Marketplace - American Public Media
Asked where oil is being produced in Eddy County, New Mexico, Jake Marbach has a one-word answer: "Everywhere."
He qualifies that with, "everywhere in the east two thirds of the county."
There's always been oil in Eddy County. It's one of the major oil-producing counties in southeastern New Mexico, part of the Permian Basin that encompasses much of the West Texas oil patch. But in the last few years, fracking has opened up new deposits, with names like Bone Spring and Wolfcamp, and oil companies have been hiring firms like Marbach's Allied Land Services to find and purchase rights to do exploratory drilling. But fracking is also expensive, and the economic viability of any new wells rides on the price of oil. Not that Marbach was following it last year, when it was up near $100.
"I'd look at it and admired it about once a week, just happy it was where it was at," he laughs. "But as far as actually tracking it? No. We were so busy and the companies kept ordering work, I didn't pay attention to it until it really started going down."
Last fall, he watched it with increasing trepidation as it dropped to $90, $80, $70 a barrel.
"When it went below $50, that's when they started pulling the plug on a lot of these projects," he says.
That happened in January, when his oil company customers cut him off en masse. He had to fire half his staff.
"I had one young guy that moved here from Fort Worth just specifically to work for me, and I had to lay him off," he says. "That was... that was rough."
Months later, oil has crept closer to $60, and his business is just starting to come back. You can see the mood in the records room of the county clerk's office where landmen like Marbach do much of their work.
It's a room with six long narrow tables that double as bookshelves for hundreds of oversized hardbacks--full of deeds and mortgages going back to the 1800s. When oil was $100, Marbach says these tables were packed shoulder to shoulder, but now there are just four people at each, one of whom is Wesley Burnett—the guy Marbach fired.
"I mean, everyone kind of knew for a couple weeks, you know," he says of his firing. "It was like: 'When is it going to happen?'"
He spent a few unemployed weeks doing odd jobs and watching TV at home, but he's back doing land title research for oil companies. For now.
"That's also a risk, like, everyone in this courthouse is taking, doing this kind of work," he says. "They kind of know that it can end at the drop of a pin."
But the ups and downs of oil don't only impact the people who work for it. In fact, oil has kind of remade the city of Carlsbad.
The roads here are full of trucks: eighteen-wheelers hauling water and heavy equipment and pickups with oil company logos on the side or in the rear windshield. They fill the parking lots of restaurants like McAlister's and Happy's, and of the hotels that are the newest, tallest buildings in town. At least six have opened since the oil boom started.
"I would say that a good 75 percent of our guests, are tied to the oil and gas industry in some way, shape, or form," says David Burton, general manager of the Comfort Suites, which opened in October.
Oil and gas industry workers are easy to identify, from their company shirts, company trucks or company credit cards. As the oil price fell, and companies began to cut back, they also cut back their hotel reservations — and their willingness to pay top dollar.
"Our rates have come down probably close to a hundred dollars a night," says Burton. "They were about $350 and they've come down to about $250."
For permanent housing, supply has taken longer to meet demand.
"We were short on housing before the oil boom started," says Jeff Campbell, director of marketing and business development at the Carlsbad Department of Development.
That housing shortage worsened over the last five years, as the oil boom nearly doubled the population from under 30,000 to what Campbell tallies at more than 50,000 people. (This count is based on water usage and Campbell believes is more accurate than the lower Census figures.)
"Right now when the oil play is down a little bit it gives a little bit of a chance to catch up," he says.
The "catching up" comes in the form of new multifamily housing like the Copperstone Apartments, where contractors were recently spreading cement onto the last few two-story buildings.
"Oh yeah, there's a lot of work right here, bro," said Cesar Enriquez as he rinsed cement off his tools. "There's a lot of work right here and in Hobbs, too."
Hobbs is another town in New Mexican oil country — where you can be sure a lot people are hoping the oil price rebound continues.
When retired U.S. Army General Stanley McChrystal took control of a Joint Special Operations Task Force in Iraq, those in his charge were highly trained, and very good at their job. And yet, "what we found was, the outcomes were diminishing. I.e., we were losing the war in Iraq,” says McChrystal. “We could either continue to be very, very good at what we did and fail — or we could change ourselves fundamentally, to be successful.”
