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Don't worry, bee happy?

Tue, 2014-01-07 05:17

Beekeepers and honey producers both launch annual meetings today.

It’s a grim time to be in the bee business as American honeybees are dying at an alarming rate due to what’s called colony collapse disorder. No one is certain what’s behind the collapse, but the problem has become so severe it’s gotten the attention of big business.

You can see heightened concern just by looking who is coming to the American Honey Producer Association conference this week. President Randy Verhoek says ten years ago their annual conference was intimate.

"We’d get in different beekeepers to speak, different scientists from the universities," he says. But with the decline of honeybees, the guest list has grown.

"We’re going to have Bayer, Dow, Monsanto," he says.

Producers worry as honey sales this year are expected at no more than $280 million, $30 million down from last year, and are concerned about certain new pesticides and herbicides. There’s also concern farmers are quickly wiping out plants that bees need for foraging as land gets converted for corn and soybeans.

University of Illinois Professor May Berenbaum says the more widely-attended meeting shows as the bee problem worsens, cooperation improves. "We really should take a lead from the bees. If anybody has figured out how to work cooperatively, it’s the honeybee," she says.

Considering that honeybee health threatens the pollination of billions of dollars worth of crops every year, Berenbaum says she’s optimistic.

Conflict minerals disclosure rule heads to court

Tue, 2014-01-07 05:04

Today, a federal appeals court hears arguments against a rule requiring companies to start reporting conflict minerals in their products. These minerals are mined in and around the Democratic Republic of Congo (DRC), and used by armed groups to fund a conflict that’s killed millions.

Critics say the rule is onerous and may have unintended consequences.

Tin, tantalum, tungsten, and gold are the minerals in question. They help you send texts. They make your phone vibrate. They are deeply embedded in our electronic lives and the supply chains of thousands of companies.

Sasha Lezhnev is a senior policy analyst with the Enough Project. He says some companies are enthusiastically rooting out conflict minerals.

“I just traveled with Intel, with Motorola Solutions and a couple of other companies to Congo, and we were identifying mines that they can start sourcing from in a clean manner,” he says.

But some industry groups say compliance is too costly and complex. J. Peter Pham is the director of the Atlantic Council's Africa Center. He worries the rule has an unwanted side effect.

“Because of the reporting requirements and the burden put on global companies, they’ve simply chosen not to do business with any companies in the DRC,” he says.

Pham says that’s driving many of the region’s individual miners out of work.

Under the rule, which is part of the Dodd-Frank Act, there’s actually no penalty for using conflict minerals. The only damage is to brand reputation.

Can startups succeed outside Silicon Valley?

Tue, 2014-01-07 04:55

In a recent article in the Harvard Business Review online, investor and tech executive Max Wessel argued forcefully that entrepreneurs should think twice about starting their companies anyplace other than a major center for venture capital and high-tech talent on the East or West Coast.

“Don’t build your startup outside of a superhub—a well-established ecosystem with funding, talent, and the ability for liquidity events to happen quite seamlessly,” Wessel explained in a recent interview.

Wessel argues that a budding entrepreneur will only be able to find enough angel and VC funding, professional support (everything from computer programmers, to lawyers and bankers who can support an IPO), and big companies that can acquire smaller companies, in three places—New York, Boston and Silicon Valley.

The Kauffman Foundation released a study in mid-2013 identifying the top twenty-five metro areas for high-tech startup density, and found San Jose, California and Cambridge, Massachusetts ranking just behind Boulder and Fort Collins, Colorado, in the top slots. Also in the top tier: Seattle, Washington; Raleigh, North Carolina; Huntsville, Alabama; and Salt Lake City and Provo, Utah.

“If you look in those minor markets, the number of acquirers who could buy your business, the number of professional services firms that could help your business get to that point of IPO, they’re all much less common,” says Wessel. “And that creates a real impediment to taking a fledgling startup ecosystem and making it a full-blown success story.”

Brad Feld, author of the book “Startup Communities: Building an Entrepreneurial Ecosystem in your City,” strongly disagrees.

“I think it’s unbelievably myopic to say the only place you can build your company is Silicon Valley or City X,” says Feld, who cofounded the Foundry Group early-stage VC fund as well as the Techstars mentorship and accelerator program for entrepreneurs. “It goes against the law of systems dynamics--if everyone goes to a certain place to do a certain thing, you’re not going to have increasing returns forever. You should decide where to live your life, and then build your life around that.”

Feld asks: “Can you have successful companies in other geographies that are significant successes? The answer is, of course, because there are many of them. Not so long ago the statement was made that you shouldn’t start a company anywhere other than Silicon Valley. Boston and New York weren’t on that list.”

Feld points out that he and other entrepreneurs have made the college town of Boulder, Colorado, the runaway leader nationwide for startups-per-capita, according to the Kauffman Foundation’s research.

Another place ranking high on that list: central Utah.

All along the Wasatch Range, from Provo, Utah, north to Salt Lake City, a warren of startups feeds off legacy tech companies like Novell and Ancestry.com.

