Portfolio
Issue 100 â– April 2014
Exclusive to Emirates First Class and Business Class
ASIAN MARKETS The Balancing Act E-COMMERCE India Aims High TECH VALUES Designer Quirks
Satya
Nadella Debugging Microsoft
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This issue APRIL 2014
Portfolio
Exclusive to Emirates First Class and Business Class
Cover Story 32 Debugging Microsoft Satya Nadella, Microsoft’s new CEO, has taken over a profitable company with a $226 billion balance sheet. However, Microsoft has been overtaken by competitors such as Apple and Google, and fallen behind in the innovation stakes. Changing Microsoft from a lumbering bureaucracy into a lean, mean fighting machine is Nadella’s biggest challenge.
Features 40 The Limbo of Asian Markets
54 Sochi Fears a Flameout
Tapering by the Federal Reserve and weaker growth in China
Now that the Winter Olympics are over, the big question for
has knocked emerging markets. Yet their economies are
Sochi is how it will fill its 40,000 hotel rooms.
more robust than ever before.
44 Mirroring Tech Values
58 India’s E-Commerce Game Snapdeal and Flipkart are competing for investment and
Facebook, Twitter and Google are embracing a corporate
racing to go public. But there are some doubts whether they
style that mirrors each company’s values while promoting
are attracting enough new users.
creativity and productivity.
50 London’s Market Battle An attempt to redevelop the Victorian-era Smithfield Market in the City of London has run into opposition and raised larger development issues.
40
54
58
13
Portfolio
14
Exclusive to Emirates First Class and Business Class
Essentials 63 The Train at the End of the World In the remote south of Argentina among scow-capped mountains there is a little railway that bears testimony to an intriguing engineering feat.
68 Life in the Slow Lane Located between Rome and Tuscany, Umbria is an often overlooked region that deserves slow-paced appraisal.
63
72 China’s Urban Refugees Millions of Chinese are streaming from the countryside into cities, but some urban dwellers have started a reverse migration.
76 The Allure of Speed Richard Noble, who raised the land speed record to 1,019.4 km/h with a jet-powered car, is planning to reach 1,609.3 km/h.
68
80 The Eyes of Intel’s Future In order to make the next generation of technology more user friendly it is imperative to know what people want. And that’s where Genevieve Bell enters the picture.
84 An Age Defying Act Plácido Domingo is known for his work rate and, at the age of 73, he shows no signs of slowing down.
76
88 Other Business Portfolio takes a light-hearted look at the latest business news.
Departments
84
17 Notebook World business in a nutshell.
23 Observer Spotting and analysing business trends.
30 Column: Philip Oltermann Rise of the “Borrowing Shops”
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Portfolio
Notebook
17
reuters
BUSINESS NEWS IN BRIEF
Greece Targets Tycoons They are some of The richesT
Fund, Greece faces fiscal shortfalls this year
by a barrage of taxes since the debt-stricken
and next. Prime minister Antonis Samaras
world’s largest commercial fleet with bank
nation was forced to accept international aid
has refused to take further unpopular
accounts and property portfolios that,
to avert bankruptcy, the country’s famously
spending cuts to plug the gap.
even by the standards of the super-rich,
secretive shipping community is digging in
elicit awe. But in the high-risk business of
its heels.
Yet the strength of reaction from shippers appears to have taken the Samaras
The new tax law overturned a previous
administration aback. The industry, which
– in line with international maritime
accord, signed after several months of talks
provides up to 200,000 jobs and sustains
tradition – have also been granted special
last year, which had allowed ship-owners
close to 500,000, has warned that the new
tax status on their vessels.
to make voluntary tax payments to help
tax regime could force it to move elsewhere –
the nation’s economic recovery. Most of the
potentially wreaking havoc on the economy.
trading the high seas, Greek ship-owners
But last month, the cash-strapped
© 2014 Guardian news & Media
But while ordinary Greeks have been hit
people in Greece, the owners of the
Since the 1960s, shipping tycoons, such as
government in Athens insisted the
shipping companies run out of Athens’ port
preferential treatment – enshrined in
of Piraeus – the industry’s base in Greece –
Aristotle Onassis, have established airlines,
the Greek constitution and respected by
had agreed to back the voluntary scheme.
shipyards, refineries and hotels in Greece.
every government since the 1940s – was
But with unemployment at a record
Indicative of their pre-eminent role in a
28 per cent, the highest in the European
sector now worth about $660 billion, this
Union, and worsening social and economic
year Greek ship-owners placed a record
said that the levy was an emergency
marginalisation, the legislation has won
number of orders to build new vessels in
measure that would last no longer than the
praise. In its fourth year of bailout funds
shipyards around the world, outstripping
next three years.
from the EU and International Monetary
any of their global competitors. n
finally over. The country’s merchant marine minister
April 2014
Notebook AsiAn WeAlth Boom
Numbers Game
According to a report from Knight Frank, Singapore will have 4,878 people with $30 million or more in assets excluding their principal residence by 2023, a 55 per
11
million homes lie empty
cent gain from last year,
across Europe, enough
and trailing only London
to house all of the continent’s
globally. The number of these
homeless twice over according
millionaires in Tokyo will climb
to figures collated by the
eight per cent to 3,818, ranking
Guardian from across the EU. In Spain more than 3.4 million homes lie vacant, in France and Italy each there are more than two million homes empty and more than 700,000 in the UK.
£53
million raked in by the Ministry of
Defence for London’s Brompton Road Tube station will go back
$460
million for Mega Brands offered by american toy maker Mattel will fill a product hole as the Barbie doll manufacturer does not have its own construction line, locking it out of a $4 billion market in the US and Europe. The acquisition puts it in a better position to compete with Denmark’s Lego, a leader in building blocks.
the city fourth worldwide after New York. “The main battleground is Asia, where a handful of locations are slugging it out in the hope of establishing a clear lead as the region’s alpha urban hub,” Nicholas Holt, Knight
The World
Frank’s Asia-Pacific head of research, said in a statement.
In Figures
The number of ultra-highnet-worth individuals in
into the defence budget. The station building, located in one
as the government institutes
Vietnam’s Ho Chi Minh City
of the most expensive corners
a raft of measures to combat
will almost triple by 2023
of London, was sold as part of
chronic pollution in the country.
to 246 from 90, the largest increase among the more than
cost-cutting efforts.
10%
80 cities tracked by Knight
of the global the 110-year milestone. Experts
Frank. That was followed by a
comprise of women according to
attribute Japan’s enviable
148 per cent advance in Jakarta
the recently released Forbes’ 28th
longevity to traditional low-fat
to 857.
annual billionaire list. Of the total
diet, affordable health care and
of 172 women, 42 broke into the
decent pensions.
super-rich
list for the first time, although only 32 female billionaires built their
$800
million will
own fortune rather than inheriting
gain Chinese
it from a parent or husband.
state-owned Beijing Capital Group rights over the biggest waste management firm in
$9
billion merger deal has been signed by
Safeway, the second largest US mainstream grocery store
116
th birthday celebrated
operator, and Cerberus’
by Misao Okawa of
albertsons. The merger will
New Zealand from australia’s
Japan on March 5 makes her
help the american grocers cut
Transpacific Industries
the world’s oldest person. The
costs, expand product selection
Group Ltd. Demand for such
centenarian is one of about 24
and fend off competition from
technology is growing in China
Japanese alive to have passed
megastores and online retailers.
aFP
18
Portfolio
Notebook
Made in China Loses Lustre
begun to shrink. The changes have led global manufacturers to begin shifting production to countries such as Bangladesh and Vietnam. China’s share of total global imports continues to advance, rising to 12.9 per
The Made in China label is losing
technology items from semiconductor
cent in the first three quarters of last
traction with the US and Europe – its
chips to medical-imaging equipment
year from 12.2 per cent in 2012 and 9.3
two biggest customers.
to airplanes.
per cent in 2008. For now, the world’s
The steepest losses are in the European
The yuan has appreciated about 35
19
second-biggest economy is compensating
Union, where China’s share of imports
per cent against the dollar since July
for its decline in developed markets with
slumped to 16.5 per cent in the first 11
2005, wages have tripled in the past
continued growth in import share in
months of last year, from a 2010 high of
decade and China’s labour force has
developing economies.
18.5 per cent, according to data compiled by Bloomberg News. The US has been holding at around 19 per cent for the past five years. China’s low-cost advantage has suffered from rising wages and an appreciating currency, while cheaper nations including Vietnam and Bangladesh compete to sell products from T-shirts to shoes. With an unexpected drop in total exports in February compounding the challenges, the trends underscore the need for President Xi Jinping’s government aFP
to foster competitiveness in higher-
Steelmakers Target Iran Even after seven years of sanctions, the Islamic Republic still consumes
the metal, most of it homemade. As economic sanctions eased in
from the West that have crippled the nation’s $500 billion economy. But it also made the country more self-reliant. Domestic steel production grew 6.5 per cent to 15.4 million tons last year, more
more steel than France or the UK. It’s
February under a temporary accord,
than double the global growth rate of
a major carmaker and needs massive
Iran is shaping up as an untapped
2.4 per cent, according to the World
infrastructure for its oil and gas industry,
opportunity for Western steel exporters.
Steel Association.
consuming about 20 million tons a year of
According to Mehdi Karbasian, Iran’s
in 2012 compared with 12.2 million tons
Mines and Commerce,
in 2007, according to data from the World
around 45 producers sent
Steel Association. Most of these imports
representatives to a steel
came from Russia and China. Iran used
conference in Tehran to
20.2 million tons in 2012, 37 per cent of
study export opportunities
the total for the Middle East.
and investing in Iran’s
ReUteRs
domestic industry.
April 2014
Iran imported 5.6 million tons of steel
deputy minister of Industry,
ArcelorMittal, the world’s biggest steelmaker, may be in one of the best
Iran saw imports fall by
positions to benefit from any easing of
more than half since 2007 in
sanctions by shipping from its plants to
the face of tough sanctions
the north in Kazakhstan.
20
Notebook DUBAI EVENT: GETEX SPRING 2014 WEBSITE: MYGETEX.COM DATE: 9-11 APRIL VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE GETEX is Dubai’s leading education event that brings together education experts, thought leaders and inspirational practitioners to share expert advice, training and guidance in academic and career choices. More than 500 trade stands will cover 14,000 square metres of exhibition space offering more thank 2,500 study and training options in more than 40 countries. Leading academic institutions from the UAE, India, UK, Canada, USA, Malaysia and Turkey will make up the bulk of exhibitors during the three-day show. Students will find top-quality academic choices ranging from regional and international schools to some of the world’s finest universities.
EVENT: PALME MIDDLE EAST WEBSITE: PALME-MIDDLEEAST.COM DATE: 15-17 APRIL VENUE: DUBAI INTERNATIONAL CONVENTION & EXHIBITION CENTRE Discover the latest cutting-edge technology in the sound, light and audiovisual industry at this annual PALME Middle East (Professional Audio Lighting Middle East) show. Offshore exhibitors including China, Netherlands, UK and Germany will be able to increase brand awareness, personally meet new and existing clients and assess ways to improve market share. Activities at the event include spectacular laser shows and lighting demonstrations in a dedicated area, free-to-attend seminars, and exhibitor-led technical workshops.
DUBAI
United Arab Emirates
EVENT: GITEX SHOPPER SPRING 2014 WEBSITE: GITEXSHOPPERDUBAI.COM DATE: 23-26 APRIL VENUE: DUBAI WORLD TRADE CENTRE Witness new product launches, explore the latest in technology and snap up rewarding deals at this shopping extravaganza. The three-day event is set to deliver the best by combining hands-on tech testing with educational presentations, vibrant exhibition stands for companies to launch products and services, and networking sessions for visitors and exhibitors. More than 210,000 visitors attended the show last year, of which 91 per cent said they saved money purchasing at the show according to GITEX’s official website. Of the 100 exhibitors from six countries, 85 per cent felt they were successful in launching their products and services with total sales exceeding $66 million.
EVENT: SMART SKYSCRAPERS SUMMIT 2014 WEBSITE: SMARTSKYSCRAPERS.COM DATE: 28-29 APRIL VENUE: SOFITEL THE PALM RESORT Attracting the region’s senior architects, developers and policy makers this event showcases some of the most innovative building technologies and solutions from around the world. The show features keynote debates, panel discussions and case studies that champion the importance of fire safety in high-rise buildings, sustainable designs and innovative engineering found in some of the world’s most impressive skyscrapers. The networking sessions will offer delegates and sponsors an opportunity to build new contacts, increase market exposure and do business on-site.
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HONG KONG - Prince
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BEIRUT - Atamian
ISTANBUL - Greenwich
MOSCOW - Mercury
DOHA - Ali Bin Ali
LONDON - Harrods
NEW YORK - Cellini
DUBAI - Levant International
MIAMI - Kings Jewelers
PARIS - Kronometry
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Observer
23
Getty imaGes
BUSINESS NEWS IN BRIEF
Can Coca-Cola Be Saved?
even bigger problems. But Coca-Cola is
Rising obesity levels, changing tastes and declining sales indicate that brand Coca-Cola is not as healthy as it once was, reports James Stewart.
of soft drinks, the bulk of it from Coke and
uniquely vulnerable, given that about 60 per cent of its revenue comes from the sale Diet Coke. “Coca-Cola is the mother brand,” Martin Lindstrom, a brand and marketing consultant and the author of six books, including Buyology and Brandwashed, told
© 2014 New york times News service
me recently in a visit to New York from CoCa-Cola has reigned for
stock, delivering steady returns in good
his home base in Denmark. “The whole
years as the world’s Number 1 brand, but
times and bad. But in February, the
company is affected. Coke has to stop
last year both Apple and Google overtook it
company reported declining sales of soda in
the erosion in the United States or it will
in Interbrand’s annual ranking. The United
the critical North American market along
cascade elsewhere.”
States’ first lady, Michelle Obama, is on a
with disappointing sales growth globally,
campaign against obesity, urging Americans
alarming investors. Shares fell more than
and marketing experts for insights into
to drink more water. Former Mayor Michael
four per cent on the news, the most in
Coke’s problems and what the company
Bloomberg tried to ban sales of giant-size
seven months. This year, Coke shares have
could do. The very idea that the Coke
high-sugar soft drinks in New York City.
dropped nearly seven per cent, which is
brand may be in trouble is startling, given
And in February, the US Food and Drug
cataclysmic by Coca-Cola standards.
that Coca-Cola has thrived for 127 years
Administration proposed new food labels
“Carbonated beverages are in
I consulted several prominent branding
and has survived countless passing health
that would more prominently display grams
precipitous decline,” said John Sicher,
fads, in part because its flagship product
of added sugar, including the high-fructose
publisher of Beverage Digest. “The obesity
contains both caffeine and sugar, which
corn syrup used in Coca-Cola.
and health headwinds are difficult and are
can be addictive.
With the longstanding backing of legendary investor Warren Buffett, CocaCola has been seen as the ultimate value April 2014
getting stronger.” It’s not just Coke that’s affected. By some measures, the Pepsi brand faces
And it’s not as if Coke isn’t moving product. Its chairman and chief executive, Muhtar Kent, told analysts at a recent
24
Observer meeting in Boca Raton, Florida, that while
have been holding back, largely because of
author of Romancing the Brand, who spent
he “wasn’t satisfied” with Coke’s performance
health concerns.
10 years working for Coca-Cola, agreed that
in 2013, “Brand Coca-Cola is growing and is
“Having your first Coke was a milestone.
