Monday, December 28, 2015

Bezos's Behind-the-Scenes Role in the Washington Post's Web Growth (BusinessWeek)

Every two weeks, Jeff Bezos holds an hour-long conference call with executives at the Washington Post. Twice a year, the managers fly to Seattle for day-long strategy sessions with the Inc. founder. And every so often, they find a reader complaint in their inbox forwarded without comment from

More than two years after he bought the Post from the Graham family for $250 million, Bezos has shaped its digital transformation in ways big and small. His behind-the-scene influence has yielded a milestone: The newspaper has surpassed the New York Times in unique U.S. Web visitors two months running.

After Bezos acquired the Post -- as an individual buyer and not as part of e-commerce giant Amazon -- he said he had no formula for rescuing the declining newspaper industry, and promised an era of experimentation.

Jeff Bezos

“I didn’t know anything about the newspaper business,” Bezos said last year at a media conference. “But I did know something about the Internet. That, combined with the financial runway that I can provide, is the reason why I bought the Post.”

Bezos didn’t respond to a request for an interview.

Post executives say the newspaper’s digital growth -- from about 26 million unique visitors in August 2013 to about 72 million in November 2015 -- is the result of several initiatives. Most notably, it has widened its focus on national and international coverage and added 70 employees to the newsroom, including about 50 reporters and editors, lifting the headcount to about 700.

The digital gains can also be attributed to its relationship with Amazon and Bezos himself. While he hasn’t expressed opinions about the Post’s journalism and has only visited the newsroom a few times, Bezos has been hands-on with its technology and instrumental in making it a more data-driven company, said Shailesh Prakash, the Post’s chief information officer.

“He’s got his fingerprints in a lot of things,” Prakash said. “I send him links to try. He’s curious. He asks questions.”

In September, the newspaper said that Amazon Prime subscribers can get online access to the national edition free for six months, with an option to continue subscribing at 60 percent off. Late last year, the Post introduced an app that comes preinstalled on Amazon Kindle Fire tablets -- a project Bezos was deeply involved with, Prakash said.

The Post has hired some engineers from Amazon, and its data scientists talk regularly with their Amazon counterparts, getting tips on how to recommend stories better based on Amazon’s approach to recommending products to consumers, Prakash said.

Recruiting top engineers has become easier because the Post is owned by Bezos, Post executives said. “A number have come from some of the top places for an engineer to be and that’s in part because they have the opportunity to work with Bezos,” said Publisher Fred Ryan.

Frozen Pensions

Not all decisions have been popular. Under Bezos, the Post has frozen pensions for some current employees. Freddy Kunkle, a co-chair of the Post unit of the Washington-Baltimore News Guild, said the pension was already fully-funded and called the decision “very shocking.”

“There was no reason to do that,” Kunkle said. “It was just macho-capitalism.”
Some Post reporters have felt more pressure to ensure their work is generating high levels of Web traffic, Kunkle said.

Kris Coratti, a Post spokeswoman, said journalists at the paper aren’t measured by how much traffic their stories generate. She declined to comment on the pension decision.

And while the Post’s online traffic has almost tripled under Bezos, its print circulation, like many other newspapers, has continued to decline. As of the end of September, daily print circulation, excluding Sundays, is down down 18 percent to 340,381 since Bezos took over, according to the Alliance for Audited Media. As a private company, the Post doesn’t disclose revenue, profit or digital subscribers publicly, and Post executives declined to comment on those figures.

Still, Bezos has imbued some of the Post’s journalists with a sense of optimism after years of buyouts and cuts. Kevin Merida, a former managing editor who recently left to join ESPN, said Bezos’s arrival was like “all of a sudden Michael Jordan is coming to your team.” 
Reporter Carol D. Leonnig, who won a Pulitzer Prize this year for her series on the U.S. Secret Service, said the Post has hired more breaking news reporters, freeing up veteran journalists like herself to do more investigative reporting.

“There’s a lot of energy and excitement in the room to replace all the grim, dour, low morale that plagued the place before,” Leonnig said.

Inside the new newsroom in Washington, which opened this month, a large screen displays real-time traffic statistics of stories on its website. Less visibly, Bezos suggested measuring whether readers prefer the Post to its rivals. So engineers created a program that takes articles from the New York Times, Wall Street Journal and other publications, strips out their branding, then surveys readers on which articles they’d rather read. The 600 or so readers are paid a small fee for taking the survey and are asked to provide some basic demographic information.


Bezos’ influence is evident in small ways, too. Post executives have adopted some of his sayings, called “Jeffisms.” They talk about reducing “cognitive overhead” and “friction” that discourages readers from signing up for e-mail newsletters. Bezos calls ideas that could upset Post subscribers, like jamming too many ads on a Web page, “reader hostile.” As he’s done at Amazon, Bezos requires Post executives to write lengthy memos outlining their projects instead of using PowerPoint presentations, believing that narrative writing forces people to think more deeply.

Marty Baron, executive editor of the Post, says the model under the billionaire owner probably can’t be replicated at publicly-held newspaper companies that are pressured to meet the financial expectations of Wall Street.

“If you’re trying to improve your financial performance quarter to quarter, it would be very difficult to do this,” Baron said. “If you take the longer view and are willing to accept the market will take the longer view as well, or you don’t care, then you can make these kinds of investments.”

Monday, December 21, 2015

Why This Year’s Christmas Season Is So Angry (BusinessWeek)

Diane Farmer, 54, is a lifelong Democrat from the New York City area now living in Palm Beach County, Fla. She attended Catholic schools and later belonged to unions while working for a phone company and then in a court clerk’s office. She voted for Barack Obama in 2008 and 2012. But Farmer says she’s never been more excited about a candidate than she is this time. Her choice? Donald Trump.