In a gleaming Provo office suite is Qualtrics. Its 350 employees crunch masses of market and customer data for corporate and university clients.

Ryan Smith is CEO—in 2012, his firm landed $70 million in venture capital from two Silicon Valley funds (Sequoia and Accel). But Smith says being far from Silicon Valley has actually been good for growth. Investors weren’t throwing money at the company early on--before it had significant revenue or customers--so his team had to create products customers actually wanted to buy—right away.

“We were bootstrapped for ten years, basically,” says Smith. “What we killed is what we could eat. You’ve got to be extremely scrappy. Some of the most innovative times at Qualtrics have been when our back was up against the wall and we had to make payroll. And every employee had to count and contribute to the bottom line.”

Other Utah entrepreneurs say employees are more loyal here—not itching to jump ship every few months for a higher salary or the dream of a quick, profitable exit.

“At some point you start to get diseconomies of too much cluster,” says Gavin Christensen, founder of Kickstart, a Salt Lake City-based seed investment fund. “You get a labor force that becomes very disloyal,” he says of Silicon Valley. “They’re always looking for the next opportunity, getting paid more, the startup that’s a little hotter.”

Investor and writer Max Wessel concedes a startup entrepreneur might find some of the funding and talent they need in places like Boulder or Salt Lake City. But otherwise—“any entrepreneur who’s looking at building a new business might be better off moving.”

First story in the series:

The best hope for U.S. job growth to take off in coming years might be through entrepreneurship. While it’s true that startups fail at a high rate, when they succeed, they can be engines for rapid job growth, often in highly skilled jobs that pay above-average wages. Metropolitan areas that are centers of startup activity also tend to have lower unemployment than the national average.

The startup scene is intense in Silicon Valley, Boston and New York, of course. Those are hubs of university research, where a lot of venture capital firms are based, as well as tech companies that have already made it big (providing talent, investment capital from stock options and exits, and spin-off ideas).

But according to research published in August 2013 by the Kauffman Foundation, a think tank based in Kansas City, some of the most active metro areas for startup-generation are farther off the beaten path. In the report, Salt Lake City and Provo, Utah, ranked No. 11 and No. 12 for information-technology startups-per-capita in the country. Just ahead of them ranked places like Cambridge, Mass., and North Carolina’s Research Triangle.

So, what’s so special about the urban corridor in Central Utah that’s helping it jump ahead in the startup race?

To find out, I first head to a startup called Power Practical. It’s based in an old warehouse in Salt Lake City. David Toledo, 25, is the co-founder—he greets me in faded cords and a work shirt.

“This project started in a basement,” Toledo explains, “and then moved to a slightly larger basement. And then from 300 square feet after our ($126,000) Kickstarter project, we expanded to 1,500 square feet, which is this production facility we’re standing in right now. We actually remodeled this place—there was no insulation, we built all the stairs. That’s what we do, we build stuff here.”

What half-a-dozen guys—also in work shirts—are building on tool benches is cooking pots that double as cellphone-or-computer-chargers. The Power Pot is designed for campers who want to use their camera or GPS in the wilderness (even if they’re out of cell-tower range), or for emergency workers when the power goes out.

Here’s how it works: You fill the pot with water or whatever you’re heating up, put it on top of a camping stove, campfire or hot coals. Then, plug your device-of-choice into an insulated cord that snakes out from the Power Pot's handle.

“As the heat goes through the thermo-electrics into the water, that’s where you get the power from,” explains Toledo.

The basic technology came out of engineering research Toledo and his colleagues did at the University of Utah. Two years since its launch, Power Practical has 15 employees, $750,000 in seed funding, and almost $1 million in sales. Toledo says some months, the business is profitable. Power Practical is also launching new products for testing and maximizing power flow through electronic chargers to computers, smartphones and other devices.

Utah has plenty of other startups doing outdoor-oriented tech-gear. The business cluster is actively promoted by state economic development officials, and fits with the mountains and world-class skiing.

“I’m an eagle scout,” says Toledo. “What we do with our free time is go adventuring, camping, hiking, backpacking. Standard of living is really high.”

The cost of living, meanwhile, is pretty low.

So, Utah’s secret weapon Number 1 is location. It’s a place to which people want to come, and in which they can afford to stay. Meaning, entrepreneurs can afford to hire them, and might not have to outbid a rival startup trying to poach their talent.

Utah’s secret weapon Number 2 is talent. It’s been built up by older Utah tech companies, such as WordPerfect and Ancestry.com. Local universities also play a big role. Brigham Young, the largest Mormon university in the country, has a robust entrepreneurship program. The University of Utah ranks up with MIT for commercializing lab research, according to the Association of University Technology Managers.

At the other end of Utah’s startup-corridor, about 40 miles south of Salt Lake City along I-15, is the city of Provo, tucked against the foothills of the Wasatch Range.

