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Peak beard theory

Fri, 2014-04-18 09:32

An actual academic study in the journal Biology Letters says, basically, "the more men who have beards...the less attractive those beards are."

It's called "negative frequency-dependent preferences and variation in male facial hair," and in plain language, it means: "We've reached peak beard. It's time for beards to go out of fashion."

To which I say: Amen, brother. I'm the clean cut type -- I wouldn't look good with a beard, even if I could grow one....


    

The resurgence of dot-com investment

Fri, 2014-04-18 07:49

Venture capitalists are pouring money into internet startups again: they’ve invested $9.5 billion in various startups so far this year, according to the latest MoneyTree report by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters. 

The report claims we haven't seen this much venture capital floating around since 2001, as the dot com bubble was starting to deflate. Right now, web ventures are getting the most investment money, and biotech is a distant second. 

“The amount of capital that a startup requires now is much less,” says venture capitalist Peter Cohan, president of Peter S. Cohan & Associates. Cohan says startups are cheaper now because technology is so much more advanced than it was in the 90s.  And it costs a lot less.

Some startups that failed in the 90s are being tried again. Things like online currier services. They weren't feasbile in the 90s, because there weren’t any smart phones yet.

“It was very difficult to track curriers and pinpoint where they are so it was very difficult to deliver,” says  Jalak Jobanputra, founder of Future Perfect Ventures, another venture capital firm. 

Is all this startup money blowing up a bubble? Jobanputra says yes.  But it probably won’t pop. Instead, she expects it to deflate, slowly. 

PODCAST: Obamacare's youth movement

Fri, 2014-04-18 06:57

The White House is touting its calculation that 8 million have signed up for health insurance under federal health reform. But a key question is whether enough of them will be young people, a group that often blew off insurance before, and are needed to make the economics of the plan work. Marketplace's Nancy Marshall-Genzer joins us to explain.

The U.S. is pressuring Japan to remove import tariffs on pork and beef as part of the Trans-Pacific Partnership — a proposed new free trade agreement being discussed by twelve countries on the Pacific Rim. Next week when President Obama goes to Tokyo this issue will be high on the agenda. Japan is the world's top importer of pork — Japanese eat expensive tenderloins and cutlets deep fried into crispy katsu. But that agreement won't be easy. Japan has traditionally protected its agricultural commodities.

A case going before the Supreme Court next Tuesday pits traditional television broadcasters against Aereo, which lets customers record broadcast TV in their local markets and then watch programs via television, computer, tablet or smartphone. The technology that makes it possible is a farm of thousands of tiny antennas, each smaller than a nickel. The case – in which some say billions of dollars are potentially at stake – hinges on what constitutes a public broadcast versus a private one, under copyright law.

 

Got a favorite tree? Throw it a party

Fri, 2014-04-18 05:48

From the Marketplace Datebook, here's an extended look at what's coming up the week of April 21, 2014:

30,000 people are expected to gather on the South Lawn at the White House for the annual Easter Egg Roll.

Do something nice for your planet on Tuesday. It's Earth Day.

The National Association of Realtors reports on sales of existing homes for March.

More interested in a new home? We get those sales figures from the Commerce Department on Wednesday.

Ebertfest gets underway in Champaign, Illinois. The annual event "celebrates films that haven't received the recognition they deserved during their original runs."

If you're in Iceland you probably have time off to celebrate the first day of summer on Thursday. It's a public holiday.

In this country it's Take Our Daughters and Sons to Work Day. And the good folks at the Commerce Department are scheduled to report on durable goods orders for March. Hopefully they can kick that out before their kids show up to the office.

Friday is National Arbor Day, the tree planting holiday. More good things for the planet.

And it's a serious event with a lot of dough at stake. The National Pie Championships roll out in Orlando. Just in time for bathing suit season.

A 'threat' to broadcast TV heads to D.C.

Fri, 2014-04-18 02:52

A case going before the Supreme Court next Tuesday pits traditional television broadcasters against Aereo, which lets customers record broadcast TV in their local markets and then watch programs via television, computer, tablet or smartphone. The technology that makes it possible is a farm of thousands of tiny antennas, each smaller than a nickel.