It's that lesson that McChrystal thinks business leaders should take to heart, something he chronicles in his new book, “Team of Teams: New Rules of Engagement for a Complex World."
On getting large, bureaucratic institutions to make changes
In the organizations that I was in, which are so elite, sometimes the aversion to change or resistance is even higher. Their very identity is wrapped up into how things have been done. But there still needs to be this creation of the idea of shared consciousness that we all understand what we're trying to do against a common understanding of what the problem is, so we can react quickly.
On "sharing information until it's almost illegal"
The old idea that we will only share information with someone who needs to know, that's sort of the tagline from movies and whatnot, is basically flawed because — who knows who needs to know?
On how technology might, or might not, change the way we do business:
What we see in Silicon Valley right now is a tremendous amount of innovation. But the idea that big data is suddenly going to give us the answer to the problem is something that, in the book, we find to be incorrect because the speed at which data is being created and changed stays ahead of our ability to harness it.
On his ideal leader of the future
I really believe it's going to be someone who creates an ecosystem. In that ecosystem, the leader allows a whole host of leaders inside that to interact and be effective, and that's where the power comes from.
On the Rolling Stone article that led to his eventual retirement
In the case of trusting your staff, I trusted my team in a case that, when sometimes things come out wrong, the most important thing is to learn from it quickly, learn from it immediately, keep the confidence of the organization up and move forward and that's what I think is really important.
Since his retirement, General McChrystal has also been an advocate of universal national service. Listen to the audio below for more of his conversation with Kai Ryssdal:
Throughout this week, network TV executives and advertisers will be meeting in Manhattan to hash out deals for some $20 billion of TV ads for the upcoming year. People in the business call these meetings the “upfronts.” There's a lot of showmanship. Univision's presentation on Tuesday features a panel that includes Bill Clinton and a performance by Ricky Martin.
At one time, about three-fourths of all TV ads were booked during the upfronts. But as with most aspects of media these days, this is no longer the case.
Jon Steinlauf is president of ad Sales for Scripps Networks, which produces shows like House Hunters and Chopped. He says access to more and more consumer data means advertisers are more strategic with their investments.
"Is it better to make decisions early and get the cost savings that go along with it?" he said. "Or are we better off holding our money and making that decision closer and closer to air?"
Today’s ad buyers want both the broad reach of television and the flexibility of the internet. Steinlauf says the upfront still accounts for half of all Scripps' ad sales.
And while TV viewership has been dropping for years now, the market for content is actually bigger than ever.
"We have to bear in mind that the definitions are very very much changing in the TV landscape,” said Macquarie Media analyst Tim Nollen.
Even though the upfront may be shrinking, the news is not all bad for the networks. Nollen points to the dramatic growth of mobile apps and DVRs in creating additional platforms to sell advertising.
"How often do you see people sitting on a train, watching TV on their phone? Which was impossible to do even a few years ago," he says. "So, it’s just about everyone trying to grab pieces of that larger pie now."
Nollen notes that Nielsen ratings are still the metric used for assigning a dollar value to TV ads. However, the company is also looking at new ways to track eyeballs on things like digital ads for mobile aps.
Greece's finance minister on Monday authorized the transfer of 770 million euros to the International Monetary Fund, meaning the debt-saddled nation will meet this particular debt payment. But the Greek government will have very little fiscal liquidity for the month of May. "This is absolutely the tightest it's been," says Douglas Elliott, a fellow at the Brookings Institution.
Athens will now hope to strike a new deal with European Union creditors that would unlock more bailout money without further tightening the screws on its battered finances. The country has approximately until the end of May or June until its newly-emptied coffers run dry. The question is: can Greece and the EU work out a new deal in time?
Germany's finance minister has said he wouldn't oppose a Greek referendum on the terms of such a deal, though the implication is that Greece's left-wing Syriza government would be supporting its passage. If Greek voters were to reject the terms of a new E. U. deal, Greece would likely exit the eurozone. John Psarapoulos, a blogger for The New Athenian, says "what [Syriza] is entitled to do is negotiate a controlled presence of Greece within the eurozone. It is not authorized to negotiate an exit, even a controlled one."
