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Gwynne Shotwell and Franklin Leonard talk creativity

Thu, 2014-11-13 15:15

 To celebrate Marketplace’s 25th anniversary, we hit the road with a series of live events across the country. The final stop on the “How I Learned…” tour brought us back to Los Angeles, where we talked about creativity in business with Gwynne Shotwell, the President and COO of SpaceX, and Franklin Leonard, founder and CEO of The Black List.

Leonard on the business of The Black List:

I think of what we do less as a business than as a mission.

We see our role as identifying and celebrating great screenwriting and facilitating that writing making it to the screen. I think it’s an ongoing process for us in terms of making it a viable business. I think we have something that sort of functions now, there are a lot of other things we want to do with it. But really the mission is far more important for us that the business model is right now.

Shotwell on the mission of Space X:

We have these crazy audacious goals. The company was founded fundamentally to change the value proposition of human transport into space. Really what we’re focused on now is doing a great job for our customers but building up enough revenue and having enough money to develop the capability to take people to Mars.

But would Shotwell go to Mars, if she had the chance? That’s a different story.

Well, I don’t like to camp. Early on, Mars is going to be camping. I think there are people far better suited to do that than me. But when the first Holiday Inn Express shows up, maybe I’ll go.

I’d love to go to space. I would love to peek out a giant window and look back at the blue marble. There’s no question, I’d love to do that. But that’s different from an eight-month trip in a bus with the same hundred people, not stopping by 7-11 for a Slurpee. You’re on that bus and you’re headed to mars. And what happens if you get there and you don’t like it? It’s eight months back. There’s no Uber back. Well you can get back on the spaceship and go back.

Bill Youngblood/Marketplace

Leonard says he learned a lot about creativity in the workplace from some of his previous jobs:

I’ve never been one to be so dogmatic about ‘Oh well the way things have always been done is the way things should be done.’ I think I’ve probably brought a lot of different approaches from previous jobs into the environments and jobs I have now and said, ‘well what if we do things this way? Why aren’t things done this way?’ And sometimes it works and sometimes it doesn’t. Sometimes there is a reason things are always done this way.

All kids are really creative. I’ve never met a child who is not creative. On some level, as we get older we take certain things for granted, assume certain things, assume things are impossible, and that things can only be done a certain way. I think a lot of it is getting back to being more childlike and sort of allowing yourself to believe that anything is possible.

Obama expected to announce immigration reform soon

Thu, 2014-11-13 13:42

President Obama is expected to make an announcement as soon as next week on immigration reform that will protect up to 5 million undocumented immigrants. To find out more, Marketplace host Kai Ryssdal talked to Michael Shear, White House correspondent for the New York Times.

To sum it up: If you are in the U.S. illegally but have a child who is a citizen, you may be able to apply for deferred action, which means you will not be deported. This may also provide a work permit. And of course, some people will be exempt, especially if they have a criminal record.  

“I think a lot of people would say, these folks are largely employed anyways," Shear says. "These are mostly people who have been living in the country for many years – five, 10 years in some cases. They hold down jobs, but they’re holding these jobs in kind of a hidden way. Or in a way that they’re constantly looking over their shoulders, having to worry about a deportation proceeding if they’re caught."

Additional components to the plan include expanding opportunities for immigrants with high-tech skills and adding extra security to the southern border.

“The idea that the administration puts forward is that if you bring these folks out of the shadows in that respect, allow them to sort of hold these jobs in an above-board way, it actually helps the economy instead of  [hurting] it,” Shear said.

There's a business opportunity behind open enrollment

Thu, 2014-11-13 11:47

Everybody knows shopping for insurance stinks. Not only do we not like it, but we’re not very good at it.

Minnesota state exchange CEO Scott Leitz says he saw consumers struggle last year.

“In many, many cases, it was hours of time that were spent kind of walking a person through what their choices were, answering their questions and helping them make a final decision,” he says.

With millions flocking to public exchanges under Obamacare, this shopping problem – which researchers have known about for years – is coming into focus.

Consumers must sort out co-insurance, deductibles, in-network, out-of-network and medications, then compare it all to screen after screen of health insurance plans. Wharton economist Jonathan Kolstad says don’t forget people also must guess what problems they’ll have over the next 12 months.

“Ultimately insurance is not just about the world as we know it today, it’s about knowing where we are going down the road,” he says.