"It is just racks and racks of storage equipment and transcoding equipment for rendering the signal, storing the signal, and providing recording functionality for the consumers," says Aereo's chief executive, Chet Kanojia, at one such data center, a 10,000-square-foot facility in Brooklyn.

The antennas pick up signals coming from the nearby Empire State Building and the Freedom Tower. Customers are assigned an antenna and a DVR, they choose what to record and when, for a few dollars a month.

"The important thing is it is a one-to-one relationship," Kanojia says. "So, one antenna, one file, one stream, all under a consumer's control at all times."

The case – in which some say billions of dollars are potentially at stake – hinges on what constitutes a public broadcast versus a private one, under copyright law.

Tom Nachbar, a professor at the University of Virginia Law School, frames the question this way: "By performing that service for thousands of people at the same time, although totally individually, are they doing what is essentially a transmission to the public?"

When it comes to copyright, there's a difference between a private performance – watching or recording something in your home, for example – and a public one – taking a copyrighted work and distributing it widely.

Aereo's opponents say the company is doing the latter: "They're grabbing signals out of the air without paying for them, and then trying to make a profit off of that," says attorney Neal Katyal, who is advising the broadcasters suing Aereo. "That's not the American way."

Every year, broadcasters invest billions of dollars in creating content, Katyal says, and they recoup those costs with ads. On top of that, Nachbar adds cable providers pay for the right to distribute local channels. Aereo, which serves 13 markets, doesn't, and that's why the case could be so monumental.

If the court rules in Aereo's favor, those cable providers could argue they shouldn't have to pay the broadcasters either.

"It really is a threat to the current structure of the way broadcast television works," *Nachbar notes.

*CORRECTION: Due to an editing error, an earlier version of this story incorrectly attributed the final quotation. The text has been corrected. 

Will the future economy be driven by purpose or money?

Fri, 2014-04-18 02:05

From Good Friday services to the Passover seder and beyond, it's a time of year that is full of reminders that there's more to life than material things. And some business thinkers are catching on. 

Aaron Hurst, author of The Purpose Economy, argues we've entered a new era of people demanding their work add up to something. He joins Marketplace Morning Report host David Brancaccio to discuss. 

Click on the audio player above to hear more. 

 

New trade talks spark beef over tariffs

Fri, 2014-04-18 01:38

Japan and the U.S. are having beef over the price of meat.

The U.S. is pressuring Japan to remove import tariffs on pork and beef as part of the Trans-Pacific Partnership — a proposed new free trade agreement being discussed by twelve countries on the Pacific Rim. Next week when President Obama goes to Tokyo this issue will be high on the agenda.

Japan is the world's top importer of pork — Japanese eat expensive tenderloins and cutlets deep fried into crispy katsu.

"Over 25 percent of the U.S. pork is exported, and Japan is our most consistent trading partner," says Bob Ivey, general manager of Maxwell Foods, a major U.S. pork producer that sells to Japan. "So we are very excited about the new trade agreement."

But that agreement won't be easy. Japan has traditionally protected its agricultural commodities. Japanese Wagyu beef is renowned, and their pork industry is one of the world's largest. Still, the U.S. is pushing for much lower import tariffs on its meat.

"That's the U.S. demand. You could say roughly free trade in a little less than a generation," says Gary Hufbauer, senior fellow at the Peterson Institute, and international economics think tank. "This will be one of those down to the wire deals."

If they can't work this out, Hufbauer says Japan could drop out of the agreement altogether.

In which we DO NOT spoil GoT: Silicon Tally

Fri, 2014-04-18 01:00

It's time for Silicon Tally. How well have you kept up with the week in tech news?

This week we're joined by corporate reporter for Quartz, John McDuling.

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Home Depot turns to the Internet for growth

Fri, 2014-04-18 00:16

Home Depot as an online retailer? The Wall Street Journal reports that the big box retailer wants to grow by getting you to purchase building and home improvement supplies online

Part of the shift is due to overbuilding. For example, when I lived in Los Angeles, there were three Home Depots within a few miles of my house. And for a while, it seemed like it was building a store on every corner.

