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An apartment in the sky, for just $20,000 one-way

Thu, 2014-11-13 02:00

Have you ever day-dreamed about flying first class and getting those precious extra inches of space? Well, how about 125 square feet of space? 

Abu Dhabi-based Etihad Airways is offering what it calls the first-ever apartment cabin on an airplane, called “The Residence.” It has three rooms—a living room, bedroom and bathroom—and comes with a butler and personalized cuisine provided by an on-board chef. 

Among the other amenities are a two-seat reclining leather sofa, a chilled mini-bar, two LCD TVs and a shower in the bathroom. The bedroom boasts a double bed with Egyptian cotton sheets. 

The service is aimed at the ultra rich of the Persian Gulf. The airline says the experience is comparable to staying at a fine hotel, traveling by yacht, or having a private jet. 

It also costs $20,000 for a one-way ticket. 

“These are societies where there are some of the highest proportion of millionaires and billionaires per capita anywhere in the world,” says David Andrew Weinberg, a senior fellow at the Foundation for the Defense of Democracies, who specializes in the Persian Gulf region. 

The three big airlines in the region all have ties to the area’s monarchies, says Weinberg.

“All of these are prestige projects for principalities in the Gulf," he says. "It’s an outbidding contest of who can build the most luxurious new feature.”

But the airlines are also an important part of the region’s future economic plans. Those billionaires and millionaires were created through oil wealth. The oil will run out eventually, and Weinberg says the area’s governments are trying to build up industries, including airlines, that can take over.  

The 10-year-old Etihad Airways became profitable only a couple of years ago. In 2008, it spent $43 billion to purchase new airplanes. It has 220 aircrafts on order, including 10 Airbus A380s and 71 Boeing 787 Dreamliners. 

It is building one residence apartment in each of the new Airbus A380s that come into service, the first of which will be active in December. The apartment is first being offered on a London/Abu Dhabi route, but the airline plans to expand the service to New York, Paris, and other cities. 

“International airlines are leading the way in super-premium services,” says Andrew Schmahl, an airline industry consultant with the firm Strategy&.

Etihad Airways is competing with a host of international carriers, which are all trying to out-luxury each other. Etihad’s competitor Emirates Airlines announced it also plans to offer apartments on some of its planes.

The first-class amenities on international airlines are starting to trickle down to U.S. carriers, as well. Amenities such as lie-flat beds, higher end cuisine that can be custom ordered, and even luxury cars that ferry first-class passengers between connecting flights. 

Schmahl says airlines are willing to offer high-end luxury service to their first-class passengers, because while competitive pressures keep prices down for the vast majority of travelers, first-class passengers are willing to pay more for better service—and that means higher profit margins for airlines. 

Norman Lear and Amy Poehler Talk creativity

Wed, 2014-11-12 13:39

During Marketplace's LA Roadshow, Kai Ryssdal sat down with actor, writer and producer Amy Poehler as well as veteran TV producer Norman Lear to talk about their careers.

 

Bill Youngblood

For Lear, fights with network executives were the norm. But for Poehler? Not so much.

"Because there's a lot of different outlets for television now... people that want to be a bit more provocative know that they have a place and a home in cable," Poehler says.

Bill Youngblood

But Lear and Poehler weren't always big-time TV producers. Lear's family had to make it through the Great Depression. Growing up, Poehler says her family always had to keep track of money too.

"When no one really has any money, everybody knows how much money everybody makes," Poehler says.

Even though money comes a little easier for Poehler these days, she admits her career sometimes seems like a bad boyfriend.

"Your career will never call you back, it flirts openly with other people. It's never gonna marry you... It likes it when you ignore it."

Bill Youngblood

Listen to the full conversation with Poehler and Lear, from our stage show "How I Learned the Business of Creativity," in the audio player above.

 

 

 

Using data to head off high school dropouts

Wed, 2014-11-12 11:12

Principal Kelley Birch’s office at Willis Jepson Middle School in Vacaville, California, has the usual stuff: elaborate scheduling calendars, photos and a neat stack of papers. 

What you won’t see, unless you walk around to Birch’s desk, is a whiteboard with handwritten names of the 56 students at Willis Jepson who have been struggling – the 7th and 8th graders who might not graduate high school a few years down the road.

Next to each name on the list trouble spots are noted, things like poor grades, poor attendance or serious behavior issues. The list also keeps track of the way the school has tried to help. The more marks next to a student’s name, the more interventions the teachers and counselors have attempted. 

“When I see that board,” says Birch, “I have an urgency that these kids need something now.” 

In the past, Birch says, getting a full view of which kids were in trouble took time.

“We would wait for the teacher. And the teacher would go to the counselor and say, 'I have this student and they aren’t doing well," Birch says. "And the counselor would go look and say, 'Yeah, they aren’t doing well.' But by then, it’s a quarter into the school year, a semester into the school year.” 