“Coke must use innovation and make news”
very healthy globally.” He continued: “Since
It was embedded in society,” Lindstrom
to “make sure that a 125-plus-year-old
2010, we’ve added 1.1 billion unit cases,
said. “Those childhood memories stick for
brand keeps a modern perception and
bringing volume to 11 billion unit cases
a lifetime. But that generational handoff
to offset health concerns that have been
in 2013. This is the equivalent of adding
is breaking down. Parents have become
voiced by everyone from health advisers to
another Brazil from a brand Coca-Cola
uncomfortable with it.”
the first lady.”
perspective.” And a Coca-Cola spokesman
Ravi Dhar, professor of management
Sicher of Beverage Digest added: “Calorie
said the company would increase media
and marketing and director of the Centre
and sweetener innovations are critical. We’ll
spending by up to $1 billion by 2016 to
for Customer Insights at the Yale School of
know within the next two to three years if
support its brands.
Management, agreed that Coke’s challenge
they succeed.”
But every expert I contacted agreed that Coke was at a critical juncture. “The big soft drink companies, and Coke
was especially difficult because it was tied to
Last year, Coca-Cola introduced Coca-
the broader consumer shift from carbonated
Cola Life, which it describes as a naturally
beverages, and not the Coke brand per se.
sweetened, reduced-calorie sparkling beverage, in Argentina and Chile.
in particular, are at the most important
“It’s another example of how we are
crossroads in their long lives,” Sicher said.
working to be part of the solution to the
No one felt there were any easy solutions, and even an acclaimed ad campaign like
obesity problem, giving consumers a blend of
Coke’s “It’s Beautiful” on the Super Bowl
sugar and natural zero-calorie sweeteners,”
can only do so much. Coca-Cola faces deep-
the company told analysts in February. Coca-Cola may also need to take more
seated problems that have been brewing for
radical steps.
at least a decade. (Sales in North America of
Seth Godin, a marketing consultant,
carbonated beverage by volume have been
founder of the popular website Squidoo and
declining for nine straight years, Sicher said.)
author of the book Purple Cow, which argues
The reasons are varied and complex. Lindstrom noted that his research indicated
that brands need to stand out, said Coke
that the average age of a Coke drinker
“has a priceless brand.” But, he went on:
was 56. “They think they’re young when
“They’re not in the sugary-water business.
they drink it,” he said. But “young people
They’re in the storytelling business. They
themselves are turning to alternatives like
think their assets are bottlers, shelf space
energy drinks.”
and futures contracts on sugar. But the real asset is trust, share of mind and a story. So
Lindstrom said surveys indicated that young people did not like highly carbonated
they should obsess about making something
drinks. Coke is more heavily carbonated
new, creating services and experiences and interactions that people will happily pay
than Pepsi, and roughly twice as carbonated as the energy drinks Red Bull and Monster,
“For Coke to regain brand relevance, it
which are rapidly gaining market share,
has to try and meet changing consumer
especially among the young.
goals,” Dhar said. “Innovation is one way.
The growing appeal of coffee and dark
A different way may be to try to identify
for that have zero to do with beverages that make people obese.” Coke has its defenders. “It has incredible distribution and
chocolate-infused beverages, especially in
relevant goals that can be tied to moments
consumer loyalty,” said Bruce Greenwald, an
Japan and Europe, has shifted the flavour
which are made for carbonated beverages.
authority on value investing and a professor
preference toward bitter and away from
This requires deep consumer insights and
at Columbia Business School. “Every once
sweet, Lindstrom said.
being on the offense rather than defence
in a while, there’s a bad quarter and people
about the category.”
panic. And it’s possible this time it really is
And parents, who in previous generations often introduced their children to Coke, typically when they were ages six to eight,
Tim Halloran, founder of the Atlanta consulting firm Brand Illumination and
the end. But are Americans really getting healthier? I wouldn’t bet on it.” n Portfolio
Observer O N E 2 W AT C H TExT: HildA d’sOuzA
Tom Albanese
Singapore Most Expensive City
Tom Albanese has been appointed chief executive officer of Vedanta Resources Plc., a global diversified metals and mining company, effective April 1. Albanese, 56, has been working with Vedanta since September as chairman of Vedanta Resources Holding, a subsidiary company. He succeeds Mahendra Singh Mehta. The appointment of an American national is in line to help the Indian-centric company shed its Indian image and globalise its business. This will place it in a better position to compete with international mining giants such as Rio Tinto and BHP Billiton according to a Citi Research analysis. Albanese is a former chief executive officer of Rio Tinto Group. Born in New Jersey, Albanese trained in Alaska where he graduated with a bachelor’s degree in mineral economics and a master’s degree in mining engineering. His career in the mining industry spans nearly three decades. He started out at Nerco’s Oregon head office in 1987 and steadily climbed the corporate ladder with a successful move from exploration to acquisition. In 1993 Nerco needed capital and Rio Tinto bought the company. Two years later Albanese moved to Rio’s London head office. He served as chief executive of the industrial minerals group at Rio Tinto from 2000 to 2004, and later as chief executive of the copper group and head of exploration. Albanese was promoted to chief executive officer of Rio Tinto in May 2007. In 2013 he stepped down as CEO when the company revealed a $14 billion write- down and Albanese shouldered the blame. Albanese was one of the several top mining executives who became victims of the downturn in mining. Speaking to Reuters he hinted there would be no repeats of such a spending spree at Vedanta. “Tom Albanese’s skills and experience in leading worldclass mining companies will be of great value in supporting our strategic objective of creating sustainable long-term value for all our stakeholders,” said Anil Agarwal, the founder and chairman of Vedanta. Analysts are sceptical of the scope of his authority as Agarwal controls a 65 per cent stake of the company. However, Albanese said in an interview that Agarwal in his role as chairman would focus on the mergers and acquisition plans of the company, whilst he would focus on ensuring that the businesses that Vedanta has are delivering true to their potential. Market reaction has been positive at the news as company shares rose 4.6 per cent on the London Stock Exchange.
getty images
26
Singapore leapt five spots to top a global ranking of the most expensive cities as a stronger currency and price increases made it costlier to live in the island nation, according to the Economist Intelligence Unit. The republic beat Paris, Oslo, Zurich and Sydney, while Tokyo moved down to sixth position from first previously after the yen slid, the EIU’s latest Worldwide Cost of Living Survey shows. The biannual report compares the price of products and services such as food, clothing, transport, private schools and domestic help between 131 cities using New York as a base. Singapore has seen home prices surge to record levels in recent years amid rising wealth and an influx of foreigners. The expansion of the island’s private banking industry and the presence of regional hubs for global companies have drawn more top talent, and senior executives in Singapore are earning more than those in Hong Kong. The Singapore dollar has gained more than 35 per cent over the past decade. The city’s transport costs are almost three times higher than New York and it is the most expensive place to buy clothes globally as retailers import luxury European brands, the EIU said. Car buyers in Singapore must pay for excise and registration duties that more than double the vehicle’s market value. They must also bid for a limited number of permits that are auctioned by the government, a tool it uses to control pollution and congestion. Singapore is set to surpass Tokyo as the Asian city with the most ultra-high-net-worth individuals within a decade as its stature as a financial centre increases with the region’s growth. Portfolio
27
Alibaba Starts US IPO Process Alibaba Group Holding Ltd. kicked off the process for what may be the biggest US initial public offering in two years after struggling to persuade Hong Kong regulators to approve its proposed governance structure. Investment banks value Alibaba, founded by former English teacher Jack Ma, at as much as $200 billion, which would make it the second-biggest internet company behind getty imAges
Google based on market capitalisation. Alibaba has decided to start the process for an IPO in the US, and a future listing in China may be considered “should
hasn’t hosted an initial share sale of more than
circumstances permit,” the Hangzhou-
$4 billion since October 2010.
based company said in a statement. Alibaba
Alibaba bought back a 20 per cent stake
stake, the companies have said. Alibaba had about 25,000 employees at the end of February and generated about
proposed that its partners nominate a
from Yahoo! Inc. in 2012 in a deal that
70 per cent of package deliveries in China
majority of the board of directors, a system
valued the Chinese company at $35 billion.
in 2012. Customers bought 35 billion
that isn’t allowed under Hong Kong rules.
The Sunnyvale, California-based web portal
yuan ($5.7 billion) of goods on one sales
still owns 24 per cent of Alibaba while
promotion day via Alibaba’s two main
Japan’s SoftBank owns about a 37 per cent
platforms last year.
The IPO may be the biggest since Facebook in 2012 and is a blow to Hong Kong, which
Google’s $1.4 Billion Clean Energy Bet
industry, sending US developers Solyndra and Evergreen Solar into bankruptcy. However, Google is succeeding by avoiding panel production and instead capitalising on controversial tax incentives that can produce investment gains of more than 10 per cent a year. While clean energy is becoming a focus for many technology companies – Facebook is developing a wind farm in Iowa and aims to generate at least a quarter of its data centre power from renewable sources by 2015 – none are spending like Google. With $60 billion in cash, the company announced energy investments of almost $400 million in 2013. Google uses tax-equity financing, a government incentive that allows it to lower its tax obligations by investing in renewable energy. Google’s tax-equity investments in energy are surpassed
getty imAges
only by JPMorgan Chase & Co, U.S. Bancorp and MetLife according to Bloomberg New Energy Finance data. Google has been openly supporting clean energy since 2007, Google has funded 15 alternative-energy projects since 2010
when it created a research group within its philanthropic arm
as part of a more than $1.4 billion investment in clean power
to develop cheaper renewable power. Early efforts were in part
production. More than half of Google’s energy projects are in
to help Google in its data centres, which use huge amounts
solar, a market that’s been hard hit. Panel prices have plunged
of energy to handle billions of monthly search queries and
58 per cent since 2010, after Chinese manufacturers glutted the
YouTube videos.
April 2014
Observer The World
CompIled by Hilda d’souza
Top 10
Dubai Refinances $20 Billion
WoRld’s MosT susTaiNaBlE CoRPoRaTioNs rank
Company
1.
Westpack banking
CoUnTry Australia
sCore (%)
2.
biogen Idec
uSA
75.3
3.
outotec
Finland
74.2
76.5
4.
Statoil
Norway
74
5.
dassault Systemes
France
74
6.
Neste oil
Finland
69.2
7.
Novo Nordisk
denmark
68.8
8.
Adidas
Germany
9.
umicore
belgium
67.8
10.
Schneider electric
France
66.5
Getty ImAGeS
28
68
Dubai, the emirate that had debt maturing this year equivalent
SourCe: CorporAte KNIGHtS INC.
WoRld’s MosT susTaiNaBlY oPERaTEd ENERGY CoMPaNiEs
to a third of its economy, refinanced $20 billion at a quarter
rank
Company
sCore (%)
of the original cost, freeing cash to service liabilities and fund
1.
Statoil uSA
74.74
2.
Neste oil
68.59
3.
Cenovus energy
56.16 55
expansion plans. The sheikhdom rolled over $10 billion of bonds owed to the central bank and a loan of the same amount due to Abu Dhabi’s
4.
Galp energia SGpS
5.
repsol
54.36
government, and will pay a fixed interest of one per cent on both,
6.
bG Group
53.74
according to a statement by the state-run WAM news agency.
7.
royal dutch Shell
52.61
8.
Suncor energy
52.60
The rate is less than the United Arab Emirates’ 1.1 per cent
9.
enbridge
52.09
10.
eni S.p.A.
49.14
inflation for 2013, and half the inflation rate forecast for this year. The new debts are renewable after five years. Dubai and its state-owned companies borrowed more than $110 billion developing the real-estate industry and
WoRld’s MosT susTaiNaBlY oPERaTEd uTiliTiEs sCore (%)
transforming the emirate into a tourism and financial-services
rank
Company
1.
Centrica
60.76
hub. Dubai, which announced plans to spend $8 billion gearing
2.
Acciona
56.03
up to host the World Expo in 2020, faced $30 billion of
3.
Cia energetica de minas Gerias
55.65
4.
enagas
53.60
maturities in 2014, according to International Monetary Fund
5.
Clp Holdings
52.80
6.
Snam S.p.A.
52.05
estimates before the deal. Dubai’s cost of borrowing has tumbled since the financial
7.
Iberdrola
51.97
crisis. The emirate sold $1.25 billion of five-year Islamic bonds in
8.
Fortum
43.98
2009 priced to yield 6.396 per cent, according to data compiled
9.
rWe
37.60
10.
GdF Suez
36.13
by Bloomberg. Last year it raised $750 million in 10-year sukuk at 3.875 per cent. The economy expanded 4.9 per cent in 2013, the fastest pace since 2007 when it soared 18 per cent. Portfolio
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Commentary
30
PhiliP Oltermann
Rise of the “Borrowing Shops” The mosT popular iTems in Berlin’s first “borrowing shop” are the electric drills. At least one of the local people who have registered with Leila – a little shop north-east of the city centre – seems to be continually fixing shelves or hanging pictures. But it’s not worth buying that person their own tools, said founder Nikolai Wolfert. “The average electric drill is used for 13 minutes in its entire lifetime – how does it make sense to buy something like that? It’s much more efficient to share it.” Wolfert, 31, came up with the idea for
which allows neighbours to swap tools and
least, experts say, because initiatives such
Leila after the Green party failed to win the
services and sets up communal “toy boxes”
as Car2Go, DriveNow or Tamyca tie in
2011 Berlin elections and he started looking
in playgrounds around Berlin.
with more old-fashioned “hitch-a-ride” schemes that used to be popular with
for ways of doing politics at a more local
“Everyone is talking about the sharing
level. Four hundred residents have signed
economy”, said co-founder Christian Ridder.
up to the project, which he says is less a
“We wanted to see if it would work not just
charity shop than a “library of things”.
for flats and cars, but also on a smaller scale.”
taken place without the support of the
The notion of the “share economy” may
city itself, said Dorothee Landgrebe, of
Members can borrow anything from
students and hitchhikers. So far, most of these developments have
board games to wine glasses, fog machines
have been coined as long ago as 1984, by
the Heinrich Boll Foundation. “The state
to hiking rucksacks, juicers to unicycles.
Harvard economist Martin Weitzman. But
could do a lot more to support genuinely
All they need to do to become members is
there is a sense that the shift away from
ecological projects such as borrowing shops
drop off an item of their own. “This is not
ownership towards functionality is nowhere
and help identify those who exploit sharing
just about doing charity out of magnanimity
as tangible in Europe as in Berlin.
schemes for their own profit.”
– the shop makes sense because it’s more
If Berlin is establishing itself as the sharing
Airbnb, for example, is facing legal
capital of Europe, said futurologist Peter
challenges in the US, because some
Since its launch in June 2012, Leila
Wippermann, it is above all because of the
homeowners are allegedly using the service
has inspired imitators across the country.
unique intersection between the alternative
to dodge taxes applicable to hotels or bed
Borrowing shops are under development in
green movement and old industry.
and breakfasts.
efficient,” Wolfert said.
© 2014 Guardian news & Media
Leila is Berlin’s first “borrowing shop” that embraces the “share economy”.
At Leila, Wolfert still works on a
several Berlin districts, with similar projects
Elsewhere on the continent, the share
being set up in Kiel and Vienna. Wurzburg
economy may be defined by startups such
volunteering basis. The rent is just about
has its own Leihbar, or “borrowing bar”,
as Airbnb, which matches travellers to
covered through donations. When he first
and a café in Berlin-Wedding has set up
people with rooms to rent, he argued,
came up with the idea for his project, he
a Dingeschrank, or “cupboard for things”.