"That’s probably accurate," says Seth Basham, an analyst at WedBush, adding that the excess of stores isn't just a problem for Home Depot. "Between them and Lowe's and Menard's, the number of households per store continued to decline throughout the decade of the 1990s and 2000s," Basham said. 

And so Home Depot is now turning to the Internet for growth. 

"The biggest unique challenge to Home Depot is figuring out what the customer actually wants to buy online," says Maggie Taylor, an analyst at Moody’s. "So I think, carpeting for example, you’re always going probably into the store and take a look at."

And heavy items like Jacuzzi tubs might not be worth buying online because of shipping costs. Getting purchases to people - on time and on budget - will be another challenge. But Taylor says with tech giants like Amazon nipping at Home Depot's business, the big box retailer has no choice but to forge ahead.

Digging into the 8 million ACA signups

Thu, 2014-04-17 13:44

Eight million Americans have signed up for insurance under the Affordable Care Act, President Barack Obama said at a White House briefing Thursday, a figure that surpassed the non-partisan Congressional Budget Office's initial projection of 7 million.

Over the past six weeks some 3.7 million people signed up for insurance, according to the White House, and 28 percent of those who got insurance via the federal exchange were in the 18-34 age range, a figure of great interest to the insurance industry. Conventional wisdom is that younger people tend to be healthier (and cheaper to insurer) than older adults. The corollary is the healthier the risk pool in 2014, the less premium prices rise in 2015.

Obama said "we have a strong, good story to tell" and then went on the offensive , adding that 5.7 million Americans have been locked out of the run on insurance through Medicaid expansion because 24 states have declined to expand their Medicaid programs.

A more complete report on enrollment numbers is expected next week. It's important to note that not all of consumers who sign up for insurance will actually purchase insurance, so it's likely the 8 million number will drop. What was interesting – and perhaps surprising – was that millions of Americans flocked to the federal and state exchanges at the 11th hour. It suggests that there is a healthy interest in having health insurance. That interest is only expected to grow.

In fast food burgers, geography is key

Thu, 2014-04-17 13:14

Sonic is America’s fourth biggest burger chain, a fact that might surprise you if you live outside of the South. Sonic’s are located mostly around Texas, Oklahoma, Tennessee and Mississippi.

There are about 3,500 Sonic locations. But the company plans on opening 1,000 more locations over the next decade. “With this move, we see Sonic entering that arena of largest national players and leaving behind those regional players,” says Patrick Lenow, a spokesperson for Sonic, which is known for reviving the classic American drive-in. Food is ordered through an intercom and delivered to your car, often by servers on roller skates.

A graphic created by Stephen Von Worley of Data Pointed shows the concentration of fast-food burger chains around the country. (Courtesy of Stephen Von Worley/Data Pointed)

“The main difference that sets drive-ins and drive-thrus apart is that the demand for drive-ins is more heavily dependent on the weather,” says Hester Jeon, an analyst with IBIS World. “Sonic’s business dips pretty dramatically during the colder months.”

That may explain why it’s focusing much of its expansion in California. “When I think of one of the most successful burger chains in America, I think of In-N-Out Burger, which originated in California as a drive-in,” says Darren Tristano, a foodservice concept & menu expert with Technomic.

Another way Sonic differentiates itself from its competitors is by emphasizing its non-burger menu items, like the more than a million different soda flavors it offers. “They also sell hot dogs that are very regionalized in terms of flavor and have items like tater-tots on the menu,” Tristano says.

So, if you don’t live in the South, and you get a late night craving for chocolate-pineapple soda and tater tots delivered on roller skates, you may soon be able to satisfy it.

By Shea Huffman and Gina Martinez /Marketplace

The data for the graphic above was provided by a Marketforce Information survey on American's favorite burger chain by region:

Courtesy of Marketforce Information

'Consent is a fiction' in consumer contracts

Thu, 2014-04-17 13:06

After Loyola University New Orleans College of Law Professor Imre Szalai's wife gave birth, the Szalais were asked to sign an arbitration clause in the delivery room. That clause stipulated that they would have to settle any disputes with the hospital through arbitration, not in court. 

