Op. Magazine by Ana Tenreiro

Op.

COVER STORY OP

BUILD YOUR OWN DREAM ISSUE#1 MARCH 2011 IRISH PRIDE: A STORY OF SUCCESS • THE PROPHET MOTIVE • LET'S GET PHYSICAL • A JUNIOR MOMENT • FASTEST GROWING FRANCHISES • TICKET TO SAVE • PAYCHECK YOURSELF • SMALL BUSINESS 101: HOW TO GET STARTED • RICHARD FOXX • AMANDA ARENBERG • TOM SCOTT • ANGELO SOTIRA • CHARGE • CHECK YOUR LOCAL LISTINGS • HOME AWAY FROM HOME • BUILD YOU OWN BUZZ • WHEN WORDS ARE CHEAP • SUPER FLY GUYS • CLOUD HAILER • FLAT-OUT COOL • ART • MUSIC • MOVIES • PHOTOGRAPHY • DESIGN • CITY LIVING • BARCELONA

MARCH 2011 1

OP COVER STORY

2 MARCH 2011

CONTENTS HOTSPOTS

NEWS 7

BUSINESS

FEATURES

NEWS 11 CASE STUDY 14 BRANDING 20 INVESTMENT 24 FRANCHISING 28 SMART MONEY 34

COVER STORY 40 PROFILES 49 INTERVIEW 56

MARKETS&FINACE

THIS&THAT

NEWS 61 INNOVATION 64 ON LINE IDEAS 68 E-COMMERCE 71 MARKETING IDEAS 75

TECH TRENDS 84 CULTURE 86 TRAVEL 88

To subscribe to OP Magazine, visit wwww.opmagazine.com

EDITOR'S NOTE “

OP magazine is based on the belief that opportunities don't come only once in a lifetime. We're just not used to seize these opportunities when confronted with extraordinary situations. Established in March 2011, OP’s innovative and ground-breaking projects have redefined the perception of the word business itself and how its concept is presented nowadays and can be used as a "weapon" by the young entrepreneurs. Interacting with a global community of dedicated viewers, OP encourages its audience to respond and contribute creatively to its projects, documenting, communicating and evaluating the results. OP collaborates with some of the most influential and acclaimed figures in the business field. OP also supports and nurtures emerging talents. Constantly changing, consistently innovating, OP delivers information, ideas, concepts, advices and lifestyles. Seize your opportunity to do whatever you want.

“

Wir Mathew Editor in chief, OP Magazine

EDITORIAL

Editor Wir Mathew Sub-editor David Ryan Contributing editors Colin Brown, Jo Bowman CORRESPONDENTS Berlin William Boston Istanbul David O'Byrne London Lucy Parker Middle East Scott Millan Moscow Anatoly Medesky Rome Lee Marshall

PRODUCTION

Helen Grimley, Antonia Ferraro Head of Events & Promotions Yolanda Acuna Ocana Logistics www.goferslogistics.com

PUBLISHING

Commercial Director Kevin Rolfe Publishing Director Simon Leslie Executive Creator Director Michael Keating Chief Operating Officer Hugh Godsal Chief Executive Jeffrey O'Rourke

ADVERTISING

Advertising Manager Carlos Northon (carlos.northon@opmagazine.com) Sales Executive Helga Schweiss (helga.schweiss@opmagazine.com) Special Reports Janet Langley (janet.langley@opmagazine.com) Country Reports Suzanna Howse (suzanna.howse@opmagazine.com)

ART

Art Director Steven Ranson Picture Editor Lisa Jacobs Design Director Jonny Clarck OP Magazine, periodicals pending, ISSN 1743-6664, is published weekly by eSubstance Ldt. 141-143 Shoreditch High Street, London E16JE

HOTSPOTS • JAPAN CRISIS • AT THE GATES OF AJDABIYAH • WESTERN STRIKE BOOST REBELS’ BID TO TAKE KEY LIBYAN CITY • TUNISIAN IMMIGRANTS PROTEST ON TINY ITALIAN ISLAND • HIGH TENSION IN YEMEN AMID RIVAL RALLIES

8 MARCH 2011

HOTSPOTS OP

JAPAN CRISIS

The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped working, prompting a second massive explosion. As with the other blast, scientists said the fuel rods did not appear to have been damaged. But fears of a meltdown remain acute. The cooling system at the second reactor is also now said to have stopped working. Like one and two, engineers are desperately pumping huge amounts of sea water into the quake stricken reactor in an effort to stabilise it. So far, scientists appear confident Japan is not experiencing a meltdown on the level of Three Mile Island in the US in 1979, let alone Chernobyl in 1986. However, the crisis is certain to force a rethink on energy policy, in a country so reliant on nuclear power. The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact.

Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped that day.

AT THE GATES OF AJDABIYAH

With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns. They had not been used to knock out the tanks he came across, burned out by the side of the road, but what he did see was enthusiasm and determination. He reported: “I’m on the frontline of the clashes between Gaddafi forces and opposition forces. One side is under opposition control, and the other is under the control of Gaddafi forces. “They have also taken control of Ajdabiya city centre. The rebels are praying and say they are

ready to march into the city and start a big assault. They say they will capture the city in 24 hours.” Their weapons are no match for the forces arrayed against them. Senior commanders have joined them on the frontline as Benghazi starts to co-ordinate command but it may be a challenge to fuse these former civilians and Gaddafi soldiers into an effective master force. “Our weapons are on the ground and can’t knock down enemy planes. We’ve heard explosions from over the hill between us and Ajdabiyah,” said one fighter. “We need support from outside. I believe in Allah. We need guns, because they have tanks and we don’t have tanks. But even with their tanks we will take them down,” said a 24-year old engineering student. He is typical of the many young people who are prepared to take on Gaddafi’s elite forces. Disorganised, and with few soldiering skills, they are defying the world’s longest-ruling dictator still in power. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns. They had not been used to knock out the tanks he came across, burned out by the side of the road, but what he did see was Ω MARCH 2011 9

OP HOTSPOTS

enthusiasm and determination. He reported: “I’m on the frontline of the clashes between Gaddafi forces and opposition forces. One side is under opposition control, and the other is under the control of Gaddafi forces. “They have also taken control of Ajdabiya city centre. The rebels are praying and say they are ready to march into the city and start a big assault. They say they will capture the city in 24 hours.” Their weapons are no match for the forces arrayed against them. Senior commanders have joined them on the frontline as Benghazi starts to co-ordinate command but it may be a challenge to fuse these former civilians and Gaddafi soldiers into an effective force. “Our weapons are on the ground and can’t knock down enemy planes. We’ve heard explosions from over the hill between us and Ajdabiyah,” said one fighter. “We need support from outside. I believe in Allah. We need guns, because they have tanks and we don’t have tanks. But even with their tanks we will take them down,” said a 24-year old engineering student. He is typical of the many young people who are prepared to take on Gaddafi’s elite forces. Disorganised, and with few soldiering skills, they are defying the world’s longest-ruling dictator still in power. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the cross10 MARCH 2011

roads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns.

WESTERN STRIKES

With coalition bombing of Libyan loyalist positions in Ajdabiyah as support, rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani is saying they fear “a great crime may have been committed” in Ajdabiyah and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO today said could be a 90-day campaign. However, air power failed to prevent government tanks re-entering Misrata in the west. With coalition bombing of Libyan loyalist positions in Ajdabiyah as support, rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman

Mustafa Gheriani is saying they fear “a great crime may have been committed” in Ajdabiyah and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO today said could be a 90-day campaign. However, air power failed to prevent government tanks reentering Misrata in the west. With coalition bombing of Libyan loyalist positions in Ajdabiyah as support, rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani is saying they fear “a great crime may have been committed” in Ajdabiyah and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO today said could be a 90-day campaign. However, air power failed to prevent government tanks re-entering Misrata in the west. With coalition bombing of Libyan loyalist positions in Ajdabiyah as support, rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani is saying they fear “a great crime may have been committed” in Ajdabiyah and that civilian casualties may be heavy.

TUNISIAN IMMIGRANTS PROTEST

Around one hundred Tunisian immigrants stagd a protest in the Italian border town of Ventimiglia on Saturday against what they said was a French policy to turn away would-be asylum seekers. The immigrants were transferred to the town close to the French border from the tiny island of Lampedusa. But living conditions appear to be no better than what they left behind. One Tunisian immigrant told the crowd: “I have risked my life on a makeshift boat with despair and when

HOTSPOTS OP

I arrived in Italy I found I had nothing.” France is home to Europe’s largest North African community and an estimated 600,00 Tunisians live there. Many of the arrivals from Lampedusa say they want to flee across the border in search of a better life. Ahmed, a Tunisian would-be asylum seeker, got as far as Monaco, only to be picked up by police and sent back to Italy. “We do not want to steal or do anything,” he said. “We just want safety. We want Europe to welcome us.” Italy says it cannot cope with the influx on its own and wants France and other European partners to do more to help. EU interior ministers will debate the issue at a meeting in Luxembourg on April the 11th. Some 20,000 Tunisians have reached Lampedusa since January’s popular uprising that ousted former president Zine al-Abidine Ben Ali. The tiny island has a population of just 5,000 and is only 260 kilometres off Tunisia’s east coast. Around one hundred Tunisian immigrants stagd a protest in the Italian border town of Ventimiglia on Saturday against what they said was a French policy to turn away would-be asylum seekers. The immigrants were transferred to the town close to the French border from the tiny island of Lampedusa. But living conditions appear to be no better than what they left behind. One Tunisian immigrant told the crowd: “I have risked

my life on a makeshift boat with despair and when I arrived in Italy I found I had nothing.” France is home to Europe’s largest North African community and an estimated 600,00 Tunisians live there. Many of the arrivals from Lampedusa say they want to flee across the border in search of a better life. Ahmed, a Tunisian would-be asylum seeker, got as far as Monaco, only to be picked up by police and sent back to Italy. “We do not want to steal or do anything,” he said. “We just want safety. We want Europe to welcome us.” Italy says it cannot cope with the influx on its own and wants France and other European partners to do more to help. EU interior ministers will debate the issue at a meeting in Luxembourg on April the 11th. Some 20,000 Tunisians have reached Lampedusa since January’s popular uprising that ousted former president Zine al-Abidine Ben Ali. The tiny island has a population of just 5,000 and is only 260 kilometres off Tunisia’s east coast.

TENSION IN YEMEN

Pro- and anti-presidential demonstrators have poured into Yemen’s capital in their hundreds of thousands, a week after a rally there ended in mass bloodshed. In a rousing speech to his supporters, veteran leader Ali Abdullah Saleh said he was ready to hand over power but only to what he called “safe hands.” This

was a chance for Saleh to show he can still command support, including within the military. A number of senior officers have defected to the rebel camp in recent days. Elsewhere in Sanaa, protesters encamped outside the university repeated demands for him to quit now on what they have dubbed a “Day of Departure.” One of the demonstrators, Sadek Ahmad Hammad Albokhari, said: “We are asking the president to leave and give up his authority to prevent bloodshed. The people will continue to rebel until the regime falls.” A week after anti-government rallies ended in dozens of deaths, soldiers fired shots in the air to prevent a confrontation between the two sides. Earlier, talks between President Saleh and a dissident general reportedly ended in stalemate. Pro- and anti-presidential demonstrators have poured into Yemen’s capital in their hundreds of thousands, a week after a rally there ended in mass bloodshed. In a rousing speech to his supporters, veteran leader Ali Abdullah Saleh said he was ready to hand over power but only to what he called “safe hands.” This was a chance for Saleh to show he can still command support, including within the military rebel camp in recent days. Elsewhere in Sanaa, protesters encamped outside the university repeated demands for him to quit now on what they have dubbed a “Day of Departure.” One of the demonstrators, Sadek Ahmad Hammad Albokhari, said: “We are asking the president to leave and give up his authority to prevent bloodshed. The people will continue to rebel until the regime falls.” A week after anti-government rallies ended in dozens of deaths, soldiers fired shots in the air to prevent a confrontation between the two sides. Earlier, talks between President Saleh and a dissident general reportedly ended in stalemate. Elsewhere in Sanaa, protesters encamped outside the university repeated demands for him to quit now on what they have dubbed a “Day of Departure.” ment rallies ended in dozens of deaths, soldiers fired shots in the air to prevent a confrontation between the two sides. π

MARCH 2011 11

BUSINESS

NEWS COMMODITY PRICES • BAD PUBLICITY CASE STUDY IRISH PRIDE: A STORY OF SUCCESS BRANDING THE PROPHET MOTIVE INVESTMENT LET'S GET PHYSICAL FRANCHISING A JUNIOR MOMENT • FASTEST GROWING FRANCHISES SMART MONEY TICKET TO SAVE • PAYCHECK YOURSELF

BUSINESS OP

NEWS COMMODITY PRICES The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped working, prompting a second massive explosion. As with the other blast, scientists said the fuel rods did not appear to have been damaged. But fears of a meltdown remain acute. The cooling system at the second reactor is also now said to have stopped working. Like one and two, engineers are desperately pumping huge amounts of sea water into the quake stricken reactor in an effort to stabilise it. So far, scientists appear confident Japan is not experiencing a meltdown on the level of Three Mile Island in the US in 1979, let alone Chernobyl in 1986. However, the crisis is certain to force a rethink on energy policy, in a country so reliant on nuclear power. The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had

been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped that day.

BAD PUBLICITY

of the clashes between Gaddafi forces and opposition forces. One side is under opposition control, and the other is under the control of Gaddafi forces. “They have also taken control of Ajdabiya city centre. The rebels are praying and say they are ready to march into the city and start a big assault. They say they will capture the city in 24 hours.” Their weapons are no match for the forces arrayed against them. Senior commanders have joined them on the frontline as Benghazi starts to co-ordinate command but it may be a challenge to fuse these former civilians and Gaddafi soldiers into an effective master force. “Our weapons are on the ground and can’t knock down enemy planes. We’ve heard explosions from over the hill between us and Ajdabiyah,” said one fighter. “We need support from outside. I believe in Allah. We need guns, because they have tanks and we don’t have tanks. But even with their tanks we will take them down,” said a 24-year old engineering student. He is typical of the many young people who are prepared to take on Gaddafi’s elite forces. Disorganised, and with few soldiering skills, they are defying the world’s longest-ruling dictator still in power. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west.

MARCH 2011 13

OP BUSINESS

CASE STUDY

IRISH PRIDE A STORY OF SUCCESS When times are good, they are very, very good for consultants. But when they are bad, they are horrid. As the economy stalled in 2009, the global consulting industry shrank by 9.1%. It was the worst year since at least 1982, according to Kennedy Information, an industry monitor.

16 MARCH 2011

BUSINESS OP

MARCH 2011 17

OP BUSINESS

{

hen times are good, they are very, very good for consultants. When times are good, But when they are bad, they are they are very, very good for consultants. But when horrid. As the economy stalled in 2009, they are bad, they are the global consulting industry shrank by horrid. As the economy 9.1%. It was the worst year since at least stalled in 2009, the global consulting industry 1982, according to Kennedy Information, shrank by 9.1%. It was an industry monitor. the worst year since at Now the kids are back in the conferleast 1982, according to Kennedy Information, an ence rooms. Companies that shelved industry monitor. plans during the recession are dusting Now the kids are back in them off and looking for help. And the the conference rooms. work is more cheerful. When bosses did hire consultants in 2009, 87% of projects were aimed at cutting costs rather than boosting growth, says Kennedy. This year, just 47% of project spending will be on cutting costs. The rest will go on growth plans, from mergers to installing new computer systems. But not all When times are good, will benefit equally. they are very, very good Consulting is a diverse industry. Best for consultants. But when known are the elite strategy consultanthey are bad, they are horrid. As the economy cies such as McKinsey & Co, the Boston stalled in 2009, the global Consulting Group (BCG) and Bain. consulting industry Firms such as AT Kearney, Booz & Comshrank by 9.1%. It was the worst year since at pany and Oliver Wyman do the same sort least 1982, according to of work but are smaller. A second categoKennedy Information, an ry comprises the consulting units of the industry monitor. Now the kids are back in Big Four accounting firms PwC, Deloitte, the conference rooms. KPMG and Ernst & Young. All but Deloitte shed their consulting units in the early 2000s, amid post-Enron fears of conflict- of-interest, but have since grown new ones. A third group consists of technology firms with big consulting businesses, such as IBM and HewlettPackard, which focus on installing and integrating computer systems. Finally, some consultants are hard to distinguish operations-management (advice on how from pure outsourcing firms. to do the same things better) will grow by 5.1% a year, that on IT by 3.9% and that on personnel by 4.0%, between 2010 and trategy consulting, the most after in 2014 again. famous variety, is also the most North America invented the strategic controversial. “I like to con people. consultant, but appears not to need many And I like to insult people. If you combine “con” and “insult”, you get consult,” more. Western Europe seems sated, too. Companies are now packed with MBAobserves Dogbert, a comic-strip characholding bosses, many of them former ter. Many firms share this harsh view consultants. Well-run companies still of the highly paid advisers who walk in know when they need outside expertise, and tell them to re-invent their busiwhich is why strategy consulting is far nesses. Spending on strategy consulting is expected to grow by an annual average from dead. But it is increasingly overof just 1.1% to 2014 (it currently accounts shadowed by the less glamorous variety. Small wonder, then, that the strategy for 12% of all spending on consulting). But more mundane work is booming. houses are vying for that work. BCG was one of just three big firms to grow (by Kennedy forecasts that consulting on

18 MARCH 2011

about 3%) in 2009, and had a good 2010, expanding by some 12%. It is expecting an even better 2012, with 15% growth. (The strategy firms are private partnerships that release few precise figures.) One reason is rapid growth in emerging markets. But BCG, like the other strategy firms, has also made money by grabbing a larger share of “downstream” work. This is bringing the strategy shops into competition with the biggest players: the Big Four audit firms. These behemoths are buying specialist firms in areas such as technology and health care, thus expanding their size and reach by both specialism and geography. In

BUSINESS OP

{ When times are good, they are very, very good for consultants. But when they are bad, they are horrid. As the economy stalled in 2009, the global consulting industry shrank by 9.1%. It was the worst year since at least 1982, according to Kennedy Information, an industry monitor. Now the kids are back in the conference rooms.

America they are forbidden from selling consulting to their audit clients. But elsewhere the rules are looser, giving the Big Four a potential “one-stop-shop” offer. Everywhere, they have scale that impresses clients. But those clients are driving harder bargains. In the past two decades most consulting firms have attached many junior consultants to projects with just a few senior people and partners, moving this army into the clients’ offices and billing for as many hours as possible. But increasingly, says Jenny Sutton of the Hong Kong-based RFP Company, clients are refusing to pay for junior staff’s on-the-

that has already hit the law firms whose business model they once copied. Clients want value for money. Consultants whose counsel is useful will still do well. But here’s a piece of advice for the rest: in a more competitive market, those who think they can dazzle a client with PowerPoints and bill him by the hour forever will starve. That’ll be $1,000, please. When times are good, they are very, very good for consultants. But when they are bad, they are horrid. As the economy stalled in 2009, the global consulting industry shrank by 9.1%. It was the worst year since at least 1982, according to Kennedy Information, an industry monitor. Now the kids are back in the conference rooms. Companies that shelved plans during the recession are dusting them off and looking for help. And the work is more cheerful. When bosses did hire consultants in 2009, 87% of projects were aimed at cutting costs rather than boosting growth, says Kennedy. This year, just 47% of project spending will be on cutting costs. The rest will go on growth plans, from mergers to installing new computer systems. But not all will benefit equally.

onsulting is a diverse industry. Best known are the elite strategy consultancies such as McKinsey & Co, the Boston Consulting Group (BCG) and Bain. Firms such as AT Kearney, Booz & Company and Oliver Wyman do the same sort of work but are smaller. A second category comprises the consulting units of the Big Four accounting job training. Instead, they are asking for firms PwC, Deloitte, KPMG and Ernst & fewer and better consultants and setting Young. All but Deloitte shed their conthem to work alongside their own staff. sulting units in the early 2000s, amid In short, consulting is looking less like post-Enron fears of conflict- of-interest, a licence to print money and more like but have since grown new ones. A third temporary labour. Clients can bypass the group consists of technology firms with big names and hire consultancies such big consulting businesses, such as IBM as Eden McCallum, a British firm that and Hewlett-Packard, which focus on packages teams of experienced independ- installing and integrating computer ent consultants, or Point B, an American systems. Finally, some consultants are firm that provides only a project managhard to distinguish from pure outsourcer, letting the client select the team. Big ing firms. Strategy consulting, the most consulting firms (with their big brands) famous variety, is also the most controcan probably coexist with smaller operaversial. “I like to con people. And I like to tors. But midsized firms, which cannot insult people. If you combine “con” and command the same fees and loyalty as “insult”, you get consult,” observes Dogthe big boys, are feeling the squeeze. In bert, a comic-strip character. Many firms this, consultants are following a trend share this harsh view of the highly Ω MARCH 2011 19

OP BUSINESS

When times are good, they are very, very good for consultants. But when they are bad, they are horrid. As the economy stalled in 2009, the global consulting industry shrank by 9.1%. It was the worst year since at least 1982, according to Kennedy Information, an industry monitor. Now the kids are back in the conference rooms Consulting is a diverse industry. Best known are the elite strategy consultancies such as McKinsey & Co, the Boston Consulting Group (BCG) and Bain.