Birch now uses what’s known as an Early Warning System. Her team gathers and processes a steady stream of student data – such as GPA, attendance, demerits, and test scores – to peer into the future and spot the 7th and 8th graders most at risk of dropping out of high school.

 

An example of an Early Warning System.

Maine Department of Education

“It’s about using data that are available to predict which students are at risk, identify them, and then provide supports and interventions so they can get back on track,” says Susan Bowles Therriault, principal researcher for the education program at American Institutes for Research. 

The national graduation rate has been climbing steadily. Today, about 80 percent of public high school seniors will graduate. A decade ago, that number was closer to 70 percent. Educators, parents, and politicians all want to see that number continue to increase.

Early Warning Systems are one way schools are trying to make that happen. Therriault says the proliferation of individual-level student data has made these systems possible, even common.

“There are probably schools and districts in every state across the nation that are using Early Warning Systems in some format,” she says. 

Research shows that the two most important factors when trying to predict whether a student will graduate from high school on-time are academic performance and attendance. But different schools, districts and states have their own models. They might include their own variables, or they start looking for signs that a child is at risk at different points in their education. And they flag them in different ways.

Dan Hill for LearningCurve

In Wisconsin, every 6th grader in the state is given a score between 0 and 100 that represents the child’s expected chances of finishing high school on time. Students under 78.5 are flagged as “high risk,” and their names are highlighted in red in the state’s student database.

“It’s early, and that’s the real advantage of it,” says Jared Knowles, a research analyst at the Wisconsin Department of Public Instruction, which calculates the scores.

Knowles says predicting the path of a 6th grader gives teachers a long lead time to change that path. Plus, he says, it can be cheaper to intervene early, before problems multiply.  

But Knowles acknowledges there are risks to using data to mark students as potential dropouts. “We do a lot of work to communicate about the limits of the prediction,” Knowles says, to show “that it’s not destiny.”

Educators wouldn't want a teacher to give up on a student with a score of, say, 20 in order to help those with 80s. They don’t want a student to find out she’s got a red flag next to her name – and give up on herself.

The data, says Knowles, is just a snapshot of how a child is doing. It’s a symptom of trouble, but it’s not a diagnosis, and it’s not a cure.

“The school has to do that hard work to re-engage them back into the education system,” Knowles says.

That is the work that will actually change an outcome for a struggling student, not data or data systems, experts say.

Back at Principal Birch’s middle school in Vacaville, these school interventions take many forms, including special-ed evaluations, behavioral counseling, mentoring, and intervention classes in a specific subject area.

In the English intervention class, about a dozen students are going over the basics of reading comprehension. In the math intervention class, students are struggling to calculate discounts and tips.

These classes take resources, and Willis Jepson Middle School didn’t have extra money, so Birch came up with an elaborate bell schedule to squeeze them into the day. She also made some classes a little bigger, to free up teachers to run these interventions.

Birch says all the extra work like data crunching and schedule crunching is worth it to get students back on track.

And, hopefully, erase their names from that list in her office.

Using data to predict students headed for trouble

Wed, 2014-11-12 11:12

Principal Kelley Birch’s office at Vacaville, Calif.'s Willis Jepson Middle School has the usual stuff: elaborate scheduling calendars, photos, and a neat stack of papers. 

What you won’t see, unless you walk around to Birch’s desk, is a whiteboard with handwritten names of the 56 students at Willis Jepson who have been struggling, the 7th and 8th graders who might not graduate high school a few years down the road.

Next to each name on the list are their trouble spots, things like poor grades, poor attendance, serious behavior issues. On the same list are notes about the ways the school has tried to help. The more marks next to a kid’s name, the more interventions the teachers and counselors attempted. 

“When I see that board,” says Birch, “I have an urgency that these kids need something now.” 

In the past, Birch says, getting a full view of which kids were in trouble took time. “We would wait for the teacher. And the teacher would go to the counselor and say, 'I have this student and they aren’t doing well," Birch says. "And the counselor would go look and say, 'Yeah, they aren’t doing well.' But by then, it’s a quarter into the school year, a semester into the school year.” 

Now, Birch uses what’s known as an Early Warning System. Her team gathers and processes a steady stream of student data, like GPA, attendance, demerits, and test scores, to peer into the future and spot the 7th and 8th graders most at risk of dropping out of high school in the future. 

An example of an Early Warning System.

Maine Department of Education

“It’s about using data that are available to predict which students are at risk, identify them, and then provide supports and interventions so they can get back on track,” says Susan Bowles Therriault, Principal Researcher for the education program at American Institutes for Research. 

The national graduation rate has been climbing steadily. Today, about 80 percent of public high school seniors will graduate. A decade ago, that number was closer to 70 percent, but educators, parents, and politicians all want to see that number increasing. 

Early Warning Systems are one way schools are trying to make that happen. 

Therriault says the proliferation of individual-level student data has made these systems possible, even common. “There are probably schools  and districts in every state across the nation that are using Early Warning Systems in some format,” she says. 