Because of his professional training, and because he has written a book on the history of arbitration, "Outsourcing Justice: The Rise of Modern Arbitration Laws in America," Szalai had his wife sign the form – his thinking being that, because she’d just gone through labor, a judge evaluating the agreement later would probably find that she was not in a clear state of mind at that time.

Arbitration started out as a business-to-business thing. During prohibition, courts were swamped, and it was a way to clear cases. Since a 2011 Supreme Court decision, arbitration has gained traction as a way for businesses to avoid lawsuits, as The New York Times noted Thursday. And when it comes to how companies are protecting themselves now, "You have to admit that, when it comes to consumer contracts, consent is a fiction," says Brian Fitzpatrick, a law professor at Vanderbilt. 

To wit:

  • From the terms of use at Netflix: “If you are a Netflix member in the United States (including its possessions and territories), you and Netflix agree that any dispute, claim or controversy arising out of or relating in any way to the Netflix service, these Terms of Use and this Arbitration Agreement, shall be determined by binding arbitration or in small claims court.” And, in all caps: “YOU AND NETFLIX AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING.”
  • Amazon.com's agreement, which says “Any dispute or claim relating in any way to your use of any Amazon Service, or to any products or services sold or distributed by Amazon or through Amazon.com will be resolved by binding arbitration, rather than in court.” And, RE: class actions: “We each agree that any dispute resolution proceedings will be conducted only on an individual basis and not in a class, consolidated or representative action.”
  • There's Electronic Arts ("By accepting these terms, you and EA expressly waive the right to a trial by jury or to participate in a class action.”) and StubHub: "You and StubHub each agree that any and all disputes or claims that have arisen or may arise between you and StubHub relating in any way to or arising out of this or previous versions of the User Agreement, your use of or access to StubHub's Site or Services, or any tickets or related passes sold or purchased through StubHub's Site or Services shall be resolved exclusively through final and binding arbitration, rather than in court, except that you may assert claims in small claims court, if your claims qualify."

For more examples, you can visit the “Forced Arbitration Rogues Gallery,” which the consumer advocacy group Public Citizen has created.  

The market's great expectations

Thu, 2014-04-17 13:03

Goldman Sachs on Thursday told the world its profits fell 11 percent. Yet the bank's stock rose on the news. It may sound odd, but it's perfectly logical on Wall Street. The markets expected Goldman to do even worse, so when the news wasn't as bad as predicted, the stock moved up.

Fine tuning market expectations is important for public companies. It's a lot like a kid who blows a test. It's better to tell mom and dad before the report card comes. If your parents are both accounting professors, they would call that giving guidance.

"If my daughter has a test that's particularly difficult, we hear about it beforehand," says James Myers.

He and his wife Linda Myers study these issues at University of Arkansas. They have two kids and are both quick to say both are good students. But if they ever hit a bump, they say it's wise to dial down their expectations before the report card arrives.

Companies can do the same thing ahead of their own report cards, the quarterly earnings reports. Providing guidance about good or bad times at the company can help keep the stock price under control when the final news comes.

Or, another example, by way of Marketplace's Paddy Hirsch and his Whiteboard:

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Mark Garrison: It’s actually pretty simple, just an expectations game. Amy Hutton is a professor at Boston College’s business school.

Amy Hutton: When Goldman announces their earnings, even if they’re down from last quarter or last year, if they’re higher than the expectation built into the stock price, the stock price is gonna go up.

Bad news can be perversely good, as long as Wall Street expected worse. So it’s important for companies to fine tune those investor expectations. It’s a lot like a kid who blows a test. It’s better to tell the parents before the report card comes. If your parents are both accounting professors, they call that giving guidance.

James Myers: If my daughter has a test that’s particularly difficult, we hear about it beforehand.

James Myers and his wife Linda study these investment issues at University of Arkansas. They say their kids make good grades and rarely need to, but sometimes a warning is wise.

Linda Myers: Because our expectations are a little bit lower, then we wouldn’t be as concerned about the low grade and I think it’s a pretty good analogy of what managers might do.

University of Michigan accounting professor Greg Miller says company guidance can work the same way. Just like parents, investors don’t like surprises.

Greg Miller: If you surprise people, they get madder. And so if there’s something coming that people are gonna be unhappy about, I’d rather own up to it now and let them know because they’re gonna be mad at me either way about the bad news.