“but in Germany it’s driven by grassroots
contacted the local borough for support, but
Other collaborative projects with an
projects like Leila on the one hand and big
got no response.
emphasis on sharing resources are popping
companies like BMW and Daimler on the
up all over the German capital.
other, who were quick to latch on to the car-
a shop,” he said. “I always wanted to do
sharing idea”.
something political. The share economy is
At the more commercial end of the spectrum, Deutsche Telekom recently helped launch the social network wir.de,
With 760,000 registered users, Germany is pioneering car-sharing in Europe – not
“It was never my aim in life to open up
a good idea, but we shouldn’t allow it to be reduced just to the economy.” n Portfolio
Profile
32
Portfolio
33
DEBUGGING MICROSOFT Satya Nadella, Microsoft’s new CEO, has taken over a profitable company with a $226 billion balance sheet. However, Microsoft has been overtaken by competitors such as Apple and Google, and fallen behind in the innovation stakes. Changing Microsoft from a lumbering bureaucracy into a lean, mean fighting machine is Nadella’s biggest challenge, reports Guido Duken.
April 2014
Profile
34
O
do. Nadella’s challenge is to reshape a
employees. In a later interview he
company whose main businesses are
embellished on his statement. “Culturally,
losing steam as efforts to expand on
I think we have operated as if we had the
the web and mobile devices have been
formula figured out, and it was all about
thwarted by Google and Apple. For
optimising, in its various constituent
example, Windows Phone 8.1 received
parts, the formula. Now it is about
rave reviews but iPhone and Android
discovering the new formula.”
have already taken 97 per cent of the worldwide smartphone market. Then there is another pertinent question
Nadella sees the future of Microsoft as a devices and services company that capitalises on the power of the cloud. “I
raised by the yet to be finalised purchase
think reconceptualising Microsoft as a
of Nokia: Should Microsoft be a software
devices and services company is absolutely
company or also a hardware company?
what our vision is all about. Does that
N THE SURFACE, EVERYTHING
Bill Gates, in his previous role as Microsoft
mean we won’t have our software available
looks rosy at Microsoft. The company
chairman, balked at the move into making
for people to build on? No. Windows
announced $24.5 billion in revenue and
smartphones – which hastened Ballmer’s
is available outside of our devices.
$8 billion profit for Q2 2014, which
departure. So did Nadella at first, although
Windows server is available outside our
means it is on track for its projected sales
he has changed his mind since.
data centres. We think that’s important
of more than $84 billion this financial
“Nokia brings mobile-first depth
year. Microsoft is also set to grow to more
across hardware, software, design,
than 130,000 employees, commercial
global supply chain expertise and deep
operations are thriving and Cloud Services
understanding and connections across the
revenue was up 107 per cent, thanks to
mobile market,” Nadella said in an email
Office 365.
statement after taking charge. “This is
Yet while Windows remained strong
the right move for Microsoft.”
in the commercial/business sector, on
Nadella, who was born in the Indian
the consumer side of things Microsoft
technology powerhouse of Hyderabad, has
continues to weaken. The Xbox One and
worked at Microsoft since 1992. In 2001
Xbox 360 sold 3.9 million and 3.5 million
he helped manage specialised products
units respectively, but gross margins for the
for small and midsize companies. In 2007
Devices & Consumer Hardware division
he had technical oversight of Bing, the
were down 46 per cent to $0.4 billion.
company’s search engine. By 2007 he was
In the past 10 years Microsoft’s revenue
managing Microsoft’s servers and cloud
growth averaged 9.4 per cent, compared
platforms, which evolved into leading
with 24 per cent in the previous decade.
Microsoft’s cloud computing efforts.
During former CEO Steve Ballmer’s
The company’s cloud platform is the
12-year tenure the software giant was
infrastructure beneath Microsoft services
profitable but outpaced by competitors.
such as Bing, Xbox Live, Office 365 and
Microsoft’s market capitalisation slid
Windows Azure.
from $288.9 billion in 2002 to $226.8
From the above it is clear that Nadella
billion in 2013, while Apple’s shot from
knows Microsoft and its culture well. He
$6.8 billion to $456 billion during the
was instrumental in turning Azure into
same period. Apple and Google launched
a serious competitor to Amazon’s cloud,
disruptive technology like the Android,
and with cloud computing set to be a
iPhone and iPad, but Microsoft was often
major driver of revenue he has the right
slow to capitalise on advancements in
experience. The question is, where does
mobile music, smartphones and tablets
Nadella think Microsoft’s future lies?
This picture of mixed fortunes gives
“Our industry does not respect
a clear indication that new Microsoft
tradition – it only respects innovation,”
CEO Satya Nadella has some work to
Nadella wrote in his email to Microsoft Portfolio
35
because there will always be distributed computing. But at the same time, there are also customer expectations that we should complete the scenario. That means running a cloud platform, running a cloud service. So we’re conceptualising the future of Microsoft along those pivots.” Nadella led Microsoft’s cloud and enterprise division, which helped propel
MICROSOFT MAY HAVE MISSED THE BOAT WHEN IT COMES TO DISRUPTORS SUCH AS MOBILE MUSIC, SMARTPHONES, TABLETS AND APPS. BUT WHEN IT COMES TO CLOUD SERVICES, MICROSOFT IS IN A STRONG POSITION.
the company to its record revenue in
commercial business but in the big scheme
which business and individual customers
the last quarter. And as far as Nadella
of things, when you say $2 trillion, we’re
put onto their own machines, confront a
is concerned, there is plenty of room for
nothing. So the way we look at it is how
growing list of companies offering similar
growth. “There’s $2 trillion of IT spend.
do we become part of the fabric which is
capabilities as a pure online service,
This is inclusive of everything that’s
helping with this digitisation of everything.”
including Google, Amazon, Salesforce, Dropbox, Box, and others. But Azure itself is
happening in hardware, networking, software platforms and applications.
LOOKING TOWARDS the cloud is
now a major player in that market, even as
That is all going to get disrupted by the
a necessary move for Microsoft. The
Microsoft still sells the packaged products.
move to the cloud. We have a significant
company’s traditional software products,
Microsoft may have missed the boat
Microsoft’s Surface tablet has not sold well despite receiving good reviews. April 2014
CORBIS/ARABIAN EYE
Profile
36
Microsoft’s new CEO Satya Nadella with company founder Bill Gates and former CEO Steve Ballmer.
when it comes to disruptors such as
versions of the same products while falling
down to: you’ve got developers, you’ve got
mobile music, smartphones, tablets
behind in the innovation stakes. With
cloud, you’ve got the legacy, the enterprise
and apps. But when it comes to cloud
PC sales plummeting, a new approach is
relationships, those things you got right.
services, Microsoft is in a strong
badly needed.
You’ve got old legacy products which
position. According to Nadella only three
“I think the new world is very different,”
people like to use, however there is a little
companies are now operating cloud
said Nadella. “I think there are multiple
bit of challenge when it comes to the new
businesses “at scale”: “Google, us, and
choices and Microsoft hasn’t done well
world. Look at the world where people are
Amazon, in that order.” He’s also confident
in the world of multiple choices, it has
spending money on applications, devices,
that there will be few other challengers.
always struggled. I think that is the
other ways of thinking. We don’t have a
“You can’t say I’m going to enter this
challenge, when I look at the cloud
Microsoft product in our company now,
business tomorrow, it requires five, six
environment — the big four plus Facebook
which was unimaginable five years ago,
billion dollars of capital expenses every
— and the challenge for Microsoft comes
and I think that’s the challenge you have.”
year. If you’re already not in at this scale, you’re probably never going to be in it.” The good thing about Nadella is that he’s not the new CEO who’s come up with a quick fix idea. Long before he even knew that he was in the running for Microsoft’s top spot he had an unerring focus on cloud services. And he has proven extremely successful in that field. The one thing he doesn’t often talk about is Microsoft’s legacy products. For example, in his CEO letter he didn’t once mention Windows and Office, which have been the company’s money makers. That is a good thing, as for far too long Microsoft has rolled out glitzier
Microsoft’s Xbox One sold 3.9 million units in the last quarter. Portfolio
Profile
38
Successful leaders need to foster a culture
failure until it’s not. It’s just an absolute
biggest challenge, motivating the
of cooperation rather than competition.
dud until it’s a hit. So you have to be able
company’s huge workforce and getting
That is particularly relevant in Microsoft’s
to sense those early indicators of success,
innovative ideas flowing again.
case where products and services must
and the leadership has to really lean in
integrate across platforms and devices.
and not let things die on the vine. When
That leads us to Nadella and Microsoft’s
Microsoft began as a lean competition machine led by young visionaries of
Nadella is well aware of this challenge.
you have a $70 billion business, something
unparalleled talent, but it has mutated into
“The thing I’m most focused on today is,
that’s $1 million can feel irrelevant. But
something bloated and bureaucracy-laden,
how am I maximising the effectiveness
that $1 million business might be the most
with an internal culture that unintentionally
of the leadership team, and what am I
relevant thing we are doing.”
rewards managers who strangle innovative
doing to nurture it? How do we take the
ideas that might threaten the established
intellectual capital of 130,000 people
to reshape Microsoft. And if he succeeds
order of things. Potential market-
and innovate where none of the category
in doing that and getting innovation
busting businesses – such as e-book and
definitions of the past will matter? Any
flowing again, then he might be proven
smartphone technology – were killed,
organisational structure you have today
right when he said: “Microsoft can grow
derailed, or delayed amid bickering and
is irrelevant because no competition
a lot bigger.” And he is also clear what it
power plays. Instead, Microsoft focused on
or innovation is going to respect those
will take to succeed.
killing off the competition in its traditional
boundaries. Everything now is going to
markets and consequently missed epic
have to be much more compressed in terms
being able to reinvent yourself or invent
changes, including web-search advertising
of both cycle times and response times.
the future. In our case, given 39 years of
and the consumer shift to mobile devices and social media.
“So how do you create that self-
Nadella’s approach is nothing less than
“Longevity in this business is about
success, it’s more about reinvention. We’ve
organising capability to drive innovation
had great successes, but our future is not
and be focused? And the high-tech
about our past success. It’s going to be
CHANGING MICROSOFT’S company
business is perhaps one of the toughest
about whether we will invent things that
culture is integral to Nadella’s success.
ones, because something can be a real
are really going to drive our future.” n
“I LOOK AT THE CLOUD ENVIRONMENT — THE BIG FOUR PLUS FACEBOOK — AND THE CHALLENGE FOR MICROSOFT COMES DOWN TO: YOU’VE GOT DEVELOPERS, YOU’VE GOT CLOUD, YOU’VE GOT THE LEGACY, THE ENTERPRISE RELATIONSHIPS, THOSE THINGS YOU GOT RIGHT.”
Portfolio
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Investment
40
The Limbo of AsiAn mArkeTs Tapering by the Federal Reserve and weaker growth in China has knocked emerging markets. Yet their economies are more robust than ever before, reports Keith Bradsher.
Ships in the port at Surabaya, Indonesia. Portfolio
41
T
he docks at big
balance and let strong domestic demand for
been so strong. Many businesses are even
Indonesian ports like Surabaya
products like cars, electronics and instant
struggling to find enough workers.
are quieter these days, as China’s
noodles carry their economies forward
demand for raw materials has
again. The question is whether their
declines in their currencies and stock
begun to cool. But drive an hour inland and
consumers and businesses will continue to
markets last summer, lasting through early
the agricultural giant Cargill is racing to
spend, or whether international troubles
autumn, after Ben Bernanke, the chairman
finish a cocoa bean processing plant, while
will spill into domestic economies in ways
of the Federal Reserve at the time, indicated
a large instant-noodle factory is running
they cannot control.
in May that the Fed would start easing back
full tilt to meet the demand for convenience
on measures that helped keep longer-term
food from Indonesia’s large and growing
said Jakob Sorensen, the chairman of the
rates at historically low levels. Bernanke’s
middle class.
European Business Chamber of Commerce
warnings had the effect of attracting money
in Indonesia. “The lower it goes, the harder
from overseas investors to the United States.
“We’re having quite a tough time keeping up,” said Tjun Sulestio, a general manager of the noodle factory, run by PT. Suprama.
© 2014 New York Times News service
“We don’t want that bar to go too low,”
India and Indonesia suffered large
it will be.” There are reasons for optimism. Many
Both India and Indonesia have since sharply narrowed the deficits in their
The contrast in many emerging markets
stock markets in emerging economies have
current accounts, a broad measure
between signs of a looming currency crisis
rebounded recently. International problems
of trade and financing. They allowed
and strong domestic demand is visible
have not yet caused the bank runs and
significant depreciation in their currencies
around the world. Stock markets and
large-scale flight of international investors
last summer, which made imports
currencies have fallen in recent months
that made previous crises so severe, like the
more expensive and their exports more
in places like Buenos Aires, Argentina;
Asian financial crisis in 1997 and 1998.
competitive. As a result, both countries have
Jakarta, Indonesia; Manila, Philippines;
Central banks in emerging markets
and Istanbul, as investors have worried
have gone out of their way to accumulate
their financial markets, although they could
that weaker Chinese growth and a US
rainy-day funds of dollars and other foreign
still be hurt if overseas investors withdrew
Federal Reserve that is pumping out fewer
currencies. With the conspicuous exception
money that they had already put in.
dollars will cause a global stumble in many
of China, bank regulators in emerging
developing nations.
markets have also imposed tougher lending
both the Fed tapering and a cooling
regulations and kept shadow banking
China,” said Saugata Bhattacharya, chief
operations on tight leashes.
economist at Axis Bank in Mumbai. But
Like limbo dancers struggling to shuffle under a low bar before standing upright again, emerging markets must shuffle along
While emerging markets may face
under weak commodity exports and capital
trouble from beyond their borders, in many
outflows before they can recover their
of them spending at home has seldom
Construction workers lay bricks at the site of a cocoa bean processing plant that Cargill is rushing to finish in Surabaya. April 2014
less need of further foreign investment in
“There definitely will be an effect of
Central banks in emerging markets have gone out of their way to accumulate rainy-day funds of dollars and other foreign currencies. With the conspicuous exception of China, bank regulators in emerging markets have also imposed tougher lending regulations and kept shadow banking operations on tight leashes.
Investment
42
China is still gaining global market share in consumer electronics, however. That may change, though not rapidly enough to help emerging markets this year.
reuters
“India is definitely better prepared today to deal with these foreign shocks than it was nine months ago.”
Rising blue-collar wages in China are prompting some industries to shift to Southeast Asia.
Political troubles have played
further growth in China will slow. A serious
is for them to displace China’s own
a role in market declines in countries like
cutback in China’s demand would not
increasingly high-cost producers of coal,
Turkey and Argentina. They have also
just harm emerging markets’ shipments
aluminium and other minerals. Another
played a role in Asia, most notably in
directly to China, it would also cause further
tactic is for emerging markets to start
Thailand, where Bangkok has been clogged
erosion in the already falling world prices
replacing China as the preferred locale for
with demonstrators for weeks.
for emerging markets’ coal, copper, palm oil
making export goods like clothing, shoes
and other commodities.
and electronics. Blue-collar wages have
The big question now is how much
Yet even the Thai tourism industry seems to be weathering the difficulties surprisingly well so far.
Jianguang Shen, an economist in the
clobbered by weaker commodity exports
increased at least fivefold in China over the
Hong Kong office of Mizuho Securities,
past decade, prompting a few industries,
recently labelled troubles in China’s
including garment and shoe production, to
economies in China and India are having
so-called shadow banking sector the biggest
start shifting to Southeast Asia.
problems, we still see increases in their
potential threat to that country’s economic
numbers of tourists,” said Pornthip
growth this year.
