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New trade talks spark beef over tariffs

17 hours 1 min ago

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

17 hours 39 min ago

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

18 hours 22 min ago

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. 

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.

PODCAST: International business and Ukraine

Thu, 2014-04-17 07:30

Diplomats from Ukraine, Russia, the U.S. and the EU are in Geneva on Thursday to try to defuse tensions in Ukraine. Over the next week, the U.S. is expected to apply more economic sanctions on Russia, which the West believes is behind the unrest in eastern Ukraine.

The European Union is also working on sanctions, but some international businesses are now pushing back.  

Also, despite being one of China’s most-visited websites, and analysts are watching to see if Weibo closes way low. That’s because questions about how "active" the site's 130 million active users really are.

And, finally, a recent study from researchers at New York University’s Stern School of Business and University of Munich shows VCs are more likely to back companies if the executives are the same ethnicity as the investors.

When a company gives 'guidance': An explainer

Thu, 2014-04-17 05:42

Google reported an 11 percent drop in profit this week. And the company's stock immediately jumped more than one percent in trading.

Hey, hold on a sec – how does that work? How can a company report a big fat loss and then see its stock go up? And how is it that some companies' shares fall, even though they generate a profit?

It's all about "expectations." If a company's results miss expectations, the stock will usually fall; if the results meet or exceed expectations, the stock will usually rise.

But whose expectations are we talking about here?

That's right – investors, specifically analysts at the big investment houses, who pore over the company's filings and news releases and come up with their projection of how the company has performed over the quarter.

No company likes to see its stock go into a tailspin, especially at earnings time, so companies do everything they can to avoid missing expectations. The biggest weapon in their arsenal is something called "guidance;" also known as "managing expectations."

Guidance is when the company calls up investors ahead of the earnings release and says "Hey chaps, we've had a few problems recently. It looks as though our numbers aren't going to be so good this quarter."

The analysts factor that into their calculations, and their expectations are lowered. That way, if the company's results are terrible, no one is surprised. And if the results are really good, then the stock gets a bump.If this sounds like manipulation, well, maybe it is. It's something that we can all practice in our lives, and it's a particularly good technique to use when you're dealing with your finances.

If you think, for example, that you might have problems managing your debt, take a leaf out of the corporate playbook and issue your own guidance to your lender. The better you manage your bank's expectations, the more likely you are to remain a borrower in good standing.

And there's nothing wrong with that.

How "public" is Weibo?

Thu, 2014-04-17 02:28

Despite being one of China’s most-visited websites, and analysts are watching to see if Weibo closes way low. That’s because of users like Lixin Huang.  He’s one of 130-million active users the website claims as its customer base. But he’s not exactly what you’d call “active.” 

“I used it sometime last year when my friends were using it,” he says. Huang, a finance professor at Georgia State University in Atlanta, now uses WeChat.  It’s growing at three times the rate of Weibo.

That’s one reason Huang is skeptical  about today’s NASDAQ debut. Another big reason? Censorship. China’s government bans everything from sexual innuendo to political dissent on the Internet.  

“Censorship has already caused a chilling effect,” says Jason Ng, who wrote the book, Blocked on Weibo.  He says China’s crackdown on that type of chatter means the site’s not as much fun as when it debuted. 

Even so, Ng says it’s still the go-to place for China’s nationwide conversation. “Obviously investors recognize the value of having that sort of space.”

A bill of health for insurance companies

Thu, 2014-04-17 02:26

Big insurance companies report quarterly earnings over the next two weeks, starting with United Healthcare today.

Thanks to new customers brought in by the Affordable Care Act, 2013 was a good year for health insurance companies.  The extended deadlines, which ended just this week, may provide more good news:   More enrollment, more premiums, more revenue.  Now comes the hard part. 

For one thing, new customers means new costs, in the form of claims, says Joel Shalowitz, a professor at Northwestern University's Kellogg School of Management.  Insurers don't yet know the extent of those costs.

"For people who needed services provided, the insurer is not going to see the claims for another month or two," says Shalowitz. "The revenue has come in, but the expense has not yet been realized."  

Those new customers also came with new restrictions on insurance companies, says Morningstar analyst Vishnu Lekraj. "They’re restricted as far as profitability, and overall there’s more competition in the market, there’s more transparency, there’s more regulation," he says. "I do still see some tough headwinds for the industry and for most of the players."

At best, Lekraj thinks the strongest companies will see flat profits for years to come.

Blind spot: VC and minority business

Thu, 2014-04-17 01:03

Before a company sells for billions of dollars, it starts as an entrepreneur's big idea. Typically, somewhere in between are venture capitalists, who invest in startups with hopes of a hefty payday if the companies make it big. A recent study from researchers at New York University’s Stern School of Business and University of Munich shows VCs are more likely to back companies if the executives are the same ethnicity as the investors.