The convert to Trumpism shared her enthusiasm while stopping by glitzy Trump Tower on New York’s Fifth Avenue to pick up her fifth “Make America Great Again” cap (free with every $30 campaign contribution). “What he’s saying is what everybody’s thinking,” she said. “Too many people are getting free stuff. We should send the illegals out of the country. I want them off welfare and food stamps. Go home, and come back again when you’re ready to work.” As for the Middle East: “We should have dropped the bomb and ended the issue. We need to annihilate that, uh ...,” she said, trailing off.

This holiday season, Trump’s glowing fireplace of fury is firing up people like Farmer who used to look to the left—as well as a surprisingly wide swath of the Republican Party—for answers. He’s scoring his highest numbers ever among Republican primary voters—35 percent, according to the latest New York Times/CBS News poll. Enthusiasm for him only grew after he called for a ban on Muslims entering the country. To some, he seems divisive, but not to Farmer. “I thought Obama would be a unifier since he’s black and white and Muslim [sic]. But he’s an antagonizer,” she said. “We need to try something different. We can’t live like this.”

Yup, it’s an angry Christmas, and it’s worth thinking about why. Something has changed to create such a shift in the public’s leanings, from taking a chance on Obama’s audacity of hope to delighting in Trump’s straight-up audacity. Fear of Islamic terrorism has something to do with it. Wars in Iraq and Afghanistan that achieved approximately nothing and the stunning rise of China as a rival power have also left many Americans feeling confused and vulnerable. But the most potent fuel for Trumpism is undoubtedly the sick economy. A long stretch of underperformance has seeded mistrust in the American Dream among millions of would-be breadwinners, especially people without college educations.

As everyone knows by now, a winner-take-all economy is producing big gains for a thin stratum at the top but little for anyone else. Bernie Sanders likes to point out that the top 10th of 1 percent of families control as much wealth as the bottom 90 percent. The inflation-adjusted income of the median American household is lower now than in 2000. On average, young men are earning less after inflation than their fathers did at the same age. More than a fifth of American children live below the poverty line, according to Census Bureau data. Even though the unemployment rate is down to 5 percent and the last recession ended in 2009, 72 percent of Americans think the country is still in a recession, according to a Public Religion Research Institute survey released last month.

This isn’t good for business, which is getting targeted for blame: Eighty-six percent of respondents in the PRRI survey said corporate offshoring of jobs is somewhat or very responsible for America’s economic troubles, up from 74 percent in 2012.

Two kinds of populists come to the fore when anger over inequality and perceived injustice runs high, says Luigi Zingales. An Italian-born economist at the University of Chicago Booth School of Business and author of the 2012 book A Capitalism for the People, Zingales says Theodore Roosevelt represents the best kind of populist: someone who fought corruption and broke up monopolies to give ordinary people a chance. Trump, says Zingales, is more about affixing blame than creating opportunity. He likens him to Silvio Berlusconi, the freewheeling media magnate who was elected prime minister of Italy four times but was ultimately convicted of tax fraud. Trump and Berlusconi, Zingales adds, “are both very good at talking to the stomach of the people.”

The erosion of trust that’s both reflected in and accelerated by the Trump phenomenon has real economic consequences. Business is hard to conduct in societies with low levels of trust. The share of people who agree that “most people can be trusted” varied from a high of 66 percent in the Netherlands to a low of 3 percent in Trinidad and Tobago in the World Values Survey, 2010-14. Government and commerce can grind to a halt when trust is absent.

The U.S., with 35 percent saying most people can be trusted, is in the top third of countries for societal trust, which helps explain why it is one of the world’s richest nations. That endowment of stability doesn’t come with a lifetime guarantee, however, and U.S. politics has lately taken on a spiteful cast. “While Americans are inclined to ‘hedge’ expressions of overt animosity toward racial minorities, immigrants, gays, or other marginalized groups, they enthusiastically voice hostility for the opposing party and its supporters,” according to Fear and Loathing Across Party Lines: New Evidence on Group Polarization, a study by Stanford political scientist Shanto Iyengar and Princeton postdoctoral researcher Sean Westwood that was published this year in the American Journal of Political Science. In four experiments, the authors found that discrimination based on political affiliation “exceeds discrimination based on race.”

Marriages across party lines are down to below 10 percent from more than 30 percent in the 1960s, Iyengar says, citing others’ research. The fabric of society is fraying. “I don’t want to sound like I’m an alarmist, but I could see the possibility of violence, large-scale street movements which are politically motivated,” he says in an interview.

Congress isn’t helping matters, because it’s even more polarized than the society it’s supposed to represent. The result is debt-ceiling brinkmanship and repeated stalemates over legislation. The Voting Rights Act of 1965 passed with the votes of 73 percent of Democrats in the Senate and 94 percent of Republicans, a fairly narrow partisan gap. In contrast, the Affordable Care Act of 2010 passed with the support of 100 percent of Senate Democrats and zero percent of Republicans, notes Michael Cembalest, chair of market and investment strategy at JPMorgan Chase.

Trump complicates the polarization story because he draws support from some disaffected Democrats, like Farmer. But that might simply mean that the political parties themselves are realigning. The free-trade and open borders philosophy of pro-business Republicans is not, to say the least, on the rise.