Companies try to manage Wall Street’s expectations, to make sure a bad earnings report doesn’t torpedo the stock price. In New York, I'm Mark Garrison, for Marketplace.

What kind of jewelry goes with a tattoo?

Thu, 2014-04-17 12:56

It's a Thursday evening in Beverly Hills and the Gagosian Gallery is hosting a rooftop reception. Price tags on the artwork here go up to several million dollars, but if you're imagining an older crowd filling the space, you'd be wrong. These art lovers are young.

 

"We don't want to get stale," says *Deborah McLeod, director of the gallery. "This is an upwardly mobile group. These people are lighting Silicon Valley on fire. They come into the gallery in tennis shoes and they're still living in their two bedroom apartment, but they've made a mountain of money and they're the idea generation. We want them in the gallery."

 

McLeod says the Gagosian wants to reach a young demographic – specifically Millennials, thus the cocktail reception for the Orange County Museum of Art Contemporaries, a group for art aficionados under forty.

 

The Millennials, the generation born between 1982 and 2004, are growing up. And marketers are starting to pay attention. The generation is enormous, 97 million in the U.S., and with adulthood comes money, and, the power to make big purchases -- homes, cars and expensive products. But only one millennial was in attendance at the Gagosian. Everyone else was a few years older, bleeding into Generation X. Marketers, it seems, are just beginning to figure out how to reach this age group at it moves into adulthood.

 

Across the country, in midtown Manhattan, Pam Danziger, a luxury marketing consultant, is on stage at the fourth annual Gold Conference. Her Powerpoint presentation is titled "The Allure of Gold, Marketing Luxury to Millennials."

 

"If you believe that the Millennials are going to respond the same as all other generations have done. If you think that the same, the same answers, the same solutions, the same branding propositions are going to work for them, you're sadly mistaken," she says to an audience of jewelers.

 

Danziger says this group does not want its grandparent's luxury.

 

"I think we have to start thinking about - what kind of jewelry goes with a yoga pant? And even more importantly for this generation, what kind of jewelry goes with tattoos?"

 

A few blocks south is the studio of jewelry designer Pamela Love. Love is 32 and she, and all 18 of her employees, except one, are Millennials. What do Millennials really want?

 

"I don't think Millennials want to see anything," says Love. "I think we want to discover it on our own and I think we really want to be treated with the respect of being given the information that we want without being pandered to."

 

And if you think that makes Millennials difficult to market to, Love notes that financially "it's very easy to deal with."

 

Less, she says, accomplished by a marketer, is more. Personally, says Love, she hates being bombarded with emails from a brand. So her company has a light touch. Her new campaign for Barneys hangs posters on the sides of buildings and construction sites so consumers can discover them on their own. Which she says is a lot cheaper than taking out ads in a magazine. There's just one catch.

 

"It's illegal but the only thing that really happens is the guy putting them up could potentially get arrested."

 

Has that happened?

 

No, she says, "Not to us."

 

Love's newest poster is an illustration of a woman standing in front of a map which has jewelry pinned to it. The poster, she hopes, tells a story.

 

MaryLeigh Bliss, a trends editor and strategic consultant with Ypulse, a youth marketing and research firm, says for Millennials, story is key.

 

"Making it more than just a product, you know it gives it a background that you can connect with emotionally rather than it just being a thing," she says.

 

Bliss plays an ad on Youtube with 15 million views. It's a story about a poor boy who steals medicine for his sick mom. It's not in English, but it doesn't need to be.

 

"It's a tear jerker," says Bliss. "We call it tissue box marketing because it really is about evoking that reaction. And, it's so intense, but as you watch it, you don't see a brand."

 

Bliss says Millennials likes to share experiences. They don't like to show off. So her advice to marketers –stop trying to promote your brand, and instead, focus on emotion.

 

From your generation to hers, says Pamela Love, "there's just more, more of everything. Especially with the internet. You can find anything you want and you can find 50 options of it."

 

So Love notes, when she picks something, she picks the one with the story she identifies with. Like the new litter box she recently spent a couple of hours picking out for her cat.