Provo is home to BYU, which helped back a new startup incubator called Camp 4. It's housed in an old candy factory, across the street from a railroad station, with dramatic views of the mountains just to the east. The name of the family that founded the candy company in the late 1800s was actually 'Startup.'

Inside, the décor is funky industrial—distressed wooden floors, exposed beams, huge casement windows, flip-charts, work stations, high-speed internet.

I met Sean Huntington here. He’s 27, originally from Mesa, Arizona, studying photography down the road at Brigham Young. Only most of the time he’s here at the startup incubator, working the phone, testing software. He’s “living the startup life,” he says. “It’s all-consuming, not taking a paycheck home, and just trying to survive with whatever means necessary.”

Huntington’s been developing a smartphone app that sells merchandise during a concert—fan-stuff like t-shirts, headshots, and CDs. “It’s a digital merch booth for live events,” he explains, “a tool for artists to reach their fans in the moment they’re most likely to buy, which is during the concert.” By gathering information about customers who make purchases, the app can help an artist with future marketing and fan loyalty.

“The project’s called Vicci,” he says. I ask if it's spelled the Latin way? No, he says. “We’re doing that startup thing where you spell things incorrectly and try to be cool. We are gearing up for the Donny and Marie Osmond Christmas tour.”

The Osmonds are still a popular act, and the family is from nearby. In fact, in the late 2000s, they performed top hits backed by the world-famous Mormon Tabernacle Choir.

The Osmonds are emblematic of Mormon business success, which constitutes the third and final secret weapon I identified as contributing to Utah’s strength as an emerging startup hub. There are Mormon values, like self-reliance and hard work. And these are reinforced by the mission, in which many young Mormons travel far from home to proselytize door-to-door (mission is typically two years for young men and eighteen months for young women).

Joel Ragar is a member of the Church of Jesus Christ of Latter Day Saints (LDS). He went on mission to Seattle, came back to Utah to go to university, and launched a startup for golf software called ForeUp. He says harsh words, doors slammed in his face, even the occasional gun pulled on him as he approached, were all par for the course on mission.

“I’ve had more rejections in the amount of two years than probably most people,” Ragar says. “Rejection is a huge thing you learn to overcome and to not take it personally. In our software today, I do a lot of sales and I’m rejected a lot, too.”

Gavin Christensen, who went on his LDS mission to Norway and eventually came back to Salt Lake City to found the Kickstart Seed Fund (with approximately $34 million invested in local startups and growth-stage companies) says the experience was invaluable.

“What Utah has in spades is entrepreneurial drive, and a lot of that comes from the culture here, which has a lot to do with the church, and a lot to do with kids like us serving missions at young ages,” says Christensen. “It was hard, it was a crucible you pass through and you learn what hard work’s about. I look back and think: starting a seed fund has not been nearly as hard as the mission was.”

Maxwell Wessel is an investor based in Washington, D.C., who’s written a series of blog posts about the startup economy for the Harvard Business Review. He agrees with Christensen that Mormonism matters.

“It is very meaningful,” says Wessel. “There is nothing quite like the drive and approach they have to building a business.”

Wessel has argued provocatively that it is hard for startups to succeed outside the traditional startup hubs such as Silicon Valley, Cambridge and New York. He doubts they can find the talent and funding they need. But he thinks Utah might be different.

“I think Salt Lake City is a very interesting market with an extensive amount of venture capital flowing in,” says Wessel. “So it might be the anomaly.”

That's as long as people with talent and drive keep settling down here, after they’ve seen the wide world beyond.

Could polar vortex dampen January's gym business?

Mon, 2014-01-06 13:55

“January is always the busiest month for us,” says Robby Huang, co-owner of Revel Fitness, a Zumba studio in Carmel, Ind. “We find a lot of people make New Year’s resolutions and they really stick to them really well.”

The influx in customers doesn’t make it harder to fit clients in at Revel Fitness because they don’t use equipment.  Huang says the classes just get bigger. Their busy season tends to last through March and April.

One damper on this year’s January boom for Huang? The snow storm that’s shut down much of the Midwest. Revel studio is closed today but Huang hopes to be open again soon.

Why non-bankers love Wall Street bonuses

Mon, 2014-01-06 13:40

This is the time of year when Wall Street bankers get their bonuses. The numbers can be staggering to those outside finance, with six-figure average payouts and high-level bonuses spiraling into the millions. This year looks to be uneven, with some bankers doing well and others, especially bond traders, getting less.

That money eventually flows through New York’s economy to a lot more people than one might expect, including armies of middle class workers and small business owners.

There may be national distaste for Wall Street, but there are many who don’t work there who nonetheless hope the big banks do well.

The New York catering company Sonnier & Castle produces elaborate dinners that cost hundreds of dollars per person. Recently, it catered the movie premiere of "The Wolf of Wall Street."

“A third of our business comes from the financial industry,” estimates co-founder David Castle. “Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.”

Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again on personal events. That means their bonuses are more important than ever.

The catering company laid off workers in the financial crisis. But with sales up 20 percent last year amid a recovering economy, Castle is hiring again, adding staff positions as well as part-time servers and cooks, who rely on the extra income or use the jobs as stepping stones to full-time work.