“Even though everyone says the
Hiranyakij, the managing director of Destination Asia, a travel company.
One way for developing countries in South and Southeast Asia to avoid being
China is still gaining global market share in consumer electronics, however. That may change, though not rapidly enough to help emerging markets this year. Indonesia was once a symbol of everything that could go wrong in a commodity-dependent country during tough times. During the Asian financial crisis, banks collapsed and civil unrest forced a change of government. But at least for now, Rolls-Royces can still be seen purring through the streets of Surabaya, Indonesia’s second-largest city, and new apartment buildings are still under construction. Whenever global economic troubles threaten, “people are calling for the end of the world in Indonesia,” said Jean-Louis
reuters
Guillou, the president of Cargill’s Indonesia operations. “And so far, I haven’t seen the Weaker growth in China will have a knock-on effect on commodity-dependent countries.
evidence for that.” n Portfolio
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Design
44
MIRRORING
TECH VALUES
Facebook, Twitter and Google are embracing a corporate style that mirrors each company’s values while promoting creativity and productivity, reports Quentin Hardy.
© 2014 NEW YORK TIMES NEWS SERVICE
B
Increasingly, Silicon Valley companies
IG INTERNET
Wi-Fi signal. Office teams grow or shrink
companies love to talk
in these open rooms, moving work and
are paying builders to fuse their values
about how they are
information as quickly as possible.
of speed, change and productivity with
“disrupting” one thing
Want privacy? Wear headphones.
their perceived corporate smarts and
or another, but they still
The blank-slate look of a big room may
quirkiness. It is a big shift. Silicon Valley
want what big companies have always
encourage communication, but it has an
long prided itself on building world-
wanted: workplaces that memorialise
important drawback. “Without inspiration,
changing technologies from the humble
their products and values.
open plan runs counter to creativity,” said
garage or the nondescript office park.
John Maeda, a former president of the
The new spaces are more distinctive,
invisible and change is high technology’s
Rhode Island School of Design and now
as companies seek to build a consumer
most valued commodity. Insubstantial
the design partner at Kleiner Perkins
profile and maybe even lasting loyalty.
as a cubicle seems, in the tech industry
Caufield & Byers, a venture capital firm.
it has given way to the long tables and
“When you inject the ethos of the company,
Apple plans to build a new ring-shaped
broad whiteboards of open-plan offices,
you’re trying to stand for something amid
headquarters that will be as distinctive
where everyone taps into a common
perpetual change.”
as its products. Up in Seattle, Amazon is
That is a challenge, because software is
The companies are dreaming big.
Portfolio
45
An open plan office area at Facebook’s headquarters in Menlo Park.
An employee works from a treadmill desk on Google’s campus in Mountain View.
building a new urban-style headquarters – utilitarian and functional, like its website. When companies feel that they are changing the world as much as these tech enterprises do, they don’t need just offices. They need monuments. FACEBOOK’S HEADQUARTERS in Menlo Park, California, is a cluster of 11 buildings enclosing a Disneylike pedestrian square and a two-way promenade. The complex has a cupcake store and a barbecue joint, a wood shop, a print shop and an arcade. In addition, there are two cafeterias, a candy shop, a taco stand, a burger stand, a pizza stand, a chopped-salad bar and three small restaurants. (A noodle shop is coming soon.) Everything is free or subsidised. The “Main Street, USA” feel is no
A conference area at Twitter's headquarters in San Fransisco.
accident. Sheryl Sandberg, the chief
itself, all of this fun is purposefully
operating officer of Facebook, also serves
designed in the service of spontaneity.
on the board of Disney, and she brought
No one has an office, although Facebook’s
Facebook’s unofficial slogan is “hack,” an engineering term that has come to mean remaking something with an amateur’s
in consultants from Anaheim, California,
chief executive, Mark Zuckerberg,
passionate disregard for the usual rules.
and Orlando, Florida, to perfect
occasionally holds meetings in a large glass
Facebook’s all-night hackathons aren’t just
Facebook’s look. As in the Magic Kingdom
cube in the middle of the campus.
an echo of crashing out a project before
April 2014
Design
46
A vending machine that dispenses tech supplies for people working late, after the help desk has closed, on Facebook’s campus.
a college final: They are efforts to keep experimenting, to try something new before some scrappy startup does.
A casual conference area with a bar at Facebook’s campus.
Computer problems during an allnighter? There are machines that dispense new computer peripherals, like keyboards, at no charge, if the help desk is closed. There are posters everywhere, including the employee entrances, that exhort change, hacking and fearlessness. Typical sentiments include “Taking risks gives me energy” and “What would you do if you weren’t afraid?” The guiding spirit is Zuckerberg’s own line: “The journey is one per cent finished.” The buildings hold 6,000 people. In the past, Facebook moved around as many as 1,000 of them a month, reassigning them to new short-term projects. Casual meeting areas are set off from
Twitter’s receptionist Christina Pak works in the bird themed lobby at the company’s headquarters in downtown San Francisco.
values of many Silicon Valley companies, as if the young royals of tech were relieving
an employee will next be working. The main dining area, across from
the open plan by squares of plywood
with a joke the embarrassment of finding
the elevator bank, is also known as
hanging from the ceiling, a visual “under
themselves running multibillion-dollar
Town Square. Twitter styles itself as the
construction” reference meant to reinforce
businesses. At Twitter, though, the irony
“global town square” for all the public
the company’s ethos.
doesn’t creep; it charges like an ostrich.
conversations it hosts, and it likes the
“It’s designed to change thinking,” said
Just outside the cafeteria, called “@
openness of the area not just for chance
John Tenanes, who oversees Facebook’s
birdfeeder,” a family of plastic, neon-
meetings but also for weekly gatherings
buildings as its director of real estate.
coloured deer stands near the couches, on
where Dick Costolo, the CEO, presides
“Even if the meeting doesn’t move faster,
which pillows bear the crocheted words
from a walkway above the townspeople.
we want people coming up with new stuff.”
“Home Tweet Home.” Irregular soft cubes serve as impromptu meeting areas. There
THERE IS seemingly no part of Google
IN SAN Francisco, an elevator opens to
are ample sticks and twigs on the walls and
that is not information-obsessed, and
walls clad with planks from a country
ceilings, as if nests under construction.
it shows in the kind of fine-tuned, all-
barn. In case you don’t get the reference,
The company encourages informal
knowing workspace the company has built
the computer at the front desk is inside
meetings in this low-stress setting, hoping
for itself. Its headquarters, in Mountain
a faux birdhouse: This is Twitter, whose
that it will help foster new ideas. Back in
View, California, has its dinosaur and
symbol is an emerging bird and whose
the business area, there are open-plan work
cupcake sculptures, and multicoloured
chief executive was once an improv comic.
spaces, along with individual file cabinets
bicycles for intracampus transport. But
on rollers that can be moved to wherever
don’t kid yourself: Even what seems like
Irony has crept into the architectural
Portfolio
enjoy responsibly
DOM PÉRIGNON VINTAGE 2004 EACH VINTAGE IS A NEW CREATION DOMPERIGNON.COM
Design
48
Semi-private booths for small group meetings at Twitter’s headquarters.
Bicycles in Google colours on their campus.
whimsy is a result of careful, data-driven decision-making. For example, Google’s free meals, famous for their quality, are a result of detailed study. Executives were turned off by the inefficiencies of an ordinary paid cafeteria; people would spend too much time going elsewhere for lunch – or fumbling for change if they stayed. Even if that was a waste of a minute, it was logical to make food fun and free. Google tries to measure as much as it can about its employees’ experience. When a new phone jack is installed at someone’s desk, the facilities staff will send an email within an hour, asking the employee to rate the experience for friendliness and
Google believes that making things fun and free boosts productivity.
efficiency. When green plants in a large
knowledge industry – how to measure
evaluation, each new employee is fitted
frame are installed on an otherwise bland
productivity,” he said. “That isn’t just how
with the correct chair, which follows her
wall, it improves the look and increases
quickly you can type words, or how well
if she is reassigned. During a reporter’s
the room’s beneficial oxygen, according to
you made a line of code. It’s about how
recent visit, Google Real Estate was
Anthony Ravitz, leader of the “Green Team”
you felt about it and whether you had
testing five types of desk chairs, three
in Google Real Estate, the department
enough energy to play with your kids
relaxation chairs, 10 lighting systems,
responsible for the company’s facilities.
when you got home.”
two heating systems and four ways to
Ravitz cited studies of “biophilia,” or
To find out those things, Google
distribute heat.
love of nature and its effects on easing
Real Estate is more lab than furniture
stress levels.
department. This is not to denigrate the
temperature, they are more comfortable
humble chair: After an initial ergonomic
and creative,” Ravitz said. n
“We are after the holy grail for the
“If people are more satisfied with the
Portfolio
Development
50
London’s Market BattLe An attempt to redevelop the Victorian-era Smithfield Market in the City of London has run into opposition and raised larger development issues, reports Jenny Anderson.
Portfolio
51
T
rying to renovate a
shops, restaurants and desperately needed
Smithfield project underscores broader
Victorian market and tack on
modern offices.
issues, including the soaring cost of
some offices hip enough for
London real estate and the inequality
would be the worst mutilation of a major
that has fuelled plus the question of how
London is not a task for the weak of heart.
Victorian building in 30 years,” said Marcus
to upgrade the creaking infrastructure of
Just ask Geoff Harris.
Binney, founder of Save Britain’s Heritage,
culture-rich cities like London.
Google in the oldest part of
As head of property development for Henderson Global Investors, he is the face of a £160 million ($266 million) proposal
© 2014 New York Times News service
His opponents beg to differ. “This
a conservation group that has two full-time employees and significant political sway. The debate over the future of Smithfield,
to restore a handful of buildings in the
which is now part of a prominent public
historic Smithfield Market in the heart of
hearing, pits big, global money – Henderson
the City of London’s historical financial
is a £70.8 billion global investment fund
centre. The market was designed by Sir
with 1,000 employees – against local
Horace Jones, the architect responsible for
conservationists who enjoy the support
the Tower Bridge.
of some prominent actors, playwrights
According to Harris, Henderson’s
“If the only people who can get a lease in this new scheme are ‘institutionally acceptable,’ i.e. no mom-and-pop shops, that will reduce the diversity
and politicians.
project is noble and expensive, restoring
But the vitriol
historical grandeur to the Victorian market
arising from the
buildings while integrating new space for
Parts of the historic Smithfield Market have not been used in 30 years. April 2014
Development
52
and interest and opportunity that the city
on the rise in London, with cranes visible
can provide,” said Eric Reynolds, founder of
across the skyline. Harris says the vacancy
Urban Space Management, who is working
rate in the City of London is 1.8 per cent.
with the conservation groups that oppose
The City of London Corp, a civic body that
the project. They have put forth plans
oversees the financial district, says it is 8.5
to refurbish the Victorian market along
per cent, lower than the 10-year average
the lines of two other popular London
of 9.6 per cent. Not far from Smithfield,
markets, Covent Garden and Borough
Henderson is developing 84,542 square
Market Hall. Smithfield’s market buildings
metres of neo-Gothic style offices.
are in the City of London, where ancient
This is not the first time at the
ruins and cobblestone streets abut modern
development dance for Smithfield. In 2007,
high-rise steel showcases. Not far from
the developer Thornfields secured a long-
Smithfield, a Starbucks is tucked neatly
term lease from the city corporation and
into a 12th-century church, and the Royal
planned to raze the buildings and construct
Exchange, a popular café and arcade,
an office block. Amid protests from English
is frequently mistaken for the Bank of
Heritage, the British government’s adviser
England, which is across the street in a less-
on historic properties, and conservation
handsome building.
groups, the government called a public
Considered one of Europe’s great 19th-century covered market halls,
hearing and a public inspector overturned the development plan.
Smithfield sits on top of what will be one
Thornfields was close to bankruptcy
of London’s busiest transportation hubs,
during the financial crisis and Henderson
connecting two busy train lines after
bought the lease in 2010 for an undisclosed
construction is completed. It will be 40
amount. According to Harris, Henderson
minutes from five airports, and neighbours
then spent three years and £10 million
in the area include Goldman Sachs,
to painstakingly develop a “conservation-
Amazon.com and Google. Young technology
led” project. It has fixed leaky roofs,
workers from nearby Shoreditch are
strengthened tunnel rails beneath the
been used for 30 years, and the general
gravitating to the area, priced out by their
buildings to the tune of £4 million,
market, which the rail company uses for
richer counterparts.
reinforced riveted girders and spent
several purposes, will be converted into a
$130,000 stabilising stonework.
combination of shops and restaurants, with
Commercial real estate development is
The old fish market, which has not
offices up to five storeys high. The project will have 5,853 square metres of retail space and 15,979 square metres of office space. “We have shown integrity here,” Harris said, adding that 75 per cent of the buildings in question would be retained. To renovaTe the general market, Henderson will demolish the airy roofs supported on elegant trusses and the central dome. Harris said much of the historical beauty of the structure was destroyed during World War II. The building was replaced in the 1950s and has never attracted tourists.
getty images
“I am baffled,” he said wearily. “It was not
Henderson Global Investors has already spend £10 million on repairing buildings.
seen by the public, and it’s not been used for 30 years.” Reynolds has a different view. He helped develop Spitalfields, another bustling Portfolio
Covent Garden is held up by conservationists as a successful development.
market, which Ballymore, a Dublin property company, sold to Ashkenazy Acquisition for more than £100 million last year. He says the same can be done with Smithfield if Henderson would accept a similar return on capital but a lower total profit. “Once these halls are gone, they are gone forever,” he said. Reynolds called Henderson’s contention that three-
Thornfields was close to bankruptcy during the financial crisis and Henderson bought the lease in 2010 for an undisclosed amount.
quarters of the building will be maintained
Feelings are being hurt. Harris calls the opposition’s description of their office space as dull “a dangerously provocative misrepresentation.” He says he does not represent the plutocrats, as some have suggested. “I think that’s an inappropriate comment.” And he insists this is not a David versus Goliath battle. “It is entirely inappropriate to demean our skill.” Henderson has made it clear that if the
misleading, though he used a more
inspector general rules against it, the company
colourful term, because Henderson counts
with English Heritage, the Design Council
has no intention of selling. So the market
the basement. The evidence submitted
CABE, the Commission for Architecture
would go undeveloped. The opposition has
suggests Henderson’s proposal to gut the
and the Built Environment, and Mayor
referred to this as “emotional blackmail.”
general market’s roof removes much of the
Boris Johnson of London.
volume of the building. “You take the middle out of a cathedral,
But protests ensued, and Eric Pickles,
“The UK is open for business,” Harris said, warning that a vote against the
the communities and local government
company’s plan could ripple through
and you don’t have anywhere to sit and
secretary, called a public hearing. The
investment circles. “This could affect
pray,” Reynolds said.
inquiry closed March 7 and the inspector
investor confidence and sentiment,” he said.
Henderson’s project is being financed
is expected to take up to two months to
Reynolds disagreed. He cited 40 years of
by the $70 billion Alberta Investment
write his report with a recommendation to
experience taking rundown buildings and
Management Co, which is investing £1
the government. Pickles will then decide
“turning them into something interesting.”
billion in London real estate. The city
whether to accept the recommendation, a
corporation approved the plan last summer,
process that could take weeks.
April 2014
“We are a counterweight to large tenants taking over and changing things.” n
reuters
Development
53
Infrastructure
54
Sochi Fears a Flameout Now that the Winter Olympics are over, the big question for Sochi is how it will fill its 40,000 hotel rooms, reports David Segal.