 

"I ended up picking the one that had a really good video that explained why they designed the litter box the way they did and their philosophies on aesthetics, and I cared, ultimately about the people making the damn litter box. So I bought that one."

 

 

*CORRECTION: An earlier version of this story misspelled the name of Gagosian Gallery director Deborah McLeod. The text has been corrected.

Malls are dead, long live the mall

Thu, 2014-04-17 11:06

Malls in America have struggled to keep business up since before the recession. They’ve faced competition from online retailers and haven’t found a solution to the loss of big box anchor stores who found they could no longer sustain the square footage they once did. It’s not hard to find an analyst trumpeting the death of the mall as developers look for alternatives.

Rick Caruso, CEO of Caruso Affiliated thinks he has it figured out.

“The most productive retailers and restaurateurs are all on streets, anywhere in the world. There isn’t a mall in New York City that does better than Madison Avenue or 5th Avenue.”

And that’s what he’s tried to imitate at his developments across Southern California. In Los Angeles, his best known properties may be the Grove and the Americana.

Even on an overcast mid-week afternoon, the Americana bustles with families. Caruso believes it’s because of the Americana’s park-like qualities.

“It taps into the natural rhythm of how we all live. Nobody naturally wants to go inside an enclosed box and spend the afternoon.”

He’s found that even bad weather won’t necessarily drive people away.  But he’s offering something more than blue skies.

“An indoor mall has now become a destination. Somebody goes there, shops for what they want and leave…and it’s not a great experience.”

At the Americana, visitors walk their dogs on the sidewalks and kids play on the green. Music piped through loudspeakers is the soundtrack and a red trolley roles by intermittently. Caruso says he doesn’t mind if people come and don’t spend money.

“We’ve created an environment where you can come and enjoy yourself. And I’m going to get you the next time” he jokes.

Shops are seen at the Americana at Brand shopping community in Glendale, California. (Shea Huffman/Marketplace) Caruso emphasizes the strict attention to detail at the Americana.

He’s had a hand in designing everything – from the type of stone used on store fronts to the statues modeled after those in France.

“We’re in the entertainment business. You step on the property in the morning, it’s got to be perfect.”

Marketplace Host Kai Ryssdal interviews Rick Caruso, CEO of Caruso Affiliated, as a trolley carries shoppers in the background at the Americana at Brand shopping community in Glendale, California. (Shea Huffman/Marketplace) And he’s serious about that – just like another entertainment company located not too far away.

“We study Disney and Disney studies us and we spend a lot of time with the Disney folks.”

For the malls that dot the country, Caruso sees a mixed outlook. Not all will survive. Those that do will have to become better at curating the mix of stores that shoppers can find there. They’ll also have to figure out what to do with the large spaces that big box retailers are shifting away from.

Shoppers talk amongst themselves at the Americana at Brand shopping community in Glendale, California. (Shea Huffman/Marketplace) But when it comes to applying what he’s learned in Southern California to the rest of the country – Caruso’s not as interested. He wants to stay in the region. The rest he’ll leave to someone else.

What 1717 means: your trolley number guess

Thu, 2014-04-17 10:21

In our interview with Rick Caruso, CEO of Caruso Affiliated and developer of famous Los Angeles malls like the Grove and the Americana, we asked him to divulge his favorite part of the mall. He answered with a riddle:

What does the 1717 number on the trolley at the Americana mean?

Or the 1759 number on the trolley at the Grove?

Caruso says if you guess the right answer, you'll get a free Sprinkles cupcake -- and we'll hold him to it.

Tweet @MarketplaceAPM or answer on our Facebook page.

[<a href="//storify.com/Marketplace/1717-and-1759-what-do-they-mean" target="_blank">View the story "1717 and 1759: What do they mean?" on Storify</a>]

Pepsi's profits up! But not because of soda

Thu, 2014-04-17 10:00

Pepsi surprised investors today with higher-than-expected earnings: Pepsi reported a net income of $1.22 billion in the first quarter of this year. 

But don't chalk the earnings up to sales of its famous soda. They've been flat. The real money is in chips.  It seems we're eating more of the chips Pepsi's Frito Lay division makes, specifically Fritos and Doritos.