Research shows that the two most important factors when trying to predict whether a kid will graduate from high school on-time are academic performance and attendance. But, different schools, districts, and states have their own models. They might include their own variables, or they start looking for signs a kid is at risk at different points in their education. And they flag them in different ways.

Dan Hill for LearningCurve

In Wisconsin, every 6th grader in the state is given a score between 0 and 100 that represents the child’s expected chances of finishing high school on time. Students under 78.5 are flagged “high risk,” and highlighted in red in the state’s student database.

“It’s early, and that’s the real advantage of it,” says Jared Knowles, a Research Analyst at the Wisconsin Department of Public Instruction, which calculates the scores.

Knowles says predicting the path of a 6th grader gives teachers a long lead time to change that path. Plus, he says, it can be cheaper to intervene early, before problems multiply.  

But Knowles acknowledges, using data this way, to mark kids as potential dropouts, has risks. “We do a lot of work to communicate about the limits of the prediction,” Knowles says, “that it’s not destiny.”

Not destiny.

You don’t want a teacher to see a kid with score of 20, and give up, in order to help the kids with 80s. You don’t want a kid to know she’s got a red flag next to her name, and give up on herself.

The data, says Knowles, is just a snapshot of how a child is doing. It’s a symptom of trouble, but it’s not a diagnosis, and it’s not a cure. “The school has to do that hard work to re-engage them back into the education system,” says Knowles.

It’s that work that’ll actually change an outcome for a struggling student, not data or data systems.

These school interventions take a lot of forms, everything from special-ed evaluations, to behavioral counseling, to mentoring, to intervention classes in a subject area back at Principal Birch’s middle school in Vacaville.

In the English intervention class, about a dozen students are going over the basic of reading comprehension. In the Math intervention class, students are struggling to calculate discounts and tips.

These classes take resources, and Willis Jepson Middle School didn’t have extra money, so Birch came up with an elaborate bell schedule to squeeze them into the day. She also made some classes a little bigger, to free up teachers to run these interventions.

Birch says all the extra work like data crunching and schedule crunching is worth it to get kids back on track.

And, hopefully, erase their names from that list in her office.

Big banks get fined in foreign exchange rigging

Wed, 2014-11-12 11:00

The big banks had a fine time on Wednesday – as in they had to pay $4.3 billion worth of fines to financial regulators in the United States, the United Kingdom and Switzerland.

Traders at several big banks – including UBS, JPMorgan Chase and Citigroup – manipulated foreign exchange rates over a five-year period starting in 2008. Essentially, they banded together to get rich at the expense of their clients.

Foreign exchange, or forex, is by far the biggest market in the world in terms of the amount of money that changes hands. According to Carol Osler, a professor at the Brandeis University International Business School, forex is “easily 10 or 20 or 30 times bigger than any other single market you could imagine.”

Every day, more than $5 trillion moves through the market.

“Trading is literally 24/almost-7,” Osler says. “Over the weekends, very little happens, but there is trading almost any time you want to trade.” 

Companies trade currencies to import and export products, and to buy and sell bonds. Banks want to be sure they have enough yen or euros to buy or sell something at a moment’s notice.Because currency trading happens all the time, there is no closing price.

“There was a need for some sort of formal price that institutions could use to value their portfolios,” Osler says.

And so the “fix” was born.

“They had to find an arbitrary time to grab off a rate, and they just decided to do it at 4 p.m.,” says Kathryn Dominguez, a University of Michigan professor of public policy and economics.

Every day, for one minute around 4 p.m. London time, Reuters takes the average exchange rate and that becomes the “fix.”

According to Darrell Duffie, who teaches finance at the Stanford Graduate School of Business, if you are buying and selling currencies, sometimes you do it in real time, “but sometimes you tell the bank, well, never mind giving me a price now, I’ll just pay whatever the 4 p.m. fixing price is.”

And because of that, currency dealers had an easy time colluding to drive that price up or down. Brandeis’ Carol Osler says that, in private chat rooms, traders told each other how much they had to buy and sell to move the price.

“The dealers are thinking, 'Well, gosh, if almost all of us are going to be buying, then we know the price is going to go up,'” Osler says. “Well, it would be helpful to know what is going on with everyone else.”

When they announced the fines, regulators called on banks to change their corporate culture – and left the door open for criminal prosecution.

Big banks get fined for fixing the forex fix

Wed, 2014-11-12 11:00

The big banks had a fine time on Wednesday, as in, they had to pay $4.3 billion worth of fines to financial regulators in the United States, the United Kingdom, and Switzerland.

Traders at several big banks, including UBS, JPMorgan Chase, and Citigroup, manipulated foreign exchange rates over a five-year period starting in 2008. They, essentially, banded together to get rich at the expense of their clients.