Kolstad says there are more than 900,000 variables to consider when shopping for health insurance, and so it's no wonder that we tend to make such poor choices. Here’s the thing: Those choices have real world costs.

Kolstad’s research shows when employees don’t know what they’re doing, they leave $1,800 on the table. There’s certainly an opportunity here to both help people and to cash in. Several University of Pennsylvania professors – along with Kolstad – have launched software called Picwell in response.

Company CEO Jay Silverstein says their software is designed to “make the process easier, simpler, faster, better.”

Here’s how it works, according to Silverstein: Consumers first answer the four simple questions, "What is your age?" "Where do you live by zip code?" "What is your gender?" and "What medications are you on?"

Then Picwell’s algorithms cut, slice and dice the responses with a big data buffet that includes medical claims and credit scores. The result is Google-like. Almost instantaneously, the software spits out a list of the plans and ranks them by best fit. It also offers a total monthly cost estimate, which includes all out-of-pocket costs.

Industry consultant Ted von Glahn – who has no ties to the company - says Picwell is taking a lot of the mystery out of shopping. 

“The golden rule is 'do the math.' Don’t make me go find that neurologist procedure and 'is it covered or not?' Bring it right to me,” he says.

Compare Picwell to healthcare.gov. The federal exchange, says von Glahn, only offers the most basic tools forcing consumers to still do the math. Picwell is one of a dozen companies including GetInsured and Consumers’ CHECKBOOK in this small consumer choice space.

As these products mature, von Glahn believes, it will force the entire industry – insurers, hospitals and doctors – to become more efficient. 

“They can’t compete on the mistakes that consumers make, the dazzle and confusion of choice,” he says.

Change may well be here sooner than it seems. PricewaterhouseCoopers says a third of private companies are considering moving their active employees onto private exchanges within the next three years.

“My gut on this is private exchanges are in the early stages,” says PWC’s Michael Thompson. “The value proposition isn’t as strong as it ultimately will be. As that proposition grows, you’ll see more companies adopt it. I think the uptick rates will be significant.”

Not only do employers need to be convinced they can save money - so do employees. To that extent, whether exchanges take off or disintegrate could turn on the success of outfits like Picwell. CEO Silverstein says business is good: They’ve already lined up private and public exchanges, including Minnesota’s. He says there’s a good chance their clients will grow from 750,000 this year to 40 million in 2015.

Picwell executives believe their tiny industry is moving towards a time when consumers can actually find value - quite a transformation for a product that today many don’t understand or trust at all.

Diplo: DJ, producer and entrepreneur

Thu, 2014-11-13 11:17

Pop music is increasingly dominated by producers – the people who shape the sound of a recording. A lot of that sound is coming from the world of electronic dance music, or "EDM."

Their working hours aren't conventional – often midnight to 5 a.m. The work has an unconventional range, too, from DJing large Las Vegas nightclubs or festivals, to time in the studio with pop superstars like Beyoncé and Justin Bieber.

Grammy-nominated producer Wesley Pentz wears these hats and more. He also runs a record label.

"It's really hard to stay alive. We almost folded a year ago," Pentz said. 

But Pentz's career is very much alive. His fans know him better as Diplo. As a teen, a friend named him after his favorite dinosaur, "Diplodocus." Back then, he says, he sold mixtapes door-to-door in Florida. He loved music but wasn't really cut out for a band.

Wikimedia Commons

"I was never good at playing horns or guitar. But I thought,' why would I want to play guitar when I could play guitar forwards and backwards, mix it up and sample it?'" Pentz said, adding, "I also thought being a DJ was the future of music."

Maybe that's hindsight talking. Selling albums was once the music industry's lifeblood, but EDM with its high-production-value live shows, dense sound and up-to-the-minute remixes fits the current model, where live tours prop up the rest of the industry, and buzz builds through free tracks shared online.

Pentz also runs Mad Decent records, where he distributes his music and a wide array of up-and-coming artists. His label shared a sampling of music on themes of business and the economy. Check out the playlist below.

Listen to the full interview in the player above.

 

 

 

 

US deals make it a big week in global trade

Thu, 2014-11-13 11:00

It’s been a big week for global trade after the U.S. cleared hurdles to push two big deals forward.

