs and policy with the National Alliance to End Homelessness.

Jenny Blahowski says her six year-old son Leon has been more emotional than usual during the three months they’ve spent in a homeless shelter in a Minneapolis suburb.

Annie Baxter/Marketplace

Jenny Blahowski says she’s tried to get onto several section Section 8 wait lists to no avail. Beacon Interfaith is helping her on that front.

But she also faces another issue in today’s tight rental market: landlords are extra picky. Blahowski says she's been sober for four years but her past includes drugs and theft. Ditto for her husband, who's now in rehab. That all puts their family at a big disadvantage.

“You don't realize how far it will follow you even if you've been sober for so many years,” she says.

Still, a county program is helping Blahowski get out of the shelter and into transitional housing with three of her four kids. Her ex has custody of her oldest boy. Once her husband’s out of rehab, they’re both working, and the family has more permanent housing, Blahowski hopes to have all four boys under one roof.

“I want them to be someone that they're proud of,” she says. “So I try my hardest to find a home for them and make sure they’re going to school and doing what they have to do.”

Live Long and Draw my Image on $5 Bills

Mon, 2015-03-02 01:30
$11.8 billion

That's how much NXP Semiconductors will pay for Freescale semiconductor in what will result in a huge chip maker for all sorts of devices and industries. As reported by the NY Times, the merger will also benefit companies looking to simplify their list of suppliers for products like smart cars and mobile phones.

2.5 million

That's how many homeless children live in America today—the highest number on record—according to the National Center for Family Homelessness at the American Institutes for Research or AIR. Some say this demographic and their families have received less attention than homeless veterans and the chronically homeless. 

$5

In honor of the late Leonard Nimoy, The Canadian Design Resource called for a revival of "Spocking fives," the practice of drawing Spock's iconic hair, eyebrows, and pointy ears over the image of Canada's seventh prime minister Sir Wilfrid Laurier on $5 bills. As Quartz reports, defacing currency may be illegal, but it doesn't stop the $5 from being legal tender.

399 yuan

That's the price of Xiaomi's recently released Go Pro-like camera, as reported by the BBC. The device costs half as much as a Go Pro, and comes with certain features that its competitor lacks. It cannot, however, withstand some of the rough and tumble action related to filming oneself out in the wild.

$3 billion

For all you House of Cards fans, this is your official Spoiler Alert. Over at Vox, they've broken down a key element of the most recent season's 5th episode: the Stafford Act, which allows the President to allocate funding to what is deemed a national emergency. In the show, what President Frank Underwood attempts to pull off under the Stafford Act is met with intense skepticism. Turns out, real life isn't that different from television, with Congress worried that Presidents have started to abuse that power over time. There's even a theory that Presidents declare more states of emergency during election years. Though, with only a couple election years to compare since the act was passed, available data isn't conclusive, as you can see from Vox's chart:

VOX

Writers on Water: Tiphanie Yanique

Fri, 2015-02-27 14:40

We’re at the end of our month-long series about Water: The High Price of Cheap. How we take water for granted, don’t want to pay for it, and as a result, can find ourselves without it. Which is, you know… not good.

The poet and novelist Tiffany Yanique has a unique perspective on water. She grew up in the U.S. Virgin Islands, surrounded by the sea, but on land with very little water to drink. The author of “Land of Love and Drowning,” Yanique tells us what water means to her:

Land of Love and Drowning

Owen Arthur Bradshaw watched as the little girl was tied up with lace and silk. He jostled the warm rum in his glass and listened to the wind.

The storm outside wasn’t a hurricane. Just a tropical gale. It was the season for storms. Lightning slated through the heavy wooden shutters that were closed but unfastened. The thunder was coming through the walls built with blue bitch stone. There was no one outside walking in the rain. That sort of thing was avoided.

A scientist visiting from America had brought the lace and the silk. They were all at the house of Mr. Lovernkrandt, an eminent Danish businessman. Denmark was giving up on the West Indies and America was buying in, but Mr. Lovernkrandt was not leaving. The scientist was tying the girl up. He was demonstrating an experiment that had become stale on the Continent, an experiment of electricity. The little girl was very beautiful. And she was very little. And she was very afraid. She was also very brave.

Captain Bradshaw thought on his daughter, Eeona, who was not unlike this American girl. Only Eeona was more beautiful and at least as brave.

The people who had come together to make Captain Owen Arthur Bradshaw could be traced back to West Africans forced to the islands as slaves and West Africans who came over free to offer their services as goldsmiths. Back to European men who were kicked out of Europe as criminals and to European women of aristocratic blood who sailed to the islands for adventure. Back to Asians who came as servants and planned to return to their Indies, and to Asians who only wanted to see if there was indeed a western side of the Indies. And to Caribs who sat quietly making baskets in the countryside, plotting ways to kill all the rest and take back the land their God had granted them for a millennium.