Portfolio
55
A
fter february’s
from resort towns in other countries.
International Olympic Committee,
Winter Games closing
It also seems that few people in
and one of the appeals of Sochi to
ceremony, Sochi is now
the upper echelons of the Russian
the IOC was that the area was largely
confronting life after the
government have given the future of
undeveloped, meaning that Russia
Sochi much thought.
would have to produce lots of spiffy new
Olympics and the impact of a building
“I don’t think anyone is sure what
largest construction site. The area is now
to do with it,” said Sufian Zhemukhov,
home to more than 40,000 hotel rooms,
co-author of a coming book on the Sochi
more than 354 kilometres of roads
four ski resorts, dozens of restaurants and
Games. “I say that because President
and bridges and 700 sports grounds
retailers, five sports arenas, one stadium,
Putin and Prime Minister Medvedev have
were built, along with overhauls and
and enough roads and railways to handle
changed the concept many times. First, it
renovations to the power grid, the
20,000 visitors an hour.
was going to become a kind of capital of
airport and the sewage system. The
southern Russia. Then they talked about
committee got its wish, Russia got
but what happens now that fans and
dismantling the arenas and taking them
its Games and now Sochi is at risk of
athletes have left? This question faces
north. A few months ago, Medvedev said
becoming a gold-rush town that just ran
every Olympic city, but it seems acutely
they were going to open casinos there.”
out of gold. A recent report by Moody’s
That made sense during the Games,
© 2014 New York Times News service
buildings and infrastructure.
boom that, for a time, made it the world’s
problematic in Sochi, experts say, in part
Virtually everything about the Sochi
The country delivered. Ultimately,
Investors Service said that the area
because the scale of overbuilding vastly
Games was improvised, it seems,
would need to double its flow of visitors,
exceeds what occurred in Vancouver,
and their aftermath will not be any
to at least five million a year, to keep
London and elsewhere, and in part
different. Russia’s primary goal in 2007
the hotels full. That is highly unlikely.
because the area will face competition
was to submit the winning bid to the
Real estate companies estimate that
Medal Plaza and the Olympic flame at the site of the 2014 Winter Olympics in Sochi, Russia. April 2014
occupancy rates could fall to between 35 per cent and 40 per cent after the games, the report said. It is unclear where additional tourists will come from. Like many hoteliers here, Brian Gleeson, the general manager of the Radisson Blue Beach Resort and Spa, is not looking to the US market, and he has written off Europeans for at least a year. Americans and Europeans have vacation options closer to home, in countries that will not require them to obtain a visa to enter. “What we need to do is focus on getting the home market up and running,”
REUTERS
Infrastructure
56
Gleeson said on a recent afternoon. “That’s 145 million people, and we need to get very creative about giving those people a reason to choose Sochi.” Some obvious assets are the Olympics
Sochi will need to double its visitor numbers to at least five million a year to keep the hotels full.
What about those tourists who want summer sun or winter snow? Many in the
said that profits in these cases were often pocketed soon after bids were won. “You inflate the price tag of the project,
themselves and the objects and buildings
moneyed class of Russia prefer foreign
they have left behind. But hotels have
destinations. A flight from Moscow to
give part of the money back to the official
to be a bit coy about promoting these
Sochi is two hours. You can spend another
who awarded you the project, then
attractions. An intellectual property law
hour in the air and go to Innsbruck,
subcontract out as much of the work as
passed in Russia at the behest of the IOC
Austria, where you are unlikely to
possible, and hide the money you took
prohibits certain things, like the word
encounter the weather anxieties that led
out,” he said. “That’s a much easier way
“Olympics” and representations of the
Russia to stockpile snow in the run-up to
to earn a profit than drafting a long-
Olympic rings, in advertising.
the Games.
term business plan and taking the risk
“So here’s our campaign for the wedding
During the summer, Sochi’s traditional
market,” said Gleeson, opening a binder
peak, it competes for upper-class rubles
filled with print ads in Russian. “It says,
with beach towns like Cesme, Turkey. As
‘Add your ring to our collection in Sochi.’
for the middle and lower classes, they may
Here’s one for families: ‘Bring out the
be priced out of Sochi, where one-star
champion in your child.’”
hotels start at about $140 a night.
associated with trying to bring in guests
The sTrange truth about these
At the start of the planning of the Games, private investment was meant to contribute more than half of the costs. As more projects turned out to be unprofitable, the Russian government stepped in.
Olympics is that little was built with longterm profits in mind, said Martin Muller, a professor of geography at the University of Zurich, who spent five years studying the area. At the start of the planning of the Games, private investment was meant to contribute more than half of the costs. As more projects turned out to be unprofitable, the Russian government stepped in. Adding to the sense that Sochi was not built for long-term prosperity are the dozens of businessmen who won contracts for other projects, large and small. Muller
The Rosa Khutor resort was the central site of the 2014 Winter Olympics. Portfolio
57
and having to invest in maintenance.”
magnate Vladimir Potanin, whose net
of Sochi. For the place to thrive more
worth was estimated at $14.3 billion by
broadly, many here believe that the
buildings here were constructed on the
Forbes last year. He conceived the idea
Russian government needs to promote
cheap. Muller said that he met with
before the Olympic bid had been won,
it, often and loudly. That does not seem
engineers in charge of quality assurance
then expanded his vision for the place.
to be happening.
One upshot is that many of the
and that “they told me there is no quality to assure.”
“We have no doubt whatsoever that
“The government has the intention to
this resort will ultimately survive and
promote Sochi as a destination, but there
will stay a ski resort,” Sergei Belikov, a
is no specific plan about how to do that,”
“It wasn’t demanded by investors, and
Rosa Khutor representative, said recently
Ekaterina Shadskaya, a director at the
nobody asked for it. Builders would
at a news conference. “Not everything
Russian Union of Travel Industry, said
sometimes even try to bribe their way
happens overnight, especially if we take
in an email. “President Vladimir Putin
through the quality assessment phase.”
into consideration the sheer scope of
declared that Sochi will not be included
investments that were channelled toward
in the government programme of tourist
building such a massive resort.”
development in Russia, because all the
“Quality wasn’t an issue,” Muller said.
That means many of these hotels will incur huge upkeep costs far sooner than well-built structures. Add in the problem of overcapacity of hotel rooms, and it is understandable why Muller is predicting losses and bankruptcies. Not everything here was built with such seemingly limited ambitions. A ski resort
But Rosa Khutor is only one part
infrastructure is already implemented.” n The 2014 Winter Olympics was a spectacular showcase for Russia.
called Rosa Khutor, which hosted downhill events like aerials and halfpipe, has 18 ski lifts, 77.2 kilometres of slopes, six hotels in operation and four others near completion. Take one look at it – a cross between an Alpine nirvana and a chaletthemed strip mall – it is clear that this is supposed to be a destination with legs.
REUTERS
REUTERS
Rosa Khutor is owned by the metals
IOC President Thomas Bach of Germany and Russian President Vladimir Putin at the opening ceremony of the 2014 Sochi Winter Olympics. April 2014
Commerce
58
Portfolio
59
INDIA’S
E-COMMERCE GAME
Snapdeal and Flipkart are competing for investment and racing to go public. But there are some doubts whether they are attracting enough new users, reports Mark Bergen.
S
NAPDEAL AND
world that Alibaba’s success can be
and shifted into its current form as an
Flipkart, India’s
replicated in India.
eBay-like marketplace for Indian sellers
two largest online
Bahl, 30, recently toured Silicon Valley,
and buyers to find one another. Today it
marketplaces, are frequent
where his New Delhi-based company
lists goods from about 20,000 merchants
recipients of honorific,
is said to be seeking $100 million in
in a variety of categories and has about 20
hopeful nicknames. They are often called
investment to give it a valuation of $750
million registered users.
the eBay and Amazon of India. But lately,
million to $1 billion.
Kunal Bahl, the young chief executive of
Eight years ago, Bahl, a graduate of the
Bahl, whose father ran a small automotive parts business, casts Snapdeal
Snapdeal, has been drawing parallels with
Wharton business school, was settling
as a champion of tiny enterprises in the
another e-commerce juggernaut, Alibaba
into corporate life in the United States,
country. “Irrespective of who you may
of China.
first with Deloitte, then Microsoft. But
be, you have a level playing field against
India lags well behind China in
in 2007, his visa renewal was rejected,
anyone in the market,” he said.
e-commerce shoppers, and its
forcing him to return to India.
incomes, credit card use and
The brokerage firm CLSA suggests that in
in a recent interview in Bangalore. After
five years, Indian e-commerce will expand
starting Snapdeal, he became a model
to $22 billion, from $3.1 billion. Flipkart,
for the faults of US visa policy, landing at
a Bangalore company often compared
the centre of a 2011 USA Today article on
to Amazon that sells books, clothes and
are trying to convince
the technology brain drain in the United
electronics online, predicts a market of
the global finance
States. At that time, Snapdeal had about
$70 billion by 2020.
internet penetration are also lower. But the Indian e-commerce market has headroom, and its leaders
400 employees. Now, its staff of 1,300
technology investors have poured in. In
towns and cities in India. The company,
a May 2013 report, Allegro Advisors, an
incorporated as Jasper Infotech, has
investment bank, said that 53 e-commerce
altered its shape along the way.
companies in India had secured $853
Rohit Bansal, a high school friend, the pair focused on online coupons, a model
© 2014 NEW YORK TIMES NEWS SERVICE
As the projections have grown rosier,
coordinates deliveries to about 4,000
When Bahl started his company with
April 2014
Estimates of the size of this market vary.
“It was a blessing in disguise,” he said
million in venture capital money in the previous three years. But now, financing is slowing and
similar to Groupon’s. They tried other
several online retailers are shutting down.
types of deals and discount cards, with
Analysts say the industry is consolidating,
little momentum. “For the first two years
with the victors emerging.
or so, we were struggling,” Bahl recalled.
“The e-commerce landscape in India is
On February 4, 2010, Snapdeal.com
becoming clearer,” said Deepak Srinath, a
began operations primarily as a website
partner at Allegro. “It’s a two-horse race;
for restaurant discounts. A year later,
it’s Snapdeal and Flipkart.”
the company received its first significant investment, from Nexus Venture Partners,
Flipkart has netted about $540 million in funding since it was founded in 2007,
60
Snapdeal CEO Kunal Bahl compares his company to China’s Alibaba.
Snapdeal, an Indian version of eBay, has plans to go public.
including a $160 million investment
investors, including Intel Capital and
go public for an unspoken reason. One
in October. (In November 2012, a
Nexus Venture Partners.
technology industry adviser suggests
government agency began investigating
Bahl said Snapdeal planned to go
that India’s online shopping potential is
whether Flipkart, which had received
public but would not specify a date. In an
being oversold, saying that e-commerce
venture funds from US firms, had violated
interview with VentureBeat, a technology
companies may be increasing their sales
foreign investment laws.)
news website, he said he was planning an
but are not adding new users as quickly as
initial public offering in the United States.
they claim. To warrant a large valuation,
consumers from an affiliated seller,
An IPO would come after the company
either company would need to mimic
WS Retail, before turning into a full
reached $1 billion in sales, he said in a
Alibaba’s spectacular success and quickly
merchant marketplace in April. So far,
separate interview. “We’ll be there in a
reach 100 million Indian shoppers. This
its marketplace has 1,000 sellers and
matter of months.”
is unlikely, said the adviser, who spoke
The company previously sold to
on the condition that he not be named
14 million registered users, well below Snapdeal’s totals. For the past fiscal year,
LIKEWISE, FLIPKART has broadcast
because his data on the companies was
which ended in March 2013, Flipkart
its desire to file an IPO, although it has no
not public.
posted revenues of $190 million.
“fixed timelines,” a company spokeswoman
Srinath says Flipkart is leading in name recognition. When Motorola introduced its newest phone in India on February 6, it chose Flipkart as its exclusive vendor for early sales. Snapdeal is now compared most often with eBay, which in June led a $50 million round of strategic funding in Bahl’s company. Since 2011, the company has raised more than $200 million from
If that truth surfaces with one IPO, a
said in an email. The company expects to
second would fetch much less interest,
hit $1 billion in sales by 2015.
he said. In short, India probably will not
The two companies may be racing to
produce an Alibaba, let alone two.
Snapdeal is now compared most often with eBay, which in June led a $50 million round of strategic funding in Bahl’s company. Since 2011, the company has raised more than $200 million from investors, including Intel Capital and Nexus Venture Partners. Portfolio
Commerce
61
Indian companies would not necessarily be ploughed under if foreign e-commerce arrived in full force. India’s market is diverse and complex, which may give local companies a leg up. Until either company goes public, parsing their financial data is very difficult, said Aditya Rath, an associate director at PricewaterhouseCoopers India. “I would not be overly enthusiastic about sales,” he cautioned. For Snapdeal, he added, a bigger question lingers: “When are they going to meet their investment targets?” Snapdeal has set ambitious goals before. In a 2010 interview, Bahl pledged that the company would soon be expanding to Sri Lanka, Bangladesh and Singapore. Those plans were shelved, and the company is focused solely on India now. RIGHT NOW, India’s online retailers are sheltered from competition abroad, thanks to the government. In September 2012, India’s Cabinet opened its retail sector to foreign direct investment but excluded e-commerce. Amazon, which entered India in June, spent some lobbying funds in the United direct investment laws, according to the company’s latest disclosure. Industry experts do not expect the law to change soon, at least not before elections in May.
GETTY IMAGES
States on issues related to India’s foreign
Flipkart was founded by Sachin Bansal (left) and Binny Bansal in 2007.
But Amazon is not holding back. On
2013, with a market capitalisation more
cash-paying customers. India’s poor roads
February 5, the company added luggage,
than twice that – dwarfing both Flipkart
and highways also make logistics difficult.
video games and music to its product
and Snapdeal.