Foreign exchange is the biggest market in the world, by far, in terms of the amount of money that changes hands. According to Carol Osler, a professor at the Brandeis University International Business School, forex is “easily 10 or 20 or 30 times bigger than any other single market you could imagine.”

Every day, more than $5 trillion moves through the market. “Trading is literally 24/almost-7,” Osler says. “Over the weekends, very little happens, but there is trading almost any time you want to trade.” Companies trade currencies to import and export products, and to buy and sell bonds. Banks want to be sure they have enough Yen or Euros to buy or sell something at a moment’s notice.

Because currency trading happens all the time, there is no closing price. “There was a need for some sort of formal price that institutions could use to value their portfolios,” Osler says.

And so, the “Fix” was born.

“They had to find an arbitrary time to grab off a rate, and they just decided to do it at 4:00 p.m.,” says Kathryn Dominguez, a professor of public policy and economics at the University of Michigan. Every day, for one minute around 4:00 London time, Reuters takes the average exchange rate and that becomes the “Fix.”

According to Darrell Duffie, who teaches finance at the Stanford Graduate School of Business, if you are buying and selling currencies, sometimes you do it in real time, “but sometimes you tell the bank, well, never mind giving me a price now, I’ll just pay whatever the 4:00 p.m. fixing price is.”

And because of that, currency dealers had an easy time colluding to drive that price up or down. Brandeis’s Carol Osler says that, in private chat rooms, traders told each other how much they had to buy and sell to move the price.

“The dealers are thinking, 'Well, gosh, if almost all of us are going to be buying, then we know the price is going to go up,'” Osler says. “Well, it would be helpful to know what is going on with everyone else.”

When they announced the fines, regulators called on banks to change their corporate culture, and they left the door open for criminal prosecution.

Why the U.S.-China climate deal isn't crazy ambitious

Wed, 2014-11-12 11:00

The agreement between President Barack Obama and his Chinese counterpart, Xi Jinping, committing both countries to major reductions in greenhouse-gas emissions in the next 10 years, has been widely hailed as a political and diplomatic breakthrough. Until now, one big point of contention in debates about reducing U.S. emissions has been, “What’s the point? China’s the biggest emitter now. Without their participation, world emissions barely budge.”

Less-discussed has been the size of the undertaking itself. President Obama is committing the U.S. to dialing back emissions to less than 75 percent of 2005 levels. That sounds tough. 

But here’s the secret: Essentially, these are reductions the Obama administration has already committed to. 

"If you’re in the clean energy industry in the U.S., and you’ve been keeping up on these developments already, then this announcement probably doesn’t represent a major game-change for you," says Ethan Zindler, an analyst with Bloomberg New Energy Finance.

If you’re not in the clean-energy industry, you may wonder what developments Zindler is talking about. One should be familiar: The Environmental Protection Agency’s Clean Power Plan, proposed in June, is designed to decrease emissions from existing power plants. That’s big.

A less well-known rule — still getting finalized — would strictly limit emissions from any new power plants. Old-style coal plants, the biggest emitters — effectively, new ones would be forbidden.

Then there’s a rule that’s already in force: fuel-efficiency standards for cars.  "The average car that’s sold this month is about 25 percent more fuel-efficient than the one that was sold about five years ago," says Zindler.

The power-plant rules are still proposals, and a new president could eventually undo them. But this agreement makes the whole framework a little stronger. "Any time two major leaders reach an agreement, it has some level of authority to it," says Dan Bakal, director of the electric-power program at the non-profit group CERES.

Finally, a diplomatic partnership opens the door wider to cooperating on the how of reducing emissions. "There will continue to be really advanced technologies that we will cooperate on together," says Susan Tierney, an energy consultant with The Analysis Group. "We need to figure out how to deal with the carbon emissions associated with coal."

Right now, technology for cleaning up emissions from coal generators is experimental and costly. Tierney thinks teaming up with China could help.

At a Starbucks near you: Chestnut Praline Lattes

Wed, 2014-11-12 11:00

Just in time to satisfy your holiday sweet tooth, Starbucks announced its first new holiday beverage in five years: the Chestnut Praline Latte.

In the lineage of holiday flavor trends, Starbucks is throwing chestnut into the ring. 

The drink, according to Starbucks is, "a blend of fresh espresso and flavors of caramelized chestnuts, with freshly steamed milk, topped with whipped cream and spiced praline crumbs."

Which ultimately just sounds like a delicious cup of caffeinated ice cream. So why not just eat ice cream?

Twinkies: brought to you by private equity

Wed, 2014-11-12 11:00

Private equity saved the Twinkie by buying up its manufacturer, Hostess Brands, and reportedly tripling its value in the process.  

Hostess’ owners, Apollo Global Management and Metropoulos and Co. bought the company for $410 million almost two years ago.  Today, there’s speculation it’s worth almost $2 billion.  How do private equity firms do it?

“They buy the company’s assets and then they start looking for inefficiencies,” says David Robinson, a finance professor at Duke University's Fuqua School of Business.