Owen Arthur had been raised from a poor upbringing to a place of importance and ownership. He was the captain and owner of a cargo ship. And now he was among the important men who sat in this living room and watched through the haze of the oil lamps as a girl was hoisted off the ground via lace and silk and a hook in the ceiling. The little girl’s body jerked as the American scientist tugged. Her body jerked until she was a few feet off the ground, but she did not cry out. Owen Arthur Bradshaw was not sure how much longer he could bear to watch. But it was essential for him to be at this gathering. The host, Mr. Lovernkrandt, was a rummaker and Owen Arthur had always shipped rum. But with Americanness would come Prohibition, and Owen Arthur needed to ensure he was included in any of Lovernkrandt’s nonliquor endeavors.

He pressed his own earlobe between his thumb and forefinger. Success and solvency should have been on his mind, but Owen Arthur could not help but watch the American girl with a father’s tenderness. This little girl was pale-faced and blond, and Owen’s little girl, Eeona, was honey-skinned and ocean-haired. But still he looked at this strange little girl as though looking on his own child. The first half of him desired that he had created this little girl. She was a pretty yellow thing. The lower half of him desired the girl. How young could she be?

He put his mouth to his glass and tilted it until the warm sweetness met his lips. She will outlive me, he thought to himself. And who was the “she” he was referring to? Perhaps his wife, who was just then sitting at home doing the sewing that it seemed God had created her to do. Or perhaps he was speaking of his mistress, who was at that moment sitting in her home playing the piano he had bought her, making a music that only God or the Devil could bless. Or perhaps he was actually speaking of his daughter, whom he loved like he loved his own skin. Perhaps he was speaking of the little girl to whom the scientist was now attaching cords of metal. Perhaps the little girl was, in a way, all women to him, as all women might be to a certain kind of man.

Owen Arthur is right. All these shes will outlive him, though he cannot bear the thought of his women going on. He knows his daughter will live forever, in the way all parents do, simply because parents generally die first. But Owen will not die of old age. Owen will die of love. The Danish West Indies will become the United States Virgin Islands and then this patriarch will die. And perhaps these things are the same thing.

“Behold,” the American is saying in his strange accent. He hands the girl a glass ball and then whispers to her, “Do not drop it or I will punish you.” She does not make a move to suggest she has heard. She only takes the glass ball in both her hands. And then the first miracle happens—her hair begins to rise. The storm outside begins to howl.

“Christ, have mercy.” This is what the Christians whisper. The Jewish and Muslim men for whom these islands have been a refuge, mutter “Oy, Gotenu” and “Allahu Akbar” under their breaths respectfully. Yes, America will bring us progress. Here is progress before us.

Reprinted from Land of Love and Drowning by Tiphanie Yanique by arrangement with Riverhead Books, a member of Penguin Group (USA) LLC, Copyright © 2014 by Tiphanie Yanique.

Waiting for a big break in Germany's new economy

Fri, 2015-02-27 11:21

Felicitas Sonnenberg is a waitress with dark hair and bright eyes, and works at a trendy restaurant in Berlin where business people go for a nice lunch.

Krissy Clark/Marketplace

As she darts from table to table, she takes customers’ orders with a pen and pad of paper she keeps tucked in a black, polka-dotted belt strapped around her waist. It holds not just her order pad, but, she hopes, her ticket to making it in the German economy.

A little context. Maybe when you think of the German economy, certain things come to mind: good pay, lots of vacation, strong social-safety net, perhaps something about precise German engineering.

For many years, those clichés were pretty accurate. Precise German engineering led to lots of well-made German products like cars, engines and industrial machines, built by lots of well-paid German workers — who could be so well-paid because their well-made products were in demand around the world. Germany called it their “economic miracle,” or Wirtschaftswunder, and it led to the companion doctrine of Wholstand Für Alle, which translates to “prosperity for all.” 

“That was the promise after the Second World War, that we will have a strong economy but that the profits will be shared so everyone can profit from the growth,” says Peter Bofinger, an economic adviser to German Chancellor Angela Merkel.

But the shifts in the German economy brought on by unification and globalization have called the promise of shared prosperity into question, says Bofinger. “We have seen in the last twenty years more or less a stagnation of living standards for the wide majority of the population.”

Along with those fears has come a new German reality, a rise in the number of working poor. Many well-paid manufacturing jobs in Germany have gone overseas, or to European countries with lower labor costs, leaving behind more temporary, part-time and low-paying work in Germany.

And that is where waitress Felicitas Sonnenberg comes in. Sonnenberg makes 8.50 euro an hour, about the equivalent of $9.65 in the United States.

Waitresses, taxi drivers, hairdressers and workers in other kinds of service industries make up a large share of Germany's new working poor. Pay has gotten low enough in many of these industries in early 2015 Germany established a minimum wage for the first time ever.