Absent another Teddy Roosevelt riding into town, there’s no easy solution for what ails the country. The hard solution is to rebuild trust by fixing the economy so it works for everyone. But turning things around will require everyone working together. Which isn’t happening because, well, Americans no longer trust each other. There’s the dilemma in a nutshell. Happy New Year!

Thursday, December 17, 2015

These 10 Artworks Alone Totaled $1 Billion at Auction This Year

The $100 million club is getting crowded.
Barring a sudden mania for illustrated Haggadahs at next week's Important Judaica sale at Sotheby's New York, the top 10 art auction lots of 2015 have already been decided.

What did it take to make it into the top 10 this year? Well, it certainly helped if the lot were a painting (9 out of 10), depicting a woman (6 out of 10), and created by a white, male artist (10 out of 10). It further helped if it were sold in New York (10 out of 10), at Christie's (7 out of 10), and at an evening sale (10 out of 10.) Finally, it greatly improved a lot's odds to be by Pablo Picasso, who painted three of the artworks in the top 10.

Add it all up and what do you get? Nine-hundred and ninety six million dollars (again: That's $996 million) and change.

The auction houses have yet to release their official 2015 totals, but anyone browsing this year's sales results could tell you that the super-high end of the art market bears an increasingly tenuous connection to the rest of the art world. Put another way, it's like trying to make a judgment about the airline industry based on Gulfstream G650 sales. Forget emerging artists and galleries. Christie's November postwar and contemporary art day sales in New York included over 300 lots of similar, slightly less-sought-after works by artists that included Jeff Koons, Alexander Calder, and Andy Warhol and totaled just under $89 million, an amount that would slot in only at No. 5 on the following list. The same for Sotheby's, whose November contemporary day sales totaled $98 million, and whose bestselling lot was an oil painting by Roy Lichtenstein that sold for $3.4 million, or 1.89 percent of the price of this year's top-selling Picasso. 

So what makes the following artworks so special, aside from totaling almost $1 billion? Scroll down and judge for yourself.

1. Pablo Picasso, Les femmes d'Alger (Version 'O'), 1955

Pablo Picasso, Les Femmes d’Alger, 1955
Sold for $179,365,000 at Christie's

2. Amedeo Modigliani, Nu couché, 1917-1918

Amedeo Modigliani, Nu Couche, 1917-1918
Sold for $170,405,000 at Christie's

3. Alberto Giacometti, L'homme au doigt, 1947

Alberto Giacometti, L'Homme au doigt, 1947
Sold for $141,285,000 at Christie's

4. Roy Lichtenstein, Nurse, 1964

Roy Lichtenstein, Nurse, 1964
Sold for $95,365,000 at Christie's

5. Mark Rothko, No. 10, 1958

Mark Rothko, No. 10, 1958
Sold for $81,925,000 at Christie's

6. Cy Twombly, Untitled (New York City), 1968

Cy Twombly, Untitled (New York City), 1968
Sold for $70,530,000 at Sotheby's 

7. Pablo Picasso, La Gommeuse, 1901

Pablo Picasso, La Gommeuse, 1901
Sold for $67,450,000 at Sotheby's

8. Pablo Picasso, Buste de femme (Femme à la résille), 1938

Pablo Picasso, Buste de femme (Femme à la résille), 1938
Sold for $67,365,000 at Christie's

9. Vincent van Gogh, L'Allée des Alyscamps, 1888

Vincent van Gogh, L'Allée des Alyscamps, 1888
Sold for $66,330,000 at Sotheby's

10. Lucian Freud, Benefits Supervisor Resting, 1994

Lucian Freud, Benefits Supervisor Resting, 1994
Sold for $56,165,000 at Christie's

Your Kid Just Got a Drone. Should You Get Insurance? (BusinessWeek)