The findings have profound implications for entrepreneurs of color, though they don't come as a surprise to them. At the South by Southwest Interactive Festival recently, African-American entrepreneur Wayne Sutton recalled times he appeared at conferences and was mistaken for a member of the service staff.

“It’s hard enough just to try to launch a product that the world can use,” Sutton says. “But overcoming those biases as a minority entrepreneur is even double hard.”

The research supports what many minority startups have long believed, that investors have a tendency to back people who look like them. Entrepreneurs of color see the problem as one of investors afraid to step beyond what they know.

“A venture capitalist provides money, but also provides a lot of blood, sweat and tears,” explains Melissa Bradley, an African-American who started a venture capital firm after seeing firsthand how finding investors can be frustrating for minorities and women. “They’re there with you day in and day out and so there’s this implicit nature around if I have something in common with you already at the onset, that we’re probably gonna do pretty well down the road.”

Bradley says she’s raised tens of millions for minority and female-owned businesses and profited.

Both Bradley and Sutton say minority entrepreneurs shouldn’t despair. Both believe in the power of a great idea to break through, no matter who pitches it.

Deepak Hegde, the NYU management professor who co-authored the study, agrees. He adds that the findings may point to changes VCs could make.

“Startups tend to come from multiple communities,” Hegde says. “A venture capitalist that has a diversity of partners in its ranks might be in a better position to identify these opportunities and evaluate them better.”

After all, the last thing investors want is a billion dollar opportunity missed, lost in a blind spot.

Mark Garrison: That’s a venture capitalist investing in a startup on the HBO show “Silicon Valley.” Everybody around the table is white. The real Silicon Valley is also heavy on white guys. Minority company founders often go unrecognized, or worse.

Wayne Sutton: It’s like, what are you doing here? Or, go get me something to drink, because they think I’m working here or something.

Wayne Sutton has started companies and mentored entrepreneurs. As an African-American in tech, he’s not surprised by the study’s findings of a tendency for investors to go with people who look like them.

Sutton: It’s hard enough just to try to launch a product that the world can use. But overcoming those biases as a minority entrepreneur is even double hard.

Many American venture capitalists are white, so black entrepreneurs confront the problems the study uncovered daily. Melissa Bradley felt it firsthand when she pitched her business ideas.

Melissa Bradley: There was no one in the room that looked like me. There were no women and there were certainly no people of color in the room, oftentimes in the building.

That sometimes frustrating experience inspired her to start her own venture capital firm. She says she’s raised tens of millions for minority and female-owned businesses and profited. Bradley sees the larger problem as one of investors afraid to step beyond what they know.

Bradley: A venture capitalist provides money, but also provides a lot of blood, sweat and tears. And so they’re there with you day in and day out and so there’s this implicit nature around if I have something in common with you already at the onset, that we’re probably gonna do pretty well down the road.

Both Bradley and Sutton believe in the power of a great idea to break through, no matter who pitches it. Deepak Hegde, the NYU business professor who co-authored the study, agrees. He adds the findings may point to changes VCs could make.

Deepak Hegde: Startups tend to come from multiple communities. A venture capitalist that has a diversity of partners in its ranks might be in a better position to identify these opportunities and evaluate them better.

Because the last thing they want is a billion dollar opportunity missed, lost in a blind spot. I'm Mark Garrison, for Marketplace.

Dude, where's my flying car?

Thu, 2014-04-17 01:00

With recent attitudes towards the tech industry sometimes bordering on chilly, Americans are surprisingly optimistic about what technology has to offer them in the next 50 years.

According to a new report published by the Pew Research Center, 59 percent of those surveyed thought that technology would lead to peoples' lives being generally better, though what most people hope for is a little different than the expectations of yester-year:

When it comes to health technology, a majority of Americans (81 percent) believe they will be able to receive a transplant of an organ that has been custom grown in a lab. That's not to say that there is general approval of high-tech healthcare: 66 percent of those surveyed think society would be worse off if parents could alter the DNA of their prospective children to create custom-designed wunderkinder.

The idea of robots taking care of the elderly was also met with disaproval; 65 percent thought this would be a change for the worse. Inspiring even less confidence is the prospect of one day being able to pull off this stunt (only 39 percent of Americans believe that scientists will achieve teleportation in the near future):

Among current hot topics (i.e. drones and Google Glass), 63 percent thought we would be worse off if drones were given permission to fly through U.S. airspace, and 53 percent thought it would also be a negative development if people wore devices that constantly showed them information about the world around them. 

In terms of that age-old expectation of flying cars, 19 percent of Americans said they would like to own a travel-related invention like said flying vehicle, but 50 percent said they would not ride in a self-driving car. Go figure.

In spite of skepticism surrounding certain aspects of technological advancement, the results of the study show that Americans' feelings are mixed-to-positive when it comes to how technology affects their lives -- Dystopian sci-fi aside, of course.

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