20 MARCH 2011

paid advisers who walk in and tell them to re-invent their businesses. Spending on strategy consulting is expected to grow by an annual average of just 1.1% to 2014 (it currently accounts for 12% of all spending on consulting). But more mundane work is booming. Kennedy forecasts that consulting on operations-management (advice on how to do the same things better) will grow by 5.1% a year, that on IT by 3.9% and that on personnel by 4.0%, between 2010 and 2014. North America invented the strategic consultant, but appears not to need many more. Western Europe seems sated, too. Companies are now packed with MBA-holding bosses, many of them former consultants. Well-run companies still know when they need outside expertise, which is why strategy consulting is far from dead. But it is increasingly overshadowed by the less glamorous variety. Small wonder, then, that the strategy houses are vying for that work. BCG was one of just three big firms to grow (by about 3%) in 2009, and had a good 2010, expanding by some 12%. It is expecting an even better 2012, with 15% growth. (The strategy firms are private partnerships that release few precise figures.) One reason is rapid growth in emerging markets. But BCG, like the other strategy

firms, has also made money by grabbing a larger share of “downstream” work. This is bringing the strategy shops into competition with the biggest players: the Big Four audit firms. These behemoths are buying specialist firms in areas such as technology and health care, thus expanding their size and reach by both specialism and geography. In America they are forbidden from selling consulting to their audit clients. But elsewhere the rules are looser, giving the Big Four a potential “one-stop-shop” offer. Everywhere, they have scale that impresses clients. But those clients are driving harder bargains.

n the past two decades most consulting firms have attached many junior consultants to projects with just a few senior people and partners, moving this army into the clients’ offices and billing for as many hours as possible. But increasingly, says Jenny Sutton of the Hong Kong-based RFP Company, clients are refusing to pay for junior staff’s on-the-job training. Instead, they are asking for fewer and better consultants and setting them to work alongside their own staff. In short, consulting is looking less like a licence to print money and more like temporary labour. Clients can

BUSINESS OP

bypass the big names and hire consultancies such as Eden McCallum, a British firm that packages teams of experienced independent consultants, or Point B, an American firm that provides only a project manager, letting the client select the team. Big consulting firms (with their big brands) can probably coexist with smaller operators. But midsized firms, which cannot command the same fees and loyalty as the big boys, are feeling the squeeze. In this, consultants are following a trend that has already hit the law firms whose business model they once copied. Clients want value for money. Consultants whose counsel is useful will still do well. But here’s a piece of advice for the rest: in a more competitive market, those who think they can dazzle a client with PowerPoints and bill him by the hour forever will starve. That’ll be $1,000, please. When times are good, they are very, very good for consultants. But when they are bad, they are horrid. As the economy stalled in 2009, the global consulting industry shrank by 9.1%. It was the worst year since at least 1982, according to Kennedy Information, an industry monitor. Now the kids are back in the conference rooms. Companies that shelved plans during the recession are dusting

them off and looking for help. And the work is more cheerful. When bosses did hire consultants in 2009, 87% of projects were aimed at cutting costs rather than boosting growth, says Kennedy. This year, just 47% of project spending will be on cutting costs. The rest will go on growth plans, from mergers to installing new computer systems. But not all will benefit equally. Consulting is a diverse industry. Best known are the elite strategy consultancies such as McKinsey & Co, the Boston Consulting Group (BCG) and Bain. Firms such as AT Kearney, Booz & Company and Oliver Wyman do the same sort of work but are smaller. A second category comprises the consulting units of the Big Four accounting firms PwC, Deloitte, KPMG and Ernst & Young. All but Deloitte shed their consulting units in the early 2000s, amid post-Enron fears of conflict- of-interest, but have since grown new ones. A third group consists of technology firms with big consulting businesses, such as IBM and HewlettPackard, which focus on installing and integrating computer systems. Finally, some consultants are hard to distinguish from pure outsourcing firms. π

Best known are the elite strategy consultancies such as McKinsey & Co, the Boston Consulting Group (BCG) and Bain. Firms such as AT Kearney, Booz & Company and Oliver Wyman do the same sort of work but are smaller. A second category comprises the consulting units of the Big Four accounting firms PwC, Deloitte, KPMG and Ernst & Young. All but Deloitte shed their consulting units in the early 2000s, amid postEnron fears of conflict- of-interest, but have since grown new ones.

MARCH 2011 21

OP BUSINESS

BRANDING

mid all the heady talk about the booming markets of Asia and Latin America, there’s an even bigger growth story witheven more staggering numbers – but one that’s been largely overlooked as a target audience for products and services. The world’s Muslim community stands at between 1.6 billion and 1.8 billion people, or just under a quarter of the global population. By 2050, that proportion is forecast to rise to more than half, and Muslims will represent about 60% of all under-18s. Yet ask most global brands about their strategy for the Muslim market and you’ll get a blank look. “Everyone has been rushing for China and India, and has mostly ignored the largest market in the world,” says Paul Temporal, a marketing specialist at the Saïd Business School of Oxford University. What a thing to ignore. The halal market alone, which usually refers to food and drink but not exclusively these areas, is worth an estimated $2.1trn (1.6trn), and is growing by $500bn (380m) a year. And it’s not all money being spent in the Middle East. A fifth of Muslims live in Muslim- minority countries. India has the world’s third-biggest Muslim 22 MARCH 2011

the PROPHET MOTIVE population, and Russia, with 16 million Muslims, has a bigger Muslim community than Jordan and Libya combined. The potential of this market has led global ad giant Ogilvy to launch a specialist agency focused entirely on Muslim consumers. Called Ogilvy Noor – noor means light – the company says that while there are “vast and colourful differences”, not least in disposable income, across the world’s Muslim population, what unites them directly affects what they buy and what they boycott, and that makes it worth having a brand communications strategy that goes beyond lazy stereotypes. “There’s no one-size-fits-all, absolutely, but the one thing they do have in common,

which is incredibly strong, is the shared values of Islam, and the values of the sharia very, very directly affect consumer behaviour,” says Nazia Hussain, director of cultural strategy for Ogilvy & Mather globally. Research by the ad agency in Malaysia, Egypt, Saudi Arabia and Pakistan found that 97% of consumers said that being Muslim at times affected their decisions as consumers. “Over 50% said this was the case every single time they buy anything – that they always filter their decision through the values of Islam,” says Hussain. “That’s enormously significant for us.” The power of the Muslim consumer to affect brands tends to get noticed when a business has caused offence, often unintentionally.

BUSINESS OP

M Millions of Muslims shop for products that acknowledge their beliefs, yet most brands don’t even talk to them. Jo Bowman reports on the mass market nearly everyone has missed

Nike recalled 800,000 running shoes in the late 1990s when it was noticed that the logo on the sole looked like the Arabic script for Allah, doubly inappropriate given that Muslims believe the feet to be unclean. In Britain in 2005, Burger King withdrew a range of ice creams because of a similar swirl on the lid. And last May, Vodafone dropped an Egyptian ad depicting an early Muslim scientist as a dim man who fell off a cliff trying to fly with feathered wings. Ogilvy’s survey found that 27% of Muslims believe it’s important to protect Islamic values from Western lifestyle and media influence, and many brands have a fear of causing offence. But, that’s not so easily done as it seems, says Saad Saraf, CEO of Media Reach, a British-based marketing agency that helps clients such as Rado watches, Rank Hovis flour and the National Health Service reach out to minority communities. “It’s not that easy to offend most [Muslim] people,” he says, “unless you put a pig in your ad.” In the West it’s accepted that sex sells to Westerners, “and the majority of people are OK with the right image in the right messages and in the right place, as long as it doesn’t encroach on religious symbols, so you wouldn’t have a woman in a hijab and a miniskirt, or put a Wonderbra billboard opposite a mosque”. Step one of marketing to Muslims is not causing moral outrage, but a few companies are realising the value of moving on to step two – actually doing something clever that speaks to Muslim consumers in a positive way. Muslim communities tend to be loyal to brands they like, and respond positively to peer-group recommendations, so careful communications can pay long-term dividends. Trust is harder to win, but is deeper and more lasting. Nestlé has a €4bn turnover in

halal products globally. In Malaysia, Unilever has launched a Sunsilk shampoo that tackles the greasiness often suffered by women wearing a headscarf. LG has developed phones incorporating the five daily calls to prayer, Nokia has released handsets pre-loaded with Islamic e-books and a programme that sends Ramadan SMS greetings, and Colgate’s toothpaste and mouthwash range is halal. Different products aren’t always necessary, though, just a change in approach to communications, and the key message from those in the know seems a little counter-intuitive – don’t be too religious. The obvious insertion of Islamic symbols can be seen as a cynical exercise designed to win a quick sale, Hussain says. Muslims look beyond the halal sticker on the box and want to know more. “They’re very open to being seen as a market – they say: ‘Please target us, but don’t just target us without understanding us.’” Coca-Cola is very successful in many majority-Muslim markets, she says, not for having an overtly proMuslim message but “because they’re all about togetherness, everyone enjoying food and drink together, which is very important to Muslims. With a message like that, you don’t need to show someone in a headscarf.” Some more politically motivated Muslims disagree. In France in 2002, Tawfik Mathlouthi launched Mecca-Cola as an alternative to Coke and Pepsi and as a means of funding humanitarian projects in the Palestinian territories. Every can of Mecca-Cola features a request not to mix the drink with alcohol. Mathlouthi was inspired by the Iranian Zam Zam Cola, the first to present its brand as a Muslim alternative to Western soft drinks. When it comes to finance, however, Mohammed Ismaeel – global head of marketing

for HSBC Amanah, the Islamic banking arm of HSBC – says overdoing Islamic imagery is a no-no. Its communications tie in with the fundamentals of the mother brand, with some finessing for Muslims such as casting local actors in ads and avoiding images that might work for HSBC, but not for Amanah. “An ad showing a beach scene is not something we’d use, or shots of bars,” Ismaeel says. “What I am very conscious to avoid using are overtly Islamic, iconic images. Customers are very clear: they don’t like to see God and money mixed together in one message, so we don’t use images of mosques or the holy mosque in Medina. They tell us: ‘We’re customers. You’re not selling us a religion; you’re selling a financial product that’s appropriate to our Islamic beliefs.’” Islamic banking illustrates the diversity of views about what kind of products, messages and corporate behaviour are appropriate. A quarter of the Muslims interviewed by Ogilvy said Islam was “adaptable to suit individual needs”; what counts as being devout is different in different countries, and even in Muslimminority markets there are liberals and conservatives, with different degrees of religiosity and consumer behaviour. It’s worth noting also that what constitutes the halal slaughter of animals is the subject of strong debate in the Muslim world; certificates of halal compliance are issued by different organisations in different countries, and in some markets there are several issuing bodies. Islamic banking, Ismaeel says, is growing at two to three times the rate of conventional banking, yet in Indonesia, the largest Muslim majority country in the world, Temporal says more than 90% of people are customers of conventional, not Islamic, banks. “They’re savvy and pragma- ▶

MARCH 2011 23

OP BUSINESS

24 MARCH 2011

increasingly relevant here,” says Temporal. “Islam not only advocates trade of what is clean and wholesome but teaches that property is a sacred trust… that man is only temporary steward on earth.” Hussain says that the phrase ‘Muslimfriendly’ is seen as marginal and frightening to many non-Muslim consumers, “yet the values underpinning it are things like honesty, humility and staying true to one’s word. The challenge really is giving it a chance and then starting to reformulate the language.” Reaching out to the Muslim market brings with it the risk of excluding non-Muslims, who aren’t always moderate in their views about halal and Islam.One recent headline in a UK paper screamed: “Britain goes halal… but no one tells the public: How famous institutions are ritually slaughtered. π

{

tic, and what they want is a sound financial product that fits their financial needs first and foremost,” says Ismaeel of Muslims generally. “If it then appeals to their Islamic background, that’s a bonus.” That said, there remains something about banks – Islamic or otherwise – that doesn’t sit well with Muslim consumers. The Ogilvy Noor Global Brand Index, which ranks global brands according to their perceived sharia compliance, shows international banks faring badly. To some, they’re seen as a “house with two doors”, Hussain says. A little like the Indonesian brewery Bintang’s foray into alcohol- free beer for Muslims, which fell flat. Lipton, meanwhile, tops the rankings, largely because it’s in a Muslim-friendly product category. Tea, togetherness, storytelling and family all chime with Muslim values. The product is seen as natural and healthy, another plus. From the outside, Hussain says Lipton ads in Muslim countries may look twee and cheesy, but they strike a chord with Muslims, and plenty of nonMuslims, for that matter. Ad tactics that don’t work include those centred on an individual striving for success at all costs, or someone challenging their superiors. One smart campaign in France, home to about 5 million Muslims, focused on the fasting month, Ramadan, for halal food distributor Isla Delice. During daylight hours, billboards around Paris showed an empty table; by night, when Muslims get together to eat, the table appeared to fill with food set for feasting. Reaching out to the Muslim market brings with it the risk of excluding nonMuslims, who aren’t always moderate in their views about halal and Islam. One recent headline in a UK paper screamed: “Britain goes halal… but no one tells the public: How famous institutions serve ritually slaughtered meat with no warning.” To that end, marketeers targeting Muslims must also inform non-Muslims about what sharia means for the way a business is run, beyond the question of halal slaughter. Social responsibility, charity and cleanliness are all key to what Muslim consumers, and many nonMuslims, want. “The little-noted overlap between Western concerns about the environment, sustainability and organic products and the core beliefs of Islam is

Millions of Muslims shop for products that acknowledge their beliefs, yet most brands don’t even talk to them. Jo Bowman reports on the mass market nearly everyone has missed.

OP BUSINESS

INVESTMENT

LET'S GET

PHYSICAL Interest in tangible investments such as gold, property, wine and art has spiked in recent years as investors seek refuge from low interest rates, the debasement of paper currencies and the spectre of inflation. Christopher Owen looks at where the smart money is heading in 2011. A survey in the UK’s Sunday Times newspaper last year asked leading financial advisers, estate agents and fund managers where they would invest a spare £100,000. The answers were revealing – they included shotguns, wine, property, classic cars, agricultural land, timber and gold bullion. Historically, real assets have been difficult and inefficient to invest in, due to opaque investment markets dominated by intermediaries and brokers charging significant fees and commissions. Add to this uneconomically large unit sizes, high costs of acquisition, storage and management, as well as the relative illiquidity of the assets themselves, and it is easy to see why paper26 MARCH 2011

based alternatives such as funds and exchange- traded products have seemed the most viable option. Exchange-traded funds (ETFs) have allowed investors to gain broad exposure to specific segments of equity, fixed- income and commodity markets with relative ease, on a real-time basis, and at a lower cost. At the end of July 2010, the industry had grown to $1.09trn in assets under management, and physically backed funds held 2,062.6 tons of gold in total for private and institutional investors. Such has been the success of investment vehicles in precious metals markets that a number of companies are now working on physically backed

ETFs designed to give investors physical exposure to copper, aluminium and other base metals whose prices have risen steeply from the depths of the financial crisis on the back of demand from China and other emerging economies. JP Morgan and BlackRock iShares are each planning physical copper ETFs in the US, while London-based ETF Securities is to launch ETFs in all the base metals traded on the London Stock Exchange. Glencore, the world’s largest commodities trading house, and Credit Suisse have both applied to launch a physical aluminium product in Switzerland For some investors, however, ETFs and other products are not pure enough.

BUSINESS OP

They are wary that ETFs can contain other financial products, such as swaps or derivatives, even if it is just a small percentage of their weighting. There is also a sentiment that ETFs are the home of the speculator while metal bullion and diamonds are real assets that offer unadulterated wealth protection rather than paper-based entitlements. Clearly the financial crisis has changed perceptions about investing – a great deal of trust has been dissipated by investment managers and a great deal of mistrust has been generated by investment products. But will the vogue for physical investments force fundamental changes on the way that investment providers have to service their clients and what new models are prospering? Gold under management in online investment platforms such as GoldMoney and BullionVault is fast accelerating on the back of particularly strong demand for physical gold. Launched in 2001, last June GoldMoney’s holdings passed $1bn of assets in the bullion vaults it uses in London, Zurich and Hong Kong. This represented growth of 112% over less than 18 months based on $476m of customer assets at the beginning of 2009. At the same time, BullionVault, launched in 2005, had about $800m for 20,000 customers from more than 90 countries. James Turk, founder and chairman of GoldMoney, says it attracted a lot of money out of the UK in 2008 as a currency hedge and is now seeing substantial growth from Holland and Germany. “We are seeing tremendous flows as people realise there is no save haven in currencies. Monetary illness is our primary driver. Wherever it strikes, we get a lot of new customers as they seek to preserve their purchasing power. “Since about 2000, investors have been moving out of financial assets and into tangible assets or commodities. This is part of the boom-bust cycle. During boom years, banks lend and lend and this bids up the value of financial assets until they are overvalued. During a bust, investors move back into undervalued tangible assets until such time as they

become overvalued and the balance shifts again.” There are two investment fundamentals – wealth preservation and wealth generation. Gold preserves wealth. The same amount of gold will buy the same amount of oil today as it did in the 1950s. The advantage is that there is no counterparty risk and, with concerns over sovereign debt and the health of banks, gold offers both protection from default as well as benefiting from the price appreciation of precious metals. “If you’re buying metal as a speculator, you’re probably happy to hold paper but if you’re buying to protect your wealth then you want direct ownership,” says Turk. “With physical gold you can buy and store it yourself or you have it stored for you. If

67%

“We maintain a market for our customers and are constantly purchasing bullion supply from Switzerland because we are selling more than we buy. Institutional interest has grown stronger since we reached the $1bn mark and some of our clients are family trusts and offices, but most are individuals.”

you store it yourself, you have it on hand but there are significant costs and it is not that liquid. GoldMoney customers have the security of regular audits and the convenience that they can buy and sell gold, silver and platinum any time. “We maintain a market for our customers and are constantly purchasing bullion supply from Switzerland because we are selling more than we buy. Institutional interest has grown stronger since we reached the $1bn mark and some of our clients are family trusts and offices, but most are individuals.” And not just the very wealthy. The average size of GoldMoney’s accounts is 60,000 but the median size is just 6,000. For BullionVault the average holding as of last June was around 35,000. A new entrant to this market is The Real Asset Company, which launched at the end of last year to provide a way to invest in tangible, “real assets” and create an online marketplace where anyone can buy and sell. In addition to precious metals, it offers diamonds and Bordeaux wines, and has plans to add farmland, an asset class that has recently enjoyed a surge in demand Chief executive Ralph Hazell says: “Significant numbers of wealthy people who work outside the financial industry find it hard to trust the financial industry. They want a good chunk of their wealth in tangible assets, and the more liquid the better. Our intention is to provide a secure and efficient way to own highly investible real assets. This will allow customers to protect and insure their wealth with proven stores of value and to diversify away from the systemic risk and leverage of the financial system.” Clients of The Real Asset Company take immediate delivery of ‘allocated’ assets at the point of trade, which are then stored in first-class facilities to ensure security of investment. Metal bullion and precious gems are stored in professional vaults in Switzerland, while wine investments are stored in professional wine-market cellars with Berry Brothers & Rudd. (It so happens that the wine market soared in 2010, with turnover rising 200% in a year and prices Ω MARCH 2011 27

OP BUSINESS

up nearly a third.) “Taking delivery of your real-asset holdings is a crucial step in isolating yourself from systemic risk and the counterparties and leverage of the global financial system. There is no credit risk or risk of non-delivery,” says Hazell. “Investors can arrange to take personal custody of their assets, provided they are in whole units, such as a full case of wine or a whole gemstone, but we recommend that they remain in a professional market ‘chain of integrity’. This maintains the guaranteed provenance of assets and ensures better resale value.” The Real Asset Company is still at the beginning of a process of bringing farmland to the market. The plan is to offer affordable parcels of good-grade land that has farming agreements in place. Investors will hold the legal title to the portion of farmland that they acquire for investment purposes and will also benefit from a portion of the farming income. The aim is to bring efficiency and transparency to this market, as well as liquidity. “Using our website, investors can deal directly and make transactions witheach other, thus cutting out the middleman,” says Hazell. “There is total pricing transparency and investors can post their own buy and sell prices. We will work with big clients to seed markets – we don’t want to take positions ourselves.” What remains to be seen is to how these digital offerings will cross-fertilise with a mainstream wealth management industry that is still dedicated primarily to financial assets. Julian Lamden, principal client partner at Coutts Private Office, says: “There is certainly more noise around other asset classes, but we have not yet seen a real appetite from clients. UHNW (ultra-high net worth) clients usually have a substantial range of real assets such as property, cars, art and wine – so they are already likely to have, in general terms, a potential inflation hedge. When discussing asset allocation with our clients it is very important to look at the complete range of assets, whether physical or not.” Alan Higgins, head of investment strategy at Coutts, says that in terms of its discretionary 28 MARCH 2011

portfolio management the closest it comes to “physical assets” is gold and commercial property. “Since 2007 we have increased our allocation to gold to around 7% and commercial property to 4%. Our investors have benefited from allocations to bonds over the last few years, however selected government bond markets which were once considered high quality are now associated with credit risk. Consequently it is understandable that some of our clients are prepared to forgo the time value of money and embrace physical assets. They are additionally increasingly concerned with counterparty risk and inflation-proofing.” It is a similar story at independent multi-family office Sand Aire. “We have invested in gold – a meaningful 5% – in the past two months via an ETF structure,” says Simon Paul, a director of the company. “We believe gold represents a hedge against the financial elements of a number of different scenarios – inflation, deflation or a collapsing dollar. But we have primarily been overweight in equities over the last 18 months, together with fixed income via corporate bonds.. “Our clients generally hold a lot of cash in their banks and that seems to give them a comfort factor such that they are prepared to lock up quite large proportions of their wealth in semi-liquid or illiquid assets such as private equity. Our clients are perhaps more focused on their daily activities. π