Thousands of novice pilots will be unwrapping drones for Christmas, and some are going to crash and burn.
The next wave of hobby drones will be wrapped in boxes underneath Christmas trees before they fill the skies. If industry sales projections come true, the holiday season will put tens of thousands of relative novices at the controls of small unmanned aerial vehicles in densely populated cities and suburbs. All that amateurish swooping over houses and cars, spooking pets and dodging humans, will invariably lead to cracked windows and more than a few bloody injuries.
First come the toy drones; then the liability claims start flying.
“Almost no one is thinking about insurance coverage when they’re opening the box,” says Jeff Antonelli, a Chicago attorney who specializes in federal regulations for unmanned aerial systems. The liability protection in homeowners or renters insurance policies will sometimes cover damage or injury from a drone crashing into a neighbor’s house, vehicle, or child. Yet this coverage isn’t universal, Antonelli says, and some policies specifically carry an aviation exclusion that encompasses recreational drones, which the Federal Aviation Administration currently classifies as small aircraft.
There's little doubt that 2015 marks a vast expansion in hobby drone ownership. The Consumer Technology Association calls this “a defining year” for small drones, projecting total U.S. sales of 700,000 units in what would mark a 63 percent increase from 2014. The wide range of drone models available this Christmas—from the $40 Protocol Neo-Drone Mini to a $3,000, 15-pound DJI T6000 with a sophisticated 4K video camera—means there’s now a model on the market to fit almost any budget.
“Things can happen, and this isn’t bulletproof technology”
Best Buy, which does a brisk business in recreational drones, has posted safety brochures in more than 1,000 stores in the hope of breeding safer rookie pilots. Shoppers bringing home a drone for the holidays can also purchase from Best Buy a one-year membership in the Academy of Model Aeronautics, an Indiana-based organization for model aircraft enthusiasts, to take advantage of group liability coverage. Another major drone retailer,, also posts links to a “Know Before You Fly” educational website established by drone manufacturers to promote safe flying. 
Of course, most of the affordable recreational drones are small and weigh less than two pounds—less a hazard to a window than the average errant football toss. Even so, a rash of drone accidents and injuries could lead to stiff regulations that might squelch the industry’s growth. And there have already been a scattering of high-profile examples, including an onstage mishap this year in which a lightweight drone turned pop star Enrique Iglesias’s hand into a bloody mess.
One of the only insurance policies designed to cover hobbyist drone pilots comes from membership in the Academy of Model Aeronautics, which charges adults $75 per year. All the group's 185,000 members enjoy $2.5 million in personal liability coverage from Westchester Surplus Lines Insurance, part of ACE Group, and $25,000 medical coverage.
“Most of the claims we have are small claims,” says Rich Hanson, the AMA’s director of government relations. The most common case involves an out-of-control drone flying into a car. The AMA declined to reveal how many claims on average are filed per year.
A DJI Inspire drone flies over Brooklyn's Calvert Vaux Park. Manufacturers expect to sell 700,000 recreational drones in 2015.
A DJI Inspire drone flies over Brooklyn's Calvert Vaux Park. Manufacturers expect to sell 700,000 recreational drones in 2015.
Homeowner policies at Allstate, one of the largest property insurers, will cover damage if a policyholder crashes a drone and damages someone else’s property. But a “first-party claim”—damage you do to your own home—isn’t covered, says Allstate spokesman Justin Herndon. The insurer sees a drone-mishap situation as akin to having your pet lion maul a neighbor’s furniture; Allstate would cover the big cat’s destruction of your neighbor’s stuff, but not your own.
A spokesman for State Farm says that its homeowner policies would generally cover a drone accident like any other mishap. “Damages from drones pose nothing new in this regard,” says State Farm spokesman Chris Pilcic.
Beyond insurers, regulators also are preparing for how to manage increased drone flying. Starting on Dec. 21, just ahead of the Christmas holiday, owners of small drones must register the machines with the federal government so that authorities will be able to more easily investigate crashes and illegal flights. Only the smallest toy drones weighing less than 250 grams will be exempt from the registry.
“Things can happen, and this isn’t bulletproof technology,” says Hanson of the Academy of Model Aeronautics. As drone registration increases, he and other observers predict that some states will require recreational drone operators to carry insurance coverage, much like mandatory insurance for motorists.
The current situation is “a balancing act between insurance and regulation,” says Matthew Henshon, a Boston attorney whose practice covers emerging technologies. States and cities are beginning to address some of the regulatory issues that accompany drone flying, and he predicts that any surge in property damage or injuries will cause politicians to react quickly.
“If bad things are happening, someone is going to figure it out and step in from a regulatory standpoint,” Henshon says. “If enough damage is being done, someone is going to call their congressman.”
Someone might also call a personal-injury lawyer. 
Michael Brevda, who spends most of his time pursuing nursing home neglect cases, has registered the website as a way to hang out a shingle for people wounded in a drone mishap. Brevda, an attorney at Domnick Law in Palm Beach Gardens, Fla., has so far settled one drone-related case for a small amount and sees the drone side of his business as still in its infancy.
Even if the skies are abuzz with drones, don’t look for the kind of rampant personal-injury legal pitches that accompany auto accidents and medical malpractice, staples of television, radio, and billboard advertising. Most amateur drone enthusiasts won’t have the kind of financial resources that make civil litigation worthwhile. The issue of a deep pocket is also one reason major commercial operators—be it Amazon, real estate agents, surveying companies, motion picture studios, or aerial photography firms—are likely to carry far more insurance and face greater regulation of their activities.
But the lawsuits probably won’t have to wait for corporate drone disasters. Hanson and other attorneys predict that invasion of privacy claims against commercial drone operators—not personal-injury torts—will likely spur most legal work.

Wednesday, December 16, 2015

Acción de la FTC: Prohibición para estafadores

Acción de la FTC: Prohibición para estafadores que los excluye del negocio de alivio para deudores hipotecarios y del sistema de telemercadeo