In the case of Sonnenberg, the boost she got when the minimum wage kicked in still wasn’t enough for her to make ends meet.

“It would be wonderful to live with my money — what I earn in my job,” she says. “But it's not enough without help of the state.”

Sonnenberg is separated from her husband, raising two young children on her own. She gets some aid from the government that goes toward rent and daycare, and she says she is grateful for it. But in recent years Germany, long known for a strong social-safety net, has been rethinking how much to spend on that net. Sonnenberg says she can feel the scrutiny when she goes to her local welfare office.

“They were treating me like somebody who doesn't want to work — who only wants to get the money of the state, “ she says. “And I am not like that.”

Sonnenberg works part time right now, but she says as a single mom even that can be a tough balancing act. Once she is home from work, her children are eager for her attention. Bath time, dinner time, homework, bedtime, “Everything has to be done in a certain way, to finish in time to bring the children to bed at 9 o’clock,” she says.

But after the kids are in bed, Sonnenberg gets busy making plans for her future.

That black dotted belt she was wearing at the restaurant, to keep her pen and order pad? She designed and made it herself, after feeling frustrated with the standard money belts that most German wait staff use.

Krissy Clark/Marketplace

She has shopped her design around to people in the fashion industry and received coaching from state-funded agencies on how to prototype and trademark the design. “I want to produce this and have my own company,” she says.

She already has the trademark certificate framed, hanging in a narrow hallway in her apartment. “This is my office,” she says with a laugh.

Krissy Clark/Marketplace

Sonnenberg says she has told the welfare agency about her efforts to start her own business; she says she was warned it might be too much for a single mother, and that maybe she should stick to waitressing. And so she says she is torn, between the income she makes now, and taking a risk to make more. 

“I am believing in my product because I love it and I use it every day, and I think that there is really a need of this thing,” she says. “But I have a fear to go into the business market, because I feel so little.”

Yet, little creative start-up businesses like Sonnenberg's are being touted by German politicians as one of the best new hopes for the German economy.

As scared as Sonnenberg is, she is also hopeful.

“I always said when I really found my company, I will open a bottle of Champagne — but I never did it, because you never know when, when is the real start,” she says.

Because even with her framed trademark certificate and her prototypes, Sonnenberg says it's hard to know when you've really made it in the German economy these days.

What happens at Netflix when House of Cards goes live

Fri, 2015-02-27 11:06

Update Feb. 27, 2015: Well, here we are a little over a year later and "House of Cards" Season 3 is up on Netflix. We can't promise this is exactly how things went down this time around (there was that slight hiccup this year when the season accidentally got released early) but it's safe to say someone called in sick to work today to be the next super-binger.

Original story: Feb. 14, 2014

The new world of Internet TV is really geeky.

I spent some time in the Netflix war room last night, as the company debuted the second season of its smash hit series, "House of Cards." The war room is a conference room with big table in the middle, and as we approached midnight, a bunch of engineers were crouched over their laptops.

Jeremy Edberg, Netflix’s reliability architect, was one of them.

"So when the clock hits 12, the first thing I’m going to be doing is looking at our dashboards to see if anybody is playing the show," Edberg said.

If nobody is playing "House of Cards," that means there’s a problem. Unlike traditional TV, people now use hundreds of different devices to go online. And last night, the engineers were there to make sure "House of Cards" would play on every one of them.

Netflix monitors House of Cards mentions on social media during the season two launch in 2014.

Courtesy of Netflix

"We’ve probably got sitting around the room an X-Box, a Play Station, Nintendo, Apple devices, Android devices and a couple of different TVs from our partner manufacturers," Edberg said.

The engineers can tell, in real time, how many people are streaming the show on these devices, where they are and who’s binging. Edberg said the last time "House of Cards" launched, the engineers figured out the entire season was about 13 hours.

"We looked to [see]  if anybody was finishing in that amount of time," Edberg said. "And there was one person who finished with just three minutes longer than there is content. So basically, three total minutes of break in roughly 13 hours."

That’s right, of its 40 million subscribers around the world, Netflix was able the find the one super binger. Netflix spokesman Joris Evers said Netflix knows everything about your viewing habits.

Netflix knows who's watching the show and in what quantities.

Courtesy of Netflix

"'House of Cards' was obviously a big bet for Netflix," Joris said. "But it was a calculated bet because we knew Netflix members like political dramas, that they like serialized dramas. That they are fans of Kevin Spacey, that they like David Fincher."

Evers said Netflix uses this data when it decides on which original program to buy.

"We monitor what you watch, how often you watch things," Evers said. "Does a movie have a happy ending, what’s the level of romance, what's the level of violence, is it a cerebral kind of movie or is it light and funny?"

Netflix’s move into original programming is all about taking viewers from other media companies, especially HBO, said Brad Adgate, an analyst at Horizon Media.