In the case of Hostess, that meant outsourcing delivery of Twinkies and Ding Dongs, slashing the labor force, and closing some plants.

But the private equity buyers also capitalized on nostalgia for Hostess snacks, and the panic that they would soon disappear. 

Their social media campaign featured stars like Snoop Dogg tweeting about a special delivery of Twinkies. 

Even Wall Street analysts weren’t immune.

“I’m a Ding Dong man,” says Bruce Cohen, senior partner at Kurt Salmon.   He did some panic-buying for his office. “We went on Amazon and we bought Twinkies and Ding Dongs and apple pies and the small doughnuts and we had a big celebration.”

With Hostess’s value apparently soaring, other private equity firms are trying the same thing. 

“Just because a company is financially a wreck, it doesn’t mean there’s not a loyalty and it symbolizes a certain thing and it  brings a certain joy and a deliciousness,” says Peter Cowen, managing director of  Clear Capital Advisors.

Cowen says there are other examples of money being made from nostalgia.  Just look at the turnarounds of  Pabst Blue Ribbon beer and Old Spice cologne.

The numbers for November 12, 2014

Wed, 2014-11-12 10:16

Before leaving to continue his tour of Asia, President Barack Obama signed a climate change agreement with Chinese President Xi Jinping.

The announcement Wednesday was part of a nine-month planning process. The U.S. will double its current rate of carbon cuts with a target of reducing 26 to 28 percent by 2025, while China pledged to peak its emissions growth by 2030. The plan is already getting pushback from the new Republican Senate majority, the Wall Street Journal reported.

Here are some stories we're reading and other numbers we're watching Wednesday:

$9.9 billion

That's how much merchandise Alibaba sold during its 11/11 shopping event Tuesday, shattering last year's 11/11 and all online sales around Thanksgiving last year, AdAge reported. Nearly half of those sales came from mobile and Chinese brands dominated.

50 million

That's Spotify's active user base, and 12.5 million of them pay for the subscription service. Spotify has seen powerful growth, but the start-up could very well be threatened by YouTube, which is launching its own service with an invite-only beta this week. It's called YouTube Music Key, and yes, it has Taylor Swift.

732,732

The number of followers Alex Lee, a.k.a #AlexFromTarget, had on Twitter as of Wednesday morning. When a photo of Lee at work went viral earlier this month, he was bombarded with requests for photos, endorsements and television appearances as well as threats and harassment. A New York Times story published Wednesday tracked the explosion of fame from Lee's perspective.

39 grams

That's how much sugar is in Starbucks' first new holiday beverage in five years, the Chestnut Praline Latte, which debuts Wednesday. That's actually on the low side - the eggnog latte, peppermint mocha and pumpkin spice latte all hover around 50 grams. ABC News has a taste test.

The cost of living up to the U.S.-China climate deal

Wed, 2014-11-12 06:00

The United States and China made a surprise announcement Wednesday: After months of secret talks, the two largest emitters of greenhouse gases had come to a joint agreement on climate change.

In its first commitment of this sort, China set a target of 2030 to halt emission increases and to produce 20% of its energy using non-fossil-fuel sources. 

The United States set a more nuanced target: a reduction of emissions by 2025 to 26-28% below 2005 levels. 

"I would characterize it as a call to accelerate what we’re already doing," says Bob Perciasepe, president of the Center for Climate and Energy Solutions. "I use the word accelerate, because in order to get there 10 years from now we have to start going a little faster."

The Obama administration claims this target is reachable under existing laws—an important consideration given that the Republican-controlled congress is highly unlikely to pass any related legislation.

To meet these goals will require building on initiatives the administration has put forward that do not require congressional approval, such as tougher fuel standards and the proposed Clean Power Plan to reduce emissions from power plants (Automobiles and electricity are the two largest sources of greenhouse gas emissions in the United States).  

Under the Clean Power Plan proposal, different states could determine how to cut carbon pollution in a variety of ways. 

"But the quickest, fastest, most cost effective option available is switching from carbon intensive coal generators to low carbon natural gas," says John Larsen, senior analyst with the Rhodium Group.

According to the Rhodium Group’s analysis, that switch could cut coal revenue by $15 to $20 billion—and boost revenues for natural gas producers by as much as $30 billion.

PODCAST: Black Friday takes a whole week

Wed, 2014-11-12 03:00

Market players are also looking at a downbeat forecast from Britain's central bank; one more reason interest rates aren't going up in the U.S. any time soon. And a surprise announcement out of Beijing today: The United States and China have come to a joint agreement ... on climate change. For the first time, China is drawing a line in the sand on greenhouse gas emissions. And what about the United States? Plus, instead of stuffing your face in one sitting, imagine a bacchanalia spread over five days. The biggest of retailers Walmart says it wants to stretch out the frenzy of post-Thanksgiving shopping into nearly a week of sudden sales and other promotions. In practice that means some of the special deals won't happen on so-called Black Friday. And at a more spiritual level, is this the time to mention that there's more to life than consumption?