15 de Diciembre de 2015
Bajo los términos de un acuerdo que resuelve los cargos presentados por la Comisión Federal de Comercio (FTC, por su sigla en inglés) imputándoles haber engañado a propietarios de viviendas que estaban enfrentando una ejecución hipotecaria, cuatro estafadores de modificaciones de hipotecas, Brian Pacios, Chad Caldaronello, Justin Moreira y Derek Nelson, quedarán sujetos a una prohibición.
 Estos acuerdos se derivan de una demanda que la FTC presentó en 2015 contra Pacios, Caldaronello, Moreira, Nelson, Denny Lake y la demandada para propósitos de recobro de daños Cortney Gonsalves en la que se alegó que operando comercialmente bajo los nombres HOPE Services y HAMP Services les prometieron ayuda a los consumidores para conseguir una modificación de sus hipotecas, pero en su lugar, les robaron los pagos de sus hipotecas, conducta que en algunos casos dio lugar a la ejecución hipotecaria y la bancarrota de los consumidores. El acuerdo con Pacios también resuelve una medida de desacato adoptada por la FTC en su contra por la infracción de una orden judicial expedida en 2013 que le prohibía participar de actividades de alivio para deudores hipotecarios.
Jessica Rich, Directora del Buró de Protección del Consumidor de la FTC, dijo al respecto: “Estos estafadores oportunistas les quitaron hasta el último dólar a los propietarios de vivienda en dificultades, pero hemos clausurado sus esquemas destructivos e ilegales. Ahora, además de las sentencias monetarias, la corte ha expedido una prohibición que les impide operar en estos sectores e incurrir en las prácticas de las que sacaron provecho.”
Bajo los términos de las órdenes judiciales acordadas anunciadas hoy, Pacios, Caldaronello, Moreira y Nelson también tienen prohibido efectuar declaraciones falsas respecto de cualquier producto o servicio, beneficiarse de la información personal de los clientes, y además deben eliminar correctamente dicha información. Pacios, Caldaronello y Moreira quedan excluidos del sistema de telemercadeo, y Pacios y Caldaronello también tienen prohibido vender productos y servicios financieros relacionados con el crédito y usar alias. Moreira y Nelson también tienen prohibido efectuar declaraciones materiales falsas e infundadas para vender productos y servicios financieros, y Nelson tiene prohibido operar en el sistema de telemercadeo si no cumple con los requisitos de mantenimiento de registros estipulados en la orden.
Las órdenes contra Pacios y Caldaronello les imponen una sentencia monetaria de más de $2.7 millones de dólares, monto que representa la cantidad total de dinero pagada por los consumidores. La orden contra Moreira le impone la misma sentencia monetaria que quedará suspendida tras la entrega de determinados activos. En caso que se descubra que Moreira tergiversó su situación financiera, deberá asumir inmediatamente el pago total de la sentencia monetaria. La orden contra Nelson  le impone una sentencia monetaria de $859,839 que quedará suspendida tras la entrega de determinados activos; pero en caso que se descubra que Nelson tergiversó su situación financiera, deberá asumir inmediatamente el pago total.
La orden contra Gonsalves, un demandado para propósitos de recobro de daños que se benefició con este esquema, le impone una sentencia monetaria de $218,768 dólares, monto que representa la cantidad de dinero que Gonsalves recibió de parte de la estafa. La litigación contra Lake sigue en curso.
El resultado de la votación de la Comisión para autorizar a su personal a presentar las órdenes de acuerdo acordadas de carácter final fue 4-0. Las órdenes contra Pacios, Caldaronello y Moreira fueron expedidas por la Corte Federal de Distrito para el Distrito Central de California el 3 de noviembre de 2015. Las órdenes contra Nelson y Gonsalves fueron expedidas el 4 de diciembre de 2015.
NOTA: Las órdenes de acuerdo de carácter final adquieren fuerza de ley cuando son aprobadas y firmadas por el juez de la Corte de Distrito.
La FTC trabaja en favor del consumidor para la prevención de prácticas comerciales fraudulentas, engañosas y desleales y para proveer información para ayudar a los consumidores a identificar, detener y evitar dichas prácticas. Para presentar una queja en internet use el Asistente de Quejasde la FTC o llame al 1-877-FTC-HELP (1-877-382-4357). La FTC ingresa las quejas presentadas por los consumidores a una base de datos segura llamada Red Centinela del Consumidor (Consumer Sentinel) que es utilizada por más de 2,000 agencias de cumplimiento de las leyes civiles y penales en los Estados Unidos y del extranjero. El sitio web de la FTC proveeinformación gratis sobre una variedad de temas del consumidor. Haga clic en la opción “me gusta” la FTC en Facebook
(link is external)
, “síganos” en Twitter
(link is external)
, y suscríbase a los comunicados de prensa para acceder a las noticias y recursos más recientes de la FTC.

Tuesday, December 15, 2015

Export Sales Mission to Korea & Taiwan: April15, 2016


Join Secretary of Commerce Bill Johnson on an
Export Sales Mission to Korea & Taiwan

April 15-23, 2016
Seoul, Korea and Taipei, Taiwan

South Korea and Taiwan, strong and growing Asian economies, are highly attractive export markets for U.S. companies. Over the past several decades, South Korea has achieved a remarkably high level of economic growth and is now the United States’ sixth largest goods trading partner with a trillion-dollar economy. The United States is Taiwan’s third largest trading partner, accounting for more than 10 percent of its total trade. Florida companies are invited to join the mission and participate in the Gold Key program. This program offers an excellent way to meet with potential business partners and build relationship in both markets.

EFI will offer a limited number of Gold Key Matchmaking, one-on-one appointments. The price of this service is $2,600, which includes a $500 fee for interpreter services in Korea. Small and mid-sized Florida manufacturers and professional service providers may qualify for a Gold Key Grant, which will offset the matchmaking registration fee of $2,100 for the first company representative. A separate application process will be required for this grant. Participants will be selected on a first-come, first-served basis.

A Delegate package is offered being for $800. The package will include admission to all mission events and ground transportation to all mission events. The Delegate package does not include any one-on-one appointments. This option encourages delegates to schedule their own individual appointments and activities during their free time.

For more information please contact:
John Diep
Enterprise Florida Inc.
Tel: 561-832-8339

Max Stewart
Enterprise Florida Inc.
Tel: 813-276-9430


Thursday, December 10, 2015

How Dow Chemical Is Turning Sewage Into a Refreshing Drink (BusinessWeek)

Inside the technology that cuts the crap from water.
Snehal Desai shows off Dow reverse osmosis elements.

“This is step one of the filtration process,” says Snehal Desai, struggling to suppress his gag reflex. “We call it the big-tooth comb.” There’s a torrent of raw sewage streaming through a channel below us at an Orange County Sanitation District facility that treats waste from the toilets, showers, and sinks of 1.5 million Californians. An enormous rake descends into the depths of the sludge and brings up a load of detritus—cardboard, wet wipes, tampons, marbles, toys, tennis balls, sneakers—that can’t fit through the screen covering the plant’s intake.

