Portfolio| April 2014

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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NEW YORK - Cellini

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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

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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

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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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MOH 9/2/1/10/4/14

Dr. CLAUDIA MACHADO

website 1949/2/8/31/7/14

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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MYSTERIOUS DOUBLE TOURBILLON 9454 MC THE ROTONDE DE CARTIER MYSTERIOUS DOUBLE TOURBILLON 9454 MC WATCH, CERTIFIED “POINÇON DE GENÈVE”, IS A FORMIDABLE FEAT OF FINE WATCHMAKING DESIGNED USING THE PRINCIPLE OF MYSTERY CLOCKS, EMBLEMATIC MAISON CREATIONS THAT DATE BACK OVER A CENTURY. ESTABLISHED IN 1847, CARTIER CREATES EXCEPTIONAL WATCHES THAT COMBINE DARING DESIGN AND WATCHMAKING SAVOIR-FAIRE.

From UAE: 800 Cartier (800-227 8437) Outside UAE: +971 4 236 8345