First up was the Information Technology Agreement, in which the U.S. and China agreed to cut tariffs on technology products like semiconductors and other high tech goods. The second cleared an impasse with India over food stockpiling that will, in turn, rejuvenate the Trade Facilitation Agreement, a trillion-dollar accord on international customs procedures.

“Ten years ago, this would have been business as usual,” says Derek Scissors, a resident scholar at the American Enterprise Institute. “Now, these are breakthroughs.”

That’s because there’s been a drought of new trade deals in recent years, so these agreements have given the World Trade Organization fresh momentum.

Scissors says they also restore American leadership in trade.

“We’re the ones breaking through the barriers,” he says. “We’re the ones making the deals and with other important countries like China and India, but nonetheless we’re the common thread. That’s important.”

U.S. companies stand to benefit when the Information Technology Agreement is finalized.

“You go through the companies that are big in this space and a lot of them, say two-thirds, have U.S. names,” says Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics. “Apple, Cisco and you can go down the list.”

Hufbauer says the key here isn’t the number of jobs this agreement might create, but the type – steady, high skilled, with good pay.

To a lesser extent, American companies that do a large volume of global shipping like FedEx and UPS also benefit from the Trade Facilitation Agreement, which will ease the process of moving goods across borders and seek to decrease corruption at ports.

Zooming out, these deals speak to how globally integrated our businesses have become, says Emily Blanchard, a professor at Dartmouth’s Tuck School of Business.

“In this world with global supply chains, little pieces of product are being added all across borders to create a final product,” she says. “If you have even small transaction costs at every border, those really add up.”

Warren Buffett finds tax advantage in Duracell deal

Thu, 2014-11-13 11:00

When Warren Buffett's company Berkshire Hathaway buys the battery brand Duracell from Procter & Gamble, Berkshire will pay the $4.7 billion price tag in stock. Not Berkshire Hathaway stock, but Procter & Gamble stock, which Berkshire just happens to have.

Berkshire Hathaway did a very similar swap earlier this year, when it bought a TV station from Graham Holdings — formerly and better known as the Washington Post Co. Same thing when it bought a subsidiary of Phillips 66 last December. Why not just pay cash?

First, these trades line up with something Berkshire Hathaway has come to favor over time: Owning and managing whole companies. According to Larry Cunningham, a George Washington University law professor and the editor of “The Essays of Warren Buffett,” Berkshire was once happy to either own stock or a small stake in a business. He says as Berkshire grew, that outlook changed.

"Now, it prefers to own entire businesses rather than small positions," he says. "So, this is a neat way to achieve that objective."

Also, these swaps allow Berkshire Hathaway to save a boatload on taxes. Procter and Gamble’s stock is worth much more than when Berkshire bought it, so selling that stock would mean paying taxes on the profit — probably more than 33 percent.

Thomas Lys, a finance professor at Northwestern University’s Kellogg School of Management, has done the math. Berkshire originally bought its shares for $336 million, and the stock is now worth $4.7 billion.  

"So that's a profit of $4.4 billion," Lys says. "So a third of that is — hefty tax." 

But in this deal, Berkshire isn’t selling the stock. It’s trading one piece of Procter and Gamble — the stock — for another piece, Duracell. Going for big tax savings seems like it would sit uncomfortably with Buffett’s role as the rich guy who’s always calling on the government to change the tax code and raise his taxes. But Lys says there is an important distinction to be made because Buffett is the CEO of Berkshire.

"Warren Buffett has an obligation to his shareholder," Lys says. "And that obligation is to pay as little as the code allows."

Hollywood's next 'it' celebs – toys

Thu, 2014-11-13 11:00

The latest buzz on Wall Street is that toy maker Hasbro might acquire Dreamworks Animation, the company behind Shrek and Kung Fu Panda.

Neither company has commented on the rumor and, according to reports, talks could still fall apart. 

The possible acquisition reflects the modern big business of selling toys. Once upon a time, toys were, well, just toys. You built stuff with Legos and played make-believe with Transformers.

But that's changed, says Chris Byrne, a toy analyst at TTPM. Popular toys are now considered entertainment “properties.” For example, Hasbro's Transformers and even its Ouija board are now the stars of movies

Bryne says the question is now, "'How do we think about this property in all the ways in which kids encounter that entertainment?' So that could be toys, that could be TV, that could be movies, that could be video games." 