The flow that passes through has now begun its journey in an advanced purification process, and that’s what Desai and I have come to see. This plant is right next to the county’s water treatment facility, and together they perform a kind of alchemy, converting human sewage into purified water so clean it can go right back into residential faucets. The plants pump out 100 million gallons of drinking water daily, enough to supply 850,000 Orange County residents, which makes this the largest “toilet-to-tap” facility on the planet.

For decades, sewage has been treated and used for irrigating crops, parks, and golf courses, but making it fit for human consumption requires a much more rigorous filtration technology using polymer membranes. No thicker than a human hair, the membranes are at once delicate and durable. Using pores smaller than one-millionth of a millimeter, they’re capable of wiping out microscopic contaminants.

That’s Desai’s specialty—manufacturing membranes that cut the crap, literally, from sullied water. He’s come to see his products at work in the plant, which has become a global proving ground for toilet-to-tap technology. Desai is 52, but even with his salt-and-pepper hair he looks a decade younger, wearing jeans, a pastel plaid button-down, and thick-framed glasses. The global business director for the water division at Dow Chemical, he pulls in more than $1 billion in sales annually. The membrane market is growing more than 10 percent a year in part because of increasing water scarcity worldwide and ever more pressure to develop drought-proof water supplies from new sources.

“Recycled wastewater will probably be the single largest source of water for California over the next quarter century,” says Tim Quinn, executive director of the Association of California Water Agencies. “And it isn’t just happening here—the same goes for many water-strapped regions of the world.” San Diego recently announced plans to produce 33 percent of its water from recycled sewage by 2035, up from none today, and is designing a toilet-to-tap facility even bigger than Orange County’s. Governments in Australia, China, India, Israel, and Spain, and throughout the Middle East and sub-Saharan Africa have developed recycled wastewater systems for irrigation; many are beginning to convert their systems to make drinking water. Singapore has the largest program, producing a third of its potable water from sewage.

When you see and smell the noxious muck that courses into a sewage plant and consider everything it holds, it’s hard to believe the purification process is even possible. It’s harder still to accept that the end result can be delicious. “The purity you get from this process is quantifiably better than the water you get from traditional treatments—better even than some bottled water,” Desai says. “What flows from our membranes is essentially the Rolls-Royce of municipal water.”

Dow Chemical is the company that gave the world napalm, Agent Orange, silicone breast implants, and plutonium triggers for hydrogen bombs. “If not Dow, then who?” Desai asks. The company has been a dominant player in advanced materials engineering for more than a century; it does business in 180 countries and has revenue of $57 billion a year. “The future water supply is a big-ass problem,” he says. “We’ve got growing urban populations, growing industries, and dwindling resources. Who can tackle something of this magnitude? You need patience and horsepower to come up with solutions and to scale them. You can’t do that without big-boy company money.”

Andrew Liveris, Dow’s chairman and chief executive officer, sees only opportunity. “Communities and companies are increasingly realizing the economic value of clean water—and that’s driving growth in Dow’s water business at two times [the rate of] the global GDP,” he says.

There’s one lingering hitch: the gross-out factor. Even given the desperation of drought, drinking your own waste is nobody’s first choice. “Accepting recycled wastewater is kind of like being asked to wear Hitler’s sweater,” says Paul Rozin, a social psychologist at the University of Pennsylvania who’s researched consumer response to toilet-to-tap programs. “No matter how many times you clean the sweater, you just can’t take the Hitler out of it.”

That’s certainly how I feel at the end of our tour of the Orange County sewage and water plants, when we arrive at a shining stainless-steel sink. What just hours earlier was raw sewage is flowing crystal clear from the tap. Desai fills two Dixie cups. “To the future!” he toasts. I shudder as I knock mine back. Somehow, there’s no trace of the Hitler. The stuff tastes every bit as good as water that bubbles up from a spring in the Alps. I pour myself a second cup.

The whole concept of recycled sewage might be harder to swallow if there weren’t already so much sewage in the water sources we routinely draw from. The Colorado River, for example, a primary source of drinking water for Southern California, receives billions of gallons a day of treated sewage: More than 200 plants in six states pump their effluent into the river. The Mississippi is also inundated. By the time water gets to New Orleans, it’s been ingested and expelled by people in more than a half-dozen cities farther upriver.“Very little of our water supply today is naturally pure,” Desai says. 

In fact, the very reason chemists created these synthetic membranes decades ago is that, increasingly, humans have been contaminating the water supply. Industries have emerged, meanwhile, that need purer water for manufacturing. Most major players in the automotive, beer and wine, food processing, petrochemical, pharmaceutical, and semiconductor industries, for example, rely on water purified by membranes.“Hyperpure water is how you get to precision electronics,” Desai says. “When you’re making a microchip—if you have even one little tiny particle of contaminant from the water used to clean the components, it could fail.”The membranes that do the hardest work—pulling out viruses, pathogens, and hormone-disrupting chemicals—perform “reverse osmosis,” known in the industry as RO.