Even congressmen get hazed

Wed, 2014-11-12 02:00

Congress is back in session on Wednesday after the mid-term elections.

As with any new job, incoming politicians will have to sit through a new-hire orientation. That's right: even congressmen and senators have a human resources process they need to clear.

Perhaps it’s not that surprising; in this age of employee handbooks, ethics policies, and background checks, it takes a whole lot more than filling out a mere W-4.

“The HR portion of this orientation is just like what you’d see in the private sector and… nothing new,” says Mike Bishop. Bishop is an incoming GOP Representative representing Michigan’s 8th District.

In Bishop’s case, his previous experience in the Michigan State Legislature should help soften the blow. But for other incoming freshmen who come from outside of politics, it could be like “drinking water from a fire hose,” he says.

As new people are getting squared away, others are conducting exit interviews.

Russ Carnahan, a Democrat from Missouri, served in Congress from 2004 to 2012. Even today, he still remembers that first orientation session.

“We were told, ‘this will be the most bi-partisan thing you ever do in your career,’” said Carnahan. “’After this, you’ll be pitted against each other, party-to-party, and it will go down-hill from there.’ That was a little prophetic.”

Any new employee will have questions and solicit advice, but here’s a pro-tip: It’s probably best to avoid asking your colleagues about the healthcare coverage.

 

Dirty 'frackwater' could yield lots of green

Wed, 2014-11-12 02:00

Inside a big industrial building in Pittsburgh, Mike Broeker shows off what he hopes is the next big thing in cleaning up the fracking business.

“We have three 8-foot diameter satellite dishes, these are the most common satellite dishes in the world,” says Broeker.

Broeker is COO of Epiphany Solar Water Systems, and no, he’s not selling telecom equipment. His company uses these satellite dishes to clean up the briny waste water that comes out of hydraulically fractured oil and gas wells. This waste stream is toxic and it’s hard to clean—at least cheaply.

Epiphany’s satellite dishes are coated with highly reflective material, making them intense solar heat collectors. They use that heat to evaporate clean water out of tanks of the salty waste, which collects at well pads.

Broeker says it’s actually the same technology bootleggers use to make moonshine.

“It is the same concept; it is distillation,” Broeker says. Instead of making whiskey, Epiphany makes pure water.

A few years ago, the company started to treat drinking water in remote parts of the developing world. But when the fracking boom came, the company sensed an opportunity to jump into the fracking waste water business. A lot of other companies did, too. But it’s been a difficult technology to master—and few have succeeded.

“It’s such low quality water that the technology crashed and burned when they try to treat it,” says Brent Giles, an analyst with Lux Research. The high salt content of fracking waste water—it’s up to 10 times saltier than the ocean—has tripped up many companies. That much salt destroys equipment and clogs up filters. 

It’s not hard to see why these companies tried to get into the fracking waste business. Lux estimates that it’s a $1 billion market right now, and could grow to $9 billion by the next decade.

Giles says right now it’s cheaper to recycle that waste or inject it underground. But underground disposal comes with its own issues. The USGS has linked underground injection to earthquakes.

Some in the fracking industry think regulation might make injection wells more expensive in the future. And if that happens, companies that can clean the water up could get a flood of new business.

 

The newest class of Goldman Sachs partners

Wed, 2014-11-12 02:00

There are raises, and then there’s the kind of raise that happens if you make partner at Goldman Sachs. 

"It literally becomes a huge compensation event," says Mitchell Peskin, a partner at Execu|Search Group, a recruiting firm. "I mean a very large raise, and I mean the ability to now participate in the Goldman Sachs Partnership bonus pool."

If the pool is large enough, Peskin says, partners can make millions. Goldman Sachs didn’t respond to a request for information, but just the salary for a partner at the firm is estimated to be around $1,000,000.

“If money is important to you, and I would say it is to most people that work on Wall Street, it’s as good as it gets,” says Peskin.

Making partner means you’ve made it, and Goldman wants partners to feel that way, says Dr. Michael J. Driscoll, a clinical assistant professor of finance at Adelphi University.

“Because they want to keep the best and brightest, they don’t want them going to private equity firms, they don’t want them launching hedge funds on their own, possibly taking client contacts away from Goldman,” he says.

Plus, with the increased scrutiny and regulation that Wall Street and investment banks have come under in the last few years, Driscoll says there's an increased fear that talent will seek a landscape that's less under the noses of regulators. 

Still, Driscoll believes partners shouldn't get too comfortable: "You’re not a made man for life; this isn’t the Mob." If partners fail to produce, says Driscoll, they could lose their title.

"But I don’t think people are shedding too many tears for those that are un-partnered, they’ll be just fine."