The shift reflects the way kids are buying toys, says  Sean McGowan, analyst at Needham and Co. Children's entertainment used to focus on toys and cartoons, but today, McGowan says, "the claims on kids' time and attention and money are growing. So you see them using their smart devices."

Featuring toys as movie stars has helped, but overall, toy sales have remained flat for more than a decade, McGowan says.

Paul Sweeney, an analyst at Bloomberg Intelligence, says the fact that movie studios have also grown bullish on featuring toys also drives the trend.

"What’s happening in Hollywood, [is] the studios are really looking for tried-and-true already proven franchises, if you will, either stories or characters," Sweeney says. 

Sweeney says this deal would make sense on some levels – but the list of companies that have lost fortunes trying to make it in Hollywood is a long one.

Hollywood's next it celebs: Toys

Thu, 2014-11-13 11:00

The latest buzz on Wall Street is that toy maker Hasbro might acquire Dreamworks Animation, the company behind Shrek and Kung Fu Panda.

Neither company has commented on the rumor, and according to reports, talks could still fall apart. 

The possible acquisition reflects the modern big business of selling toys. Once upon a time, toys, were, well, just toys. You built stuff with Legos and played make-believe with Transformers.

But that's changed, says Chris Byrne, a toy analyst at TTPM. Popular toys are now considered entertainment “properties.” For example, Hasbro's Transformers and even its Ouija board are now the stars of movies

Bryne says the question is now, 'How do we think about this property in all the ways in which kids encounter that entertainment? So, that could be toys, that could be TV, that could be movies, that could be video games." 

The shift reflects the way kids are buying toys, says  Sean McGowan, analyst at Needham and Co. Children's entertainment used to focus on toys and cartoons, but today, McGowan says, "the claims on kids time and attention and money are growing. So, you see them using their smart devices."

McGowan says featuring toys as movie stars has helped, but overall, toy sales have remained flat for more than a decade. 

Paul Sweeney, an analyst at Bloomberg Intelligence, says the fact that movie studios have also grown bullish on featuring toys also drives the trend. "What’s happening in Hollywood, [is] the studios are really looking for tried-and-true already proven franchises, if you will, either stories or characters," Sweeney says. 

Sweeney says this deal would make sense on some levels, but he says the list of companies that have lost fortunes trying to make it in Hollywood is a long one.

Why the Reddit CEO stepped down

Thu, 2014-11-13 11:00

Reddit CEO Yishan Wong stepped down Thursday. In a blog post, investor Sam Altman said the departure was over a fight with the board about a new office.

That's right: Wong didn't get the office he wanted so he quit.

"To be clear, though, we didn't ask or suggest that he resign — he decided to when we didn't approve the new office plan," Altman explained.

Whether this is actually what happened or just corporate nonsense is up for the debate.

 

Why toymaker Hasbro could buy DreamWorks Animation

Thu, 2014-11-13 08:27

Deadline Hollywood reported this week that Hasbro—the second-largest toy maker in the United States—is in talks to acquire DreamWorks Animation. 

DreamWorks Animation has been looking to get acquired—a deal with Japanese SoftBank fell apart just last month. And Hasbro has been looking to get more involved in the movie business. 

But why? 

For DreamWorks Animation, part of it is a need to diversify beyond a marketplace for movie ticket sales that is increasingly challenging, especially for computer animated films.

"Like any technology, it's become easier, cheaper and faster," says Phil Contrino, chief analyst at BoxOffice.com. "So what that means is there's more competitors than in 1995, when Toy Story came out."

Now, DreamWorks Animation competes not only with Toy Story's Pixar, but with Sony and Universal, with its "Despicable Me" franchise. 

As DreamWorks Animation has sought more revenue elsewhere, it has, in part, turned to merchandise. This is a business where Hasbro has excelled, with profits bouyed by toys based on the Star Wars movies and those of Marvel comic books, like Spiderman and Iron Man. 

But it also works the other way around. Hasbro has profited off games and toys that have turned into movies: GI Joe, Ouija and—most of all—Transformers. 

"The Transformer movies have been very lucrative not just because of the toy side but also because the toy side provided the [intellectual property] to make movies which did very well at the box office," says Martin Brochstein, senior vice president of industry relations and information at the International Licensing Industry Merchandisers' Association.