They simulate the biological filtration process that happens within our cells as fluids flow across semipermeable membranes. Imagine that a hole in the RO membrane is the width of a basketball hoop. On that same scale, a water molecule would be the width of a basketball, but a pathogen or a virus would be the size of a Hummer—it can’t pass through. Nor can pharmaceutical residues, which on this scale can be as large as a Mack truck.The most difficult thing to remove is salt, because it isn’t suspended in water, but dissolved. That’s why recycling wastewater is about half the cost of desalinating ocean water: Both use RO membranes, but the salinity of ocean water is much higher, so it’s harder and much more energy-intensive to pump it through the tiny holes. The RO membranes are rolled up inside 8-by-40-inch cylinders, thousands of which are stacked and networked together at the Orange County facility. Water is blasted through the modules with 1,000-horsepower pumps.Before the water gets to the RO stage, it must go through seven other stages of filtration. In one, it enters a “microfiltration” process in which the water is sucked through thousands of tiny, porous straws. In another, it’s zapped with a purifying ultraviolet light. “At each stage of filtration, you’re using methods that remove contaminants with lower and lower molecular weight,” Desai says. “Ultimately, by the time you get to reverse osmosis, nothing gets by but pure water.”Traditional forms of treating water are much cruder. Instead of forcing it through membranes, most plants in the U.S. today use chemicals. When water is pulled from the Colorado River, for instance, chemicals known as coagulants and flocculants are poured in, causing particles to bind together, separate from the liquid, and settle to the bottom of a holding tank. The water is then removed and disinfected with chlorine.Another plus of the toilet-to-tap process: Sewage water doesn’t have to be transported long distances. 

Almost none of the freshwater consumed by the 22 million people of Southern California is local, and the cost of importing it is climbing.Even though it’s local and cost-effective, toilet-to-tap has been hard to sell to the public. Proposals for major recycled wastewater plants in Tampa Bay, Los Angeles, and Brisbane, Australia, have failed in the past two decades—shut down by public objection to the yuck factor.A key concern of critics is that wastewater could be more easily contaminated by a pathogen. Everybody in the water industry remembers the largest epidemic of waterborne disease in U.S. history: a 1993 outbreak caused by cryptosporidium, an invisible parasite that made its way into Milwaukee’s public water supply. Almost half a million people were affected with uncontrollable diarrhea; 70 died from dehydration. The disinfectant chemicals used at the water treatment plant weren’t strong enough to kill the parasite.Because of this concern, the Orange County plant is required to have an “environmental buffer.” After it gets through the RO process, the water that I drank at the end of my plant tour must flow into a local aquifer and mix with that natural supply before it’s pumped into people’s homes. And yet there’s no health reason why processed water can’t be consumed immediately. “No pathogen, including cryptosporidium, can make it past the physical barrier of an RO membrane,” says Mike Markus, general manager of the Orange County Water District. “Nor can pharmaceutical chemicals or endocrine disrupters or virtually all other contaminants.” He explains that as toilet-to-tap technology becomes more widely accepted, it will be cheaper and more efficient to pump directly into people’s homes.

Desai is frowning into his grande black coffee at Starbucks. He’d asked the baristas to leave “room for milk,” but they filled his cup nearly to the brim. “This is one of those inefficiencies that drives me crazy,” he says. “Think of all the millions of people each day who dump out a portion of their coffee to put milk in because it’s filled too high—all the water and heat and fuel and coffee beans that are wasted because of this negligence! Why isn’t there a line printed on every coffee cup that represents a universal standard for ‘room for milk’?” He pauses, and his face brightens. “If you’re interested in efficiency, everywhere you look there are opportunities.”

Desai has the kind of mind that churns out ideas so fast you can almost hear it humming. The son of Indian immigrants, he grew up in Ann Arbor, Mich., where his father was a civil engineer for Bechtel. While a pre-med student at the University of Michigan, he decided he preferred chemistry to biology; he didn’t like laboratories, but he loved business. “I was the guy who was the social chairman of my fraternity, and I worked my way through college as a bartender,” he says. “I wasn’t cut out for a lab coat.”

He got a job at Dow after graduating, selling water treatment products to power and food processing plants. After a few years in the field, he received an MBA from Northwestern’s Kellogg School of Management, where he took night classes. He spent more than a decade at Dow, then got the entrepreneurial itch and left to help build the startup Natureworks, a maker of corn-derived biodegradable plastics. He took annual sales from $10 million to $100 million and then returned to Dow to head the water division.

A model used for demonstration shows a cross section of one of the company’s reverse osmosis filters. Unfurling a roll of reverse osmosis membrane.
                                                                               Unfurling a roll of reverse osmosis membrane.
Dow’s been making water filtration membranes since the 1970s—at first as a means for desalination. By the mid-’80s, it was selling water filtration products to Intel, General Motors, and other companies that wanted reliable streams of hyperpure water in their manufacturing facilities. Today, Dow is the biggest player in the RO membrane market, but it faces stiff competition from Toray Industries and Hydranautics. “They’re like the Toyota, Ford, and GM of membranes,” says Tom Pankratz, a water industry analyst, “but Dow is considered to be out front.”

Desalination is still a huge part of Dow’s water business. Its membranes were used at a $1.5 billion plant that opened this fall in Carlsbad, Calif., which provides almost 10 percent of San Diego’s drinking water, siphoned from the Pacific Ocean. But given the cost advantages of toilet-to-tap, it has far more potential than desalination. Desai expects his sales will eventually tilt heavily toward toilet-to-tap. “When I look at my innovation portfolio now, pretty much everything in it has some connection to recycling wastewater,” he says. “That’s the megatrend.” 

The nerve center of the membrane industry is located in an unassuming metal warehouse in Edina, Minn., just outside the Twin Cities. “This is by far the most membrane made under one roof anywhere on the planet,” Desai says. Tens of thousands of RO units are fabricated here every day. The membranes, which are thinner than tracing paper, are layered with mesh spacers that allow the water to flow through; they’re then rolled into cylinders, wrapped in fiberglass, tested, and packaged.