"They're receiving income and in turn, they turn around, they spend it," says New York University economics professor Lawrence J. White. "The initial beneficiaries are the people who receive the bonus, but it doesn't stop there."

It's what economists call a multiplier effect, the rippling economic impact of all that bonus money as it passes through various hands.

Speaking of candlesticks, there are some rather nice ones in homes where Darren Henault designs the interiors.

Photos on the walls of his studio show the many rooms he created. They include the homes of some of the top people in finance.

The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.

"I have definitely had people say to me, 'I did not have a great year. Let's dial back,'" Henault says.

Many people reading this won’t care if a rich banker is less rich. It might even make them smile.

But before anyone gets too drunk on schadenfreude, it’s worth remembering that the fate of big banks can directly affect small business. If a banker scores a sweet bonus, he can give Henault a bigger budget. That means more pricey custom elements, and thus a lot more people going to work.

"More people are involved in the making of the higher-end things than the lower-end things," Henault explains, listing the types of people a big project will employ. "A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine."

And those giant bonuses are taxable, which means revenue from them helps fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay.

Attacking bank bonuses is ever fashionable, providing meaty, easy targets for everyone from newspaper editorial writers to Washington politicians. But for regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They’re vital.

Mark Garrison: We are miles from the financial district, inside the busy kitchen of New York catering company Sonnier & Castle. That sizzle is the sound of swine near the end of the line.

Later, the glistening cube will be skewered, then passed around by an impeccably dressed young server at a very fancy party.

The company’s most elaborate dinners cost hundreds of dollars per person. Today, the team’s prepping for an event for a famous fashion designer. Recently, it catered the movie premiere of “The Wolf of Wall Street.” Co-founder David Castle says the real Wall Street is critical to the company’s bottom line.

David Castle: A third of our business comes from the financial industry.

Castle says corporate entertaining hasn’t fully recovered from the crash, but bank employees are spending again. That means their bonuses are more important than ever.

Castle: Bonuses would be great for us. It would definitely translate into bigger spending and to more hiring, more jobs.

His catering company laid off workers in the financial crisis. But with sales up 20% last year, Castle is hiring again, full-time staff as well as part-time servers and cooks who rely on the extra income. From the owners to the dishwashers, the whole company reaps the benefits of Wall Street bonuses.

Lawrence J. White: They’re receiving income and in turn, they turn around, they spend it.

That’s what economists like NYU’s Lawrence J. White call a multiplier effect. All that bonus money ripples across the entire economy.

White: The initial beneficiaries are the people who receive the bonus, but it doesn’t stop there.

A big bonus banker orders a fancy steak dinner from a server, who uses the big tip to splurge on new home furnishings. Everybody wins. As the old rhyme goes: the butcher, the banker, the candlestick maker. Ok, I did tweak it a bit. Speaking of candlesticks, there are rather nice ones in homes where Darren Henault designs the interiors.

In his studio, he shows photos of rooms he created. They include the homes of some of the top people in finance. The rooms look stunning, like lush film sets. Clients pay him hundreds of thousands of dollars to perfect the insides of their multi-million dollar properties. When a banker’s bonus comes up short, he knows.

Darren Henault: I have definitely had people say to me, ‘I did not have a great year. Let’s dial back again.’

Chances are, you don’t care if a rich banker is less rich. But think about it this way. If a banker gets a larger bonus, he can give Henault a bigger budget, which helps small businesses.

Henault: More people are involved in the making of the higher-end things than the lower-end things.

If that banker goes for pricey custom elements, a lot more locals are going to work.

Henault: A custom painter, a faux finisher, out in Queens, there’s a company that does hand embroidery, all these different sort of artisans are people that we would bring in, as opposed to stock items which are being formed and spit out by machine.

And those giant bonuses are taxable, which means they help fix streets, pay cops and fund programs low income residents depend on. That’s why New York politicians, even those on the left, rarely attack Wall Street pay. For regular people whose jobs depend on them, big Wall Street bonuses aren’t excessive. They are absolutely vital. In New York, I'm Mark Garrison, for Marketplace.

Do big fines even matter for JP Morgan Chase?

Mon, 2014-01-06 12:58

Another year, another big fine for JP Morgan Chase. The bank's expected to soon be paying out another $2 billion in criminal and civil settlements to the federal government. This time for ignoring signs of Bernie Madoff's Ponzi scheme. That brings the grand total of fines JPM has paid in just the past year to just about $20 billion.

But the markets aren't paying any heed: Shares are up almost a percent today and CEO Jamie Dimon is still there. The company's doing just fine, it seems. But is there a limit?

Tim Fernholz from Qz.com thinks JPM's seeming invulnerability may be due to Wall Street's indifference to anything but the bank's financial performance: 

"What I think to look for with Jamie Dimon is going to be, the company's latest earnings report. Ultimately on Wall Street and I think among the investors and these banks, they're an amoral bunch in the strictest sense of that term in that they do not care about the crime, they care about the stock price and the earnings."