79%

OP BUSINESS

FRANCHISING

A JUNIOR MOMENT

Beer is a common alcoholic beverage that is made from barley, yeast, hops, water, and grains. Its alcoholic content comes from the process of fermentation, which converts the simple sugars in the grains and barley into alcohol. It is widely consumed all over the world. Strictly, a battery is a collection of multiple electrochemical cells, but in popular usage battery often refers to a single cell. For example, a 1.5 volt AAA battery is a single 1.5 volt cell, and a 9 volt battery has six 1.5 volt cells in series. The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described multiple Leyden jars (early electrical capacitors) by analogy to a battery of cannons. Thus Franklin's usage to describe multiple Leyden jars predated Volta's use of multiple galvanic cells. It is speculated, but not established, that several ancient artifacts consisting of copper sheets and iron bars, and known as Baghdad batteries may have been galvanic cells. Volta's work was stimulated by the Italian anatomist and physiologist Luigi Galvani, who in 1780 noticed that dissected frog's legs would twitch when struck by a spark from a Leyden jar, an external source of electricity. In 1786 he noticed that twitching would occur during lightning storms. After many years Galvani learned how to produce twitching without using any external source of electricity. In 1791 he published a report on "animal electricity." He created an electric circuit consisting of the frog's leg (FL) and two different metals A and B, each metal touching the frog's leg and each other, thus producing the circuit A-FL-B-A-FL-B...etc. In modern 30 MARCH 2011

terms, the frog's leg served as both the electrolyte and the sensor, and the metals served as electrodes. He noticed that even though the frog was dead, its legs would twitch when he touched them with the metals. Within a year, Volta realized the frog's moist tissues could be replaced by cardboard soaked in salt water, and the frog's muscular response could be replaced by another form of electrical detection. He already had studied the electrostatic phenomenon of capacitance, which required measurements of electric charge and of electrical potential ("tension"). Building on this experience, Volta was able to detect electric current through his system, also called a Galvanic cell. The terminal voltage of a cell that is not discharging is called its electromotive force (emf), and has the same unit as electrical potential, named (voltage) and measured in volts, in honor of Volta. In 1800, Volta invented the battery by placing many voltaic cells in series, literally piling them one above the other. This voltaic pile gave a greatly enhanced net emf for the combination, with a voltage of about 50 volts for a 32-cell pile. In many parts of Europe batteries continue to be called piles. Volta did not appreciate that the voltage was due to chemical reactions. He thought that his cells were an inexhaustible source of energy, and that the associated chemical effects. Although early batteries were of great value for experimental purposes, in practice their voltages fluctuated and they could not provide a large current for a

sustained period. Later, starting with the Daniell cell in 1836, batteries provided more reliable currents and were adopted by industry for use in stationary devices, particularly in telegraph networks where they were the only practical source of electricity, since electrical distribution networks did not exist at the time. These wet cells used liquid electrolytes, which were prone to leakage and spilage if not handled correctly. Many used glass jars to hold their components, which made them fragile. These characteristics made wet cells unsuitable for portable appliances. Near the end of the nineteenth century, the invention of dry cell batteries, which replaced the liquid electrolyte with a paste, made portable electrical devices practical. Since then, batteries have gained popularity as they became portable and useful for a variety of purposes. Strictly, a battery is a collection of multiple electrochemical cells, but in popular usage battery often refers to a single cell. For example, a 1.5 volt AAA battery is a single 1.5 volt cell, and a 9 volt battery has six 1.5 volt cells in series. The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described multiple Leyden jars (early electrical capacitors) by analogy to a battery of cannons. Thus Franklin's usage to describe multiple Leyden jars predated Volta's use of

BUSINESS OP

multiple galvanic cells. It is speculated, but not established, that several ancient artifacts consisting of copper sheets and iron bars, and known as Baghdad batteries may have been galvanic cells. Volta's work was stimulated by the Italian anatomist and physiologist Luigi Galvani, who in 1780 noticed that dissected frog's legs would twitch when struck by a spark from a Leyden jar, an external source of electricity. In 1786 he noticed that twitching would occur during lightning storms. After many years Galvani learned how to produce twitching without using any external source of electricity. In 1791 he published a report on "animal electricity." He created an electric circuit consisting of the frog's leg (FL) and two different metals A and B, each metal touching the frog's leg and each other, thus producing the circuit etc. In modern terms, the frog's leg served as both the electrolyte and the sensor, and the metals served as electrodes. He noticed that even though the frog was dead, its legs would twitch when he touched them with the metals. Within a year, Volta realized the frog's moist tissues could be replaced by cardboard soaked in salt water, and the frog's muscular response could be replaced by another form of electrical detection. He already had studied the electrostatic phenomenon of capacitance, which required

"Annually, the world consumes over 100 billion liters of beer. Reports show that this value is on the rise due to an increased amount of under-aged drinkers and an increasing variety of beers. When it comes to beer, America is the greatest consumer, for people there ingest around 23 billion liters annually. 23 billion liters is equal to the quantity of 23 gigaliters. (The prefix giga is equal to 109.) This alcohol intake contributes to the high rate of death via accidents on the road."

RUSSIA

ASIA

USA

EUROPE

measurements of electric charge and of electrical potential ("tension"). Building on this experience, Volta was able to detect electric current through his system, also called Galvanic. cell. The terminal voltage of a cell that is not discharging is called its electromotive force (emf), and has the same unit as electrical potential, named (voltage) and measured in volts, in honor of Volta. In 1800, Volta invented the battery by placing many voltaic cells in series, literally piling them one above the other. This voltaic pile gave a greatly enhanced net emf for the combination, with a voltage of about 50 volts for a 32-cell pile. In many parts of Europe batteries continue to be called piles. Volta did not appreciate that the voltage was due to chemical reactions. He thought that his cells were an inexhaustible source of energy, and that the associated chemical effects. Although early batteries were of great value for experimental purposes, in practice their voltages fluctuated and they could not provide a large current for a sustained period. Later, starting with the Daniell cell in 1836, batteries provided more reliable currents and were adopted by industry for use in stationary devices, particularly in telegraph networks where they were the only practical source of electricity, since electrical distribution.

Strictly, a battery is a collection of multiple electrochemical cells, but in popular usage battery often refers to a single cell. For example, a 1.5 volt AAA battery is a single 1.5 volt cell, and a 9 volt battery has six 1.5 volt cells in series. The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described .

MARCH 2011 31

OP BUSINESS

FASTESTGROWING FRANCHISES

If you're one of those who likes things to move fast, who wants a new challenge all of the time, then maybe a fast-growing franchise is for you. We've culled the fastest-growing franchises and compiled a list to get you started fast.

FOOD

RECREATION

33%

87% 62%

32 MARCH 2011

HOTELS&MOTELS

BUSINESS OP

FRANCHISES TIME FOOD The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped working, prompting a second massive explosion. As with the other blast, scientists said the fuel rods did not appear to have been damaged. But fears of a meltdown remain acute. The cooling system at the second reactor is also now said to have stopped working. Like one and two, engineers are desperately pumping huge amounts of sea water into the quake stricken reactor in an effort to stabilise it. So far, scientists appear confident Japan is not experiencing a meltdown on the level of Three Mile Island in the US in 1979, let alone Chernobyl in 1986. However, the crisis is certain to force a rethink on energy policy, in a country so reliant on nuclear power. The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had

HOTELS&MOTELS

Virtual events can be a lowcost source pf lead generation for business on a budget. With this kind of first-page exposure for local listings, there is a reason they call it the Lucky 7. For any local search, the major search engines (e.g., Google Maps, Yahoo! Local, Bing Local) all use their own "black box" algorithms to deliver results they determine are most-to-least relevant. From what I can tell, the 7-Pack algorithm is mostly based on the Maps algo, but also has a layer of Universal on top of it. From extensive research in local search optimization, I've found a handful of factors that influence rankings. Back to my equation: Ranking = Location + Information + Corroboration + Input + X; X being defined as the consistent unknown and ever-evolving factor contributing to the unpredictability we see in results. The definition of X might as well be stored in the same vault as the Coca-Cola recipe. The other criteria of the local search equation are better understood. To avoid getting bogged down with explaining the step-by-step process of claiming your business, I'll point you to a recent blog on that very topic: How To Claim Your Google Maps Listing. You can start with your Google Maps listing and in a similar fashion work your way through the rough Understanding these variables is a critical part of successfully marketing your business online. SMB's have just two meaningful representations in the local search space: a website and a business listing or "LBL". I'm dismissing social media presence because it is primarily necessity a representation of a single user rather than what we conceive as a traditional brick and mortar business anyway. With this kind of first-page exposure for local listings, there is a reason they call it the Lucky 7. For any local search, the major search engines (e.g., Google Maps, Yahoo! Local, Bing Local) all use their own "black box" algorithms to deliver results.they determine are MARCH 2011 33

OP BUSINESS

caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped that day. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns. They had not been used to knock out the tanks he came across, burned out by the side of the road, but what he did see was enthusiasm and determination. He reported: “I’m on the frontline caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact.Despite that, 34 MARCH 2011

those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits.

RECREATION

"I'm dismissing social media presence because it is primarily necessity. A great crime may have been committed."

could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns. They had not been used to knock out the tanks he came across, burned out by the side of the road, but what he did see

was enthusiasm and determination. He reported: “I’m on the frontline caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact.Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped that day. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns. π

OP BUSINESS

SMART MONEY

TICKET TO SAVE

By bringing his ticket brokerage online, this entrepreneur found success.

eatGeek was inspired by frustration. Jack Groetzinger and Russ D'Souza, both avid concertgoers and sports enthusiasts, were fed up with the unpredictability of the secondary ticket market--reseller pricing that can swing from significantly higher than face value to cut-rate, depending on an event's popularity. So in 2009 they founded SeatGeek, a ticket search engine that

one time, including professional sporting events, concerts and theater performances. It claims an accuracy rate of 80 percent. Last July, Founder Collective and NYC Seed--two early-stage venture firms based in New York City--joined forces to pump a $1 million Series A round into the fledgling forecaster. Groetzinger and D'Souza had met the Founder Collective team when they were in the DreamIt

add more engineers and marketers to its 12-person staff. The team also plans to expand its forecast offerings into college sports as well as niche sports and will explore other markets. "We started this to be exclusively focused on forecasting and how prices move," Groetzinger says, "but we have broadened our scope into being a ticket search site that uses data to help people find good deals." Seat-

SAVINGS PER YEAR JAN FEB MAR APR MAY JUN

22986 19865 15890 11763 11763 9086

tracks ticket pricing trends. The duo had previously founded the blogging community Scribnia and also had general business experience: Groetzinger worked as an associate consultant at Boston-based management consulting firm Bain & Co., and D'Souza was an analyst at management consulting firm Monitor Group in Cambridge, Mass. Together, they developed an econometric approach to ticket price prediction that considers factors such as venue, ticket supply and popularity of the performer or team to determine whether prices are likely to head up or down in the secondary market. This helps customers make more accurate decisions about when to buy their tickets, D'Souza says. SeatGeek has grown to forecast ticket prices for more than 10,000 events at any 36 MARCH 2011

JUL AUG SET OCT NOV DEC

Ventures accelerator program, a Philadelphia incubator for startups, before they relocated the company to Manhattan in September 2009. David Frankel, managing partner at Founder, was an investor in GetMeIn.com, a London-based online ticket seller that sold to Ticketmaster in 2008, and he immediately liked SeatGeek and its founders. "Concept is important to me, but I look for the entrepreneur and the people first," Frankel says. "I had a great reaction to Jack and Russ. They're hugely into detail, and I love entrepreneurs who are immersed in the details of the business." SeatGeek gets a cut of sales it refers rather than selling tickets directly, so improving accuracy and growing usage is critical to the company's viability. Groetzinger says SeatGeek will use the investment to

22986 19865 15890 11763 11763 9086

Geek was inspired by frustration. Jack Groetzinger and Russ D'Souza, both avid concertgoers and sports enthusiasts, were fed up with the unpredictability of the secondary ticket market--reseller pricing that can swing from significantly higher than face value to cut-rate, depending on an event's popularity. So in 2009 they founded SeatGeek, a ticket search engine that tracks ticket pricing trends. The duo had previously founded the blogging community Scribnia and also had general business experience: Groetzinger worked as an associate consultant at Boston-based management consulting firm Bain & Co., and D'Souza was an analyst at management consulting firm Monitor Group in Cambridge, Mass. Together, they developed an econometric approach to ticket price

BUSINESS OP

SeatGeek was inspired by frustration. Jack Groetzinger and Russ D'Souza, both avid concertgoers and sports enthusiasts, were fed up with the unpredictability of the secondary ticket market-reseller pricing that can swing from significantly higher than face value to cutrate, depending on an event's popularity.

"From a consumer's perspective, it's confusing to know when to buy tickets because you can buy them one day and see prices go to half that price a couple weeks later," Groetzinger says.

o in 2009 they founded SeatGeek, a ticket search engine that tracks ticket pricing trends. The duo had previously founded the blogging community Scribnia and also had general business experience: Groetzinger worked as an associate consultant at Boston-based management consulting firm Bain & Co., and D'Souza was an analyst at management consulting firm Monitor Group in Cambridge, Mass. Together, they developed an econometric approach to ticket price prediction that considers factors such as venue, ticket supply and popularity of the performer or team to determine whether prices are likely to head up or down in the secondary market. This helps customers make more accurate decisions about when to buy their tickets, D'Souza says.SeatGeek has grown to forecast ticket prices for more than 10,000 events at any one time, including professional sporting events, concerts and theater performances. It claims an accuracy rate of 80 percent. Last July, Founder Collective and NYC Seed--two earlystage venture firms based in New York City--joined forces to pump a $1 million Series A round into the fledgling forecaster. Groetzinger and D'Souza had met the Founder Collective team when they were in the DreamIt Ventures accelerator program, a Philadelphia incubator for startups, before they relocated the

company to Manhattan in September 2009. David Frankel, managing partner at Founder, was an investor in GetMeIn. com, a London-based online ticket seller that sold to Ticketmaster in 2008, and he immediately liked SeatGeek and its founders. "Concept is important to me, but I look for the entrepreneur and the people first," Frankel says. "I had a great reaction to Jack and Russ. They're hugely into detail, and I love entrepreneurs who are immersed in the details of the business." SeatGeek gets a cut of sales it refers rather than selling tickets directly, so improving accuracy and growing usage is critical to the company's viability. Groetzinger says SeatGeek will use the investment to add more engineers and marketers to its 12-person staff. The team also plans to expand its forecast offerings into college sports as well as niche sports and will explore other markets. "We started this to be exclusively focused on forecasting and how prices move," Groetzinger says, "but we have broadened our scope into being a ticket search site that uses data to help people find good deals." SeatGeek was inspired by frustration. Jack Groetzinger and Russ D'Souza, both avid concertgoers and sports enthusiasts, were fed up with the unpredictability of the secondary ticket market--reseller pricing that can swing from significantly higher than face value to cut-rate, depending on an event's popularity.

"From a consumer's perspective, it's confusing to know when to buy tickets because you can buy them one day and see prices go to half that price a couple weeks later," Groetzinger says. So in 2009 they founded SeatGeek, a ticket search engine that tracks ticket pricing trends. The duo had previously founded the blogging community Scribnia and also had general business experience: Groetzinger worked as an associ-

ate consultant at Boston-based management consulting firm Bain & Co., and D'Souza was an analyst at management consulting firm Monitor Group in Cambridge, Mass. Together, they developed an econometric approach to ticket price prediction that considers factors such as venue, ticket supply and popularity of the performer or team to determine whether prices are likely to head up or down in the secondary market. This helps customers make more accurate decisions about when to buy their tickets, D'Souza says. SeatGeek has grown to forecast ticket prices for more than 10,000 events at any one time, including professional sporting events, concerts and theater performances. It claims an accuracy rate of 80 percent. Last July, Founder Collective and NYC Seed--two early-stage venture firms based in New York City--joined forces to pump a $1 million Series A round into the fledgling forecaster. Groetzinger and D'Souza had met the Founder Collective team when they were in the DreamIt Ventures accelerator program, a Philadelphia incubator for startups, before they relocated the company to Manhattan in September 2009. David Frankel, managing partner at Founder, was an investor in GetMeIn.com, a London-based online ticket seller that sold to Ticketmaster in 2008, and he immediately liked SeatGeek and its founders. "Concept is important to me, but I look for the entrepreneur and the people first," Frankel says. "I had a great reaction to Jack and Russ. They're hugely into detail, and I love entrepreneurs who are immersed in the details of the business." SeatGeek gets a cut of sales it refers rather than selling tickets directly, so improving accuracy and growing usage is critical to the company's viability. Groetzinger says SeatGeek will use the investment to add more engineers and marketers to its 12-person staff. The team also plans to expand its forecast offerings into college sports as well as niche sports and will explore other markets.

MARCH 2011 37

OP BUSINESS

{

PAYCHECK YOURSELF

Millions of Muslims shop for products that acknowledge their beliefs, yet most brands don’t even talk to them. Jo Bowman reports on the mass market nearly everyone has missed. Millions of Muslims shop for products that acknowledge their beliefs, yet most brands don’t even talk to them. Jo Bowman reports on the mass market nearly everyone has missed. Millions of Muslims shop for products that acknowledge their beliefs, yet most brands don’t even talk to them. Jo Bowman reports on the mass market nearly everyone has missed. Millions of Muslims shop for products that acknowledge their beliefs, yet most brands don’t even talk to them. Jo Bowman reports on the mass market nearly everyone has missed. Millions of Muslims shop for products that acknowledge their beliefs

A fluctuating income is no excuse for getting off track with your personal budget.

38 MARCH 2011

P BUSINESS OP

I chatted recently with a woman who earns her living as a freelance copy editor and sometime photographer. Her income fluctuates, making it tough to budget. She's able to pay the bills, but some months are tougher than others. I'm in the same boat. I've been selfemployed for three years, and my income has never been the same from one month to the next. Although budgeting for a variable income can be frustrating, it is possible. I've found a system that takes the terror out of an uncertain future. The key is to give yourself a regular paycheck. First, project your personal income for the upcoming year. Traditionally, a small-business owner with variable income might build a budget based on average income earned during the previous 12 months. But as the Great Recession has demonstrated, revenues can decline, which wreaks havoc with the "average-income" method. A more guarded approach projects future income based on the least amount earned during the previous year. For example, maybe your average income in 2010 was $6,000 per month, but you earned only $4,800 in June. To be safe, tighten your belt and allow yourself only $4,800 per month in 2011. (If your income varies wildly $120 one month and $12,000 the next, say you'll need to use the average-income method.) Once you've established a monthly salary, it's time to draw a paycheck and to save the rest of your cash for the future. To make this work, use two different bank accounts: A designated savings account owned by your business. This holding account should stand apart from your other business accounts. (Consider a highinterest savings account like those listed at Money-Rates.com.). Your personal savings account . After paying business expenses each month, write yourself a paycheck based on the salary you calculated. Move any remaining cash into your business savings account, where it will accumulate during the year. At the end of each year, do three things. Reset your salary based on the previous year's income. If needed, use the money pooled in your business savings account to pay

taxes. Finally, if there's money left after paying taxes, pull it to your personal account as a year-end bonus. To make variable income more manageable: don't be tempted to draw from your holding account as cash accumulates. Build a firewall of personal savings. When you have $5,000 or $10,000 or $20,000 in the bank, a few slow months won't bring you to panic. Prioritize spending. Financial guru Dave Ramsey recommends listing all your expenses in order of importance. ("Importance, not urgency," he says.) When you get paid, start at the top of the list and work down. This system may seem complex, but it's simple in practice. Best of all, it's effective. Drawing a salary based on your minimum monthly income creates a safety buffer and that brings peace of mind, which allows you to focus on more important things, like your business. I chatted recently with a woman who earns her living as a freelance copy editor and sometime photographer. Her income fluctuates, making it tough to budget. She's able to pay the bills, but some months are tougher than others. I'm in the same boat. I've been self-employed for three years, and my income has never been the same from one month to the next. Although budgeting for a variable income can be frustrating, it is possible. I've found a system that takes the terror out of an uncertain future. The key is to give yourself a regular paycheck. First, project your personal income for the upcoming year. Traditionally, a small-business owner with variable income might build a budget based on average income earned during the previous 12 months. But as the Great Recession has demonstrated, revenues can decline, which wreaks havoc with the "average-income" method. A more guarded approach projects future income based on the least amount earned during the previous year. For example, maybe your average income in 2010 was $6,000 per month, but you earned only $4,800 in June. To be safe, tighten your belt and allow yourself only $4,800 per month in 2011. (If your income varies wildly $120 one month and $12,000 the next, say you'll

need to use the average-income method.) Once you've established a monthly salary, it's time to draw a paycheck and to save the rest of your cash for the future. To make this work, use two different bank accounts: a designated savings account owned by your business. This holding account should stand apart from your other business accounts. (Consider a high-interest savings account like those listed at Money-Rates.com.). Your personal savings account . After paying business expenses each month, write yourself a paycheck based on the salary you calculated. Move any remaining cash into your business savings account, where it will accumulate during the year. At the end of each year, do three things. Reset your salary based on the previous year's income. If needed, use the money pooled in your business savings account to pay taxes. Finally, if there's money left after paying taxes, pull it to your personal account as a year-end bonus. To make variable income more manageable: don't be tempted to draw from your holding account as cash accumulates. Build a firewall of personal savings. When you have $5,000 or $10,000 or $20,000 in the bank, a few slow months won't bring you to panic. Prioritize spending. Financial guru Dave Ramsey recommends listing all your expenses in order of importance. ("Importance, not urgency," he says.) When you get paid, start at the top of the list and work down.

"Drawing a salary based on your minimum monthly income creates a safety buffer and that brings peace of mind, which allows you to focus on more important things, like your business."