But even though Syriza has talked tough toward its EU creditors, it has moved to improve the country's finances, says Vicki Pryce, chief economic advisor at the Centre for Economic and Business Research. "In other words," Pryce says, "it's improved its fiscal position a lot more than many other countries have done."
So the EU may be moved by Greece's efforts... or frustrated enough to take a tougher line.
When the anonymous sharing app Secret shut down recently after taking around $35 million in investment in its first year, it sparked an open conversation that touched on current frothy conditions in Silicon Valley, where high financing rounds and valuations have been getting more attention of late. (Secret's valuation rose $60 million over just four months last year, but this pales in comparison to Uber, which is growing so rapidly that it might be on its way to a $50 billion valuation). A Google Ventures investor was quoted saying Secret raised too much, too soon. He later wrote that it's inadvisable for companies to sell stock too early.
In an unrelated series of tweets, the president of the influential startup incubator Y Combinator presented a different view on today's startup financing scene, but one that also began on a cautionary note: "I am deeply uncomfortable by the continued phenomenon of startups raising multi-million dollar seed/Series A rounds with no board member."
We wanted to know more, so we asked Y Combinator's Sam Altman for some details:
What's the purpose of investors also serving as board members for the startups they inject money into?
An outside board member provides discipline and rigor. If the company knows they have to present to the board once a month, everyone is focused on making sure things are moving in the right direction. If there is no board meeting to act as a forcing function, there is less urgency.
Also, board members can often talk the founders out of their own (often healthy) delusions. Delusions are good in some cases but not when a company is getting close to running out of money. The board provides an important guardrail in cases like these.
When did you start to see a shift away from that arrangement becoming the norm?
I started to see the shift about four years ago. It started with the start of party rounds (lots of investors writing small checks and no one single investor taking a board seat). Then it got worse when VC firms started doing large seed rounds; they stopped taking board seats too. It's a case of being very aggressive and trying to participate in more companies than they have bandwidth to help.
What can potential investors do in this environment to balance out responsibility for a startup's performance?
I think that this is an easy problem for investors to fix — they can just return to their previous practice of rolling up their sleeves and helping companies.
Providing all kids in the U.S. with high-quality, publicly-funded preschool would take a concentrated overhaul to strengthen and build up existing state programs.
At the current progress rate, preschool for all children would take 300 years to achieve, according to Steven Barnett, director of the National Institute for Early Education Research, which issued the State of Preschool 2014 report Monday.
The 2013-14 school year saw state funding for pre-K increase by more than $116 million nationwide, or 1 percent, adjusted for inflation. About half of that spending was in just one state — Michigan.
Barnett says since spending varies widely state to state, the country is still struggling to make gains in enrollment, funding and quality; ten states don't provide state-funded pre-K programs at all.
"When the average doesn't budge, but some places are moving rapidly ahead, that just tells you other places are dropping behind,” he says.
In five states in 2013-14, state funding per child for pre-K fell by 10 percent or more from the previous year, while in five different states, per-child spending increased by the same margin.NIEERBarnett says the country spends about $1,000 less per pupil — adjusted for inflation — on pre-K now than a decade ago.
“Preschools are turning the corner, but they are turning so slowly," he says. "If we moved at the same rate as last year it would be 75 years before we enrolled half of the kids."
That's no exaggeration. From 2006 to 2010, enrollment increased every year at a steady pace. Barnett says that rate would have put half of the kids in the country in preschool in just 10 years. But from 2010 to 2014, there was effectively no progress made.
The report also reveals stark regional differences, with more students served in the east and south, compared to the west.
"It matters tremendously where you live," Barnett says. "Last time we measured quality, we saw the same disparities. There's no sense of urgency in many states."
He says more than half a million children — 40 percent of nationwide enrollment — were in programs that met less than half of the NIEER quality standards benchmarks.
"The vast majority of children served in state-funded pre-K are in programs where funding per child may be inadequate to provide a quality education."
—State of Preschool 2014
Barnett says investing in preschool yields a high return, but only if states also invest in high-quality education standards.