Bahl insisted that Snapdeal, as it grew
list in India. The list now encompasses
Still, analysts noted that Indian
900,000 items, excluding books, and it
companies would not necessarily be
India’s peculiarities to compete. When
has 2,300 sellers in India. It is working
ploughed under if foreign e-commerce
asked about his better-funded rivals, Bahl
with the postal service to ship to remote
arrived in full force. India’s market is
offered a boastful verdict on his industry.
areas and has started same-day delivery
diverse and complex, which may give local
“It’s not about the money that you have
in six Indian cities.
companies a leg up. A total of 65 per cent
in the bank; it’s how you spend it,” he said.
of Snapdeal’s customers pay in cash, and
“This is a game of execution. India’s not
other companies have even higher rates of
an easy market to execute in.” n
In its latest earnings report, Amazon posted $74.5 billion in global sales in April 2014
and evolved, had adapted enough to
Essentials
63
THE BEST OF LEISURE AND LIFESTYLE
THE TRAIN AT THE END OF THE WORLD
PHOTOS: GETTY IMAGES
In the remote south of Argentina among snowcapped mountains there is a little railway that bears testimony to an intriguing engineering feat, reports Graham Simmons. But in a climate where the temperature
IT’S THE NEAREST THING ON
south of Argentina, is in good hands.
wheels to a super-sized model train. Even
Expert train driver Fabian came to the
even in midsummer rarely gets above
the locomotive seems like a toy – and with
world’s most southerly city from northern
15°C, it seems that there would have to
names like “Rodrigo”, “Camila” and “Nora”,
Argentina some 25 years ago, lured (like
be some other compensating factors to
these locos are endearingly human-like.
so many others) by the good money to be
make life here – in Tierra del Fuego at the
The “Train at the End of the World”,
made here. “I’ve got three kids”, he says,
very southernmost tip of South America –
“and this is a great place to raise a family.”
worthwhile.
which runs near Ushuaia in the remote April 2014
64
Essentials
Travel
And there are compensating factors
than to establish a penal colony, where
the prison cells. So, every morning the
in abundance. The spectacular views of
cheap prison labour could be used to
prisoners on that day’s work roster would
snowcapped mountains towering over a
help develop the region and thus ensure
be marshalled to “ride the rails inland”
bustling harbour recall Charles Darwin’s
continued Argentinian sovereignty?
to Mount Susana what is now Tierra del
words when he visited Tierra del Fuego
The first convicts arrived in Ushuaia
Fuego National Park, where they were set
in 1833. “It is scarcely possible to imagine
in 1884, crammed into the holds of small
to work felling trees under the watchful
anything more beautiful than the beryl-
boats and shackled at the ankles during
eyes of armed guards.
like blue of these glaciers”, he said.
their one-month voyage from Buenos
Just outside Ushuaia, the “Ferrocarril
The “Trencito” (little train) soon became
Aires. Upon arrival, they were put to work
the most important form of transport
Austral Fueguino” (FCAF), aka “El Tren
building their own prison, which grew to
in Ushuaia. Way back in 1923 intrepid
del Fin del Mundo” (“The Train at
become a substantial building of five wings,
tourists from the cruise ship Cap Polonio
the End of the World”) is a reasonably
housing up to 600 inmates at a time.
were treated to a railway trip to Mount
authentic re-creation of one of history’s
The construction of the prison was no
Susana. And even after the closure of the
most intriguing engineering feats, a
ordinary project. Wood and building stone
prison in 1947, the rail line continued to
rail line built to service the then fast-
had to be hauled over long distances, so
cart timber from sawmills located to the
growing town in the late 1800s and early
a better means of haulage than horse-
west of the city.
1900s. Sadly, the original line was built
and-cart had to be found – and quickly.
on the backs of hard-working prisoners,
In 1902 the first “xylocarril” was built,
landslide that blocked the train line in
who laboured in conditions of extreme
consisting of wooden rails along which
1949, the railway was left abandoned
wind and cold. It seems that the prison
flatcars laden with supplies were dragged
for the next 45 years. Finally, in 1994, a
authorities went out of their way to
by oxen. In 1910 the xylocarril was
consortium of local businessmen decided
devise the cruellest possible forms of
replaced by a “decauville”, a 60-centimetre
to get the line up and running once
punishment.
type of narrow gauge rail line named after
again. The result is somewhat less than
the French engineer Paul Decauville.
totally authentic – for starters, the rail
Like the Brits who exiled convicts to Port Arthur in southern Tasmania back
But when a big earthquake caused a
Despite the freezing conditions
line is seven kilometres shorter than the
in the 19th Century, the Argentinian
along the railway line, it is said that
original line, and secondly the new track
government at that time thought that the
prisoners would beg to be sent out to
is 50-centimetre gauge, 10-centimetre
best way to get convicted criminals “out of
work. Apparently, anything was better
less than the old Trencito.
sight, out of mind” was to banish them to
than suffering the cold, boredom and
the remote south – and what better way
regular beatings that accompanied life in
Nevertheless, a trip aboard the new “little train” provides a great insight into
Ushuaia is the capital of Tierra del Fuego.
Conductor on the Tren del Fin do Mundo railway. Portfolio
65
how the great south of Argentina was
through to the centre of Ushuaia.
opened up. I set out to join a trip along
It’s no exaggeration to call this trip
the line, taking an inexpensive taxi ride
super-scenic. The rail line follows the
from Ushuaia to the railhead at Estación
track of the original prison railway, along
del Fin do Mundo (“The End of the World
the picturesque Pipo River valley. At
railway station”), about eight kilometres to
Macarena Waterfall station, we get out to
the west of the city. I was pleased to hear
take a short walk to the scenic falls, just
that plans are afoot to extend the new line
three minutes on foot from the station. The train then resumes the journey, entering the Tierra del Fuego National Park, where wild horses graze the peaceful river flats. We then traverse the “Tree Cemetery”, a ghostly and near-ghastly “graveyard” of dead tree-stumps, where
The region was a part of Gondwanaland
the forest was ravaged a century ago for
some 80 million years ago, so that the
its timber.
vegetation resembles that found in far-
Somewhat excruciatingly, the “canned”
the slopes, with the Lenga beech (known
staccato Britlish, bears little connection to
to the local Yamana people as “chomink”)
what we are experiencing. For example,
growing to over 30 metres tall.
the “tree cemetery to your right” is
Refreshed by the aromas of the forest,
actually on our left. Maybe a mute
I take a minibus back to Ushuaia, where
commentary would be better – if silence
modern-day “voluntary convicts” come
is golden, then unfortunately the current
to find work in what is now a boom city.
narrative is little better than base metal.
Ushuaia is so far south that it’s almost of a sophisticated urban fabric attracting
railhead. Facilities at the station are
settlers from across the globe.
somewhat rudimentary; maybe this is
Tragically, the railway is not the only
why many passengers (especially those on
End of the World in Ushuaia. To the
package deals) elect to immediately take
indigenous peoples of the south – the
the return trip to the End of the World
Selk’nam and Yamana – who were
station. But I take a more relaxed option,
ferociously hunted down and nearly wiped
namely a walk through the unique forests
out by “respectable” members of European
of Tierra del Fuego National Park.
society, the arriving of white colonisers
of a seashore framed by forest mountains.
April 2014
north, but this hasn’t stopped the growth
Parque Nacional, the National Park
The Ushuaia region is a rare example
Effigy of one of the prisoners who built the Tren del Fin do Mundo railway.
distant New Zealand. Beech forests cover
commentary aboard the train, spoken in
Finally, our train reaches Estación A striking mural of a Yamana Indian adorns the city post office.
The rail line follows the track of the original prison railway, along the picturesque Pipo River valley. At Macarena Waterfall station, we get out to take a short walk to the scenic falls, just three minutes on foot from the station.
must have felt like the end of the world as they knew it. The last known full-
The current train runs on 50 centimetre gauge, which is 10 centimetres less than the original.
66
Essentials
Travel
A signboard shows just how far Ushuaia is from other major cities. The rail line follows the amazing scenery of the Pip River Valley.
In 1889, 11 Selk’nam were taken to France to perform in a “human zoo”. But the indigenous peoples of Tierra del Fuego had a strong sense of human dignity. “We were taught respect,” Luis Garibaldi Honte, one of the last surviving Selk’nam, is quoted as saying. “And how to behave with all people including old people, women, children, the hungry and invalids. And always to give the best that you have, and keep the worst for yourself.” Regrettably, these values are nowadays so rare as to be facing extinction. But at least one Argentinian is admired and
Ushuaia is the most southern city in the world and Argentinians sometimes call it “fin del mundo” (end of the world).
respected in Ushuaia. A billboard at a city bus-stop bears a quote from Evita Peron, widely regarded as “The Spiritual Leader
blooded Yamana – an elderly lady living
acclimatised did they and the later-arriving
of the Nation of Argentina”, who sadly
on an island near Ushuaia – passed away
Yamana become that they wore little
passed away in 1952. “Donde existe una
just recently; but throughout southern
clothing except for guanaco capes in mid-
necesidad nace un derecho”, says the quote:
Argentina the visitor will come across
winter, insulating their bodies instead with
“Wherever there is a need, a right is born”.
mestizo people, their features etched
animal fat. But when the whites arrived,
with the sorrow of the downtrodden.
all hell broke loose. Gangs led by the mad
at the time of the first European settlement
aristocrat Jose Menendez hunted down the
of Tierra del Fuego, then the trajectory of
Selk’nam, killed them and stole their capes.
history might have been very different. n
To try to get a handle on this tragic history, I paid a visit to Ushuaia’s Yamana Museum, where the history of the indigenous peoples of Tierra del Fuego is graphically depicted through photographs, dioramas and displays of local housing and handicrafts. The ancestors of the Selk’nam arrived in Tierra del Fuego some 11,000 years ago. So
If this call to justice had had been heard
The Ushuaia region is a rare example of a seashore framed by forest mountains. The region was a part of Gondwanaland some 80 million years ago, so that the vegetation resembles that found in far-distant New Zealand. Portfolio
MOH 471/2/3/31/08/2014
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Essentials
68
Cuisine
LIFE IN THE SLOW LANE COUNTRYSIDE ARRIVES QUICKLY
outcrops, proud little city-states of leaning
Umbria is rich in history, gloriously
out of Rome. Yellow villas stand on
houses and terracotta-roofed chapels.
beautiful and at the centre of Italy’s slow
hillsides surrounded by the exclamation
It’s a landscape that has been shaped by
food movement. Take your time, and its
marks of cypress trees. This is a rich land,
two-and-a-half millennia of human effort
pleasures are revealed.
where sunflowers bloom in summer, wild
until it’s just right. Naysayers knock it as
horses splash in marshland and truffles
the poor man’s Tuscany, but this is absurd.
Orvieto comes first if you’re heading north. It’s just an hour and a half out of
grow in dense oak forests. Olives and
Rome, and appears in a tangle of railway
vines were brought here by the ancient
lines, petrol stations and supermarkets. But
Etruscans. Medieval towns sit on tufa
look up in Umbria: its old towns are cragclinging and haven’t been spoiled by the
Orvieto, like many Umbrian towns, is built on a crag.
GETTY IMAGES
PHOTOS: BRIAN JOHNSTON, REGIONE UMBRIA
Located between Rome and Tuscany, Umbria is an often overlooked region that deserves slow-paced appraisal, reports Brian Johnston.
Portfolio
69
modern infrastructure that, of necessity, lies below. Visitors ascend in an elevator through rock that has been tunnelled since Etruscan times, and find themselves in an old town dense with medieval buildings and almost free of traffic. I’m here for lunch with Lorenzo Polegri, the self-styled ‘Etruscan chef ’ who grew up in the Umbrian village Bacchi and now runs Zeppelin Restaurant in Orvieto, when he isn’t training other chefs at the Instituto di Arte Culinara. The bald, bearded Led Zeppelin fan has soon popped a sparkling wine, which we have as an aperitif accompanied by grainy nuggets of and tables, where he dispenses random advice to his customers: “Watermelon in summertime is essential.” “A bite of
GETTY IMAGES
aged parmesan. He flits between kitchen
People dining along Corso Vannucci in Perugia.
porchetta in the morning will transform your day.” “Canneloni is so 1960s!” I tuck into his autumnal tagliatelle al cingiale, rich with a sauce containing wild boar. Over an espresso Lorenzo advises me to use my free time in Orvieto to visit the market in Piazza del Popolo, where farmers arrive with eggs, rosemary, red beets and flowers, and I can try a strange local herb called rooster’s foot. “Near the entrance of Caffè Scarponi you’ll find a fruit-and-vegetable seller we call Silvio
The Basilica of St Francis in Assisi.
the Sicilian – wrinkled face, some teeth
sinner’s arm, and a horned imp pulls off
missing, eyes blue as the Sicilian sea. He
someone’s ear as feathery angels float above.
sells amazing artichokes from the slopes
After these ferocious warnings, I calm
of Etna, with black volcanic ash still on
my nerves in local delicatessens. Orvieto’s
them. He cuts blood oranges into wedges
shops are rich in cheese and salami and
and hands them out…”
crespolino pancakes with leeks and cheese
I head off past old towers, compact
The Zeppelin Restaurant in Orvieto is run by Chef Lorenzo Polegri. April 2014
in a béchamel sauce. I only have room for
Gothic palaces and shops selling wooden
a gelato, however. Chef Lorenzo has his
animals and Renaissance-inspired
doubts that gelato here is any better than
earthenware. Patterned cobblestones lead
elsewhere. “We may use less sugar, churn
towards the cathedral, which suddenly
it less, use less fat, or maybe our cows
looms in improbable black-and-white
provide better-tasting milk. But I think it’s
stripes. The façade is a wonder in pink
just because you’re on vacation, relaxing
and green marble, with superb sculptures
and savouring the beautiful surrounds, so
picking out scenes from the Creation and
all of a sudden gelato tastes like nothing
Last Judgement. A dragon chews on a
at home.” Maybe, but my jasmine ice
70
cream subtly flavoured with cinnamon is sensational. I slurp and stroll down to San Giovenale on the western edge of town. The district has an almost villagelike appeal, with little laneways huddled around an ancient church and locals sitting in the square. From the walls, I look over valley sunflowers and vineyards. From here it’s on to Perugia, which sits high on another hill, eyeballing rival Assisi across the valley. Where invaders were once flummoxed, escalators now rumble up through the rock to emerge to sunlight, cypress trees and a town of Gothic windows and teetering chimneys. The wide main street of the old town, Corso Vannucci, is lined by buildings in pale pink stone. Gothic Palazzo dei Priori, built in
Umbrian salamis on sale in an Orvieto shop.
1297, is one of Italy’s great public buildings.
to its university, where foreigners come
It’s actually several buildings – including
to study all things Italian. The town has
the valley is the most truly touristy: nearly
a meeting house for lawyers studded with
good jazz bars and a lively atmosphere.
six million people come here each year
heraldic crests, two guild houses with
At Osteria a Priori, I find a compact
to visit the hometown of St Francis, a
elaborate woodwork, and the home of
restaurant and food store that has
thirteenth-century saint who preached
one-time moneychangers – decorated with
only Umbrian-sourced food, wine and
poverty and became a firm favourite
superb Renaissance frescoes.
drinks. Locals dine on hand-cut pastas,
among the jostle of Catholic saints. His
homemade ragù and loin flavoured with
tomb lies at one end of town, fellow St
local Valnerina truffles.
Clare’s at the other. But among the holiness
But Perugia is also very much a living town, surprisingly cosmopolitan thanks
Of all Umbrian hill towns, Assisi across
View over Assisi, one of Umbria’s most popular tourist destinations.
Portfolio
Essentials Cuisine
‘Etruscan chef’ Lorenzo Polegri making tagliatelle in his Restaurant Zeppelin in Orvieto.