He says Netflix has more subscribers than HBO, but when it comes to making money, Netflix is David to HBO’s Goliath. But Adgate says, Netflix does have its slingshot.

A scene from the Netflix War Room during 2014.

Courtesy of Netflix

"I think right now Netflix does have a competitive advantage over HBO because of the analytics," Adgate said.

Networks like HBO still rely, on large part, on Nielsen data. But the information Netflix gets is much more textured, granular — and valuable.

"And I think that’s where television and streaming video is headed — but I think right now streaming video is in the lead," Adgate said. That said, he added, it’s just a matter of time before HBO and other premium channels catch up.

Finding the natural in natural flavors

Fri, 2015-02-27 09:39

Unless you grow or hunt all your own food, chances are you've encountered natural flavors in things you eat. According to a study by the Environmental Working Group, "natural flavor" is now the fourth most common ingredient in food after salt, water, and sugar.

So, what are natural flavors? Why are they seemingly in everything? And if they are so natural, why don't ingredient labels list what they are? These questions come from Marketplace listener Jean Beach.

Since being diagnosed with Celiac Disease, Beach has been diligently checking ingredient labels. She sees natural flavors everywhere. On the iced tea she drinks, the ingredient list reads water, natural flavors, and then tea, which means there's more natural flavoring in Beach's tea than actual tea.

When it comes to flavors, Lisa Lefferts with the Center for Science in the Public Interest says there are a lot of mysteries, and calls the flavor industry a “big black box.” Lefferts says a flavor ingredient can be some combination of about 2,300 possible substances. 

By reading the ingredient label, customers can tell if the flavor is artificial or natural. Artificial flavors are entirely man-made — chemicals synthesized to deliver a particular taste. Natural flavors are processed from a substance initially found in nature, but those substances can vary widely.

Take castoreum, for instance. “Castoreum is a natural flavor extracted from the anal castor sacs of beavers,” Lefferts says, “and it's used to help create a vanilla or occasionally a fruity taste. So, in other words, vanilla flavor doesn't necessarily come from the vanilla bean.”

Okay, you are probably not eating castoreum, it's expensive and primarily used in fragrances. Most natural flavors come from more obvious sources like herbs and fruit.

The problem Lefferts says, is that flavors are not real food. “The main reason to be concerned about flavors, whether they are natural or artificial, is that when they are in there, you can be pretty sure that something real and nutritious has been left out,” she says.

But raw ingredients can be tricky. They may be expensive, or spoil. In packaged food, they may not even taste right, says John Hallagan. He' s with the Flavor and Extract Manufacturers Association. Hallagan says “You can't achieve the same flavor sensation from just putting strawberries in a bottle and mixing water in. It's not going to taste like strawberry to you.”

So, companies craft their own strawberry flavors — maybe they mix in a little fruit extract with some compounds processed from other plants, even trees. 

Sue Ebeler, a food scientist and professor at the University of California Davis, says a few drops of the right ingredients can make a big impact on flavor. We're talking about parts per trillion, she says, just a few molecules in an entire swimming pool.

Ebeler says advances in science have helped companies understand which molecules influence taste. A gas chromatograph could break down the flavor components of a substance to help replicate it.

So, why not explain what natural flavors are on ingredient labels? For one thing, Well, companies want to keep their special formulas secret — plus what sounds more appetizing: Things like beaver castor sacs and a long list of chemicals, or natural flavor?

“Putting the word natural anywhere there gives you an aura,” Marsha Cohen says. Cohen is a professor at the UC Hastings College of Law, and says when it comes to selling food, she says, it's all about the aura.

I call Jean Beach back to tell her what I've found out. She's not impressed by the “natural aura."

Beach says she feels less comfortable about natural flavors, and would like to avoid them altogether. Problem is, they're in so many things.

Your Wallet: What's broken in your community?

Fri, 2015-02-27 09:05

This week we want to know about infrastructure in your community. How are your sidewalks, bridges, or hospitals?

Talk to us the way you might in a town hall. What's broken in your community, in your home, and what's stopping the fix?

Is it money?

We want to hear you stories. Send us an email, or reach us on Twitter, @MarketplaceWKND

John Boehner doesn't enjoy congressmen wearing jeans

Fri, 2015-02-27 08:53

Speaker of the House John Boehner, second in line for the presidency, is not at all happy with the way things are going in Congress.

No, not the whole gridlock thing.

Let's just say there's no such thing as casual Friday in Congress. Boehner gave a dress code reminder during the last votes Wednesday.

"Members should wear appropriate attire during all sittings of the House however brief their appearances on the floor may be," he said, according to the Hill. "You know who you are."

Boehner also reiterated House rules against taking photos, and reminded lawmakers to show up for votes on time.

No word about bringing snowballs in the chamber though. 

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