MARCH 2011 39

FEATURES

COVER STORY SMALL BUSINESS 101: HOW TO GET STARTED PROFILES RICHARD FOXX • AMANDA ARENBERG • TOM SCOTT INTERVIEW ANGELO SOTIRA

OP FEATURES

42 MARCH 2011

FEATURES OP

Small Business 101: How to Get Started From writing a business plan to choosing a corporate structure to raising money, starting a business is full of daunting challenges. Here’s how to get started. It has never been easier to lay the groundwork for starting a small business.

ake a good look at that store on the corner. There is a 10 percent to 12 percent chance it will not be there next year, according to the Office of Advocacy for the company Small Business Administration. “If you’re new you have about a 50-50 chance of surviving five years,” said Brian Headd, an economist with the Office of Advocacy, which tracks small businesses and examines the impact of proposed regulations on them. Still, such odds do not seem to damp the desire of entrepreneurs. An estimated 671,800 small businesses with employees opened their doors in 2005, the most recent year with statistics available, even as another 544,800 were expected to close theirs that year. “Starting a business is actually easy. You can get business cards and an address at Mailboxes, etc.,” said Bill Morland, chairman of the Orange County chapter of Score, a nonprofit association that works with the S.B.A. to educate and assist entrepreneurs. “But you’re not really in business until you sell something, and that isn’t easy.” Success comes with education, careful planning and adequate cash flow, specialists say. And it has never been easier to lay the groundwork for starting a small business. Many tools are available on the Internet and at libraries to aid aspiring

entrepreneurs. Whole magazines are devoted to the subject. But where to start? The Small Business Administration Web site is an excellent place to obtain information easily. It provides everything from details on characteristics important to run a business to information on writing a business plan to links to local centers offering assistance to start-ups. The site’s “getting ready” section runs through a series of questions intended to help aspiring business owners gauge whether they have the qualities needed for the job: Are you a self-starter? Can you get along with different types of people? Are you risk-tolerant? Flexible and self-disciplined? Need someone to hold your hand? Score, short for Service Corps of Retired Executives, has a network of more than 10,000 volunteers, working and retired executives, offering free guidance on the Web, through their offices across the country and at workshops. Small Business Development Centers, a partner of the S.B.A., also provide guidance at centers across the country. Gillian Murphy, director of the San Joaquin Delta College Small Business Development Center, said she quizzed her clients about their reasons for going into business on their own. “I tell them ‘I know you have something in your heart that’s telling you you’re going to be in-

credibly successful. My job is to get in your head and balance your head with your heart,’ ” Ms. Murphy said. To do that she has them create a basic business plan, including a very good financial statement. “Understanding the industry is key,” she said. “If someone is going to start a floral shop and they do a projected profitand-loss statement and I don’t see spikes in February and May, they have no idea what they’re doing.” Eunice Green, who owns a health food store in Stockton, Calif., turned to the development center at San Joaquin Delta College when she thought about buying a second store. With the help of the center, she took information on the types of customers at her existing store and did what Ms. Murphy calls “economic gardening.” After applying the demographics at various distances from the store, she decided against opening a second store. “It’s kind of intuitive, but the S.B.D.C. gave me so many great concrete tools,” said Ms. Green, owner of Green’s Nutrition. A number of online resources have also grown up in recent years geared to providing small-business owners with a wide range of information. They include sites like Work.com, which has more than 1,700 how-to segments covering a multitude of issues confronting small businesses; E-venturing, run by Ω MARCH 2011 43

OP FEATURES

ward getting through lean times. “People who fail to plan have really not given themselves an opportunity to succeed,” she said. Take a good look at that store on the corner. There is a 10 percent to 12 percent chance it will not be there next year, according to the Office of Advocacy for the Small Business Administration. “If you’re new you have about a 5050 chance of surviving five years,” said Brian Headd, an economist with the Office of Advocacy, which tracks small businesses and examines the impact of proposed regulations on them. Still, such odds do not seem to damp the desire of entrepreneurs. An estimated 671,800 small businesses with employees opened their doors in 2005, the most recent year with statistics available, even as another 544,800 were expected to close theirs that year. “Starting a business is actually easy. You can get business cards and an address at Mailboxes, etc.,” said Bill Mortill, any business or financial plan land, chairman of the Orange County is only as good as the information it is built on. Finding that informa- chapter of Score, a nonprofit association that works with the S.B.A. to educate and tion may seem like a daunting task, but there are many free resources to turn to. assist entrepreneurs. “But you’re not really in business until you sell something, A good first stop is the Census Bureau, and that isn’t easy.” which has detailed information in many Success comes with education, careareas including population, income and ful planning and adequate cash flow, speeconomic indicators for business. If the cialists say. And it has never been easier breadth of the Census Bureau’s inforto lay the groundwork for starting a small mation seems overwhelming, check out CensusScope, an Internet site that breaks business. Many tools are available on the Internet and at libraries to aid aspiring demographic information down into entrepreneurs. Whole magazines are demanageable segments. Another source of free statistical infor- voted to the subject.But where to start? mation online is FedStats, a site that pro- The Small Business Administration Web vides a range of information produced by site is an excellent place to obtain information easily. It provides everything the federal government. And don’t forget you can still do your research the old- from details on characteristics important fashioned way by visiting a public library to run a business to information on writing a business plan to links to local centwhere a librarian will be able to provide a range of information, including indus- ers offering assistance to start-ups. The site’s “getting ready” section runs try publications.The Library of Congress through a series of questions intended has compiled The Entrepreneur’s Guide to help aspiring business owners gauge to Small Business Information, a listing whether they have the qualities needof books and directories helpful in esed for the job: Are you a self-starter? Can tablishing and running a business. Ms. Murphy, who has been counseling small- you get along with different types of peobusiness aspirants since 1989, says care- ple? Are you risk-tolerant? Flexible and self-disciplined? ful planning is essential to creating a The site’s “getting ready” section runs successful business. Knowing the prodthrough a series of questions intended uct, the market and the costs while havto help aspiring business owners gauge ing enough capital will go a long way tothe Ewing Marion Kauffman Foundation; and About.com’s small business and entrepreneur sites. (The New York Times Company owns About.com.) StartupNation, a Web site founded by Rich and Jeff Sloan, offers advice through video segments augmented by written information and provides forums and groups where entrepreneurs can share information. Other sites, like Bplans, owned and operated by Palo Alto Software, publisher of Business Plan Pro, have taken a more focused approach. Bplans offers more than 100 free sample business plans (more can be purchased) and they offer advice and other planning tools. When it comes to sorting through financial information, CCH Business Owner’s Toolkit has templates to help examine financial issues as well as other model business documents, checklists and government forms.

44 MARCH 2011

whether they have the qualities needed for the job: Are you a self-starter? Can you get along with different types of people? Are you risk-tolerant? Flexible and self-disciplined?

FEATURES OP

From writing a business plan to choosing a corporate structure to raising money, starting a business is full of daunting challenges. Here’s how to get started. It has never been easier to lay the groundwork for starting a small business. sic business plan, including a financial statement. “Understanding the industry is key,” she said. “If someone is going to start a floral shop and they do a projected profit-and-loss statement and I don’t see spikes in February and May, they have no idea what they’re doing.”

unice Green, who owns a health food store in Stockton, Calif., turned to the development center at San Joaquin Delta College when she thought about buying a second store. With the help of the center, she took information on the types of customers at her existing store and did what Ms. Murphy calls “economic gardening.” After applying the demographics at various distances from the store, she decided against opening a second store. “It’s kind of intuitive, but the S.B.D.C. gave

Software, publisher of Business Plan Pro, have taken a more focused approach. Bplans offers more than 100 free sample business plans (more can be purchased) and they offer advice and other planning tools. When it comes to sorting through financial information, CCH Business me so many great concrete tools,” said Owner’s Toolkit has templates to help exMs. Green, owner of Green’s Nutrition. amine financial issues as well as other Anumber of online resources have almodel business documents, checklists so grown up in recent years geared to and government forms. providing small-business owners with Still, any business or financial plan is a wide range of information. They inonly as good as the information it is built clude sites like Work.com, which has on. Finding that information may seem more than 1,700 how-to segments covlike a daunting task, but there are many ering a multitude of issues confronting free resources to turn to. A good first small businesses; E-venturing, run by the Ewing Marion Kauffman Foundation; stop is the Census Bureau, which has deand About.com’s small business and en- tailed information in many areas including population, income and economic intrepreneur sites. (The New York Times dicators for business. If the breadth of Company owns About.com.) the Census Bureau’s information seems StartupNation, a Web site foundoverwhelming, check out CensusScope, ed by Rich and Jeff Sloan, offers advice an Internet site that breaks demographic through video segments augmented by information down into manageable simwritten information and provides fople and good segments. rums and groups where entrepreneurs Another source of free statistical inforcan share information. Other sites, like Bplans, owned and operated by Palo Alto mation online is FedStats, a site that Ω

MARCH 2011 45

OP FEATURES

entrepreneurs. An estimated 671,800 small businesses with employees opened their doors in 2005, the most recent year with statistics available, even as another 544,800 were expected to close theirs that year.

ries of questions intended to help aspiring business owners gauge whether they have the qualities needed for the job: Are you a self-starter? Can you get along with different types of people? Are you risktolerant? Flexible and self-disciplined? Take a good look at that store on the cor“Starting a business is actually ner. There is a 10 percent to 12 percent chance it will not be there next year, ache Library of Congress has com easy. You can get business cording to the Office of Advocacy for the piled The Entrepreneur’s Guide to cards and an address Small Business Administration. Small Business Information, a list- at Mailboxes, etc.” “If you’re new you have about a 50ing of books and directories helpful in es50 chance of surviving five years,” said tablishing and running a business. Ms. said Bill Morland, chairman of the OrMurphy, who has been counseling small- ange County chapter of Score, a nonprof- Brian Headd, an economist with the Office of Advocacy, which tracks small busibusiness aspirants since 1989, says care- it association that works with the S.B.A. ful planning is essential to creating a suc- to educate and assist entrepreneurs. “But nesses and examines the impact of processful business. Knowing the product, you’re not really in business until you sell posed regulations on them. Still, such odds do not seem to damp the market and the costs while having something, and that isn’t easy.” the desire of entrepreneurs. enough capital will go a long way toward Success comes with education, caregetting through lean times. ful planning and adequate cash flow, spe“People who fail to plan have really not cialists say. And it has never been easier n estimated 671,800 small busigiven themselves an opportunity to sucto lay the groundwork for starting a small nesses with employees opened ceed,” she said. business. Many tools are available on the their doors in 2005, the most reTake a good look at that store on the Internet and at libraries to aid aspiring cent year with statistics available, even as corner. There is a 10 percent to 12 perentrepreneurs. Whole magazines are de- another 544,800 were expected to close cent chance it will not be there next year, voted to the subject. theirs that year. according to the Office of Advocacy for But where to start? The Small Busi“Starting a business is actually easy. the Small Business Administration. ness Administration Web site is an exYou can get business cards and an ad“If you’re new you have about a 50cellent place to obtain information easidress at Mailboxes, etc.,” said Bill Mor50 chance of surviving five years,” said ly. It provides everything from details on land, chairman of the Orange County Brian Headd, an economist with the Ofcharacteristics important to run a busichapter of Score, a nonprofit association fice of Advocacy, which tracks small business to information on writing a busithat works with the S.B.A. to educate and nesses and examines the impact of proness plan to links to local centers offerassist entrepreneurs. “But you’re not reposed regulations on them. Still, such ing assistance to start-ups. The site’s ally in business until you sell something, odds do not seem to damp the desire of “getting ready” section runs through a se- and that isn’t easy.”

provides a range of information produced by the federal government. And don’t forget you can still do your research the old-fashioned way by visiting a public library where a librarian will be able to provide a range of information, including industry publications.

46 MARCH 2011

FEATURES OP

Success comes with education, careful planning and adequate cash flow, specialists say. And it has never been easier to lay the groundwork for starting a small business. Many tools are available on the Internet and at libraries to aid aspiring entrepreneurs. Whole magazines are devoted to the subject. But where to start? The Small Business Administration Web site is an excellent place to obtain information easily. It provides everything from details on characteristics important to run a business to information on writing a business plan to links to local centers offering assistance to start-ups. But where to start? The Small Business Administration Web site is an excellent place to obtain information easily. It provides everything from details on characteristics important to run a business to information on writing a business plan to links to local centers

offering assistance to start-ups. The site’s “getting ready” section runs through a series of questions intended to help aspiring business owners gauge whether they have the qualities needed for the job: Are you a self-starter? Can you get along with different types of people? Are you risktolerant? Flexible and self-disciplined?

eed someone to hold your hand? Score, short for Service Corps of Retired Executives, has a network of more than 10,000 volunteers, working and retired executives, offering free guidance on the Web, through their offices across the country and at workshops. Small Business Development Centers, a partner of the S.B.A., also provide guidance at centers across the country. Gillian Murphy, director of the San Joaquin Delta College Small Business Development Center, said she quizzed her clients about their reasons for going into business on their own. “I tell them ‘I know you have something in your heart that’s telling you you’re going to be incredibly successful. My job is to get in your head and balance your head with your heart,’ ” Ms. Murphy said. To do that she has them create a basic business plan, including a financial statement. “Understanding the industry is key,” she said. “If someone is going to start a floral shop and they do a projected profitand-loss statement and I don’t see spikes in February and May, they have no idea what they’re doing.” Eunice Green, who owns a health food store in Stockton, Calif., turned to the development center at San Joaquin Delta College when she thought about buying a second store. With the help of the center, she took information on the types of customers at her existing store and did what Ms. Murphy calls “economic gardening.” After applying the demographics at various distances from the store, she decided against opening a second store. “It’s kind of intuitive, but the S.B.D.C. gave me so many great concrete tools,” said Ms. Green, owner of one of smallest Green’s Nutrition. A number of online resources have also grown up in recent years geared to providing small-business owners with a wide range of information. They in-

clude sites like Work.com, which has more than 1,700 how-to segments covering a multitude of issues confronting small businesses; E-venturing, run by the Ewing Marion Kauffman Foundation; and About.com’s small business and entrepreneur sites. (The New York Times Company owns About.com.) StartupNation, a Web site founded by Rich and Jeff Sloan, offers advice through video segments augmented by written information and provides Take a good look at that store on the corner. There is a 10 percent to 12 percent chance it will not be there next year, according to the Office of Advocacy for the Small Business Administration.

“If you’re new you have about a 50-50 chance of surviving five years.” Said Brian Headd, an economist with the Office of Advocacy, which tracks small businesses and examines the impact of proposed regulations on them. Still, such odds do not seem to damp the desire of entrepreneurs. An estimated 671,800 small businesses with employees opened their doors in 2005, the most recent year with statistics available, even as another 544,800 were expected to close theirs that year. “Starting a business is actually easy. You can get business cards and an address at Mailboxes, etc.,” said Bill Morland, chairman of the Orange County chapter of Score, a nonprofit association that works with the S.B.A. to educate and assist entrepreneurs. “But you’re not really in business until you sell something, and that isn’t easy.”

uccess comes with education, careful planning and adequate cash flow, specialists say. And it has never been easier to lay the groundwork for starting a small business. Many tools are available on the Internet and at libraries to aid aspiring entrepreneurs. Whole magazines are devoted to the subject. But where to start? The Small Business Administration Web site is an excellent place to obtain information easily. It provides everything from details on characteristics important to run a business to information on writing a business Ω MARCH 2011 47

OP FEATURES

A number of online resources have also grown up in recent years geared to providing small-business owners with a wide range of information. They include sites like Work.com, which has more than 1,700 how-to segments covering a multitude of issues confronting small businesses; E-venturing, run by the Ewing Marion Kauffman Foundation; and About.com’s small business and entrepreneur sites. (The New York Times Company owns About.com.) StartupNation, a Web site founded by Rich and Jeff Sloan, offers advice through video segments augmented by written information and provides forums and groups where entrepreneurs can share information.

plan to links to local centers offering assistance to start-ups. The site’s “getting ready” section runs through a series of questions intended to help aspiring business owners gauge whether they have the qualities needed for the job: Are you a self-starter? Can you get along with different types of people? Are you risk-tolerant? Flexible and self-disciplined?

ther sites, like Bplans, owned and operated by Palo Alto Software, spikes in February and May, they have no publisher of Business Plan Pro, idea what they’re doing.” have taken a more focused approach. Eunice Green, who owns a health food Bplans offers more than 100 free sample store in Stockton, Calif., turned to the de- business plans (more can be purchased) velopment center at San Joaquin Delta and they offer advice and other planning College when she thought about buying a tools. When it comes to sorting through second store. With the help of the center, financial information, CCH Business she took information on the types of cus- Owner’s Toolkit has templates to help extomers at her existing store and did what amine financial issues as well as other Ms. Murphy calls “economic gardening.” model business documents, checklists After applying the demographics at vari- and government forms. ous distances from the store, she decided Still, any business or financial plan is against opening a second store. only as good as the information it is built “It’s kind of intuitive, but the S.B.D.C. on. Finding that information may seem gave me so many great concrete tools,” like a daunting task, but there are many said Ms. Green, owner of Green’s Nutrifree resources to turn to. A good first tion. stop is the Census Bureau, which has deA number of online resources have al- tailed information in many areas includso grown up in recent years geared to ing population, income and economic inproviding small-business owners with dicators for business. If the breadth of a wide range of information. They inthe Census Bureau’s information seems clude sites like Work.com, which has overwhelming, check out CensusScope, more than 1,700 how-to segments covan Internet site that breaks demographic ering a multitude of issues confronting information down into manageable segsmall businesses; E-venturing, run by ments. the Ewing Marion Kauffman Foundation; Another source of free statistical inforand About.com’s small business and en- mation online is FedStats, a site that protrepreneur sites. (The New York Times vides a range of information produced by Company owns About.com.) the federal government. And don’t for-

FEATURES OP

get you can still do your research the oldfashioned way by visiting a public library where a librarian will be able to provide a range of information, including industry publications.The Library of Congress has compiled The Entrepreneur’s Guide to Small Business Information, a listing of books and directories helpful in establishing and running a business. Ms. Murphy, who has been counseling smallbusiness aspirants since 1989, says careful planning is essential to creating a successful business. Knowing the product, the market and the costs while having enough capital will go a long way toward getting through lean times. “People who fail to plan have really not given themselves an opportunity to succeed,” she said. Take a good look at that store on the corner. There is a 10 percent to 12 percent chance it will not be there next year, according to the Office of Advocacy for the Small Business Administration.

Need someone to hold your hand? Score, short for Service Corps of Retired Executives, has a network of more than 10,000 volunteers, working and retired executives, offering free guidance on the Web, through their offices across the country and at workshops. Small Business Development Centers, a partner of the S.B.A., also provide guidance at centers across the country. Gillian Murphy, director of the San Joaquin Delta College Small Business Development Center, said she quizzed uccess comes with education, care- her clients about their reasons for going into business on their own. ful planning and adequate cash “I tell them ‘I know you have someflow, specialists say. And it has nevthing in your heart that’s telling you er been easier to lay the groundwork for starting a small business. Many tools are you’re going to be incredibly successful. My job is to get in your head and balance available on the Internet and at libraries to aid aspiring entrepreneurs. Whole your head with your heart,’ ” Ms. Murphy said. magazines are devoted to the subject. But where to start? The Small Business Administration Web site is an excelo do that she has them create a balent place to obtain information easily. It sic business plan, including a fiprovides everything from details on charnancial statement. “Understanding acteristics important to run a business to the industry is key,” she said. “If someinformation on writing a business plan one is going to start a floral shop and to links to local centers offering assisthey do a projected profit-and-loss statetance to start-ups. ment and I don’t see spikes in February The site’s “getting ready” section runs and May, they have no idea what they’re through a series of questions intended doing.” to help aspiring business owners gauge Eunice Green, who owns a health food whether they have the qualities needstore in Stockton, Calif., turned to the deed for the job: Are you a self-starter? Can velopment center at San Joaquin Delta you get along with different types of peo- College when she thought about buying a ple? Are you risk-tolerant? Flexible and second store. With the help of the center, self-disciplined? she took information on the types of customers at her existing store and did what Ms. Murphy calls “economic gardening.” After applying the demographics at various distances from the store, she decided against opening a second store. “It’s kind of intuitive, but the S.B.D.C. gave me so many great concrete tools,” said Ms. Green, owner of Green’s Nutrition. A number of online resources have also grown up in recent years geared to providing small-business owners with a wide range of information. They include sites like Work.com, which has more than 1,700 how-to segments covering a multitude of issues confronting small businesses; E-venturing, run by the Ewing Marion Kauffman Foundation; and About.com’s small business and entrepreneur sites. π 2005, the most recent year with statistics available, even as another 544,800 were expected to close theirs that year. “Starting a business is actually easy. You can get business cards and an address at Mailboxes, etc.,” said Bill Morland, chairman of the Orange County chapter of Score, a nonprofit association that works with the S.B.A. to educate and assist entrepreneurs. “But you’re not really in business until you sell something, and that isn’t easy.”

MARCH 2011 49

FEATURES OP

PROFILES RICHARD FOXX

Like millions of others, your correspondentâ&#x20AC;&#x2122;s extended family took to the road over the long weekend that marks the unofficial start of summer. With warmer weather beckoning, the urge to migrate to the mountains, forests, beaches and deserts seems every bit as much a genetic imperative among humans as the migratory instincts of petrels. cetaceans or wildebeest.

AMANDA ARENBERG

From June to September, Americans have traditionally taken to the roads in droves, clocking up thousands of miles for leisure and pleasure. By all accounts, this year has started off no differently like the nose-to-tail traffic leaving Los Angeles at the beginning.

TOM SCOTT

Forced to pay over twice as much, Europeans snigger at how little it costs even Californians to fill the tank. But people in the United States pay through the nose for many other things in life (health, education, property taxes, wireless services, etc) that foreigners get for far less or even free. For most Americans, having to drop too much can bee serious.

MARCH 2011 51

OP FEATURES

richardfoxx

A lot of clever technology has gone into making the new four-cylinder engines cleaner and more efficient, if not smoother. One approach has been to use variable-lift inlet valves that can be raised or lowered to different heights, depending on the amount of power needed. Dispensing with the usual throttle arrangement in this way saves weight and complexity. It also minimises the pumping losses caused.