Prosciutto is a typical Umbrian delicacy.
there’s plenty of history too, and much for non-pilgrims to enjoy. Assisi’s old town square has ancient Roman columns from a Temple of Minerva, and the hillside is a cascade of cobblestone streets topped by a whopping papal fortress. The valley below is a spread of sunflower fields and olive groves like a vision of heaven. For those seeking an alternative reality, down the road, yet a tourism world away. Only locals sit in the bars, and the streets are pleasingly quiet, but Spello still blends impressive art with history and good food. It has an ancient Roman
GETTY IMAGES
however, Spello is only 14 kilometres
Umbria’s two largest cities, Perugia and Foligno, are both famous centres of pastry and sweets.
gateway, sixteenth-century church
Roman-era walls. It has arched roofs and
frescoes and buildings of pink marble
a vast fireplace where lamb is cooking over
that blush as the afternoon progresses.
coals. The menu features creative modern
At first encounter it seems like an aloof,
dishes using local produce such as black
closed sort of place, with enclosed squares
truffle, Norcia ham, mountain asparagus
and secretive, narrow streets and houses
and porcini mushrooms. It’s a feast enjoyed
so close together on the hillside they’re
in slow time: a flan of pear and melted
locked in an eternal stone embrace. But
pecorino cheese, gnocchi with fresh tomato
then I notice the homely details: plant
and pancetta sauce, and filet of pork in
pots by doorways, neighbourhood women
potato crust with walnuts. Somewhere,
chatting from wooden chairs dragged into
I even have room for chocolate fondant
the street, kids skipping in alleys.
with orange cream. It’s four o’clock when
I settle in for an afternoon of indulgence at Il Molino. The restaurant is housed inside a medieval mill and even has some April 2014
I stumble out into the cool autumn Umbria has a huge selection of cheese made from both cow and sheep milk.
afternoon, but what’s the hurry? This is Italy, and life’s to be enjoyed. n
71
Essentials
72
Environment
ChinA’s UrbAn reFUgees A typicAl morning for lin liyA,
beneath cloudless blue skies and sat down
Guangzhou – she at a Norwegian risk
a native of Shanghai transplanted to the
with a visitor from Beijing in the lakeside
management company, he at an advertising
ancient town of Dali in southwest China,
boutique hotel started by her and her
firm that he had founded – to join the
goes like this: See her three-year-old son off
husband. “I think luxury is sunshine, good
growing number of urbanites who have
to school near the mountains; go for a half-
air and good water,” she said. “But in the big
decamped to rural China. One resident
hour run on the shores of Erhai Lake; and
city, you can’t get those things.”
here calls them “environmental refugees”
browse the local market for fresh vegetables and meat. She finished her run one morning
More than two years ago, Lin, 34, and her husband gave up comfortable careers in the booming southern city of
or “environmental immigrants.” At a time when hundreds of millions of Chinese, many of them poor farmers, are
geTTY images
© 2013 New York Times News service
Millions of Chinese are streaming from the countryside into cities, but some urban dwellers have started a reverse migration, reports Edward Wong.
Chongsheng temple is situated close to the ancient town of Dali. Portfolio
73
leaving their country homesteads to find work and tap into the energy of China’s dynamic cities, a small number of urban dwellers have decided to make a reverse migration. Their change in lifestyle speaks volumes about anxieties over pollution, traffic, living costs, property values and the general stress found in China’s biggest coastal metropolises. Take air quality: Levels of fine particulate matter in some Chinese cities reach 40 times the recommended exposure limit set by the World Health Organisation. In November, an official Chinese news report said an eight-year-old girl near Shanghai was hospitalised with lung cancer, the youngest such victim in China. Her doctor blamed air pollution. The urban refugees come from all walks of life – businesspeople to artists, teachers to chefs – although there is no
Lin Liya and her husband gave up good careers to start a boutique hotel.
reliable estimate of their numbers. They have staked out greener lives in small enclaves, from central Anhui province to remote Tibet. Many are Chinese bobos, or bourgeois bohemians, and they say besides escaping pollution and filth, they want to be unshackled from the material drives of the cities – what Lin derided as a focus on “what you’re wearing, where you’re eating, comparing yourself with others.” The Town of Dali in Yunnan province, nestled between a wall of 3,962-metre mountains and one of China’s largest
Their change in lifestyle speaks volumes about anxieties over pollution, traffic, living costs, property values and the general stress found in China’s biggest coastal metropolises.
Zhao Qing, an artist, built homes there. As at other lakeside villages, the immigrants, some with immense wealth, live near fishermen and farmers. “All kinds of people come here with different dreams,” said Ye Yongqing, 55, an ethnic Bai artist from the region who has lived mostly in cities, including London, but bought a home here five years ago. “Some people imagine this place as Greece or Italy or Bali.” “Dali is one of the few places in China that still has a close tie to the earth,” he
freshwater lakes, is a popular destination.
added, sitting in front of a table of squashes
Increasingly, the indigenous ethnic Bai
in his garden courtyard. “A lot of villages in
people of the area are leasing their village
China have become empty shells. Dali is a
homes to ethnic Han, the dominant group
streets of the old town. They run cafes,
in China, who turn up with suitcases
hotels and bookstores, and the younger
and backpacks. They come with one-way
ones sit on the streets selling trinkets
when she came as a backpacker in 2006.
tickets from places like Beijing, Shanghai,
from blankets.
She returned twice before moving here.
Guangzhou and Shenzhen, all of which have
Some become farmers here, and some
survivor of this phenomenon.” Lin said she first fell in love with Dali
In 2010, on the third visit, she and her
roaring economies but also populations of
spend their days home schooling their
husband, whom she had met trekking in
15 million people or more.
children. Their presence has transformed
Yunnan, looked for land to lease to build
Dali and surrounding villages into a cross
a hotel on Erhai Lake. It has not all been
between Provence and Haight-Ashbury.
easy going, Lin said, citing negotiations
On internet forums, the new arrivals to Dali discuss how to rent a house, where to shop, how to make a living and what
One magnet is the village of Shuanglang,
schools are best for their children. Their
which became a draw after the famous
presence is everywhere in the cobblestone
Yunnan natives Yang Liping, a dancer, and
April 2014
and misunderstandings with local officials, villagers and employees. “We just wanted to switch to a different
74
Essentials
Environment
Educator and translator Song Yan leads a discussion during a book club meeting at her tea salon and bookstore.
life,” said Lin, who had lived in Shanghai as well as Guangzhou. “My friends in Shanghai are struggling there – not only in their work but also just to live. The prices are too high, even higher than in Europe. They become crazy, go mad.” Lin moved here less than two years after giving birth to a son. “It’s good for the baby because it’s like my mother’s childhood,” she said. “My mother’s childhood in Shanghai – the air was still clean, you could see blue skies, there was clean water.” That is a common refrain among parents here. One afternoon, four mothers, all urban refugees, sat outside a bookstore cafe, Song’s Nest, practicing English with each other.
Young “urban refugees” play guitar and sell souvenirs in Dali.
“The one thing we all have in common is we
about their moves. “I’ve never felt so free in
fled in September with her three-year-old
moved here to raise our children in a good
my life,” Zheng said. “I grew up as a city boy,
son and husband, an American who works
environment,” one woman said.
and I never realised how much I like living
remotely as a technology director for a New
close to nature.”
York publishing company.
The bookstore’s owner, Song Yan, moved here this year and translates books
From the nearby lakeside village of
“I’m still productive even though I don’t
by an Indian philosopher popular with
Caicun, Huang Xiaoling, a photographer,
go into an office,” she said. “I don’t know if
Chinese spiritual seekers. One night, she
flies back to Beijing to shoot portraits and
it’s the weather and the environment, or just
and another translator and urban refugee,
events for clients. She had once lived in a
me feeling that, ‘Oh, I got out of the cave
Zheng Yuantao, 33, talked over dinner
courtyard home in the Chinese capital but
that I wanted to escape.’” n Portfolio
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A team approach gives patients the power of choice
Essentials
Innovation
THE ALLURE OF
SPEED Richard Noble, who raised the land speed record to 1,019.4 km/h with a jet-powered car, is planning to reach 1,609.3 km/h, reports John Burns.
T
HE AMBITION TO be the fastest man on four wheels – the divine madness of it, as enthusiasts see it – had
modest beginnings in 1898, at a village on what were then the outskirts of Paris. A Frenchman, Count Gaston de Chasseloup-Laubat, driving what was little more than a streamlined horse cart with an electrically powered motor, achieved 63.1 km/h. Chroniclers in the Paris newspapers wondered if he had gone fou furieux, or raving mad, as the French put it when somebody fired by ambition or soaring imagination loses all grip on reality. Richard Noble knows all about de Chasseloup-Laubat and others – mostly Britons and Americans, just about all
© 2014 NEW YORK TIMES NEWS SERVICE
76
Portfolio
Essentials Innovation of them far-gone mavericks – who have
the enthusiasm of generations. Some
taste for well-cut suits and tables at some
followed in the quixotic and sometimes
have also gone bankrupt, or worse,
of London’s most upscale clubs, Noble
deadly annals of the world land speed
pushing the record ever higher.
has a background as a largely self-taught
record. As an established member of the
At times, Noble, 67, seems puzzled by
club – Noble raised the record to 1,019.4
the crackpot nature of it all. After decades
gentleman’s side of the mix of well-heeled
km/h with a jet-powered car, Thrust SSC,
of chasing the record, and starting again
adventurers and gritty garage men who
in 1983 – he has bankable credentials in
when some usurper – especially an
have chased the record.
his bid to raise the record to 1,609.3 km/h
American – hijacks the mark, he admits
by the end of 2016.
to an element of exhaustion with the
Noble to polar explorer Robert Falcon
technical and financial challenges.
Scott and Everest mountaineer George
Noble’s plan involves a dart-shaped missile of a car called Bloodhound, named
“People often say to me, ‘It must be
aviation engineer that puts him on the
British commentators have compared
Leigh Mallory, who flew the flag for
for a British-built ground-to-air-missile
exciting,’ and I tell them, ‘It’s a bloody
Britain – and died for it – during
of the Cold War era, which comes with a
nightmare,’” he said. Quickly recovering
unsuccessful record-breaking bids of their
$70 million price, by far the most costly
his passion, he added: “You know, we
own when Britain was an imperial power,
attempt on record.
Brits have always been good at this kind
and eager to demonstrate it.
It is a venture with a long pedigree. In vehicles powered by batteries, steam, piston engines, jets or rockets, and on
of caper. And it’s the most exciting thing you can do on earth.” As an English-educated Scot with a
For all that, the Bloodhound team has bowed to contemporary values by declaring its undertaking to be primarily
stretches of public roads, frozen lakes,
motivated by a desire to inspire a new
racing circuits, dried-up lake beds and
generation of British engineers. The
deserts, in Britain, the United States and
approach helped engineers secure
Australia, past record-setters have fired
the government’s backing – crucial in acquiring the state-of-the-art combat jet
A Rolls-Royce jet engine developed for the Typhoon fighter jet will provide part of the power for the Bloodhound car.
April 2014
77
GETTY IMAGES
78
Andy Green holds the current land speed record of 1,227.9 km/h, making him the only man to exceed the speed of sound on land.
Richard Noble, who set a land speed record in 1983, hopes to raise the record to 1,603.9 km/h by the end of 2016.
on land. He set the mark aboard Noble’s second jet-powered vehicle, also called Thrust, in 1997. Now he has teamed with Noble to raise the record by about 402.3 km/h, which would be by far the biggest single jump in the record’s history. Green will make the bid without an ejector seat, or much else in the way of inbuilt survivability should Bloodhound crash; the project engineers have decided, in effect, that a catastrophic failure at The $70 million Bloodhound project is so complex that it requires 60 designers, engineers and ground support staff.
engines indispensable to the project – after the daunting risks brought an initial point-blank refusal. Science classes at more than 5,000 British secondary schools are now linked into the project via the Bloodhound website, BloodhoundSSC.co.uk, which
Bloodhound is expected to cover nearly 457 metres, or about the length of five American football fields, per second.
furnishes what the project’s principals say
1,609.3 km/h would be inescapably fatal. Instead, they have decided that Green’s safety will be assured, as far as it can be, by the rigorous design of Bloodhound and the thousands of hours spent on computer simulations to prevent the vehicle from going airborne – the greatest fear of all aspiring record-breakers – or veering from the arrow-straight path it must follow. The Bloodhound team aims to achieve the target at the Hakskeen Pan, a vast,
is up-to-the-minute technical data that
to a Royal Air Force fighter pilot, Andy
dried-up lake bed in the Kalahari desert
can be channelled into classroom projects.
Green, an Oxford-educated mathematician
in South Africa’s Northern Cape province.
One school has built a miniature version
and wing commander who flew combat
Hundreds of villagers recruited by
of Bloodhound and propelled it across the
missions in northern Iraq before the
the local government are already well
schoolyard at 386.2 km/h.
US-led invasion in 2003.
advanced in readying the stretch of desert
Noble no longer travels that fast. Since
Green, 51, holds the current speed
floor earmarked for the attempt, 19.3
setting his record two decades ago, he
record, 1,227.9 km/h, making him the
kilometres long and nearly 549 metres
has handed the driving responsibilities
only man to exceed the speed of sound
wide, by removing more than 6,000 tons Portfolio
Essentials Innovation It will take almost eight kilometres to bring Bloodhound to a halt with airbrakes, parachutes and, at under 321.9 km/h, inboard brakes on its castaluminium wheels, and only after it has passed through the “measured mile” that record-breakers are required to cover. halt with airbrakes, parachutes and, at under 321.9 km/h, inboard brakes on its The frame of the Bloodhound car under construction in Avonmouth, England.
cast-aluminium wheels, and only after it has passed through the “measured mile” that record-breakers are required to cover. Under rules set by the Paris-based governing body for motorsports, the Federation Internationale de l’Automobile, record-breakers must complete two legs – outbound, then back over the course in the opposite direction – within 60 minutes. Like many who have challenged the land speed record, Noble has travelled a lonely and at times forlorn path since beginning the project in 2008. At times, the bid has survived month to month, through financing shortfalls and unexpected technical problems. Deadlines for the record attempt have repeatedly passed. Now, though he still has millions of
The Bloodhound project has been stalled numerous times by lack of funding and unforeseen technical issues.
dollars to raise, Noble is confident that his team of 60 designers, engineers and support staff members working in a
metres, or about the length of five American
chilly commercial warehouse at
football fields, per second. No aircraft flying
Avonmouth, just south of Bristol, will
first rolling tests for an airfield in
lower than 152 metres – a level at which
meet the 2016 deadline.
England in the spring of 2015. That will
shock waves generated by supersonic speeds
be followed by series of runs at carefully
resonate off the ground, causing massive
enough, to deliver a sobering note of
ascending speeds on the Hakskeen Pan in
challenges for stability – has gone that fast;
caution.
August 2015. Finally, after Bloodhound
the record for low-level manned flight is
has been fine-tuned back in England,
1,590 km/h, set in the 1970s by a civilian,
time,” Noble said of his pilot. “He wants
an assault on the 1,609.3-km/h mark is
Darryl Greenameyer, piloting an American-
to live long enough to sail his boat into
planned for August or September 2016.
built F-104 Starfighter.
of surface stones. The team has scheduled the vehicle’s
At the height of the record attempt, Bloodhound is expected to cover nearly 457 April 2014
On top of that, it will take almost eight kilometres to bring Bloodhound to a
But he is wary enough, and experienced
“Andy Green wants to live a long
harbour at a steady five knots. We’re going to do everything we can to make sure that he does.” n
79
80
Essentials
Technology
The eyes of
InTel’s fuTure
In order to make the next generation of technology more user friendly it is imperative to know what people want. And that’s where Genevieve Bell enters the picture, reports Natasha Singer. Portfolio
81
AFP
Genevieve Bell, a cultural anthropologist, at the Intel Corporation in Hillsboro, Oregon.
B
ehind the grey,
© 2014 New York Times News service
noise-absorbing cubicle walls
Intel is trying to understand how people interact with technology in their daily lives.
big-ringed, trailing clouds of Chloé perfume. She may still see herself as “just a feral kid
how people use technology in their homes and in public. The team’s findings help
at the Intel Corporation in
from Australia.” But for Intel, she personifies
inform the company’s product development
Hillsboro, Oregon, researchers
something grander: the company’s
process and are also often shared with
who forecast the future of computing can
aspirations to be regarded as more than just
the laptop makers, automakers and other
sense her arrival.
a chip maker.
companies that embed Intel processors in their goods.