Fernholz also says that it's important to remember that the fines and penalties we see today are punishing crimes and practices that aren't necessarily still happening.

"So it's hard to say...if they've cleaned up their act, and I think that's one of the reasons that prosecutors have reportedly opted for this deferred prosecution agreement," Fernholz says, "They're going to ask JP Morgan to really strengthen the controls that they supposedly put to watch out for things like Ponzi schemes or drug runners or any other kind of money laundering."

Is Congress playing a shell game?

Mon, 2014-01-06 12:45

One of the first items on Congress's agenda in the new year is whether to reinstate emergency unemployment benefits that expired in late December.

There is a key vote in the Senate Monday afternoon. House Republicans have said they'd consider the idea, but only if the cost of the extended benefits is offset.

Deals like that are common in Washington, but that doesn't mean the savings always materialize as promised. 

“There’s a con going on,” says economist Donald Marron. 

Marron is a former economic adviser for George W. Bush, now at the Urban Institute.  He says Congress isn’t a bunch of cons, but he says its budget deals are pretty gimmicky, like when Congress ignores a program’s long-term costs, focusing instead only on short-term revenues.

“So they’ll show up and they’ll appear to be helping to pay for whatever the program is you want to pursue, but it still means in the long run that we’re going to lose money," Marron explains.

Now you see it.  Now you don’t.   That short-term thinking leads leads to itty-bitty deals, like the Senate’s proposed emergency unemployment extension, which would only last three months. 

“If it’s only for three months you can sort of slide it under the rug and you don’t have to pay for it," says Henrietta Treyz, a budget expert at Height Analytics.

Just don’t look under the rug.  Some Washington wonks say these kinds of games are inevitable right now.  Harry Holzer, who teaches public policy at Georgetown, says with some in Congress vowing to take huge bites out of the deficit, normal budget negotiations just aren’t possible.    

"It often has to be a bit of a shell game to square with their very severe rhetoric on fiscal austerity right now,” he says.

How cold is it when the economy breaks?

Mon, 2014-01-06 12:45

Schoolchildren are home by the millions. Flights are grounded by the thousands. Wind chills are being measured in the negative double digits. The great Polar Vortex of '14 is making its mark on much of the country, and the economy. Because a lot of things we take for granted day in and day out -- from starting the car to turning on the faucet -- were a little harder today.

“Plumbers get really busy,” says Nolan Doesken, state climatologist in Colorado. “This is the ideal situation for frozen pipes, when it’s not only really cold, but really windy to go with that cold.”

Jeff Cherwenka is used to working in extreme cold. He spent six seasons doing research at the South Pole. Now he’s back at the University of Wisconsin-Madison, where it was minus 17 degrees this morning.

“It looks like it’s minus 9 Fahrenheit at the South Pole today, so it’s actually colder here than at the South Pole,” he says.

At these temperatures, Cherwenka says, plastic and steel become so brittle they can break. Car batteries stop working.

“There’s a lot of little inconveniences,” he says, “but if it’s your car and it’s not starting then it’s a big inconvenience, right?”

At the high-tech end, electronics can fail. Kevin Gutknecht with the Minnesota Department of Transportation says things got dicey today on a reversible toll road on the west side of Minneapolis.

“We call it reversible because it goes in one direction in the morning, and another direction in the afternoon,” he says. “One of the gates on that quit working because of the cold.”

Below ground, water mains break. Even sewers can freeze. Shipping slows down in the Great Lakes. Diesel fuel can congeal.

“Things just break when it’s cold,” says Wilf Nixon, professor of civil and environmental engineering at the University of Iowa. “Unfortunately, they’re under more stress and it’s when you need them most…when they’re most likely to fail on you.”

That includes humans, too. We don’t work so well when it only takes a few minutes in the cold to end up with frostbite.

Fatigue doesn’t help. In Elgin, Il., public works superintendent Daniel Rich says his workers have been doing 12-hour shifts since before Christmas, removing snow, de-icing streets and fixing water main breaks.

“You can tell the guys are getting a little tired, and as a result of that they slow down a quarter step,” he says.

Where are our jetpacks and flying cars?

Mon, 2014-01-06 12:45

Tomorrow is the start of the Consumer Electronics Show in Las Vegas, the annual bacchanal of all things technological. The tech industry is known for promising us the future, but how often does technology deliver on that promise. We are after all, still waiting on the JetPack.

Benjamin R Harrison was working at CES last year as videographer for the website Engadget when he was ushered into a hotel room, to see the unveiling of a prototype for a virtual reality headset that allows users to become the character in a game. "At that point it was literally ski goggles that had components duct-taped into it," remembers Harrison. Virtual Reality, like JetPacks, was promised to us long ago. In this case, the duct tape ski goggle contraption became Oculus Rift, a virtual reality headset expected to deliver on the promise of virtual reality gaming.