"The PepsiCo products, whether it's chips or the other grab and go items they have certatinly fit well within the consumer's need for on-the-go food" - David Henkes, Vice President at Technomic.

Henkes says Pepsi is also venturing into other types of beverages, like juices and teas. It also makes energy drinks, which sell for more than soda. With Pepsi snacks gaining popularity in developing countries like India, Henkes says a great deal of Pepsi's future growth will be in new markets. 

Prefab apartment buildings on the rise

Thu, 2014-04-17 09:23
Monday, April 21, 2014 - 16:13 Dan Bobkoff

The first floors of a modular apartment building are already in place behind the Barclays Center in Brooklyn.

A new apartment building called The Stack is about to open in the Inwood section of Manhattan. By design, it looks like a collection of staggered Lego blocks. On the inside, it’s like any other modern rental building in New York. It has a sleek, simple design. 

What’s different is that these apartments were not built here in Manhattan, but almost entirely somewhere else. 

“The paint, the lighting, the kitchen cabinets, the appliances, the bathroom tile, fixtures, mirror, all of that is done in the factory,” says The Stack’s architect, Tom Gluck, with the firm GLUCK+.

Gluck has been an architect for years, but this is the first time his firm has built what’s called a modular building. 

Each apartment comes out of a factory from a company, like Capsys in the Brooklyn Navy Yard. It looks like an auto plant, complete with assembly line run on a track in the ground. 

“Where we’re building pieces of building like you’d build a car in a factory. You get that repetition, that precision," says Tom O’Hara, director of business development at Capsys.

On one end of the plant, a team is joining steel beams to make the skeleton of a new apartment. On the other end, a crew is putting the finishing touches on a unit. One guy is tiling the bathroom. You could cook in this kitchen. There’s even a thermostat on the wall already. The apartments are so close to finished that they look like you could move in immediately, if they weren’t sitting on a factory floor.

An apartment module nearing completion at Capsys. It will soon be trucked to the building site and hoisted into place. (Photo: Dan Bobkoff)

But soon, this entire apartment will be put on a flatbed, trucked to the Bronx, then hoisted on top of all the other modular apartments. When the building’s done, you won’t even know it was built this way. 

There are many reasons proponents like O’Hara think modular construction is better: it’s built inside, away from weather and dirt. It’s faster because you can build the foundation and the building at the same time. There’s much less wasted material. And yet, while it’s popular in Europe, modular construction in the U.S. remains a rounding error, accounting for just a tiny percentage of new home and multifamily construction. 

“I think a lot of people really have misconceptions about the modular business,” O’Hara says.  “I think they feel somehow that there’s substandard construction in the factory.” 

He says most people think modular means mobile homes or boring, blocky buildings. To him, it just means it’s built better. 

“Why would I want my toaster built by a guy sitting on a bench with a ten snip banging things together. I want it out of a factory! Why shouldn’t the building come out of a factory?” O’Hara says. 

Modular has been seen as the future before, and yet never caught on beyond certain sectors like college dorms and hotels. 

But nearly everyone I talked to thinks this is the moment that changes.

“A lot of it truthfully has to do with this building that we’re standing in front of,” says Jim Garrison, an architect and professor at the Pratt Institute. We’re behind the new Barclays Center arena in Brooklyn, looking at what’ll soon be the tallest modular building: 32 stories of apartments. 

It’s funded by a big name developer. Garrison says it’s the biggest example that modular is possible, practical, and not necessarily cookie cutter. 

“We now have opportunities to build very interesting buildings using these systems. And, people are listening to the benefits that come with it,” Garrison says. 

That’s not to say modular doesn’t have downsides. Because it’s made of boxes, you end up with walls against walls, taking up valuable square footage in the building. Designers have to decide everything on the front end. But more developers are attracted to modular’s faster, and sometimes cheaper construction. And, with new projects in the works, maybe this time is different.

Marketplace for Monday April 21, 2014 Dan Bobkoff

The skeleton of a new apartment module comes together at Capsys's factory in the Brooklyn Navy Yard. 

Dan Bobkoff

A bathroom in an apartment at The Stack. All fixtures were installed in the factory, not at the site. 

Dan Bobkoff

A kitchen in an apartment at The Stack. Even the appliances were installed in the factory. 