52 MARCH 2011

Like millions of others, your correspondent’s extended family took to the road over the long weekend (Memorial Day in America, Spring Bank Holiday in Britain) that marks the unofficial start of summer. With warmer weather beckoning, the urge to migrate to the mountains, forests, beaches and deserts seems every bit as much a genetic imperative among humans as the migratory instincts of petrels, cetaceans or wildebeest. From June to September, Americans have traditionally taken to the roads in droves, clocking up thousands of miles for leisure and pleasure. By all accounts, this year has started off no differently. Certainly, the nose-to-tail traffic leaving Los Angeles at the beginning of the holiday weekend testified to the perennial Whitsun wanderlust. The surprise was the amount of traffic, given the current price of petrol. While the average pump price is down from the $4.11 peak reached just before the economy tanked in 2008, regular (ie, 87-octane) grade still costs $3.80 a gallon nationally. In California, which has some of the priciest petrol in the country, the average cost of a gallon of regular

FEATURES OP

amandaarenberg

The Bureau of Economic Analysis, the federal agency that churns out monthly reports on how the economy is faring, believes the 2008 spike in petrol prices and the subsequent recession have changed the consumption patterns of American motorists irreversibly. How so? The short answer is that technology and marketing have altered the type of vehicles Americans are now buying. For a start, the gas-guzzling V-8 engine that once ruled American roads has all but vanished from the showrooms. Starting imperceptibly in the early 1990s, American motorists traded in their eight-cylinder vehicles for the better fuel efficiency of six-cylinder models. Today, eight-cylinder cars and trucks account for less than 10% of new vehicles. In the new era of austerity, the hulking 6,000lb SUV, once the pride of the parking lot, is now ridiculed as obscene. Meanwhile, sales of even six-cylinder vehicles have plummeted over the past five years, from 40% of the market to 25%. The big winners have been cars with four-cylinder engines, which have increased their share of the market from 48% five years ago to 65% today. In short, the new cars

Americans are buying are almost as frugal as those driven by their counterparts in Europe, if not Japan. The big difference today is that, in their adverts and marketing material, carmakers boast less about the number of cylinders their models possess, and more about the number of miles per gallon they get on the highway (figures for city driving are usually buried in the fine print). Last yearâ&#x20AC;&#x2122;s version of the Ford Explorer, a three-row SUV, came with a four-litre V-6 engine that delivered a modest 210 horsepower and had an estimated (but rarely achieved) fuel economy of 20mpg (11.8litres/100km) on the highway. This yearâ&#x20AC;&#x2122;s redesign can be ordered with a four-cylinder engine of just two-litres capacity that delivers 237 horsepower and apparently does a realistic 25mpg on the highway. Meanwhile, BMW is about to start offering a four-cylinder engine in America for the first time in over a decade. The German carmakerâ&#x20AC;&#x2122;s new two-litre engine, which will be seen initially in its Z4 sportscar, is more powerful than the three-litre motor it replaces and 20% more fuel efficient.

Other makers of four-cylinder cars have either ignored the problem or adopted cheaper solutions like heavier flywheels and more padded engine mounts to help dampen the secondary vibrations. But as the engine size increases, the vibration eventually becomes intolerable. The practical limit for an unbalanced inline-four is around 2.4 litres. That is why luxury cars have invariably used much smoother inline-six engines or V-8s.

MARCH 2011 53

OP FEATURES

tomscott

54 MARCH 2011

FEATURES OP

Analysis, the federal agency that churns out monthly reports on how the economy is faring, believes the 2008 spike in petrol prices and the subsequent recession have changed the consumption patterns of American motorists irreversibly. How so? The short answer is that technology and marketing have altered the type of vehicles Americans are now buying. For a start, the gas-guzzling V-8 engine that once ruled American roads has all but vanished from the showrooms. Starting imperceptibly in the early 1990s, American motorists traded in their eight-cylinder vehicles for the better fuel efficiency of six-cylinder models. Today, eight-cylinder cars and trucks account for less than 10% of new vehicles. In the new era of austerity, the hulking 6,000lb SUV, once the pride of the parking lot, is now ridiculed as obscene. Meanwhile, sales of even six-cylinder vehicles have plummeted over the past five years, from 40% of the market to 25%. The big winners have been cars with four-cylinder engines, which have increased their share of the market from 48% five years ago to 65% today. In short, the new cars Americans are buying are almost as frugal as those driven by their counterparts in Europe, if not Japan. The big difference today is that, in their adverts and marketing material, carmakers boast less about the number of cylinders their models possess, and more about the number of miles per gallon they get on the highway (figures for city driving are usually buried in the fine print). Last year’s version of the Ford Explorer, a three-row SUV, came with a four-litre V-6 engine that delivered a modest 210 horsepower and had an estimated (but rarely achieved) fuel economy of 20mpg (11.8litres/100km) on the highway. This year’s redesign can be ordered with a four-cylinder engine of just two-litres capacity that delivers 237 horsepower and apparently does a realistic 25mpg on the highway. Meanwhile, BMW is about to start offering a four-cylinder engine in America for the first time in over a decade. The German carmaker’s new two-litre engine, which will be seen initially in its Z4 sportscar, is more powerful than the three-litre motor it replaces and 20% more fuel efficient. What has turned

the lowly four-banger into such a ready replacement for its bigger brethren is the widespread use of turbo-charging and direct fuel injection. Such power-boosting technologies have made it possible for the inherently “rough” straight-four to do the job of bigger, more refined motors. Unlike the better balanced straight-six or even the ultra-smooth V-12 engine, the humble four-cylinder generates an up and down vibration with a frequency of twice the crankshaft's rotational speed. It’s an age old problem. In a fourcylinder engine, the forces caused by the primary harmonic of the crankshaft’s

"A practical, though expensive, solution was developed in 1904 by Frederick Lanchester, an inventor, engineer and poet, who was one of the founding motor industry."

rotational frequency can be balanced by arranging one pair of pistons to move down while the other pair moves up. Unfortunately, the forces caused by the secondary harmonic remain out of kilter as a result of the pistons having to accelerate and decelerate faster in the upper half of the cylinders than in the lower half. For the secondary forces to be in balance, the rods connecting the pistons to the crankshaft would have to be of infinite length. A practical, though expensive, solution was developed in 1904 by Frederick Lanchester, an inventor, engineer and poet, who was one of the founding fathers (with Harry Ricardo and Henry Royce) of the British motor industry. In Lanchester’s design, two balance shafts rotated in opposite directions at twice the crankshaft speed to cancel out the niggling secondary vibrations. Mitsubishi Motors was one of the first to popularise the use of balance shafts in straight-four engines built from the 1970s onwards. Other makers of four-cylinder cars have either ignored the problem or adopted cheaper solutions—like heavier fly-

wheels and more padded engine mounts to help dampen the secondary vibrations. But as the engine size increases, the vibration eventually becomes intolerable. The practical limit for an unbalanced inline-four is around 2.4 litres. That is why luxury cars have invariably used much smoother inline-six engines or V-8s—and why most of the new breed of four-cylinder motors rarely exceed two litres. A lot of clever technology has gone into making the new four-cylinder engines cleaner and more efficient, if not smoother. One approach has been to use variable-lift inlet valves that can be raised or lowered to different heights, depending on the amount of power needed. Dispensing with the usual throttle arrangement in this way saves weight and complexity. It also minimises the pumping losses caused by no longer having to “throttle” (ie, strangle) the air flowing into the cylinders in order to control the engine speed. Injecting fuel directly into the engine (rather than into the inlet manifold, upstream of the inlet valves) also has beneficial effects. Modern solenoid injectors can squirt very precise amounts of fuel close to the spark plug at 200 times atmospheric pressure, resulting in extremely clean and homogeneous combustion. Meanwhile, the cooling effects caused by high-pressure jets of fuel expanding rapidly into the cylinders allows the engine to operate at a higher compression ratio than normal. Adding all such improvements together can result in a 20% gain in fuel economy. From June to September, Americans have traditionally taken to the roads in droves, clocking up thousands of miles for leisure and pleasure. By all accounts, this year has started off no differently. Certainly, the nose-to-tail traffic leaving Los Angeles at the beginning of the holiday weekend testified to the perennial Whitsun wanderlust. The surprise was the amount of traffic, given the current price of petrol. While the average pump price is down from the $4.11 peak reached just before the economy tanked in 2008, regular (ie, 87-octane) grade still costs $3.80 a gallon nationally. In California, which has some of the priciest petrol in the country, the average cost of a gallon of regular Ω MARCH 2011 55

OP FEATURES

has fallen over the past week to $4.05 (€0.74/litre). Forced to pay over twice as much, Europeans snigger at how little it costs even Californians to fill the tank. But people in the United States pay through the nose for many other things in life (health, education, property taxes, wireless services, etc) that foreigners get for far less or even free. For most Americans, having to drop $70 or more at a gas station can still give serious pause for thought about whether the journey is really necessary. Yet, here’s the conundrum. Following all previous recessions, petrol consumption has been a leading indicator of recovery, bouncing back sharply as people started using their vehicles more to shop, to dine out, to seek the curious and the entertaining, and, above all, to take vacations. Despite the American economy’s belated and still timid recovery— seen in increasing sales of cars, clothing, hospitality, entertainment, and consumer goods generally (though still not housing)—the amount of petrol being consumed across the country has tumbled to 2001 levels, and shows every sign of falling further. The Bureau of Economic Analysis, the federal agency that churns out monthly reports on how the economy is faring, believes the 2008 spike in petrol prices and the subsequent recession have changed the consumption patterns of American motorists irreversibly. How so? The short answer is that technology and marketing have altered the type of vehicles Americans are now buying. For a start, the gas-guzzling V-8 engine that once ruled American roads has all but vanished from the showrooms. Starting imperceptibly in the early 1990s, American motorists traded in their eight-cylinder vehicles for the better fuel efficiency of six-cylinder models. Today, eight-cylinder cars and trucks account for less than 10% of new vehicles. In the new era of austerity, the hulking 6,000lb SUV, once the pride of the parking lot, is now ridiculed as obscene. Meanwhile, sales of even six-cylinder vehicles have plummeted over the past five years, from 40% of the market to 25%. The big winners have been cars with four-cylinder engines, which have increased their share of the market from 48% five years ago to 65% today. In 56 MARCH 2011

short, the new cars Americans are buying are almost as frugal as those driven by their counterparts in Europe, if not Japan. The big difference today is that, in their adverts and marketing material, carmakers boast less about the number of cylinders their models possess, and more about the number of miles per gallon they get on the highway (figures for city driving are usually buried in the fine print). Last year’s version of the Ford Explorer, a three-row SUV, came with a four-litre V-6 engine that delivered a modest 210 horsepower and had an estimated (but rarely achieved) fuel economy of 20mpg (11.8litres/100km) on the highway. This year’s redesign can be ordered with a four-cylinder engine of just two-litres capacity that delivers 237 horsepower and apparently does a realistic 25mpg on the highway. Meanwhile, BMW is about to start offering a four-cylinder engine in America for the first time in over a decade. The German carmaker’s new twolitre engine, which will be seen initially in its Z4 sportscar. π

OP FEATURES

INTERVIEW

Angelo otira If it sounds like what other social networks have been doing for years, well, that's because they have been doing it for years. But, in fact, deviantART was doing most of it first.

ngelo Sotira fidgets like a kid caught without his PSP2. Skinny, fashionably unshaven and looking even younger than 30 in ripped jeans and a True Religion thermal, he scoots back and forth on the couch in his office, bounces his knees and leans over the coffee table as he talks about launching the biggest, longestrunning social network you've probably never heard of. The tabletop is littered with pieces from the Lego kits he works on when he wants to unplug (he goes through about three a month), and a chat alert periodically pings from the big-screen computer across the room. "When we started this," he says, fingers tapping against his leg, "we wanted to build the deepest, most vertically integrated network that ever existed." By all accounts, Sotira has succeeded. He is co-founder and CEO of deviantART, an online artists' community that started in 2000 and now has a staggering membership of more than 14 million. DeviantART users, lovingly referred to as "deviants," sign up for free accounts that come with a personal profile page, a blog and a space to

58 MARCH 2011

post artwork and photos, along with the ability to chat, message and comment. If it sounds like what other social networks have been doing for years, well, that's because they have been doing it for years. But, in fact, deviantART was doing most of it first. It is one of the world's first comprehensive online communities formed around user-generated content, and it was up and running three years before Myspace, four years before Flickr and Facebook--and a whole decade before Aaron Sorkin and Hollywood decreed it the age of The Social Network. As of December, deviantART's Alexa page rank was a respectable 125, and the SEO website ranking site SEO Stats Script listed the company's valuation around $19 million. Sotira hit those numbers by deliberately keeping membership viral, allowing "artists to tell artists to tell artists." Now, he says it's time for deviantART to go mainstream. The site is bursting with content--roughly 155,000 art submissions, or "deviations," are uploaded daily, with 2.4 million unique visitors posting 1.5 mil-

FEATURES OP

{ As of December, deviantART's Alexa page rank was a respectable 125, and the SEO website ranking site SEO Stats Script listed the company's valuation around $19 million. Sotira hit those numbers by deliberately keeping membership viral, allowing "artists to tell artists to tell artists."

lion comments every day. A groups platform that was launched successfully early last year lets any deviant create a smaller, niche community, allowing the site to preserve its sense of intimacy. There are now 75,000 such groups, with hundreds more springing up every day. "We spent three years architecting it," Sotira says, using his preferred verb for what he does,"because if this place feels too big, the community loses its identity." And all this attention to community is paying off. While other early networks like Friendster and Xanga have tanked, deviantART continues to grow at a healthy clip. Three of the company's revenue streams--ads, subscriptions and branded retail--are multimillion-dollar businesses, and overall revenue is expected to grow by about 60 percent this year. "Angelo did all these things that we attribute to Facebook or YouTube way back," says Travis Kalanick, founder of Scour, one of the earliest peer-to-peer multimedia search engines. "And it's by design that the site is doing as well in the space it's focused on after so many years."

Kalanick, who worked with Sotira at DMusic, a multimedia site Sotira founded in high school, says deviantART has been so successful because Sotira has an "absolute passion" for a strong online art community, and the natural ability to build things--cultures, applications and companies. These days, Sotira, whom Richard Branson consulted before starting his push into new media in 2006, has been working on products that might appeal to non-artists, like a drawing tool for people to leave comments in pictures instead of words, and a program that recommends artwork based on an individual's viewing history. If the pattern holds, it's just a matter of time before these latest innovations become industry standards. DeviantART's offices look out over one of the main tourist drags in Hollywood, Calif., and the decor pegs the boss as a gamer: A Super Mario Bros. wall decal spans one side of the room, a mustachioed Pikachu beams down from the top of a filing cabinet, the window ledges are crowded with toys and figurines and the walls are filled with manga-influenced pop art canvases. â&#x201E;Ś MARCH 2011 59

OP FEATURES

Can you give our readers a bit of insight as to what motivated you to start the site? In 2000, there was no place for artists to put their artwork online. DeviantArt was founded by a programmer, an artist, and an entrepreneur. I would be the entrepreneur. The artist Matt Steven really was like, “Look, I’ve created all of these application skins and technical types of art, but there’s no place for me to put my paintings, my drawings, or my sketches. Let’s create an exciting new atmosphere that allows the community to tell us what they want.” We’d embrace new categories of art as [the community] asked for them. We started out with about 30 categories and we’re now at about 750. I think that the embracing of the community is what has allowed it to grow so rapidly. It keeps the artists very very happy, because they have a place to share their work and an audience to come see what they put out. DeviantArt allows anyone to post their artwork. Do you feel that takes away from the site’s level of professionalism? Oh no, there is a little bit of artist in anybody, so we embrace the artist. The mentoring aspects are a very important part in that. The system is designed in such a way where everyone gets to go on the front page, and then we have filtering systems so the more people react to your artwork, the more that it filters up. So, if you want to come to see just the best stuff, you just browse top favorites. But there’s a community of people who just love to see the real raw reaction to the world every single day. That’s what DeviantArt is. There is one submission every 2 to 3 seconds. DeviantArt was alive and thriving during the September 11th attacks; you should see the reaction by the artistic community during those days. It’s a live vehicle for artists to explain the world around them every day of the year. And if you look at it in a different perspective, 13 million pieces of art in the past 5 years is an artistic documentation of a history of art online. That’s absolutely an incredible thing. It’s timely, and you can see it day by day. I don’t think anybody else can say 60 MARCH 2011

I was designing maps for the game, and because I listened and built what people wanted, I became pretty popular, Sotira says. Then, he used that popularity to write blogs about other players, which meant players were logging in constantly to see. that. Galleries are rarely time stamped. We are actually preserving history in a great way. Are there any challenges that come to mind when you think back to the time when you started DeviantArt? Oh sure, money! That’s always the problem with any startup. But everything else came into place when you run an internet company and know how to do marketing. The main challenges for an entrepreneur are marketing, funding, and business models - things like this. We didn’t have these kinds of troubles; we just had the money troubles. The community embraced it, millions of people came to visit, and you figure out the details. Scaling and learning how to build brand new technologies that have never been built before is a challenge as well, but these are also all the things that make it fun too. Who are some of your favorite artists? Aaron Jasinski definitely, Mark Brooks is someone I admire because he draws Spiderman and that’s pretty awesome. Mancopter is an artist who is downstairs,

and I really like him as well. Mancopter is Mancopter.deviantart.com, Jasinski is Jasinski.deviantart.com, Mark Brook is diable2003.deviantart.com. Those are some of my favorite artists. I lost track, but I have about 86 artists of my Deviant Watch, whom I watch and comment on as their artwork is submitted. So I go through them all, and it’s a lot. What is your favorite aspect of DeviantArt? Communities and building digital environments that make people comfortable. Also, allowing them to engage one another in a way which produces results. It’s absolutely a fascinating science - something I have been studying since I was 12. It’s because I became heavily addicted to BBS Bulletin Board systems and online communities centered around video games. I guess you’d call them digital gladiators now, who are now being illustrated by the Cyberathlete Professional League with .5 million dollar prizes. They’re basically becoming a sport of the reflex, and that was a fascination of mine when I was younger. That applies to every area of taking a

FEATURES OP

physical world and making digital. [It] gives everybody in the world the advantage of coming together under a topic. [It] doesn’t matter where you are, it’s really just about sheer talent and the way the entire world will react to you. That brings to light the truly brilliant, truly amazing people on the planet, rather than just in a local area. That’s an absolutely fascinating part of the internet in general; I just like to focus on embracing that and building communities. But there’s a community of people who just love to see the real raw reaction to the world every single day. That’s what DeviantArt is. There is one submission every 2 to 3 seconds. DeviantArt was alive and thriving during the September 11th attacks; you should see the reaction by the artistic community during those days. It’s a live vehicle for artists to explain the world around them every day of the year. And if you look at it in a different perspective, 13 million pieces of art in the past 5 years is an artistic documentation of a history of art online. That’s absolutely an incredible thing. It’s timely, and you can see it day

by day. I don’t think anybody else can say that. Galleries are rarely time stamped. We are actually preserving history in a great way. Are there any challenges that come to mind when you think back to the time when you started DeviantArt? Oh sure, money! That’s always the problem with any startup. But everything else came into place when you run an internet company and know how to do marketing. The main challenges for an entrepreneur are marketing, funding, and business models - things like this. We didn’t have these kinds of troubles; we just had the money troubles. The community embraced it, millions of people came to visit, and you figure out the details. Scaling and learning how to build brand new technologies that have never been built before is a challenge as well, but these are also all the things that make it fun too. Can you give our readers a bit of insight as to what motivated you to start the site? In 2000, there was no place for artists to put their artwork online. DeviantArt was

founded by a programmer, an artist, and an entrepreneur. I would be the entrepreneur. The artist Matt Steven really was like, “Look, I’ve created all of these application skins and technical types of art, but there’s no place for me to put my paintings, my drawings, or my sketches. Let’s create an exciting new atmosphere that allows the community to tell us what they want.” We’d embrace new categories of art as [the community] asked for them. We started out with about 30 categories and we’re now at about 750. I think Ω

Of all of the online art communities in the world, DeviantArt.com is one of the largest and least selective. With a system of messageboards, personal pages, and forums which embrace and encourage artists of all types to showcase their work for free, DeviantArt is viewed by some as an artist’s heaven, and by others as the a drag on the artistic experience.

MARCH 2011 61

OP FEATURES

{ Of all of the online art communities in the world, DeviantArt.com is one of the largest and least selective. With a system of messageboards, personal pages, and forums which embrace and encourage artists of all types to showcase their work for free, DeviantArt is viewed by some as an artist’s heaven, and by others as the a drag on the artistic experience.

million pieces of art in the past 5 years is an artistic documentation of a history of art online. That’s absolutely an incredible thing. It’s timely, and you can see it day by day. I don’t think anybody else can say that. Galleries are rarely time stamped. We are actually preserving history in a great way. that the embracing of the community is Are there any challenges that come to what has allowed it to grow so rapidly. It keeps the artists very very happy, because mind when you think back to the time they have a place to share their work and when you started DeviantArt? Oh sure, an audience to come see what they put it money! That’s always the problem with any startup. But everything else came all wout. into place when you run an internet DeviantArt allows anyone to post their artwork. Do you feel that takes away from company and know how to do marketing. The main challenges for an entrepreneur the site’s level of professionalism? Oh no, there is a little bit of artist in anybody, are marketing, funding, and business so we embrace the artist. The mentoring models - things like this. We didn’t have aspects are a very important part in that. these kinds of troubles; we just had the money troubles. The community The system is designed in such a way embraced it, millions of people came where everyone gets to go on the front page, and then we have filtering systems to visit, and you figure out the details. so the more people react to your artwork, Scaling and learning how to build brand the more that it filters up. So, if you want new technologies that have never been built before is a challenge as well, but to come to see just the best stuff, you these are also all the things that make it just browse top favorites. But there’s a fun too. community of people who just love to Who are some of your favorite artists? see the real raw reaction to the world Aaron Jasinski definitely, Mark Brooks every single day. That’s what DeviantArt is someone I admire because he draws is. There is one submission every 2 to 3 Spiderman and that’s pretty awesome. seconds. DeviantArt was alive and thrivMancopter is an artist who is downstairs, ing during the September 11th attacks; you should see the reaction by the artistic and I really like him as well. Mancopter is Mancopter.deviantart.com, Jasinski is community during those days. It’s a live Jasinski.deviantart.com, Mark Brook is vehicle for artists to explain the world around them every day of the year. And if diable2003.deviantart.com. Those are you look at it in a different perspective, 13 some of my favorite artists. I lost track, 62 MARCH 2011

but I have about 86 artists of my Deviant Watch, whom I watch and comment on as their artwork is submitted. So I go through them all, and it’s a lot. What is your favorite aspect of DeviantArt? Communities and building digital environments that make people comfortable. Also, allowing them to engage one another in a way which produces results. It’s absolutely a fascinating science - something I have been studying since I was 12. It’s because I became heavily addicted to BBS Bulletin Board systems and online communities centered around video games. I guess you’d call them digital gladiators now, who are now being illustrated by the Cyberathlete Professional League with .5 million dollar prizes. They’re basically becoming a sport of the reflex, and that was a fascination of mine when I was younger. That applies to every area of taking a physical world and making digital. [It] gives everybody in the world the advantage of coming together under a topic. [It] doesn’t matter where you are, it’s really just about sheer talent and the way the entire world will react to you. That brings to light the truly brilliant, truly amazing people on the planet, rather than just in a local area. That’s an absolutely fascinating part of the internet in general; I just like to focus on embracing that and building communities. π

MARKETS& FINANCE

NEWS ENERGY PRICES • JAPANESE BANKS • CREDIT RATINGS • ENTERTAINMENT INSURANCE INNOVATION CHARGE ONLINE IDEAS CHECK YOUR LOCAL LISTINGS • HOME AWAY FROM HOME • BUILD YOU OWN BUZZ E-COMMERCE WHEN WORDS ARE CHEAP MARKETING IDEAS SUPER FLY GUYS • CLOUD HAILER

OP MARKETS&FINANCE

NEWS ENERGY PRICES The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also stopped working, prompting a second massive explosion. As with the other blast, scientists said the fuel rods did not appear to have been damaged. But fears of a meltdown remain acute. The cooling system at the second reactor is also now said to have stopped working. Like one and two, engineers are desperately pumping huge amounts of sea water into the quake stricken reactor in an effort to stabilise it. So far, scientists appear confident Japan is not experiencing a meltdown on the level of Three Mile Island in the US in 1979, let alone Chernobyl in 1986. However, the crisis is certain to force a rethink on energy policy, in a country so reliant on nuclear power. The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had 64 MARCH 2011

JAPANESE BANKS

of the clashes between Gaddafi forces and opposition forces. One side is under opposition control, and the other is under the control of Gaddafi forces. “They have also taken control of Ajdabiya city centre. The rebels are praying and say they are ready to march into the city and start a big assault. They say they will capture the city in 24 hours.” Their weapons are no match for the forces arrayed against them. Senior commanders have joined them on the frontline as Benghazi starts to co-ordinate command but it may be a challenge to fuse these former civilians and Gaddafi soldiers into an effective major force. “Our weapons are on the ground and can’t knock down enemy planes. We’ve heard explosions from over the hill between us and Ajdabiyah,” said one fighter. “We need support from outside. I believe in Allah. We need guns, because they have tanks and we don’t have tanks. But even with their tanks we will take them down,” said a 24-year old engineering student. He is typical of the many young people who are prepared to take on Gaddafi’s elite forces. Disorganised, and with few soldiering skills, they are defying the world’s longest-ruling dictator still in power. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy. That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag.