This trend can be seen throughout the toy industry. "Mattel, Hasbro, Lego have kind of turned on to the fact that they have this asset that can be mined," says Brochstein. 

In other words: Toys are the new comic books.

PODCAST: Movies become child's play

Thu, 2014-11-13 03:00

We know that unleaded is less than $3 dollars a gallon on average now. The Department of Energy is now saying it'll stay that way for 2015. More on that. And a Hollywood trade publication Deadline.com was first to report that the toymaker Hasbro is in talks to buy DreamWorks Animation. More on the move to make movies out of toys. Plus, we take a look at a new book that shows how a currency crisis was pivotal to the history of George Washington, and to the United States as we know it.

World of Warcraft competes in a 'freemium' world

Thu, 2014-11-13 02:00

The latest incarnation of the World of Warcraft video game is released Thursday. The PC-based online multi-player game is among the most popular with more than seven million subscribers, who pay a fee up-front to join the game.

But the subscriber base is down from a peak of 12.3 million in 2010. That decline is opposite the rest of the video gaming industry, which has seen rapid growth—four times that of the rest of the U.S. economy, according to industry data.

A lot of the growth has been in free mobile game apps—so-called freemium apps, which mobile consumers can download for free, but which entice players to pay for extras inside the game.

"The question of whether or not free to play is evil, is of course a fair question,” says Joost van Dreunen, who heads SuperData Research, a firm that tracks the video game industry. Van Dreunen says a lot of game designers themselves refer to "freemium" apps as "evil."

But despite any misgivings or criticisms, growth of mobile has changed video games, says van Dreunen, to the point that “only 20 to 25 percent of games in the app stores are charging people up front." 

And Brian Blau, research director at the technology-focused firm Gartner, says the free-to-play model is expanding. 

"There are many games across all platforms that are looking at the free-to-play monetization model as their ticket for the future,” says Blau.

That may mean a lot more freemium games, and certainly a continued growth in the mobile market, as the global video games industry is forecast to hit the $100 billion mark by 2017. 

Average college student debt on the rise

Thu, 2014-11-13 02:00

New statistics on student loans show the cost of newly minted bachelor’s degrees continuing to rise. The latest report from the Institute for College Access and Success says the average debt for undergraduates sits at $28,400, up 2 percent from last year.

But the people with the really big debt loads are not the ones to worry about.

Across the country, student debt levels vary widely, from student to student and college to college. Lauren Asher, president of the institute, notes that even though the rate at which tuition is increasing is going down, “that’s still growth on top of growth on top of much-faster growth before—far exceeding inflation, let alone where family wages are.”

Asher says that even as unemployment rates among college graduates improve following the Great Recession, loan defaults still continue to rise.

But those students with the highest debt are typically entering more lucrative career fields. 

“The people with the largest debts are the ones who went to professional school,” says Susan Dynarski, an economist at the University of Michigan. “They’ve got a B.A. already, typically the default rate for that group of students is about 3 percent.”

Compare that with students with just a bachelor’s degree defaulting at 16 percent, and even higher for those who drop out before graduating.

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

Thu, 2014-11-13 02:00

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Norman Lear and Amy Poehler Talk creativity

Wed, 2014-11-12 13:39

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

 

Bill Youngblood

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

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

Bill Youngblood

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

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

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

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

Bill Youngblood

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

 

 

 

Using data to head off high school dropouts

Wed, 2014-11-12 11:12

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

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

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

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

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

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

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

 

An example of an Early Warning System.

Maine Department of Education

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

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

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

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

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

Dan Hill for LearningCurve

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

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

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

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

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

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

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

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

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

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

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

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

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

Using data to predict students headed for trouble

Wed, 2014-11-12 11:12

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

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

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

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

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

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

An example of an Early Warning System.

Maine Department of Education

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

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

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

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

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

Dan Hill for LearningCurve

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

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

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

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

Not destiny.

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

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

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

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

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

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

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

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

Big banks get fined in foreign exchange rigging

Wed, 2014-11-12 11:00

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

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

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

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

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

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

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

And so the “fix” was born.

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

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

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

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

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

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

Big banks get fined for fixing the forex fix

Wed, 2014-11-12 11:00

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

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

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

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

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

And so, the “Fix” was born.

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

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

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

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

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

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