Dan Bobkoff

A model living room at The Stack in the Inwood section of Manhattan. 

Dan Bobkoff

The staggered block design of The Stack was designed to highlight its modular construction. 

by Dan BobkoffPodcast Title Prefab apartment buildings on the riseStory Type FeatureSyndication SlackerSoundcloudStitcherSwellPMPApp Respond No

Clarissa explained it all ... now she's 38

Thu, 2014-04-17 08:17

From the Marketplace Datebook, here's a look at events for Friday:

It's Good Friday. The stock market will be closed, but most banks, business and government offices will be open.

Happy Birthday to Melissa Joan Hart... Sabrina, America's favorite teenage witch turns 38.

And a pop quiz! On April 18, 1775, this man earned his place in American history, for his famous ride alerting everyone that some unwanted guests were on their way.

The dream office of the future: No email!

Thu, 2014-04-17 08:11

You’ve heard of B.Y.O.D.? That’s Bring Your Own Device.

It started when office workers ditched the company Blackberry and shelled out their own money to buy an iPhone for work. And that helped bring mobile computing devices into the workplace. Right now, there's another trend reshaping the workplace, says Tom Eich, the head of the digital tools practice for the design consulting firm IDEO. That trend is called B.Y.O.S., or bring your own software.

"It's also called the consumerization of IT,” Eich says. He notes that in the not so distant past, if you wanted software for work, say, like Powerpoint or Photoshop, "you used to have to go to your IT guy to get a licensed version on your computer."

Now you can find everything online and most of it is free. Office workers are turning to Dropbox instead of FTPing files to the company server. They're ditching Word and using Google Docs, when they need to share. And they're often doing it without asking the IT department Eich says this shift in buying power is what's whetting investor's appetites.

"And a lot of the more interesting innovations are entering through the consumer channels first," Eich says. 

In other words, start-ups are more focused on worker's needs. High up on that list of needs: getting rid of email.

"People are complaining about how much email is dominating their lives," Eich says. "So there's a need there that'll definitely push companies to find better solutions."

I went to check out Asana, one of the many startups in the Valley that's working on what's now being called "productivity software." Asana's co-founder is Dustin Moskovitz, who's also a co-founder of Facebook. The social network's unofficial motto is "move fast and break things." And in those early days, it was Moskovitz's job to keep Facebook moving fast.

"And I would spend a lot of my day trying to figure out what was going on," Mosiovitz explains. "And that's when we got into the pattern that most companies still use today which is just sending around a lot of email threads."

Moskovitz went looking for a software tool to help him coordinate people and projects but he couldn't find one and so he started writing a program himself. He says, engineers at Google, Apple and other tech companies have done the same thing. And those management tools have cut down on email and workers are more productive.

Moskovitz thinks these tools are part of the secret to Silicon Valley's success. And he wants to sell them to businesses around the world. And in the Valley, it sorta feels like everybody is using Asana, including start-ups like Uber, Airbnb, Nest and Pinterest.

When Pinterest's head of products Tim Kendall joined the company last year, they were 18 employees. Today, there are about 250.

"A lot of our projects require product design, they require engineering, they require marketing," Kendall says. "Tools like Asana can allow you to track all those different components that need to get executed to build and launch a product."

Kendall flips open his Macbook Air and shows me how Asana works. On his screen a dashboard, which shows all tasks, correspondence, check-ins, to-do lists -- or all the information he needs to manage a project -- on one page. I asked him how this was different from creating a Google docs list?

"It just has more flexibility," Kendell said and explained how he can re-organize information to fit the project.

It's not quite the brave new world I was expecting. It sorta looked like a mash-up of software like gdocs and a "to do list."

And Kendall was using email!

"I still use email but I'm able to track a higher volume of projects and workflows without commensurately increasing the volume of email," Kendall says.

Eich, the consultant from IDEO, sees lots of challenges. He says it's early days and there aren't any clear cut winners and losers yet. But he says, there's no turning back.

"Once you have had a workforce that’s complete grown up and immersed in digital technology, there not going to accept a tool kit from their employer that's so much worse than the thing that they experience in their personal lives," he says.

You know who he's talking about, right? Millennials.

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