MARKETS&FINANCE OP

saw little evidence of any heavy wea With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. Recapturing the crossroads to Benghazi is vital if the rising against Colonel Gaddafi is to push on to the capital. The rebels, reinforced and better equipped since they were expelled last week, say they now surround the city and an attack is imminent. Rebel spokesman Mustafa Gheriani said that after the city was recaptured by Gaddafi’s forces they fear “a great crime may have been committed” in Ajdabiyah, and that civilian casualties may be heavy.

CREDIT RATINGS

the quake stricken reactor in an effort to stabilise it. So far, scientists appear confident Japan is not experiencing a meltdown on the level of Three Mile Island in the US in 1979, let alone Chernobyl in 1986. However, the crisis is certain to force a rethink on energy policy, in a country so reliant on nuclear power. The nuclear crisis and the threat of an uncontrolled radiation leak following Japan’s devastating quake and tsunami remains significant. Notably at the Fukushima Daiichi plant, some 240 kilometres north of Tokyo. On Saturday, the outer casing of building housing reactor number one blew. Japan’s nuclear experts quickly tried to allay fears saying this had been caused by a hydrogen build-up and not radioactive gases. For the moment, the core of the reactor is said to be intact. Despite that, those living near the plant were immediately evacuated as the problems with its cooling systems became apparent. So far, authorities say more than a 150 people have been exposed to radiation levels beyond normal limits. On Sunday the exclusion zone around Fukushima N1 was extended to 20 kilometres, while the evacuation area around Fukushima N2 nearby was held at 10 kilometres. It was also badly rocked by the quake, but the primary worry remains Fukushima N1. Earlier, the cooling system at the plant’s third reactor also have been stopped.

ENTERTAINMENT INSURANCE

That is one of the things the air bombardment is seeking to prevent in what NATO has said could be a 90-day campaign. However air power failed to prevent government tanks re-entering Misrata in the west. Euronews’ correspondent in eastern Libya Mustafa Bag saw little evidence of any heavy weaponry as the rebels tightened their siege of Ajdabiyah. While a truck-launched rocket had been used to take the city’s eastern gate, Mustafa saw mostly Kalashnikovs, RPGs and a few anti-aircraft guns. They had not been used to knock out the tanks he came across, burned out by the side of the road, but what he did see was enthusiasm and determination. He reported: “I’m on the frontline of the clashes between Gaddafi forces and opposition forces. One side is under opposition control, and the other is under the control of Gaddafi forces. “They have also taken control of Ajdabiya city centre. The rebels are praying and say they are ready to march into the city and start a big assault. They say they will capture the city in 24 hours.” Their weapons are no match for the forces arrayed against them. Senior commanders have joined them on the frontline as Benghazi starts to co-ordinate command but it may be a challenge to fuse these former civilians and Gaddafi soldiers into an effective major force. “Our weapons are on the ground and can’t knock down enemy planes. We’ve heard explosions from over the hill between us and Ajdabiyah,” said one fighter. “We need support from outside. I believe in Allah. We need guns, because they have tanks and we don’t have tanks. But even with their tanks we will take them down,” said a 24-year old engineering student. He is typical of the many young people who are prepared to take on Gaddafi’s elite forces. Disorganised, and with few soldiering skills, they are defying the world’s longest-ruling dictator still in power. With coalition bombing all day on Ajdabiyah in support of Libyan loyalist positions, the rebels say they have taken the city’s eastern gate and are looking to move back in. MARCH 2011 65

OP MARKETS&FINANCE

INNOVATION

CHARGE In the clamour for iPads, electric cars and laptops, 2011 is set to be the year of the battery. Stephen Pritchard looks at the contenders jostling for pole position.

trictly, a battery is a collection of multiple electrochemical cells, but in popular usage battery often refers to a single cell. For example, a 1.5 volt AAA battery is a single 1.5 volt cell, and a 9 volt battery has six 1.5 volt cells in series. The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described multiple Leyden jars (early electrical capacitors) by analogy to a battery of cannons. Thus Franklin's usage to describe multiple Leyden jars predated Volta's use of multiple galvanic cells. It is speculated, but not established, that several ancient artifacts consisting of copper sheets and iron bars, and known as Baghdad batteries may have been galvanic cells. Volta's work was stimulated by the Italian anatomist and physiologist Luigi Galvani, who in 1780 noticed that dissected frog's legs would twitch when struck by a spark from a Leyden jar, an external source of electricity. In 1786 he noticed that twitching would occur during lightning storms. After many years Galvani learned how to produce twitching without using any external source of electricity. In 1791 he published a report on "animal electricity." He created an electric circuit consisting of the frog's leg (FL) and two different metals A and B, each metal touching

66 MARCH 2011

the frog's leg and each other, thus producing the circuit A-FL-B-A-FL-B...etc. In modern terms, the frog's leg served as both the electrolyte and the sensor, and the metals served as electrodes. He noticed that even though the frog was dead, its legs would twitch when he touched them with the metals. Within a year, Volta realized the frog's moist tissues could be replaced by cardboard soaked in salt water, and the frog's muscular response could be replaced by another form of electrical detection. He already had studied the electrostatic phenomenon of capacitance, which required measurements of electric charge and of electrical potential ("tension"). Building on this experience, Volta was able to detect electric current through his system, also called a Galvanic cell. The terminal voltage of a cell that is not discharging is called its electromotive force (emf), and has the same unit as electrical potential, named (voltage) and measured in volts, in honor of Volta. In 1800, Volta invented the battery by placing many voltaic cells in series, literally piling them one above the other. This voltaic pile gave a greatly enhanced net emf for the combination, with a voltage of about 50 volts for a 32-cell pile. In many parts of Europe batteries continue to be called piles. Volta did not appreciate that the voltage was due to chemical reactions. He thought that his cells were an inexhaustible source of energy, and that the associated chemical effects.

MARKETS&FINANCE OP

THE BATTERIES

SOLID-STATE LITHIUM The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described multiple Leyden jars (early electrical capacitors) by analogy to a battery of cannons. He noticed that even though the frog was dead, its legs would twitch when he touched them with the metals.

NICKEL LITHIUM The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described multiple Leyden jars (early electrical capacitors) by analogy to a battery of cannons. He noticed that even though the frog was dead, its legs would twitch when he touched them with the metals.

NICKEL IRON The first electrochemical cell was developed by the Italian physicist Alessandro Volta in 1792, and in 1800 he invented the first battery, a "pile" of many cells in series. The usage of "battery" to describe electrical devices dates to Benjamin Franklin, who in 1748 described multiple Leyden jars (early electrical capacitors) by analogy to a battery of cannons. He noticed that even though the frog was dead, its legs would twitch when he touched them with the metals.

MARCH 2011 67

OP MARKETS&FINANCE

ONLINE IDEAS

CHECK YOUR LOCAL LISTINGS search optimization, I've found a handful of factors that influence rankings. Back to my equation: Ranking = Location + Information + Corroboration + Input + X; X being defined as the consistent unknown and ever-evolving factor contributing to the unpredictability we see in results. The definition of X might as well be stored in the same vault as the Coca-Cola recipe. The other criteria of the local search equation are better understood. To avoid getting bogged down with explaining the step-by-step process of claiming your business, I'll point you to a recent blog on that very topic: How To Claim Your Google Maps Listing. You can start with your Google Maps listing and in a similar fashion work your way through the roughly 100 other search engines, IYP directories, maps, mobile sites and niche local/ social sites. And yes, this is a laborious process which requires time and some web expertise - prior SEO knowledge a Understanding these variables is a critiping 2.6 billion local searches conducted plus. Below is a list of the more notable cal part of successfully marketing your per month1. But surprisingly, only about sites to submit your business to. I gave business online. SMB's have just two 11% of SMB's have even claimed their link juice to the sites I particularly like. meaningful representations in the local business listings. And roughly 25% of the Even after you have built out a robust search space: a website and a business existing NAP (Name, Address, Phone business profile and painstakenly gone listing or "LBL". I'm dismissing social Number) representations floating around through the manual submission process, media presence because it is primarily online are incorrect. These NAP's appear page one ranking is never a lock. Unlike a representation of a single user rather primarily in local results. To be more more traditional local advertising methods than what we conceive as a traditional specific, local results are the product of (TV, radio, yellow pages), guaranteebrick and mortar business -- functioning online consumers looking to find qualiing placement in local search is nearly as more of compliment to website SEO fied local businesses, by entering "top of impossible. Local search engines hold anyway. The latter of the two local search mind" keywords, phrases and geographic their proprietary search logic "close to the presences is worth discussing in detail. modifiers on major search engines, IYP's vest" so businesses cannot easily game Business listing optimization and improv- (Internet Yellow Pages) and other online the system. For the very same reason ing your "findability" in the local search directories. they also change the rules often. And just space is the hot market right now. Local With this kind of first-page exposure like us, their logic isn't perfect. search is mainstream. And If you're not for local listings, there is a reason they In short, local search engines are already convinced of this, all you have call it the Lucky 7. For any local search, a prominent, and increasingly popular to do is measure the real estate Google the major search engines (e.g., Google component of the local search landscape. allots to their Map-packs (listings that Maps, Yahoo! Local, Bing Local) all use And factors like regency, accuracy, "cerappear adjacent to the large map of busi- their own "black box" algorithms to deliver tificate of trust" and depth of content are ness locations) in the universal results results they determine are most-to-least the critical elements to supporting a busi- on many screens almost pushing the relevant. From what I can tell, the 7-Pack ness' image, increasing "findability" and index-based results below the fold -- the algorithm is mostly based on the Maps generating qualified, ready-to-buy local 7-pack being the most frequently seen. algo, but also has a layer of Universal on customers. Last year, the major engines saw a whop- top of it. From extensive research in local 70 MARCH 2011

MARKETS&FINANCE OP

HOME AWAY FROM HOME Understanding these variables is a critical part of successfully marketing your business online. SMB's have just two meaningful representations in the local search space: a website and a business listing or "LBL". I'm dismissing social media presence because it is primarily a representation of a single user rather than what we conceive as a traditional brick and mortar business -- functioning as more of compliment to website SEO anyway. The latter of the two local search presences is worth discussing in detail. Business listing optimization and improving your "findability" in the local search space is the hot market right now. Local search is mainstream. And If you're not already convinced of this, all you have to do is measure the real estate Google allots to their Map-packs (listings that appear adjacent to the large map of business locations) in the universal results - on many screens almost pushing the index-based results below the fold -- the 7-pack being the most frequently seen. Last year, the major engines saw a whopping 2.6 billion local searches conducted per month1. But surprisingly, only about 11% of SMB's have even claimed their business listings. And roughly 25% of the existing NAP (Name, Address, Phone Number) representations floating around online are incorrect. These NAP's appear primarily in local results. To be more specific, local results are the product of

online consumers looking to find qualified local businesses, by entering "top of mind" keywords, phrases and geographic modifiers on major search engines, IYP's (Internet Yellow Pages) and other online directories. With this kind of first-page exposure for local listings, there is a reason they call it the Lucky 7. For any local search, the major search engines (e.g., Google Maps, Yahoo! Local, Bing Local) all use their own "black box" algorithms to deliver results they determine are most-to-least relevant. From what I can tell, the 7-Pack algorithm is mostly based on the Maps algo, but also has a layer of Universal on top of it. From extensive research in local search optimization, I've found a handful of factors that influence rankings. Back to my equation: Ranking = Location + Information + Corroboration + Input + X; X being defined as the consistent unknown and ever-evolving factor contributing to the unpredictability we see in results. The definition of X might as well be stored in the same vault as the Coca-Cola recipe. The other criteria of the local search equation are better understood. To avoid getting bogged down with explaining the step-by-step process of claiming your business, I'll point you to a recent blog on that very topic: How To Claim Your Google Maps Listing. You can start with your Google Maps listing and in a similar fashion work your way through the rough-

ly 100 other search engines, IYP directories, maps, mobile sites and niche local/ social sites. And yes, this is a laborious process which requires time and some web expertise - prior SEO knowledge a plus. Below is a list of the more notable sites to submit your business to. I gave link juice to the sites I particularly like. Even after you have built out a robust business profile and painstakenly gone through the manual submission process, page one ranking is never a lock. Unlike more traditional local advertising methods (TV, radio, yellow pages), guaranteeing placement in local search is nearly impossible. Local search engines hold their proprietary search logic "close to the vest" so businesses cannot easily game the system. For the very same reason they also change the rules often. And just like us, their logic isn't perfect. In short, local search engines are a prominent, and increasingly popular component of the local search landscape. And factors like regency, accuracy, "certificate of trust" and depth of content are the critical elements to supporting a business' image, increasing "findability".

INTERIOR PAGE MUST-HAVE Every page on your site should contain the following elements: - Company logo and tagline - Consistent navigation, including search - Call to actions both above and below the fold - Clear, concise, compelling and grammatically correct copy - Consistent design and color scheme to establish brand presence - Advertisements to promote featured products, services and special offers MARCH 2011 71

OP MARKETS&FINANCE

BUILD YOUR OWN BUZZ

You don't necesseraly need professional help to get the word out. Try these tactics for some good old-fashioned self-promotion

nderstanding these variables is a critical part of successfully marketing your business online. SMB's have just two meaningful representations in the local search space: a website and a business listing or "LBL". I'm dismissing social media presence because it is primarily a representation of a single user rather than what we conceive as a traditional brick and mortar business -- functioning as more of compliment to website SEO anyway. The latter of the two local search presences is worth discussing in detail.Business listing optimization and improving your "findability" in the local search space is the hot market right now. Local search is mainstream. And If you're not already convinced of this, all you have to do is measure the real estate Google allots to their Map-packs (listings that appear adjacent to the large map of business locations) in the universal results - on many screens almost pushing the index-based results below the fold -- the 7-pack being the most frequently seen. Last year, the major engines saw a whopping 2.6 billion local searches conducted per month1. But surprisingly, only about 11% of SMB's have even claimed their business listings. And roughly 25% of the existing NAP (Name, Address, Phone Number) representations floating around online are incorrect. These NAP's appear primarily in local results. To be more specific, local results are the product of online consumers looking to find qualified local businesses, by entering "top of mind" keywords, phrases and geographic modifiers on major search engines, IYP's (Internet Yellow Pages) and other online directories. With this kind of first-page exposure for local listings, there is a reason they call it the Lucky 7. For any local search, the major search engines (e.g., Google 72 MARCH 2011

Maps, Yahoo! Local, Bing Local) all use their own "black box" algorithms to deliver results they determine are most-to-least relevant. From what I can tell, the 7-Pack algorithm is mostly based on the Maps algo, but also has a layer of Universal on top of it. From extensive research in local search optimization, I've found a handful of factors that influence rankings. Back to my equation: Ranking = Location + Information + Corroboration + Input + X; X being defined as the consistent unknown and ever-evolving factor contributing to the unpredictability we see in results. The definition of X might as well be stored in the same vault as the Coca-Cola recipe. The other criteria of the local search equation are better understood. To avoid getting bogged down with explaining the step-by-step process of claiming your business, I'll point you to a recent blog on that very topic: How To Claim Your Google Maps Listing. You can start with your Google Maps listing and in a similar fashion work your way through the rough Understanding these variables is a critical part of successfully marketing your business online. SMB's have just two meaningful representations in the local search space: a website and a business listing or "LBL". I'm dismissing social media presence because it is primarily a representation of a single user rather than what we conceive as a traditional brick and mortar business -- functioning as more of compliment to website SEO anyway. The latter of the two local search presences is worth discussing in detail. Business listing optimization and improving your "findability" in the local search space is the hot market right now. Local search is mainstream. And If you're not already convinced of this, all you have to do is measure the real estate Google allots to their Map-packs (listings that

SHOWTIME ON THE WEB Virtual events can be a lowcost source pf lead generation for business on a budget. With this kind of first-page exposure for local listings, there is a reason they call it the Lucky 7. For any local search, the major search engines (e.g., Google Maps, Yahoo! Local, Bing Local) all use their own "black box" algorithms to deliver results they determine are most-to-least relevant. From what I can tell, the 7-Pack algorithm is mostly based on the Maps algo, but also has a layer of Universal on top of it. From extensive research in local search optimization, I've found a handful of factors that influence rankings. Back to my equation: Ranking = Location + Information + Corroboration + Input + X; X being defined as the consistent unknown and ever-evolving factor contributing to the unpredictability we see in results. The definition of X might as well be stored in the same vault as the Coca-Cola recipe. The other criteria of the local search equation are better understood. To avoid getting bogged down with explaining the step-by-step process of claiming your business, I'll point you to a recent blog on that very topic: How To Claim Your Google Maps Listing. You can start with your Google Maps listing and in a similar fashion work your way through the rough Understanding these variables is a critical part of successfully marketing your business online. SMB's have just two meaningful representations in the local search space: a website and a business listing or "LBL". I'm dismissing social media presence.

MARKETS&FINANCE OP

E-COMMERCE L

WHEN WORDS ARE CHEAP A decade after digital music knocked the record industry sideways, book publishers find themselves in a similar precarious position, as Jo Bowman reports.

ike other unexciting, impersonal, depressing events, BookExpo America began this year with a press conference. The annual convention for publishingindustry insiders has never begun with a press conference before. From an anthropological standpoint, this collusion of two dying industries publishing and journalism was fascinating. Several ancient reporters actually doddered around using canes, and representatives from the publishing industry continually enthused about how blown away they were by the fact that the media was paying attention to them. The main speaker was Lance Fensterman, the vice president of books, publishing, and pop culture for Reed Exhibitions (the company that organizes the convention). It is at once weird and admirable that, up until now, BEA has never really courted the press, but Fensterman made a mad run for the disinterested journalists in attendance. "You, as members of the media, besides our bookselling friends, are probably the most important contingent" of the show, Fensterman said. This was because "BEA at its core is really about content and connectivity" and about "content in all its form and content creators." He commented that the show was "opening a dialogue" between one thing and another probably the media and the publishing world (I literally was too busy yawning to pay attention). Fensterman read a litany of numbers: BEA attendance was down 14 percent from 2007's BEA in New York and up 30 percent from last year's show in Los Angeles. This isn't so surprising, since Los Angeles is not the epicenter of the book industry, whereas you could throw a rock pretty much anywhere in Manhattan and take out the eye of someone who works in publishing. If you have a show in publishing's backyard, of course more people are going to come out. The exhibition space was about one-fifth the size of last year's, but media attendance at the show was up 20 percent from 2007. "We like you," Fensterman said to the â&#x2013;ś MARCH 2011 73

OP MARKETS&FINANCE

journalists. That didn't change the awful feeling in the room. This year's BEA felt less like a convention and more like a funeral: Last fall's recession triggered perhaps the most dismal year in the history of publishing in America. Book sales are down across the board, layoffs have plagued the industry like a virulent STD, and retailers including Borders, which is only staying alive through a byzantine corporate ritual that involves hovering over bankruptcy like a vulture lost money with astonishing speed. The publishers who put any energy into BEA bought smaller booths and were giving away noticeably fewer advance copies of their fall lineups for review. Larger publishers like Farrar, Straus, and Giroux and smaller presses like McSweeney's and Small Beer didn't even bother to set up booths this year. There were fewer parties to celebrate new releases, and no single event consumed people's attention. Many starstruck bloggers reported that the atmosphere at BEA was optimistic (sometimes with a "cautiously"), but they were just giddy from the increased personal attention that publicists, editors, and authors (who had nothing else to do) were affording them.

are likely about to downsize or close. A bunch of people tried to hustle another bunch of people into buying something they didn't want. Some of them succeeded, but most of them didn't.

"If I was starting now, I'd be very pro e-dissemination. I think it's one of those things where it is both inevitable and desirable."