Roughly 20,000 new products will launch at this year's CES. But very few will be big commercial successes. "I think the way to think about this is as more of a case of evolution then things succeeding or failing," says Shawn Dubravac, chief economist and head of research at The Consumer Electronics Association, which produces CES.

Many of the products unveiled this week will flop commercially. Often the first generation of a product is the crummiest. It can take time for bugs to be worked out or for people to understand why something would be useful to them. Many of this year's new products are part of a larger technological trend, the digitization of everyday things.

Dubravac says the future is one of sensorization, where everyday objects, from toothbrushes to tennis rackets, will have sensors that generate streams of data, like the speed of your backhand. The age of autonomy, as Dubravac calls it, where cars drive themselves, and all of our things talk to our computer so it can manage all the data generated by our new gadgets, freeing us to enjoy them.

A planemaker by any other name ...

Mon, 2014-01-06 12:38

This final note to observe a long-overdue bit of corporate rebranding.

First, do you know what EADS stands for?

No? Even though you've probably flown on their planes.

The European Aeronautic Defense and Space Company makes Airbuses.

Executives have now apparently recognized the ungainlyness of that name and have renamed themselves simply: Airbus.

Will I get stuck in the Kitchen Aid ecosystem?

Mon, 2014-01-06 09:33

The Consumer Electronics Show kicks off in Las Vegas this week. On view almost 2 million square feet of the latest consumer gadgets and one of this year's themes is the Internet of Things. 

You know what the internet is, right? Well, the Internet of Things?

"So the Internet of Things is basically this idea that everyday objects will be able to connect to the Internet, will be able to communicate with each other," said Scott Jacobson is a venture capitalist at the Madrona Venture Group.

And the more we connect the Internet to things  like thermostats, refrigerators and even cars, the idea is, the smarter they get. Jacobson says a few things are driving this trend. Sensors have gotten really cheap and so you can detect sound and take images with almost any electronic gadget. And then, there’s the cloud.

"And so once they get connected, all the computing that needs to be done for these things can be done in the cloud," Jacobson said. 

Frank Gillett, an analyst at Forrester research, says expect to see a lot of Internet of Things around the home at the consumer electronics show this week.

"There’s a range of things here, there’s door locks that can be wifi enabled that you can unlock from your phone," Gillet said. 

But Gillet says, the real question is how do we make everything work together. It’s like the conundrum of the million remote controls you need to make your TV work. And that one has yet to be solved.

Will I get stuck in the Kitchen Aid ecosystem?

Mon, 2014-01-06 09:33

The Consumer Electronics Show kicks off in Las Vegas this week. On view almost 2 million square feet of the latest consumer gadgets and one of this year's themes is the Internet of Things. 

You know what the internet is, right? Well, the Internet of Things?

"So the Internet of Things is basically this idea that everyday objects will be able to connect to the Internet, will be able to communicate with each other," said Scott Jacobson is a venture capitalist at the Madrona Venture Group.

And the more we connect the Internet to things  like thermostats, refrigerators and even cars, the idea is, the smarter they get. Jacobson says a few things are driving this trend. Sensors have gotten really cheap and so you can detect sound and take images with almost any electronic gadget. And then, there’s the cloud.

"And so once they get connected, all the computing that needs to be done for these things can be done in the cloud," Jacobson said. 

Frank Gillett, an analyst at Forrester research, says expect to see a lot of Internet of Things around the home at the consumer electronics show this week.

"There’s a range of things here, there’s door locks that can be wifi enabled that you can unlock from your phone," Gillet said. 

But Gillet says, the real question is how do we make everything work together. It’s like the conundrum of the million remote controls you need to make your TV work. And that one has yet to be solved.

Cars get even more connected with Google's Open Automotive Alliance

Mon, 2014-01-06 08:47

Tomorrow, the International Consumer Electronics Show kicks off. But today, the swarms of company reps and entrepreneurs have arrived in Las Vegas. And one topic that's already big news is Google's Open Automotive Alliance. There was news ahead of this week's show about the tech giant partnering with Audi to put its Android operating system in cars. But it turns out the partnership is much bigger than that, including Honda and even General Motors. Tim Stevens, editor-at-large at CNET, tells Marketplace Tech more about Google's plans for your car.

Cars get even more connected with Google's Open Automotive Alliance

Mon, 2014-01-06 08:47

Tomorrow, the International Consumer Electronics Show kicks off. But today, the swarms of company reps and entrepreneurs have arrived in Las Vegas. And one topic that's already big news is Google's Open Automotive Alliance. There was news ahead of this week's show about the tech giant partnering with Audi to put its Android operating system in cars. But it turns out the partnership is much bigger than that, including Honda and even General Motors. Tim Stevens, editor-at-large at CNET, tells Marketplace Tech more about Google's plans for your car.

Texas town closes the toilet-to-tap loop: Is this our future water supply?

Mon, 2014-01-06 08:47

Lots of us would probably rather not think too hard about where our drinking water has been. For instance, much of Houston’s water comes from the Trinity River, some of which is treated sewage effluent from Dallas and Fort Worth

But almost no one has taken the step of connecting sewage pipes directly to the drinking water supply. Until now.