Reverberating down the hall comes an
Bell’s title at Intel, the world’s largest
emphatic Australian voice and the rhythmic
producer of semiconductors, is director of
thwack-thwack of pointy-heeled boots
user experience research at Intel Labs, the
interviewed parents in China who regarded
on carpet. And then, Genevieve Bell, an
company’s research arm. She runs a skunk
home computers as distractions from their
anthropologist who is Intel’s resident tech
works of some 100 social scientists and
children’s schoolwork. Intel developed a
intellectual, materialises – auburn-haired,
designers who travel the globe, observing
prototype “China Home Learning PC,”
April 2014
Some years ago, for instance, Bell’s team
Essentials
82
Technology
reuters
Although carmakers have embedded voicecommand systems and the like in their vehicles with the idea of reducing distracted driving, the researchers found that when drivers were bored in traffic, they often picked up their handheld personal devices anyway. Bell and her team had forecast the mobile trend early on, but Intel was slow to capitalise.
Although carmakers have embedded
eventually manufactured by an Intel
but Intel didn’t prioritise it at the time.
customer, with a key that parents could
Although the company recently introduced
voice-command systems and the like in
activate to prevent their children from
new chips for mobile devices, PC makers are
their vehicles with the idea of reducing
playing online games during homework time.
still Intel’s largest customer base, accounting
distracted driving, the researchers found
for $33 billion of its $52.7 billion in revenue
that when drivers were bored in traffic, they
last year.
often picked up their hand-held personal
“My mandate at Intel has always been to bring the stories of everyone outside the building inside the building – and make
Now, attributable in part to the efforts of
devices anyway. “What became clear was a couple of
them count,” says Bell, who considers
Bell and her team, Intel is trying to catch up,
herself among the outsiders. “You have
forging into realms like wearable gadgets
things: how much technology people bring
to understand people to build the next
that could showcase its new, lower-powered
to cars, how much they were ignoring the
generation of technology.”
ultra-small chips.
technology that was built in and how much
By “outside,” she isn’t referring only to
A few years ago, Bell was thinking about
consumers outside of the United States. Bell
one particular end user: the car owner. If
and her team are responsible for sussing
the marketing is to be believed, cars are no
out the attributes that people everywhere
longer just transportation devices, but mobile
love, or wish they could have, in their PCs,
entertainment systems.
televisions and so on. Over the last few
Bell has never been much impressed by
years, they have been concentrating on
such idealised visions of technology. So when
consumers’ appetites for hyper-personal
those notions start to settle into conventional
technology, like voice-recognition systems
wisdom, she wants to kick the tires, so to
and fitness trackers. In essence, they are
speak. This urge is not just contrarianism. If
pushing Intel toward a more people-centric
Intel wanted to innovate for its automaker
era of personal computing.
clients, Bell believed, the company would
Lately, that work has become all the
This more grounded, nuanced view of driver behaviour served as a reality check
need to better understand how real people
more important to the company. That is
shifted back and forth between built-in
because Intel, which has long dominated
technologies and the personal devices they
the laptop processor field, was surprisingly
carried into their cars.
slow to acknowledge the burgeoning market
that technology was failing them,” Bell says.
So Bell and Alexandra Zafiroglu, a fellow
for smartphone chips. In fact, Bell and her
Intel anthropologist, set off on an expedition.
team, among others, had forecast the mobile
They travelled around the world, examining,
trend early on, says Diane Bryant, general
logging and photographing the contents of
manager of Intel’s data centre group,
people’s cars.
Alexandra Zafiroglu, an Intel anthropologist, shows a blanket bearing a huge photograph of the contents of one person’s car.
Portfolio
83
for Intel and its clients. In the autumn, Intel announced a collaboration with Jaguar Land Rover to develop, among other things, better ways for consumers to sync their personal devices with their cars. Intel has a similar effort with Toyota, to develop userinteraction systems involving voice, gesture and touch. The goal is to make built-in technology more seamless and supersede a driver’s reflex to reach for a hand-held device. Bell was teaching in the Stanford anthropology department in 1998 when a technology entrepreneur she met in a Palo Alto bar suggested that she apply for a job at Intel. At the time, the company had a handful of social scientists on staff. But executives had been looking for an
Genevieve Bell with Brian David Johnson, who is leading Intel’s project to develop the Jimmy robot.
anthropologist to conduct research into how
observances. After she and her colleagues
environments. Bell sees these connected
people used technology in their homes.
returned, they printed posters with the
objects as harbingers of devices that will have
photographs and comments of people they
relationships, rather than mere interactions,
her would-be bosses that she couldn’t see
had interviewed, posting them around
with people.
herself fitting in at Intel. After all, she wasn’t
Intel’s offices. Employees were so interested
a technologist, she didn’t do PowerPoint,
in the images, she recalls, that there were
about delighting us or taking care of us, not
she used a Mac and she was, she told them,
bottlenecks in the hallways.
traffic lights,” Bell mused over lunch with
During her job interview, Bell apprised
a “radical feminist and an unreconstructed neo-Marxist.” She was hired. At Intel, Bell started taking research trips around the world to see how consumers
She also discovered that Intel engineers were more welcoming of naysayers than many professors she had encountered. “At Stanford, they didn’t like it when
“Maybe the Internet of Things will be
Brian David Johnson, a futurist in her lab. Johnson is leading a project to develop a personal robot, named Jimmy, which would relate to people as individuals. White
used technology in their kitchens and
you told the faculty they were dead wrong,
and curvaceous, Jimmy is a knee-high
living rooms, at sports events and religious
whereas here, that was a cultural value,” Bell
customisable system – like a mobile phone
explains. “Here I would say, ‘You are dead
on legs – onto which consumers could
wrong, and here are 17 reasons why and six
download apps.
data sources,’ and they would say, ‘That’s very interesting; tell me more.’” Bell has been reflecting on a contemporary
“There’s enough computational power to
issue: anxiety over the possibility of
sense what your mood is, where you are, an
intelligent, sensate computers that might
understanding that is relationship-based.”
take on a life of their own. In 1818, she notes,
Jimmy is meant to show Intel’s corporate
the publication of Frankenstein, by Mary
customers what its design thinking – and
Shelley, stoked fears that inventions might
chips – can accomplish. But it is also rooted
come to life and kill us – a theme that later
in Bell’s belief that the future of computing
recurred in films like The Terminator.
is in personalised, people-centric devices. In
It’s relevant again now, she says. With
April 2014
“Jimmy is a computational platform that can walk around,” Johnson explained.
fact, Intel plans to make the software public
the advent of the Internet of Things,
this spring so that people with access to
an increasing number of objects, like
3-D printers can create their own Jimmys.
thermostats and traffic lights, are being
“Ultimately, it will be about people stuff,”
outfitted with sensor chips that can collect
Bell says, “and Jimmy makes the people stuff
and transmit information about their
readily apparent.” n
84
Essentials
Profile
An Age Defying Act Plรกcido Domingo is known for his work rate and, at the age of 73, he shows no signs of slowing down, reports Michael Cooper.
Domingo has sung some 144 roles and is nearing his 3,700th performance.
Portfolio
85
© 2014 New York Times News service
P
lácido domingo’s day
of New York City Opera, the company
roles. “I always have an itch to look for
began with a morning dress
that propelled his career but declared
interesting things.”
rehearsal on the stage of New
bankruptcy last fall. After Domingo
York’s Metropolitan Opera,
brought down the house with an aria
for one generation’s leading Hamlet to
where he traded jokes with the cast and
from Andrea Chénier, the conductor,
become another’s King Lear. But such
crew at a theatre where he has been
George Manahan, turned and offered
evolutions are harder to pull off in opera,
singing for nearly half a century. Then,
him the baton. Domingo took it, leapt to
where voices wear out, and the parts of
in full regalia as the sea god Neptune, he
the podium and led the orchestra in the
older characters are often written for
ran through a new Handel aria he was
overture of Verdi’s La Forza del Destino.
lower voices than those of young heroes.
learning for the revival of The Enchanted
It was the kind of pace for which
It is not uncommon in the theatre
But Domingo, who sometimes
the industrious Domingo has been
describes his voice as “baritenor,” is
That night, Domingo was still going
famous throughout his career – and
making it happen. Several years after he
strong, returning to the City Centre stage
which, somewhat to his surprise and
Island, a Baroque pastiche.
where he made his New York debut in 1965 to sing at a benefit with the musicians
to his evident delight, he has been able to maintain long past the age when many singers have retired to a life of giving master classes. Domingo celebrated his 73rd birthday in January in Vienna, where he was singing the role of Francesco Foscari in Verdi’s I Due Foscari. It is one of the few parts, he said, that are too old for him. “He is in his 80s, so for that I am very young,” he said with a laugh. He has been defying the gravity of age, and continuing to command the stages
He has been defying the gravity of age, and continuing to command the stages of the world’s leading opera houses, as a result of one of the more remarkable transformations in opera history.
of the world’s leading opera houses, as a result of one of the more remarkable transformations in opera history. Domingo, one of the great tenors of
first tested the baritonal waters in the
recent memory and one-third of
title role of Verdi’s Simon Boccanegra,
the Three Tenors of pop fame, is making a second career singing baritone roles. “What can I tell you?” Domingo asked in an
Domingo finds himself engaged to sing a growing roster of baritone roles for several years to come. If some critics note that his voice lacks the dark colours of a
interview in his dressing
true baritone, his ability to sing the parts
room at the Met, where he
in his own unmistakable ringing tones
discussed the latest twists
has continued to thrill many fans around
in a preternaturally wide-
the world.
ranging career in which
April 2014
which he hinted might be his swan song,
His late-career voice change poses
he has sung some 144
not only musical challenges, but also
roles in repertory ranging
dramatic ones: Domingo has never liked
from lyric Italian parts
to play bad guys, a staple of the baritone
to Wagner heldentenor
repertory. But he is now returning to
86
Essentials
Profile
“When I first got here, and he was talking about wanting to have serious planning about five, six years down the road, I thought he couldn’t be serious.”
some of the operas in which he enjoyed his greatest triumphs as a tenor, including Verdi’s La Traviata and Il Trovatore – not as the lover, but as the father or the adversary. For decades, Domingo has been preparing his plan B, C, and D for when he could no longer sing. He started conducting. He became the general director of the Washington National Opera and then the Los Angeles Opera, a position he still holds. He began Operalia, a contest to identify young talent, and started working with several programmes for young artists. But he has kept singing. “I don’t think any Faustian deal was involved,” said Peter Gelb, the Met’s general manager, who has engaged Domingo to sing Don Carlo in Ernani next season, Simon Boccanegra the following season and Nabucco in 2016-17. “When I first got here, and he was talking about wanting to have serious planning about five, six years down the road, I thought he couldn’t be serious,” Gelb recalled. “But he’s proved everyone wrong, including me.” His longevity is all the more remarkable given that doubters have long warned that he was singing too many taxing roles. A 1972 profile in The Placido Domingo on a throne designed by David Adjaye for the Metropolitan Opera in New York.
New York Times Magazine asked: “Will Plácido Domingo last at the top of the tenor heap? Or is he, at 31, in danger of burning himself out, and joining all those Portfolio
87
with my granddaughters.” If he has sometimes seemed fearless in taking on roles, he always prepared them meticulously, paying special attention to his breathing technique. But even Domingo – who is nearing his 3,700th performance and was called “the Iron Man of opera” by the Met’s former general manager, Joseph Volpe – winces when young singers tell him that they sing every day. “The throat needs a rest,” he said. He is generous with his praise of other singers, rhapsodising about a Met performance he had just heard by the tenor Jonas Kaufmann as Massenet’s “Werther,” a role Domingo sang at the Met in 1978. “I think he is one of the best singers I ever heard,” he said. Domingo as the sea god Neptune in The Enchanted Island.
Domingo, who has a full schedule of performances planned this spring in Spain, Berlin, Mexico, Poland, Vienna, Los Angeles and London, still brushes off the idea that he works too hard, citing the example of his parents. When he was a child, they brought him from Spain, where he was born, to Mexico, where they ran a company that performed zarzuelas, a kind of Spanish operetta, twice a day and three times on Sundays, not counting rehearsals. “So when people tell me, ‘Plácido, you work too much,’ I say, ‘Listen, my parents worked too much,’” he said. Domingo is still weighing more plans for the future, noting that he has recovered from the pulmonary
AFP
embolism that landed him in the hospital Conductor George Manahan handed Domingo the baton at a recent performance with the New York City Opera.
last summer.
His longevity is all the more remarkable given that doubters have long warned that he was singing too many taxing roles.
title role of Verdi’s Rigoletto, which he
April 2014
predecessors on opera’s casualty list?”
He said that he would like to bring the
It seems safe to say, four decades later,
sang for a television special a few years
that those fears may have been overstated.
ago, to the stage. He is tempted to sing
“I have been around so long, I started
Amfortas in Wagner’s Parsifal. And, he
to sing with ladies that could be my
said, he hopes to sing at the Met to mark
grandmother,” said Domingo, recalling
the 50th anniversary of his 1968 debut.
the time he sang in Donizetti’s Lucia
“I have many things in mind,” he said. “I
di Lammermoor in 1962 at the Fort
don’t know how many I’m going to be able
Worth Opera with Lily Pons, a major
to accomplish. But certainly it’s not for
star of the 1930s. “I am singing now
lack of ideas. Maybe for lack of time.” n
Essentials
Other Business
US Mints Baseball Coin The United States Mint began selling
The coins were created as part
special curved coins in March to
of the National Baseball Hall of
honour the National Baseball Hall of
Fame Commemorative Coin act of
Fame, with a design representing the
2012 to help fund operations of
inverse images of a ball and mitt.
the independent, not-for-profit
Some 50,000 $5 gold coins,
educational institution that
400,000 $1 silver coins and 750,000
runs a museum in Cooperstown,
half-dollar alloy-clad coins will be
New York.
produced. They will be the first curved
Surcharges on the pieces will be
coins – concave on the heads side and
$35 for each gold coin, $10 for a silver
convex on the reverse – ever minted by
coin and $5 for each half-dollar coin
the US Mint, according to a statement
and will be authorised for payment to
on the agency’s website.
the Hall of Fame, the US. Mint said.
REUTERS
88
Investors Prefer Handsome Pitches Investors are more likely to put money into a business idea pitched by a man than a woman, and even more so if the man is good looking, according to a new study. The research, published in the Proceedings of the National Academy of Sciences and authored by researchers from MIT, Harvard and the Wharton School, reveals that a good idea and an experienced presenter are not always enough to win the financial backing required for a successful start-up.
Sicilian Pastry in Space
The study examined several business
Sicilian amateur scientists have launched a
pitches, both at real pitch competitions
model cannolo, a cream-stuffed pastry roll
a home-made spacecraft called the
in the United States and in a controlled
symbolic of the Italian island, into the
'Cannolo Transporter' equipped with
experiment setting, in which the content
stratosphere, capturing bizarre images of
two cameras and a GPS tracker, captured
of the pitches was the same but the
the dessert flying far above the earth.
stunning and comical images as the
presenters were different. It found investors “prefer pitches
The ‘Sicilian Space Programme, which cost a rough total of 350 euros, had
Attached to a large helium-filled balloon,
cannolo soared above the clouds towards space.
presented by male entrepreneurs
symbolic importance as well as being a
compared with pitches made by female
scientific feat, the three natives of the
according to Paolo Capasso, 37, a
entrepreneurs, even when the content of
island town of Enna behind it told Reuters.
computer technician responsible for the
the pitch is the same.” It added “attractive males were
Their heavily indebted island, long plagued by organised crime, was forced to
It rose to at least 29,768 metres
careful calculations behind the launch. As a real cannolo would be unlikely to
particularly persuasive, whereas physical
impose a strict spending programme by
survive the voyage, the group made a
attractiveness did not matter among
Rome in 2012 and has one of the highest
model of the cherry-studded pastry with a
female entrepreneurs.”
unemployment rates in Italy.
polymer clay material hardened in an oven. Portfolio
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