After the convention, MobyLives, the blog for indie publisher Melville House, published a postmortem titled "BEA Is Over... for Good?" I'm not so sure that it was the last one, but it was certainly a milestone: By the time next May's BEA rolls around, at least one of the major publishers probably won't be around to see it. The age of the giant conglomerate publisher is over. Publishing has always been an industry that has seen razor-thin profit margins if it saw profit at all, and t's strange that the only sign of growth the corporate model isn't satisfied with a at this BEA was in the number of jour- business model that optimally remains 1 or 2 percent above zero growth. The nalists present, and that the people running BEA somehow seemed to think only way that 2009 will be considered a good year for the publishing industry is that the presence of more journalists was going to save them, considering that in comparison with the unprecedented disaster of 2008. People will tsk-tsk at journalism just saw its most terrifying the numbers and write endless, boring year in memory, too. It felt like the two blog posts about it, which won't be read industries were clinging together out by anyone except other people writing in the ocean, drowning together. Since endless, boring blog posts about it. Here most of the bloggers were new to the we were in the epicenter of publishparty, none of them were asking any of ing, at publishing's big yearly event for the hard questions. No one was asking editors why they didn't think twice before insiders, and it was almost completely crushing any belief I had in the future of tossing out seven-figure deals for books publishing. I don't enjoy attending funerbased on zany blogs that anyone with als, so unless things drastically change, half a brain could read for free on the I'll probably never go back to BEA. The internet. No one seemed to notice that major presses like HarperCollins weren't author Sherman Alexie flew to New York for the convention to promote his asking booksellers what they wanted to sell or what their readers wanted to read. upcoming story collection War Dances, and he announced at a panel that when Instead, there were well-attended panels about making an insignificant amount of he saw a woman on his flight reading on money off of Twitter. A sizeable number a Kindle, he "wanted to hit her." He also of booksellers were unwittingly attending referred to the Kindle as "elitist," causing the kind of flap that can only happen their last BEA, because their bookstores

74 MARCH 2011

on the internet: Alexie was accused of "reverse elitism" on Twitter and blogs and over e-mail. In an interview with litblogger Edward Champion, Alexie responded: "I don't think I'm so crazy to worry that large corporations may not have my best interests in mind when they are offering me deals... When it comes to this, many people are taking the side of massive corporations over one writer trying to get answers." The e-books "gold rush" as Alexie called it in that interview was the weekend's main topic of conversation. Sci-fi author China MiĂŠville told me, "If I was starting now, I'd be very pro e-dissemination. I think it's one of those things where it is both inevitable and desirable." It was hard to find an author or publisher who would disagree with him. By the end of the show, Google had announced that it will begin selling e-books, in direct competition with Amazon.com, by the end of this year. This is a tremendous change for Google traditionally it sells services, like advertising or mobile-phone operating systems. Though there's no sign that Google will be making an exclusive reader for its e-books presumably readers will be able to read their books on whatever e-reading platform they prefer, including cell phones and laptops this will be its first endeavor into any kind of mass-market retail, and Google doesn't do things halfheartedly.

nd what will happen to printed books? On the second day, author Stephen Elliott looked out over the hundreds of booths and said to me, "There's no place for literature here." He then published a post on his blog, The Rumpus, claiming, "I don't care about the publishing industry that's concerned with cookbooks and celebrity memoirs." He crowed about the death of the glitzy publishing industry and the modest rise of the small press. I know at least three authors who, torn between a larger cash offer from a major house and a smaller offer from a small press, decided to go with the latter because a small press won't just throw the infant book out into the world to die and cares more about the physical product. It's easy to imagine that this collapse is a happy ending for publishing: Picture a world of small,

MARKETS&FINANCE OP

good regional publishers like Two Dollar Radio, Seattle publisher Chin Music Press, and Akashic Books printing beautiful books with high literary merit and authors making good, honest blue-collar salaries (instead of grossly overinflated six-figure book deals). Frankly, that sounds like my dream industry.

many publishing companies and newspapers, that demands for certain margins squeezed some of the joy out of the business." Fittingly, Eggers also announced that the next issue of his literary journal McSweeney's will be published in newspaper form. "The hope is that we can demonstrate that if you rework the newspaper model a bit, it can not only survive, but actually thrive. We're convinced that the best way to ensure the future of journalism is to create a workable model where journalists are paid well for reporting here and abroad," he writes. "If you really truly give readers an experience that can't be duplicated on the web, then they will spend $1 for a copy. And that $1 per copy, plus the revenue from some (but not all that many) ads, will keep the enterprise afloat."

zoom in close to, and practically walk through on our desktops will somehow create the next big thing.

This kind of inventiveness needs to come to the e-book experience, too. The reason nobody is genuinely excited about e-books is nobody is thinking of revolutionizing e-books; they're only trying to squeeze money out of them while putting in as little thought as possible, which (memo to the publishing industry!) is how this goddamned mess started in the first place. Maybe Google, which has permanently transformed so many of our daily experiences from revolutionizing the way we find information on the internet to creating essentially a scale model of Earth that we can locate anything with,

"If I was starting now, I'd be very pro e-dissemination. I think it's one of those things where it is both inevitable and desirable."

Can't we make e-books and e-readers a unique experience? Can't independent booksellers make their websites destinations real founts of information, with blogs and ever-changing staff and customer reviews and video of recent readings at the stores and a real sense of personality? Can't independent booksellers stop complaining about Amazon and the brick-and-mortar chains long enough to put their considerable intelligence to figuring out how to collectively get ahead of Barnes & Noble, for once, in the e-book game. â&#x201E;Ś

MARCH 2011 75

OP MARKETS&FINANCE

nd as McSweeney's does with their exquisite design sense again and again, can't we somehow make the e-book experience a beautiful one? In an e-mail, Alexie lamented to me the potential loss of one of the great pleasures of book culture: "Have you ever fallen in love with somebody, a stranger, just because of the book they happened to be reading? And what about the recent awe of walking onto an airplane and seeing that forty or fifty people are reading the same Harry Potter novel? How many times have you talked to a stranger just because they happened to be reading a great book, an eccentric book, a book that you arrogantly thought that only you and the author and his or her mother had ever read?" That's not possible with a Kindle, he notes. You can't see what people are reading. "And then again, I wonder this: Do you think the e-book makers will ever design a machine that has a screen on the back that displays the digitized cover art of the book that is being read? Will that make me happy? Don't know." But it sure would be something, wouldn't it? People are reading and writing more than ever, including people who never used to write at all, like the vast majority of commenters on blogs, and the future will no doubt include all of these literary experiences on one gorgeous, sleek device: the internet and books and blogs and e-mail and whatever comes next, too. This device will be simple and it will be effective and it quite possibly, if it's as gorgeous and sleek as I'm imagining, will have an apple somewhere on it. But whatever it is, and however it comes to be, it will not be created on the sticky floor of the Javits Center in New York, the setting of this year's BEA. There's noth-

"If I was starting now, I'd be very pro e-dissemination. I think it's one of those things where it is both inevitable and desirable."

76 MARCH 2011

ing in that direction but the stench of death. Like other unexciting, impersonal, depressing events, BookExpo America began this year with a press conference. The annual convention for publishingindustry insiders has never begun with a press conference before. From an anthropological standpoint, this collusion of two dying industries—publishing and journalism—was fascinating. Several ancient reporters actually doddered around using canes, and representatives from the publishing industry continually enthused about how blown away they were by the fact that the media was paying attention to them.

he main speaker was Lance Fensterman, the vice president of books, publishing, and pop culture for Reed Exhibitions (the company that organizes the convention). It is at once weird and admirable that, up until now, BEA has never really courted the press, but Fensterman made a mad run for the disinterested journalists in attendance. "You, as members of the media, besides our bookselling friends, are probably the most important contingent" of the show, Fensterman said. This was because "BEA at its core is really about content and connectivity" and about "content in all its form and content creators." He commented that the show was "opening a dialogue" between one thing and another—probably the media and the publishing world (I literally was too busy yawning to pay attention). Fensterman read a litany of numbers: BEA attendance was down 14 percent from 2007's BEA in New York and up 30 percent from last year's show in Los Angeles. This isn't so surprising, since Los Angeles is not the epicenter of the book industry, whereas you could throw a rock pretty much anywhere in Manhattan and take out the eye of someone who works in publishing. If you have a show in publishing's backyard, of course more people are going to come out. The exhibition space was about one-fifth the size of last year's, but media attendance at the show was up 20 percent from 2007. "We like you," Fensterman said to the journalists. That didn't change the awful feeling in the room. This year's BEA felt less like a convention and more like a

funeral: Last fall's recession triggered perhaps the most dismal year in the history of publishing in America. Book sales are down across the board, layoffs have plagued the industry like a virulent STD, and retailers—including Borders, which is only staying alive through a byzantine corporate ritual that involves hovering over bankruptcy like a vulture—lost money with astonishing speed. The publishers who put any energy into BEA bought smaller booths and were giving away noticeably fewer advance copies of their fall lineups for review. Larger publishers like Farrar, Straus, and Giroux and smaller presses like McSweeney's and Small Beer didn't even bother to set up booths this year. There were fewer parties to celebrate new releases, and no single event consumed people's attention. Many starstruck bloggers reported that the atmosphere at BEA was optimistic (sometimes with a "cautiously"), but they were just giddy from the increased personal attention that publicists, editors, and authors (who had nothing else to do) were affording them. It's strange that the only sign of growth at this BEA was in the number of journalists present, and that the people running BEA somehow seemed to think that the presence of more journalists was going to save them, considering that journalism just saw its most terrifying year in memory, too. It felt like the two industries were clinging together out in the ocean. π

MARKETS&FINANCE OP

MARKETING IDEAS

SUPER FLY GUYS

oes with their exquisite design sense again and again, can't we somehow make the e-book experience a beautiful one? In an e-mail, Alexie lamented to me the potential loss of one of the great pleasures of book culture: "Have you ever fallen in love with somebody, a stranger, just because of the book they happened to be reading? And what about the recent awe of walking onto an airplane and seeing that forty or fifty people are reading the same Harry Potter novel? How many times have you talked to a stranger just because they happened to be reading a great book, an eccentric book, a book that you arrogantly thought that only you and the author and his or her mother had ever read?" That's not possible with a Kindle, he notes. You can't see what people are reading. "And then again, I wonder this: Do you think the e-book makers will ever design a machine that has a screen on the back

that displays the digitized cover art of the book that is being read? Will that make me happy? Don't know." But it sure would be something, wouldn't it? People are reading and writing more than ever, including people who never used to write at all, like the vast majority of commenters on blogs, and the future will no doubt include all of these literary experiences on one gorgeous, sleek device: the internet and books and blogs and e-mail and whatever comes next, too. This device will be simple and it will be effective and it quite possibly, if it's as gorgeous and sleek as I'm imagining, will have an apple somewhere on it. But whatever it is, and however it comes to be, it will not be created on the sticky floor of the Javits Center in New York, the setting of this year's BEA. There's nothing in that direction but the stench of death. Like other unexciting, impersonal, depressing events, BookExpo America began this year with a press conference.

The annual convention for publishingindustry insiders has never begun with a press conference before. From an anthropological standpoint, this collusion of two dying industries—publishing and journalism—was fascinating. Several ancient reporters actually doddered around using canes, and representatives from the publishing industry continually enthused about how blown away they were by the fact that the media was paying attention to them. The main speaker was Lance Fensterman, the vice president of books, publishing, and pop culture for Reed Exhibitions (the company that organizes the convention). It is at once weird and admirable that, up until now, BEA has never really courted the press, but Fensterman made a mad run for the disinterested journalists in attendance. "You, as members of the media, besides our bookselling friends, are probably the most important contingent" of the show, Fensterman said. Ω MARCH 2011 77

OP MARKETS&FINANCE

another—probably the media and the publishing world (I literally was too busy yawning to pay attention). Fensterman read a litany of numbers: BEA attendance was down 14 percent from 2007's BEA in New York and up 30 percent from last year's show in Los Angeles. This isn't so surprising, since Los Angeles is not the epicenter of the book industry, whereas you could throw a rock pretty much anywhere in Manhattan and take out the eye of someone who works in publishing. If you have a show in publishing's backyard, of course more people are going to come out. The exhibition space was about one-fifth the size of last year's, but media attendance at he main speaker was Lance Fenthe show was up 20 percent from 2007. sterman, the vice president of books, publishing, and pop culture "We like you," Fensterman said to the journalists. That didn't change the awful for Reed Exhibitions (the company that feeling in the room. This year's BEA felt organizes the convention). It is at once less like a convention and more like a weird and admirable that, up until now, funeral: Last fall's recession triggered BEA has never really courted the press, but Fensterman made a mad run for the perhaps the most dismal year in the history of publishing in America. Book sales disinterested journalists in attendance. are down across the board, layoffs have "You, as members of the media, besides plagued the industry like a virulent STD, our bookselling friends, are probably and retailers—including Borders, which the most important contingent" of the show, Fensterman said. This was because is only staying alive through a byzantine corporate ritual that involves hovering "BEA at its core is really about content over bankruptcy like a vulture—lost and connectivity" and about "content in money with astonishing speed. The all its form and content creators." He publishers who put any energy into BEA commented that the show was "openbought smaller booths and were giving ing a dialogue" between one thing and Like other unexciting, impersonal, depressing events, BookExpo America began this year with a press conference. The annual convention for publishingindustry insiders has never begun with a press conference before. From an anthropological standpoint, this collusion of two dying industries—publishing and journalism—was fascinating. Several ancient reporters actually doddered around using canes, and representatives from the publishing industry continually enthused about how blown away they were by the fact that the media was paying attention to them.

78 MARCH 2011

away noticeably fewer advance copies of their fall lineups for review. Larger publishers like Farrar, Straus, and Giroux and smaller presses like McSweeney's and Small Beer didn't even bother to set up booths this year. There were fewer parties to celebrate new releases, and no single event consumed people's attention. Many starstruck bloggers reported that the atmosphere at BEA was optimistic (sometimes with a "cautiously"), but they were just giddy from the increased personal attention that publicists, editors, and authors (who had nothing else to do) were affording them.

t's strange that the only sign of growth at this BEA was in the number of journalists present, and that the people running BEA somehow seemed to think that the presence of more journalists was going to save them, considering that journalism just saw its most terrifying year in memory, too. It felt like the two industries were clinging together out in the ocean, drowning together. Since most of the bloggers were new to the party, none of them were asking any of the hard questions. No one was asking editors why they didn't think twice before tossing out seven-figure deals for books based on zany blogs that anyone with half a brain could read for free on the internet. No one seemed to notice that

MARKETS&FINANCE OP

endless, boring blog posts about it, which won't be read by anyone except other people writing endless, boring blog posts about it. Here we were in the epicenter of publishing, at publishing's big yearly event for insiders, and it was almost completely crushing any belief I had in the future of publishing. I don't enjoy attending funerals, so unless things drastically change, I'll probably never go back to BEA. The author Sherman Alexie flew to New York for the convention to promote his upcoming story collection War Dances, and he announced at a fter the convention, MobyLives, the panel that when he saw a woman on his flight reading on a Kindle, he "wanted to blog for indie publisher Melville hit her." He also referred to the Kindle as House, published a postmortem "elitist," causing the kind of flap that can titled "BEA Is Over... for Good?" I'm not so sure that it was the last one, but it was only happen on the internet: Alexie was accused of "reverse elitism" on Twitter certainly a milestone: By the time next and blogs and over e-mail. In an interMay's BEA rolls around, at least one of view with litblogger Edward Champion, the major publishers probably won't be Alexie responded: "I don't think I'm so around to see it. The age of the giant conglomerate publisher is over. Publish- crazy to worry that large corporations ing has always been an industry that has may not have my best interests in mind when they are offering me deals... When seen razor-thin profit margins if it saw profit at all, and the corporate model isn't it comes to this, many people are taking satisfied with a business model that opti- the side of massive corporations over one writer trying to get answers." mally remains 1 or 2 percent above zero The e-books "gold rush"—as Alexie growth. The only way that 2009 will be called it in that interview—was the weekconsidered a good year for the publishend's main topic of conversation. Sci-fi ing industry is in comparison with the author China Miéville told me, "If I was unprecedented disaster of 2008. People starting now, I'd be very pro e-dissemwill tsk-tsk at the numbers and write

major presses like HarperCollins weren't asking booksellers what they wanted to sell or what their readers wanted to read. Instead, there were well-attended panels about making an insignificant amount of money off of Twitter. A sizeable number of booksellers were unwittingly attending their last BEA, because their bookstores are likely about to downsize or close. A bunch of people tried to hustle another bunch of people into buying something they didn't want. Some of them succeeded, but most of them didn't.

ination. I think it's one of those things where it is both inevitable and desirable." It was hard to find an author or publisher who would disagree with him. By the end of the show, Google had announced that it will begin selling e-books, in direct competition with Amazon.com, by the end of this year. This is a tremendous change for Google—traditionally it sells services, like advertising or mobile-phone operating systems. Though there's no sign that Google will be making an exclusive reader for its e-books—presumably readers will be able to read their books on whatever e-reading platform they prefer, including cell phones and laptops—this will be its first endeavor into any kind of mass-market retail, and Google doesn't do things halfheartedly. And what will happen to printed books? On the second day, author Stephen Elliott looked out over the hundreds of booths and said to me, "There's no place for literature here." He then published a post on his blog, The Rumpus, claiming, "I don't care about the publishing industry that's concerned with cookbooks and celebrity memoirs." He crowed about the death of the glitzy publishing industry and the modest rise of the small press. I know at least three authors who, torn between a larger cash offer from a major house and a smaller offer from a small press, decided to go with the latter because a Ω MARCH 2011 79

OP MARKETS&FINANCE

small press won't just throw the infant book out into the world to die and cares more about the physical product. It's easy to imagine that this collapse is a happy ending for publishing: Picture a world of small, good regional publishers like Two Dollar Radio, Seattle publisher Chin Music Press, and Akashic Books printing beautiful books with high literary merit and authors making good, honest bluecollar salaries (instead of grossly overinflated six-figure book deals). Frankly, that sounds like my dream industry.

ut here's the thing: If nobody can afford to publish John Grisham, that doesn't mean that Grisham's readers are suddenly going to pick up a quality literary novel by, say, Dave Eggers or Stephen Elliott. It just means they're not going to read anymore. And when the number of people reading decreases at the top of the mass-reading marketthe Twilight and Stephen King readersthere will be fewer people filtering down to the serious literary experience, and the idea of reading printed books will be a tiny boutique experience, not unlike collecting vinyl. At a conference one week earlier, Dave Eggers gave out his e-mail address to everyone in attendance (who then sent it all over the internet) and promised to correspond over e-mail with anyone concerned about the future of the publishing industry. The most worthwhile part of the e-mail you got if you wrote to Eggers reads: "If you can stay small, stay independent, readers will be loyal, and you'll be able to get by publishing work of merit... It's only recently, when large conglomerates bought so many publishing companies and newspapers, that demands for certain margins squeezed some of the joy out of the business." Fittingly, Eggers also announced that the next issue of his literary journal McSweeney's will be published in newspaper form. "The hope is that we can demonstrate that if you rework the newspaper model a bit, it can not only survive, but actually thrive. We're convinced that the best way to ensure the future of journalism is to create a workable model where journalists are paid well for reporting here and abroad," he writes. "If you really truly give readers an experience that can't be duplicated on the web, then

80 MARCH 2011

they will spend $1 for a copy. And that $1 per copy, plus the revenue from some (but not all that many) ads, will keep the enterprise afloat." This kind of inventiveness needs to come to the e-book experience, too. The reason nobody is genuinely excited about e-books is nobody is thinking of revolutionizing e-books; they're only trying to squeeze money out of them while putting in as little thought as possible, which (memo to the publishing industry!) is how this goddamned mess started in the first place. Maybe Google, which has permanently transformed so many of our daily experiences from revolutionizing the way we find information on the internet to creating essentially a scale model of Earth that we can locate anything with, zoom in close to, and practically walk through on our desktops will somehow create the next big thing. Can't we make e-books and e-readers a unique experience? Can't independent booksellers make their websites destinations real founts of information, with blogs and ever-changing staff and customer reviews and video of recent readings at the stores and a real sense of personality? Can't independent booksellers stop complaining about Amazon and the brick-and-mortar chains long enough to put their considerable intelligence to figuring out how to collectively get ahead of Barnes & Noble, for once, in the e-book game?

people are reading. "And then again, I wonder this: Do you think the e-book makers will ever design a machine that has a screen on the back that displays the digitized cover art of the book that is being read? Will that make me happy? Don't know." But it sure would be something, wouldn't it? People are reading and writing more than ever, including people who never used to write at all, like the vast majority of commenters on blogs, and the future will no doubt include all of these literary experiences on one gorgeous, sleek device: the internet and books and blogs and e-mail and whatever comes next, too. This device will be simple and it will be effective and it quite possibly, if it's as

MARKETS&FINANCE OP

gorgeous and sleek as I'm imagining, will have an apple somewhere on it. But whatever it is, and however it comes to be, it will not be created on the sticky floor of the Javits Center in New York, the setting of this year's BEA. There's nothing in that direction but the stench of death. Like other unexciting, impersonal, depressing events, BookExpo America began this year with a press conference.

he annual convention for publishing-industry insiders has never begun with a press conference before. From an anthropological standpoint, this collusion of two dying industries—publishing and journalism—was fascinating. Several ancient reporters

actually doddered around using canes, and representatives from the publishing industry continually enthused about how blown away they were by the fact that the media was paying attention to them. The main speaker was Lance Fensterman, the vice president of books, publishing, and pop culture for Reed Exhibitions (the company that organizes the convention). It is at once weird and admirable that, up until now, BEA has never really courted the press, but Fensterman made a mad run for the disinterested journalists in attendance. "You, as members of the media, besides our bookselling friends, are probably the most important contingent" of the show, Fensterman said. This was because "BEA at its core is really

about content and connectivity" and about "content in all its form and content creators." He commented that the show was "opening a dialogue" between one thing and another—probably the media and the publishing world (I literally was too busy yawning to pay attention). Fensterman read a litany of numbers: BEA attendance was down 14 percent from 2007's BEA in New York and up 30 percent from last year's show in Los Angeles. This isn't so surprising, since Los Angeles is not the epicenter of the book industry, whereas you could throw a rock pretty much anywhere in Manhattan and take out the eye of someone who works in publishing. π

MARCH 2011 81

OP MARKETS&FINANCE

CLOUD HAILER Eucalyptus CEO Marten Mickos is spreading tge word about cloud computing, helped by open-source software evangelists across the globe, writes Pia Heikkila.