With about 27,000 people, Big Spring is a decent-sized town for West Texas. It’s got a Walmart and a four-screen movie house.

But there’s no actual spring anymore. That dried up almost 90 years ago— around the same time that oil was discovered in West Texas.

It’s dry here. But so is a lot of the state--and drought has slammed wide swaths of Texas in recent years.  So why is Big Spring the site of this experiment in what experts call “direct potable reuse”? Here’s one clue:  In terms of customer satisfaction, the local water supply didn’t have a lot to lose.

“Nobody drinks the water here,” says Mary Jo Atkerson, proprietor of Big Spring Welding Supply.  “Nobody drinks it out of the faucet.”

“Hell no!  We don’t do that,” says Terry Sanders, age 54.  “I’ll bathe in it, but I won’t drink it. It’s too hard— it’s— it’s nasty.”

“It’s well-complained-about, that’s for sure,” says Chanel Castillo, age 20.

For years, people here in Big Spring have relied on filtered water. Many, like Atkerson, have filter systems in their homes.

Like many others, Sanders and Castillo buy water retail.  In their case, an early-December morning finds them filling jugs with filtered water at the Water Shoppe for 20 cents a gallon, using a self-serve machine on one side of the building.

On another side, Crystal Lopez’s family serves a steady stream of drive-through customers.

“Cars come through, and we’ll fill up their jugs and send them on their way,” says Lopez. Her younger sister, Emily Key, and their mother, Anastasia Key, handle everything from five-gallon containers that would be at home atop an office water-cooler to one-gallon jugs that recently contained milk and orange juice.

Last year, the city water that Big Spring residents avoid started to include treated sewage effluent.  

The treatment, at a brand-new, $14 million “raw water production facility,” is extensive. Water arrives there after initial treatment at Big Spring’s old sewage treatment plant.

 


 

The new facility treats that water with a heavy-duty filtration called reverse osmosis— the same process used by the Water Shoppe— plus two stages of disinfection and multiple stages of testing. Any water failing to meet the tests gets sent back to the town’s sewage treatment plant to start the process again.

Water that passes the test is drinkable, and arguably of higher quality than the water pulled out of nearby reservoirs.  However, before getting piped back to the homes and businesses of Big Spring, the “raw” water gets blended with reservoir water and the blend gets a final round of treatment in the town’s old drinking-water treatment plant.

John Grant, general manager of the Colorado River Municipal Water District, is the new system’s architect.   

And yes, he drinks filtered water at home too. “We’re not blessed, in West Texas, with really good-quality water,” he says.  “It’s got a lot of salt in it.  I mean, that’s all we got.”

It’s like the old joke about the bad restaurant:  The food is terrible.  Yes, and such small portions.  

Big Spring gets fewer than 20 inches of rain a year.  And the air is so dry, water evaporates from the reservoir at three times that rate. “So we pretty much start out in the hole already,” says Mr. Grant.

That strucural water deficit— the enormous gap between rainfall and evaporation— is why Big Spring has to pipe its sewage— albeit its rigorously-treated sewage—directly to the main waterworks.

Sending it to the reservoir, by way of the creek, would be more traditional.  And it wouldn’t work.

“If we put that water in the creek, it would evaporate,” says Grant.  “We’re actually creating more water.”

Grant’s system recovers 2 million gallons a day— about 40 percent of what the town consumes. The system actually reclaims a much higher percentage of the water it receives— 80 percent— but about half of the town’s water consumption never reaches the sewer system.  That’s the water for watering lawns, washing cars and other outdoor uses.

Grant started planning this system more than 10 years ago, before the recent years of super-drought, which made it appear more urgent. The nearest reservoir to Big Spring is currently 1.4 percent full.   

And it’s not the lowest in the state. Because of the drought, Texas voters recently approved $6 billion in new water projects.

The current five-year plan  doesn’t include much potable re-use. But when that plan was created, Big Spring wasn’t online yet.  No one had gone first.  

“It takes somebody—some local entity—brave enough to try it out,” says Robert Mace, of the Texas Water Development Board. “Then everyone else is looking over their shoulder. And then once they see it works: Boom. Off everyone goes.”

Already, three more places in Texas are actively exploring potable re-use projects: The town of Brownwood, the city of Wichita Falls, and the much bigger city of El Paso, with more than 600,000 people.  

However, getting their citizens on board could be a tough sell.

In Big Spring-- where no one seems to drink the water-- the re-use project appears to have flown under some people’s radar. About half the people I talked with there had never heard of it.  

That included Crystal Lopez, at the Water Shoppe. Here’s how she responded when I told her about it:

“Really,” she said. “I didn’t know that, that’s gross. That is gross. Wow.”

I explained how good the filtering was— the same filtering process she uses in her shop-- plus the decontamination, the testing.

And the fact that lots of cities take their water from rivers that some other town has dumped sewage in.