Cell phone dead zones bring a call for more towers

Tue, 2014-11-11 12:22

On the afternoon of May 20, 2014, travelers driving through Oak Creek Canyon on their way to Sedona’s famous red rocks noticed a plume of smoke. Since they couldn’t get a cell signal, they followed  the windy road until they reached the fire station 10 minutes away.

“I was very, very worried,” says lodge owner Mary Garland. “I just thought this fire was moving so fast. I really thought the lodge was going to be burned.” Garland watched the blaze devour hundreds of trees and come right up to her property line. First responders actually kept the flames from reaching the lodge and all of the other homes and businesses in the canyon, but the blaze burned 21,000 acres of the canyon.

Minutes are crucial,” Sedona Fire Chief Kris Kazian says. “Seconds are crucial. Quick access makes the difference in our business.”

Residents say the fire could have been extinguished much sooner had there been a cell phone signal. “Cell phone service is the key to living in modern society,” says canyon resident John David Herman.

He worries about all of the potential emergencies that could happen in a 12-mile-long cell phone dead zone. “You drove here,” Herman says. “You could’ve had a flat tire. You could’ve gone off in the road. A million things could’ve happened, and you’d still be there.”

There are hundreds of places around the country like Oak Creek Canyon. If you look at a map of a cell phone provider’s service, there are large swaths of the country that have no cell signal.

The solution seems simple: Erect more cell towers. But Verizon and AT&T say the rugged terrain in Oak Creek Canyon makes that too difficult. Sprint says erecting towers in places with few people is just too expensive. The cost to install a cell phone tower is about $25,000, and that’s not including the necessary permits.

None of the carriers are going to do what we want them to do for the sake of 50 families in this community,” Herman says.

But  carriers might put in cell towers for the thousands of travelers who drive through the popular canyon every day, says Mike Keeling, a cell phone engineer turned lawyer. That traffic is a determiner for the operators of cellular companies as to where they put their towers,” Keeling says.

A  long, unpopulated stretch of highway between Phoenix and Las Vegas, for example, has cell towers because it is  heavily traveled by the  subscribers,  he says.

If there were lots of folks there, then the return on investment would be available for a Verizon, or AT&T or Sprint,” Keeling says.

The federal government is working on a $7 billion program called First Net, which would put all first responders on the same cellular frequency and  cell towers in those dead zones. But that program is still in its design phase.

For now,  Fire Chief Kris Kazian is making do with an old emergency siren.

"Just a siren that notifies you,” Kazian says. “There’s no voice and there’s no means to tell you what to do once that siren’s activated. Everyone just run and panic.”

People often come to Oak Creek Canyon to get away from technology like cell phones. But as John David Herman says, it sure would be nice to have the option of turning that cell phone on to dial 911.

Cell phone dead zones bring call for more towers

Tue, 2014-11-11 12:22

On the afternoon of May 20, 2014, travelers driving through Oak Creek Canyon on their way to Sedona’s famous red rocks noticed a plume of smoke. Since they couldn’t get a cell signal, they kept driving the windy road until they reached the fire station 10 minutes away.

“I was very, very worried,” says lodge owner Mary Garland. “I just thought this fire was moving so fast. I really thought the lodge was going to be burned.” Garland watched the blaze devour hundreds of trees and come right up to her property line.

First responders actually kept the flames from reaching the lodge and all of the other homes and businesses in the canyon, but the blaze burned 21,000 acres of the canyon.

Minutes are crucial,” Sedona Fire Chief Kris Kazian says. “Seconds are crucial. Quick access makes the difference in our business.”

Residents say the fire could have been extinguished much sooner had there been a cell phone signal. “Cell phone service is the key to living in modern society,” says canyon resident John David Herman.

Herman worries about all of the potential emergencies you could have in a 12-mile-long cell phone dead zone. “You drove here,” Herman says. “You could’ve had a flat tire. You could’ve gone off in the road. A million things could’ve happened and you’d still be there.”

There are hundreds of places around the country like Oak Creek Canyon. If you look at a map of a cell phone provider’s service, there are large swaths of the country that have no cell signal.

The solution seems simple: Erect more cell towers. But Verizon and AT&T say the rugged terrain in Oak Creek Canyon makes that too difficult. Sprint says erecting towers in places with few people is just too expensive. The cost to install a cell phone tower is about $25,000, and that’s not including the necessary permits.

None of the carriers are going to do what we want them to do for the sake of 50 families in this community,” Herman says.

But, carriers might put in cell towers for the thousands of travelers who drive through the popular canyon every day, says Mike Keeling, a cell phone engineer turned lawyer. That traffic is a determiner for the operators of cellular companies as to where they put their towers,” Keeling says.

Keeling says a long unpopulated stretch of highway between Phoenix and Las Vegas, for example, has cell towers because it’s so heavily traveled by their subscribers.  

If there were lots of folks there, then the return on investment would be available for a Verizon, or AT&T or Sprint,” Keeling says.