{ Qui dolorrum que eumqui voloribus as nonsendam consequo od esequundit, nos aliquatiosam alis ex ea vitate restem dolupta coratem quis pel ma incietus iusam ut aspeliqui officimo volestium a cupta conecae velectatur? Qui dolorrum que eumqui voloribus as nonsendam consequo od esequundit, nos aliquatiosam alis ex ea vitate restem dolupta coratem quis

an Marten Mickos (pictured, left) capture open source lightning in a bottle twice? He previously built MySQL into an estimated $100 million open source database company that Sun ultimately acquired for $1 billion. Now, Mickos is stepping into the CEO role at Eucalyptus Systems, the open-source cloud platform provider. Here’s what Mickos has to say about his new position, and the implications for the channel. Mickos, an engineer by training, says he began by running several startups in his native Finland before becoming CEO of MySQL AB in 2001. When he left in 2009 following Sun Microsystems’ acquisition of MySQL AB, Mickos sought direction for his career. That’s when Mickos asked colleagues a simple question: “What’s bigger than open source?” Some wags answered “closed source” in an attempt to be funny, but two words “cloud computing” kept coming up again and again. With that in mind, he was pointed towards Eucalyptus, where then-CEO Woody Rollins was looking to step out of the spotlight and into the CFO position he 82 MARCH 2011

now holds. The fact that both companies were built on open-source technology, in addition to his prior executive management experience, made him a perfect fit for Eucalyptus, he says. Now that he’s at Eucalyptus, Mickos isn’t planning on rocking the boat, business-wise. He says that the management team has done a great job steering the company towards success, and that under his leadership, technology and business investment will increase with an eye towards turbocharging their growth. As part of that plan, Mickos plans a renewed focus on Eucalyptus’ channel program. While the cloud platform provider isn’t currently accepting new reseller partners, Mickos says that’s definitely in the cards for 2010. Eucalyptus’ opensource nature provides partners with leads before you even factor in active marketing, he says, and their solution is well-suited for MSPs to build services on top of besides. Eucalyptus Systems remains one of the most interesting companies in the cloud space. The VAR Guy will be watching Mickos’ tenure as CEO with great interest, so, as always, stay

tuned for more. Can Marten Mickos (pictured, left) capture open source lightning in a bottle twice? He previously built MySQL into an estimated $100 million open source database company that Sun ultimately acquired for $1 billion. Now, Mickos is stepping into the CEO role at Eucalyptus Systems, the open-source cloud platform provider. Here’s what Mickos has to say about his new position, and the implications for the channel. Mickos, an engineer by training, says he began by running several startups in his native Finland before becoming CEO of MySQL AB in 2001. When he left in 2009 following Sun Microsystems’ acquisition of MySQL AB, Mickos sought direction for his career. That’s when Mickos asked colleagues a simple question: “What’s bigger than open source?” Some wags answered “closed source” in an attempt to be funny, but two words “cloud computing” kept coming up again and again. spotlight and into the CFO position he now holds.

THIS&THAT

TECH TRENDS FLAT-OUT COOL CULTURE ART • MUSIC • MOVIES • PHOTOGRAPHY • DESIGN • CITY LIVING TRAVEL BARCELONA

OP THIS&THAT

TECH TRENDS

iPAD

Apple, from €500 Once you pick it up, it’ll be hard to put down. That’s the idea behind the all-new design. It’s 33 percent thinner and up to 15 percent lighter, so it feels even more comfortable in your hands. And it makes surfing the web, checking email, watching movies, and reading books is easy and so natural.

SAMSUNG GALAXY TAB

€550 The Galaxy Tab has been billed as the device most likely to take on the iPad and win. It has a seven-inch screen and, like the Dell Streak, works as a phone. It is well built and, while it feels more a little more like plasticky.

86 MARCH 2011

THIS&THAT OP

TOSHIBA FOLIO 100

around €390 Toshiba has been making portable computers for as long as there have been portable computers, so the Folio should be good. On paper, at least, the Folio off ers a reasonable mix of features for the price: a 10.1-inch screen, Android and the ability to play really high definition movies.

FLAT-OUT COOL

W DELL STREAK

€470 The Streak sits somewhere between a BlackBerry or iPhone and a full-sized tablet. With a five-inch screen it slips easily into a bag, if not a pocket. Unlike the iPad, it has full mobile-phone functionality built in, and supports video.

hen the iPad tablet computer was launched in 2010, the hype from Apple enthusiasts was matched, in almost equal measure, by criticism from the IT world. It was too expensive, they said. It lacked important features, such as a camera – and why would anyone with a laptop and mobile phone need another device anyway? Consumers, though, thought differently. In less than a year, Apple has sold 4.2 million iPads and its success has prompted phonemakers, consumer electronics companies and even high-street fashion retailers such as the UK’s Next to bring out their own tablet (or slate) computers. Here we round up five of the best and three to watch.

MARCH 2011 87

OP THIS&THAT

CULTURE ART

MUSIC NICKI MINAJ WORLDWIDE

Summet 2011 It didn't take long for the level of interest to make itself felt. Lot 5 (pictured top) was a powerful miniature of a fierce, crimson god, decorated with skulls. Dated to about 1630, the unnerving piece was attributed to Payag, regarded as one of the master artists in the Mughal royal court. It was estimated at £30,00040,000, but after a protracted bidding war it sold for £1.38m, 40 times the low estimate. Reliable sources say it went to the Metropolitan Museum of Art in New York. A magnificent large 14th-century mandala (pictured right), estimated at £300,000400,000 in New York.

MIRÓ LONDON, UK

14.04 - 24.10.11 Last week saw the final round of Sotheby's spring sales of Indian art from the estate of the late and legendary Stuart Cary Welch. Three years after his death, aged 80, Welch's legacy is keenly felt. The first sale in April concentrated on Islamic material and totalled £20.9m ($34.4m), seven times the low estimate and a world auction record for Islamic art. (Totals include the buyer's premium; estimates do not.) An illustrated page from the Shahnameh of Shah Tahmasp, the most esteemed edition of the 11th-century Persian epic poem, sold for £7.4m, triple the pre-sale figure and a world auction record for a single Islamic lot. Last week saw the final round of Sotheby's spring sales of Indian art from the estate of the late and legendary Stuart Cary Welch. Three years after his death, aged 80, Welch's legacy is keenly felt. The first sale in April concentrated on Islamic material and totalled £20.9m ($34.4m), seven times the low estimate and a world auction record for Islamic art. (Totals include the buyer's premium; estimates do not.) An illustrated page from the Shahnameh of Shah Tahmasp, the most esteemed edition of the 11th-century. 88 MARCH 2011

MOVIES

DREAM HOUSE

May Welch was a famed collector with an aesthete's eye. He had confidence in his own taste, and bought regardless of condition or fashion. The choices he made opened the eyes of others. He was an inspired and inspiring teacher, an advisor to other collectors, a curator of influential exhibitions and a sometime dealer.

THE HANGOVER PART II

June But had the cream been skimmed off? The arrival of the catalogue for round two suggested that it had been. while it featured some 20 exceptional works, others bordered on the ordinary. Many of the drawings, crumpled and faint, seemed likely to have been thrown in when Welch bought bundles of works on paper.

THIS&THAT OP

PHOTOGRAPHY RICHARD AVEDON PORTO, PT

01.06 - 01.09.11 Standing in the back of the room Bernhard Rist, a dealer based in Stuttgart, was an avid and successful bidder on behalf of an unidentified European private collector. He won two of the top-ten lots; both particularly beautiful Indian miniatures. "By the Light of the Moon and Fireworks" sold for more than ten times its low estimate, and "Radha and Krishna in a Bower" for more than eight. Standing in the back of the room Bernhard Rist, a dealer based in Stuttgart, was an avid and successful bidder on behalf of an unidentified European private collector. He won two of the top-ten lots.

DESIGN

OFFF BARCELONA, ES

9 - 10 - 11.06.11 The sale crept slowly forward. The auctioneer indulged the chattiness or indecision of telephone bidders, but above all there were many intense bidding wars. Sam Fogg and Simon Ray, both London-based dealers, dug in trying to buy Lot 49, a Rajistani map of the world in watercolour and ink. Finally it went to Mr Fogg for £32,450, more than five times the low estimate. The sale crept slowly forward. The auctioneer indulged the chattiness or indecision of telephone bidders.

CITY LIVING

CULTURAL CELEBRATIONS TURKU, FIN

All year Indeed almost everything in the sale, regardless of its quality or condition, sold for many times the estimates. Such was the demand that even the most modest lot, a small 18th-century ink drawing estimated at £40-60, ended up selling for £800. Sotheby's pre-sale estimate for Part II of Stuart Cary Welch's Indian works of art was between £1.2m and 2m, but the sale of the 203 lots realised £8.4m. The power of provenance reigns. Indeed almost everything in the sale. MARCH 2011 89

OP THIS&THAT

TRAVEL

BARCELONA

Barcelona sited between the sea and the mountains, has found a formidable balance: a foot in the traditional things and the other in the avant-garde.

90 MARCH 2011

THIS&THAT OP

SLEEP IN DUC DE LA VICTORIA CARRER DUC 15, METRO CATALUNYA 08028 Apartments are situated next to Les Corts Metro Station and 5 minutes’ walk from Barcelona’s Camp Nou Football Stadium. The modern apartments share a rooftop pool with views of Barcelona. Apartments and suites at the 08028 feature contemporary design and free Wi-Fi. H1898 LA RAMBLA 109, METRO LICEU 987 Barcelona Hotel is set 200 metres from Passeig de Gràcia boulevard, 5-minutes’ walk from Gaudí’s La Pedrera. It features free Wi-Fi and stylish rooms with flat-screen TVs. Set in listed buidling, the 987 Barcelona maintains many of its original features. HOTEL FONTANELLA VIA LAIETANA 71, METRO URQUINAONA City Center Apartments offers stylish apartments and studios set just off Passeig de Gràcia, or on Plaza de Catalunya. All accommodation has free Wi-Fi access. Apartments accommodate between 2 and 8 people. Studio and loftstyle apartments are located at the top of Passeig de Gràcia. HOTEL BARCELONA CATEDRAL CARRER CAPELLANS 4, METRO JAUME I Fully equipped apartments situated in city center, Las Ramblas, El Born, Barceloneta-Beach, Gràcia... Different categories/ sizes apartments with capacity to accomodate 1-10 people. Please inform us on our mobile number of your arrival time. HOTEL NERI CARRER SANT SEVER 5, METRO JAUME I The Pullman Barcelona Skipper offers 5-star luxury next to Barcelona’s Olympic Port. It is just 100 metres from the beach, with free Wi-Fi and 2 outdoor pools. This modern hotel has spacious bedrooms, with flat-screen TVs and DVD players. BARCELO RAVAL RAMBLA RAVAL 17, METRO DRASSANES ABaC Restaurant Hotel Barcelona fea-

tures stylish rooms with Bang & Olufsen plasma-screen TVs, Jacuzzis and rainfall showers. The hotel’s 2 Michelin star restaurant is run by chef Jordi Cruz. This boutique hotel has a 1500m² spa with a jacuzzi, Hammam and an indoor swimming pool. HOTEL CURIOUS CARRER CARME 25, METRO LICEU Abba Rambla Hotel is set in the Raval District, 500 metres from Las Ramblas and Liceu Metro Station. It offers free WiFi in public areas and a sun terrace. The modern, air-conditioned rooms at Abba Rambla feature satellite TV, a safe and as expected a minibar.

EAT OUT ACOMA CARRER BOQUERIA 21, METRO LICEU Cal Pep is one of the most known tapas restaurant in Barcelona. Its reputation goes largely behind the city wall and it's justified.. Everything is fresh and fun, the tapas, the people, the service, the wine.. Nothing to say just that you have to be there once otherwise you don't know what tapas are. While waiting look the orders and make your menu. Every meal is a delight and every season a new pleasure that follows the market arrivals.. There is also the restaurant " Cal Pep" next door with notorious fish and seafood dishes as well. BAR CELTA CARRER MERCE 16, METRO DRASSANES This will be the best way to enjoy this dish called “Dentro de Mar” or “the ocean and its shells”, a very iodized composition bathing in an amazing blue bubble or the very graphic “seabass with ink of cuttlefish and coconut milk”. Unforgettable desserts and very beautiful chart of the wines. BAR PINOTXO LA BOQUERIA 466, METRO LICEU Vinya Roel is a restaurant enoteca in Barcelona where you can enjoy traditional catalan recipes in combination with a full wide-ranging list of wines. This restaurant not only stands out for its gastron-

omy level and particular setting, wine is in th limelight throughout. For its cannellonis (stuffed with pig and with chicken livers), his fideus (like a risotto but made with pastes) and its black rice (with the ink of cuttlefish). One tastes at the restaurant the wines of the store at cost price!! It has also two private dinning rooms for your special dinners and lunches, with a capacity of 30 and 40 people. It is a very distinguished restaurant of Barcelona with an accurated environnement. CAFE DE L'OPERA LA RAMBLA 74, METRO LICEU Excellent Catalan cooking with French inspiration. Ca l'Isidre from the name of his owner Isidre Gironés and her daughter Nuria (she worked for Alain Ducasse) is the favorite restaurant of the King Juan Carlos in Barcelona. Difficult to choose an only dish. Try grilled baby octopuss a la plancha, baked seabass, grilled 'king sea cucumber', fried codfish 'home style', grilled scampi from Sant Carles, grilled turbot with vegetables... And much more.. You will have to go there several times, if you can afford it, to be able to try all these wonderful plates. Small but nicely decorated. We enjoyed the wines as well. Essential to book ET ATRIL CARRER CARDERS 23, METRO JAUME I Located at the ground floor of superb and very design Omm hotel ,restaurant Moo, from now on advised by the Roca brothers (El Celler de Can Roca in Girona), is a contemporary wonder. The Chef Felip Llufriu takes as a starting point the traditional Mediterranean food to carry out purified, modern and very personal interpretations of them. Roger Visuà, recently crowned better sommelier of Europe (wine cellarmaster), proposes for each dish, a glass of wine in agreement. Very beautiful cellar. Prices more than reasonable for such a level of esthetics and feelings. BAR DEL CONVENT PLA. DE L'ACADEMIA, METRO JAUME I IComerç 24 "One of the chic eateries in town". The "luxury tapas" concept is the same as in the "Santa Maria" across the MARCH 2011 91

B OP THIS&THAT

street. All these new Spanish cuisine places are inspired by goodfather Ferran Adria (el Bulli). The interior is quite a failure. A beautiful seventies landscape photograph in the middle of sad grey walls and a silly "drums" lightning system. Service is excellent. Unfortunately, as in many other places, they serve their tiny portions with senseless "salsazigzag" drippings. Try Coast sardines with grape and avocado (10€), Tuna pizza sashimi and wasabi vinaigrette sauce (9€).

SHOP TILL YOU DROP

MAREMAGNUM MOLL D'ESPANYA, METRO DRASSANES Bulevard Rosa is situated in the middle of the Eixample, Barcelona, making a spectacular place in the heart of the Barcelona's shopping area. It consists of more than 100 stores offering vanguard fashion and a careful selection of products and services. The shopping centre is pleased to be able to join a range of irresistible brands and one of the best offers of fashion in the city. In our stores you will find from the boldest products to the classics. CAMPER C/ PELAI 13, METRO CATALUNYA The Custo Barcelona fashion empire was created in the 1980s after the brothers Custo (pictured) and David Dalmau (born in Lleida Catalonia) went on a round-theworld motorcycle trip. Throughout their journey they discovered not only new landscapes but also the most diverse manifestations of art, culture and philosophy. One of the most surprising things they encountered was the Californian lifestyle, expressed in the look of the surfers living in the southern part of the state, as well as the traditional psychedelic in the north. They were also impressed by the colorful and innovative clothing fashion they found there, and particularly a style of t-shirt that did not exist in Spain at that time. That was the beginning of the story: Custo-Barcelona has been producing this exceptional line of fashion for 20 years, combining the best quality screen-printing with textiles and designs that are superbly original. Since its introduction to the United States, the demand for Custo-Barcelona has skyrocketed! It has become a favorite in Hollywood fea92 MARCH 2011

tured on "Friends" and MTV. It has been worn on the big screen by such stars as Julia Roberts in "Runaway Bride" and Natalie Portman in "Anywhere But Here." In addition, musicians such as: The Dixie Chicks, Sarah McLachlan and LeAnn Rimes have been regularly spotted in Custo. Unique and innovative, Custo-Barcelona aspires to make women feel truly special in what they wear. Custo-Barcelona leads the way to a new fashion frontier; they truly stand out with an individual voice that has yet to be equaled.

ELS ENCANTS C/ DOS DE MAIG 177, METRO GLORIES Into the deepest dark heart of the Barcelona's neighborhood "El Born", as if it was such an adventure where we walk into a fantastic Tim Burton's style hood, we find unexpected little treasures: we have arrived to Declivelan. Declivelan is an artesian space, studio and shop, from two local artists: Pablo Martínez with its clothing brand "No Comprendo", and "Nicotine", a jewelry brand under the imaginary and responsibility of a yet known character in the Barcelona's art scene, Alberto Gomez (Totxa). This artist originally from Basque Country, works with all kind of products related with the contemporary jewelry (necklaces, bracelets, in-ox iron rings, ...) but its specialty doesn't base in the product, comes from the “nonorthodox” design and chosen raw materials which he works with, closer to the industrial universe than the traditional jewelry field. Innovating style pieces created from novel raw materials worked with actual technologies. JAMONISIMO C/ PROVENCA 85, METRO HOSPITAL CLINIC If you like innovative, original and different clothing fashion, Desigual is your shop. As its name means, Desigual it is not the same. You can find designs completely different, as well as its printed than as its style. This shop is growing and is getting a very well-known brand for the originality of its designers and for the design of the stores. You will find from casual clothes to the last fashion trend for your best “fiestas” in the beautiful city of Barcelona! They have also some fashion clothes for your children. This shop is growing and is getting well known.

JOSEP FONT C/ PROVENCA 304, METRO DIAGONAL Diesel is one of the most innovatives international companies with jeans designs, casual clothes and accessories. You can find it in more than 80 countries with more than 10.000 selling places and almost 50 own shops. One of the clues of their collections is the fact to not follow any kind of fashion. MUXART CARRER ROSSELLO 230, METRO DIAGONAL El Corte Inglés is Spain's largest department store chain. El Corte Inglés is seen by the Spanish as a symbol of their Culture. Many products and services in various local stores cater to the country's diverse regions. It offers from the last fashion tendencies to all kind of home products, clothing, perfumery, a supermarket, a library, a gourmet store, tickets selling and a travel agency. You cannot miss this enormous building in plaza Catalunya. El Corte Inglés is "the" department store of Barcelona. To see! SANTA EULALIA PASSEIG DE GRACIA 93, METRO DIAGONAL El Triangle it is a small shopping centre located in the corner of Plaza Cataluña and Pelayo Street, in front of Corte Inglés. You can find around fifteen shops, of which the most important are Fnac (which offers all kind of electronic devices, books and music), Sephora ( where, mainly women, will be able to choose.

CULTURE VULTURE

ADJUNTAMENT PLA. SANT JAUME, METRO JAUME I The Picasso museum is "the" museum to visit in Barcelona. For the artist and for the building. Imagine in Montcada street, in the Gothic area, five medieval palaces linked together to make a museum. So charming to visit and a very fast immersion in Catalan?s ambient. Concerning Pablo Ruiz Picasso the museum is indispensable for understanding its formative years. The genius of the young artist is revealed through the more than 3,500 works that make up the permanent collection. It also reveals his relationship with Barcelona: an intimate, solid relationship that was shaped in his

THIS&THAT OP

adolescence and youth, and continued until his death.. You will remember corrida drawing. To see as well some oils and drawings from Picasso's Barcelona period and even some works from later stages in his career. The Museum also has a set of 42 pieces of ceramic (vases, dishes and plates) made in the 1950s and bequeathed by Jaqueline Picasso in 1982. You will appreciate the open-air terrace café restaurant and the bookshop. CENTRE D'ART SANTA MONICA LA RAMBLA, 7, METRO DRASSANES Joan Miro Foundation is one of our favourite museums in Barcelona. Be there once is an obligation. The building designed by Josep Lluís Sert offers you a moment of calm and beatitude: experience of light and beautiful spaces. Among the trees, you will have a stunning sightseeing of the city and a particular moment to see again or discover the work of Miró who throughout his life took a particular interest in the diversity of materials, forms and colours. It led him to explore and experiment with different art

forms such as painting, sculpture, printing techniques, ceramics, theatre and tapestry. A central work exposed in this permanent collection. MUSEU DE CERA PTGE. DE LA BANCA, 7, METRO DRASSANES IThe Tapies foundation was created by the Catalan painter Antoni Tapies in 1984 to promote the study and understanding of modern art and culture. Of course you will find works from all periods of the artistic development of Antoni Tapies. You will appreciate the beautiful library devoted to modern literature and documentation on the art and artists of our century. reception and bookshop… To see!! PALAU GUELL C/ NOU RAMBLA 3, METRO DRASSANES Go to Montjuic to visit the Barcelona Pavilion, a work emblematic of the Modern Movement: just great! The Foundation Mies van der Rohe was set up in 1983 by the Barcelona City Hall.

TOP TEN - La Sagrada Familia - Magic Fountain - Picasso Museum - La Rambla - FC Barcelona museum & stadium - Barrio Gotico area of Barcelona - Park Guell - Modernist buildings - Poble Espanyol village - Tibidabo hill MARCH 2011 93

COVER STORY OP

MARCH 2011 95

OP COVER STORY

96 MARCH 2011