The process is automated. Each RO cylinder is cut, glued, and rolled by robotic arms that look like praying mantises dancing. “The robotics in this facility allow us to scale and build products that don’t fail,” Desai says. “Failure in the purity of the water supply isn’t an option. The membranes have to work. Precision is everything.”

Desai with a load of reverse osmosis water filters at the manufacturing facility in Edina.
Desai with a load of reverse osmosis water filters at the manufacturing facility in Edina.

Desai is reluctant to disclose much detail about Dow’s precision manufacturing; there’s a blue line painted on the floor that I can’t cross, and no pictures can be taken. He says Dow lost its patent on RO membranes in the 1990s—a blow to the company but a boon to the larger industry in the long term, driving competition, efficiency, cost reduction, and scale. In that same period, Dow has increased its products’ efficiency. A decade ago, each RO cylinder could filter 4,800 gallons of water per day; now that same-size unit can filter 6,000 gallons.

“Ten years ago there was only one machine in this whole building—the rest was empty,” says Max Fadeyev, a plant engineer. “Now it’s jampacked with equipment running 24 hours a day, seven days a week. To us, it’s seemed like an explosion.” In December, Dow is opening a second large-scale water membrane manufacturing plant, in Saudi Arabia.

For now, Desai is focused on making membrane products for big industrial and municipal water systems, but he predicts the systems will eventually become smaller, serving communities and even individuals. Dow is also investing heavily in decentralized, at-home water recycling for developing-world markets. Bill Gates made a pitch for a similar approach in January 2015 when he blogged about watching a big pile of human feces on a conveyor belt enter a small-scale waste treatment plant built to serve a community. In minutes, the feces was converted into “water as good as any I’ve had out of a bottle,” Gates wrote. “I would happily drink it every day.” He’s funding this “poop water” technology, as he calls it, developed by Janicki Bioenergy in Sedro-Woolley, Wash., for a pilot project in Dakar, Senegal; the self-powered plant treats and boils human waste, distilling the moisture into clean water.

Desai predicts that all water filtration technology may eventually be this accessible. “It’s Moore’s Law,” he says. “What we’re perfecting at a large scale, for big centralized plants, may become affordable and effective enough to use in a decentralized system, household by household, so that we each control and regenerate our own water supplies.”

Wednesday, December 9, 2015

Gun Stocks, Predictably, Climb After Massacre (BusinessWeek)

'Obama surge' continues as the Supreme Court takes a pass on the fight to ban assault weapons

Mass shootings such as the one that took 14 lives at a southern California social services center sent gun owners to dealers and prompted pawn shops to buy additional firearms.

 Why? Some people say it's to defend themselves in future attacks, but the bigger reason is a different kind of fear: that politicians will make it more difficult to obtain guns in the future. 

That's good news for companies in the business of making firearms, which have benefited for years from the predictable consumer reaction to shootings in places including Colorado, Oregon, Connecticut, and on Dec. 2, California. Criminal background checks—the best proxy for national gun sales—were already on the rise before the latest massacre. Checks were up 7.7 percent in November, compared with a year earlier, according to adjusted government figures published by the National Shooting Sports Foundation, the gun industry's main trade association. 

Strong sales translate into boom times for gun maker stock. Smith & Wesson's share price jumped 7.6 percent on Monday to $20.44, an eight-year high, while investors also pushed up Sturm Ruger's stock. S&W shares have doubled this year; Ruger's have climbed 66 percent, to $57.50. 

"The No. 1 driver of firearms sales is fear," Brian Ruttenbur, an analyst at BB&T Capital Markets, told Bloomberg News. 

People who work in the gun industry refer to it as the "Obama surge," a pattern of strong sales that has persisted since the president took office in 2009. Anxiety about stiffer federal gun control, however, hasn't been matched by action: Even after the Newtown, Conn., elementary school massacre in December 2012, congressional Republicans have thwarted Democratic attempts to enact such restrictions as universal background checks. 

Speaking from the Oval Office on Sunday night, Obama urged Congress to block people on federal no-fly lists from buying guns and said he would push to make it more difficult to buy "powerful assault weapons such as the ones that were used in San Bernardino." 

Two days earlier, the New York Times called for a far more drastic restriction on semiautomatic, large-capacity, military-style rifles. "Certain kinds of weapons, like the slightly modified combat rifles used in California, and certain kinds of ammunition, must be outlawed for civilian ownership," the Times declared in a front-page editorial, the paper's first in 95 years. "It is possible to define those guns in a clear and effective way," the Times added, "and, yes, it would require Americans who own those kinds of weapons to give them up for the good of their fellow citizens."

Americans own millions of military-style semiautomatic rifles, one of the most common being the AR-15. While it's a safe bet that some of those gun owners wouldn't voluntarily surrender their arms, forestalling that kind of confrontation is the reality that a Republican-controlled Congress is unlikely to pass a ban on new assault weapon sales, let alone on ownership. 

In the face of this standoff, the U.S. Supreme Court has studiously avoided the fray, ignoring pleas from gun-rights advocates to expand Second Amendment protections it defined in 2008 and 2010. 

The high court's ambivalence was in evidence this week. On Monday, the justices declined to hear a constitutional challenge to a local law in a Chicago suburb that bans assault weapons and large-capacity magazines. They left undisturbed a lower court ruling that said Highland Park, Ill., had not infringed the Second Amendment's protection of the right to "keep and bear arms." 

The lower court said residents of the town had other means to protect themselves, including handguns.