No sale.

“I don’t know,” she said. “That’s— it’s disgusting.  I can’t think of another word.”

PODCAST: Yellen expected to be confirmed today

Mon, 2014-01-06 08:40

Janet Yellen is expected to be confirmed as the chair of the Federal Reserve this afternoon, and Wall Street is watching.

As Congress comes back to work this week, it’s expected to debate the possibility of re-instating unemployment benefits for the long-term unemployed, which expired for 1.3 million people a few days after Christmas. 

Delta Air Lines is the last domestic carrier to fly the DC-9, and one final Delta flight this Monday afternoon will mark the close of the plane’s nearly half-century run.    

What if Congress doesn’t reinstate unemployment benefits?

Mon, 2014-01-06 08:13

As Congress comes back to work this week, it’s expected to debate the possibility of re-instating unemployment benefits for the long-term unemployed, which expired for 1.3 million people a few days after Christmas. 

Research shows that when unemployment benefits get cut, the unemployment rate goes down -- but not just because some people take new jobs. Some of the reduction is the combination of bad news and a quirk of how the numbers get compiled. 

The bad news is, when benefits go away, some people give up on finding a job, since an active job search is a requirement for collecting benefits. 

And the quirk is, when people stop looking for work, they stop getting counted as “unemployed.”

“When people give up and drop out of the labor force, that lowers the unemployment rate -- but that’s not a good way of lowering the unemployment rate.” says Chad Stone, chief economist for the Center on Budget and Policy Priorities.  “It’s not that they’re transitioning into jobs -- it’s that they’ve stopped searching.”

And people without work -- and without unemployment benefits -- can’t necessarily get what they need from the local food bank. 

“What we’re seeing is, charities are not really able to keep up with the increased demand, with more and more people unable to make ends meet,” says Melissa Boteach of the Center for American Progress.

She says the price tag for reinstating benefits -- $25 billion -- far outstrips what charities could supply. According to her group’s analysis, it’s five times the amount anti-hunger charities collect in a year.

Looking at the future of the TV

Mon, 2014-01-06 07:32

One of the big topics at the Consumer Electronics Show this week is television -- like smart TVs and more high-definition programming. But as more and more of us stream our content, what does the future of television really look like beyond pixels and frame rates? For a look at how television stations might be licensed in the future and how interactive new programming might be, Marketplace Tech turns to Harvard's Jonathan Zittrain. Click the audio player above to hear more.

How do Muslim investors know when a company is Sharia friendly?

Mon, 2014-01-06 06:01

This week, Marketplace is looking at investors who are using their money to invest in companies that share their values.

IdealRatings is a San Francisco company that helps Muslim investors do just that. Through its screening system, IdealRatings finds stocks and other investment vehicles that comply with Sharia law.

Mohamed Donia, IdealRatings' chief executive officer, says there are many levels at which a company is judged to see if it is a socially responsible buy for Muslim investors.

"You screen for good companies not interested in alcohol or gambling -- even games," he explains. "Then, there is another level of leverage, interest. So, I'll give you an example -- like firearms. There are companies that are selling the firearms, so we look at whether they're getting an income of less than 5 percent from firearms -- typically these companies will pass. If the income level is more than 5 percent, then it is likely to fail."

Donia says a service like the one IdealRatings supplies is essential to Muslims, because too much money is being left on the table as investors worry whether a company complies with Islamic teaching.

"The Islamic finance industry is estimated around $1.5 trillion, growing steadily at 25 percent," Donia says. "Most of that money is in cash accounts, not earning interest, because investors -- they have the fear that they cannot invest the money, so when you provide a screened universe of companies, this would definitely help investors to start investing this kind of money, and also leverage their investments across different regions."

For more about Islamic finance and IdealRatings, click the audio player above.

Private jet business picks up speed

Mon, 2014-01-06 05:40

“Fly faster, do more.” That’s what the website for Spike Aerospace’s supersonic business jet reads. The new $80 million dollar aircraft is due out in 2018 and promises to fly from New York to London in just three to four hours.

Corporate plane shame is gone.

“Particularly the perception that as people were losing their jobs and as the economy was tanking, you shouldn’t be out flying around in a business jet,” says Doug Royce, vice president of research and editorial services for aerospace research firm Forecast International. “That’s gone away,” he says.

The market for private jets is worth tens of billions a year, says Royce, but the lower end is still struggling. He says a signal the top of the market is growing is manufacturers like Bombardier and Gulf Stream developing new aircraft.

Robert Mann, president of R. W. Mann, an airline industry analysis and consulting firm says Fortune 500 firms are still the biggest business buyers of private jets. He notes that pilots on private planes can pay twice as much for fuel as commercial airlines. It can be expensive to ship jet fuel to small airports and  large commercial airlines have the luxury of consuming fuel without paying taxes on it.

“The old adage goes speed costs money -- how fast can you afford to go,” he says.

Aerion, developer of another supersonic jet says it has letters of intent for 50 aircraft. The check in date is 2020. 

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