The federal government is working on a $7 billion program called First Net, which would get all first responders on the same cellular frequency that would put cell towers in those dead zones. But that program is still in its design phase.

So for now, Fire Chief Kris Kazian is making do with an old emergency siren.

"Just a siren that notifies you,” Kazian says. “There’s no voice and there’s no means to tell you what to do once that siren’s activated. Everyone just run and panic.”

People often come to Oak Creek Canyon to get away from technology like cell phones. But as John David Herman says, it sure would be nice to have the option of turning that cell phone on to dial 911.

Ford's new assembly line jobs: less middle class

Tue, 2014-11-11 11:00

In Dearborn, Michigan this morning, Ford’s brand new F-150 truck rolled off the line. What’s new? The body. It’s aluminum instead of steel. That sheds 700 pounds, or 15 percent,  from its predecessor. They call it lightweighting.

Ford boasts 850 new jobs on the truck line. Are they good jobs? Think of them as lightweighted, too.

New workers at Ford – as well as GM and Chrysler – start at around $18 an hour. That’s generous relative to other sectors. But put that next to $30 an hour. That’s what auto workers hired before 2007 make.

Bureau of Labor Statistics

This is the new, two-tiered economy of auto workers.

“The people who are bearing the brunt of the adjustment to a more competitive world are the new hires,” says University of Michigan economist Don Grimes. “And they don’t get nearly as good benefits.”

On the shop floor, the high and low paid workers often do the same job.

“It would be interesting how the employees are getting along,” Grimes says. “I mean the guy working right next to you may be making a third less than you are.”

For new hires, life comes with lots of "if"s.

You can retire well, if your investments grow. Get a raise, if the company profits. It’s all in the new contract between the Big Three and the United Auto Workers union.

It worked out well last year.

“The workers went home with lots of money in their pockets,” Kristin Dziczek at the Center for Automotive Research says. “The profit sharing payouts at Ford were $8,800 last year. But, you know, if Ford makes no money this year, they don’t get that.”

So goes the brave new industrial world. U.S. automakers have to be lean to compete. More factory work is done by technology instead of people.

IBIS World

And the United Auto Workers has lost leverage. Back in the 1970's, the UAW set wages that Toyota and Honda plants in non-union states felt compelled to match.

No longer. The bottom came with the 2009 auto bankruptcies.

“A provision of those bankruptcies was that the automakers would become cost competitive with the internationals in the United States,” Dziczek says. “So that was a complete turn of the books. The internationals set the wage and benefit package for the auto industry.”

How important is a CEO to a company's success? It depends.

Tue, 2014-11-11 11:00

The question of how much a CEO has to do with a company’s success became critical in an Oklahoma divorce case this week.  Lawyers for the multi-billionaire who runs Continental Resources, Harold Hamm, argued that other factors  – including luck – had more to do with the oil company's success than the CEO himself.

The judge in Hamm's divorce case ruled otherwise on Monday. He said the CEO - credited with leading Continental's acquisition of fracking sites in North Dakota and neighboring areas - played a central role in his company’s success, and awarded Sue Ann Hamm $1 billion, the largest divorce settlement in U.S. history.

Since the ruling concluded that Hamm's wealth - a reported net worth of $17 billion - had been earned due to his efforts or skills, Oklahoma law mandated that it would have to be shared with his ex-wife.

Continental's expansion began in the mid-1980s, when Continental was an Oklahoma-centric natural gas and oil company. Over the last three decades, the company’s value has increased 400-fold.

“The record is pretty clear that Continental made a whole series of decisions that were timely, and shrewd and courageous,” says Joseph Bower, a professor emeritus at Harvard Business school who taught management for 51 years.

Bower says when a company changes course, like Continental did, the CEO is the pilot. But while a visionary CEO can set the course for a company’s future, it doesn't usually happen that way: The trajectory the company is already on has a greater impact on its future success or failure, says  assistant professor of management at the University of Georgia Timothy Quigley, who co-authored a study on the impact CEOs have on companies.

Quigley’s research shows CEOs account for up to a quarter of a company’s success or failure, while trajectory accounts for as much as a third.

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“If we were to put my mom in charge of Wal-Mart tomorrow, Wal-Mart would probably still outperform Kmart for the foreseeable future," he says. "The point is: The trajectory that the company is on matters."

While the impact of chief executives may be limited in the U.S., it’s even more so in much of the rest of the world. In the U.S., CEOs have more power and discretion, according to assistant professor of management at the University of Notre Dame Craig Crossland, who has studied international business culture surrounding CEOs.

In societies where CEOs are given more discretion, "we’re more likely to see big hits and big misses,” says Crossland, giving the U.S. and UK as two examples.

Western Europe and Asia differ, he says, because in those countries collectivism is more important than individualism, so CEOs are less empowered and decisions are more often made by consensus.

"And the places we tend to see CEOs being given least discretion is in East Asia. So societies like Japan, like South Korea,” Crossland says.

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