projectophile

For several months, my four-year-old insisted she wanted to dress up like a letter for Halloween. Yes, a letter. As in, “This letter states that, due to an overdue library book, you never actually graduated college.” *

This past weekend, Estelle “flipped her mind” and declared that she wanted to dress as a princess instead.  A Princess! Within seconds, big brother and I delivered an onslaught of white lies in order to shield her from the Princess Industrial Complex  (despite the fact that her last name means “King” in Poland, she’s not next in line for the Polish crown).

“You don’t want to be a princess!” Max declared. “Everyone else is going to be a Princess.” I took the deceit a step further: “You know Biscuit, there is a strict limit on the number of Princesses on Halloween, and all those spots are already taken.”

Satisfied with our explantion…

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The Cutter Rambles

In case you haven’t been paying attention to the news, the federal government (or at least the “non-essential” parts of it) has been shut down.

What’s the cause of this shutdown?  The simple technical answer is that Congress hasn’t approved a spending bill, so the government isn’t allowed to operate.  The more important question is: Why did this happen?  You’ll likely get a different answer depending on who you ask, but the underlying cause is that America’s two major political parties have been unable to cooperate.  It’s gotten so bad that some Congressmen have basically admitted that they aren’t really interested in working together for the betterment of the country; They only care about getting their way.

Obviously, they weren’t paying attention when I wrote the first part of my Guide to Fixing America.  So just in case any of them happen to stumble upon this site, I’ve decided to re-visit my plan…

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You heard it here first: the billionaire behind Starbucks SBUX -1.2% is watching his caffeine intake. Howard Schultz, CEO of the java giant, won’t drink coffee after 5pm.

He’s more of a tea man these days, having taken a liking to the Maharaja Chai Oolong blend sold at Teavana, the mainly mall-based tea retailer Starbucks bought for $620 million last November.

On Wednesday, Schultz sipped a $4.95 cup of his new favorite at the first ever Teavana tea bar, which opens Thursday morning in New York City. Next up: a Seattle outpost, opening just before Thanksgiving.

Schultz says to expect 1,000 such tea bars — complete with zen decor, grey walls and dim lighting — in the next five years as Teavana aims to do for tea what its parent company has done for coffee.

The location of the first Teavana Fine Teas + Tea Bar couldn’t be more perfect: on Manhattan’s super-wealthy Upper East Side at 85th St and Madison Ave, steps from a branch of cult yoga outfitters Lululemon (“you’ve got to give us some credit,” Schultz said laughingly of the canny real estate grab) and blocks from Central Park.

Starbucks will slowly add tea bars to its 300 or so existing Teavana stores, which until now sold loose-leaf tea (two ounces of the Silver Needle blend goes for $17.98, for instance) plus gifts and accessories like ceramic teapots and stainless steel infusers. As well as drinks like Matcha Lattes, the new tea bars will sell food to appeal to a health-conscious customer (an egg-white frittata is $5.95).

Schultz is angling for a piece of a hot and iced tea market worth $90 billion worldwide, according to recent Euromonitor data, with Starbucks-saturated countries like Japan, China, Canada and the U.K. leading the trend. Globally, tea is the second-most consumed beverage besides water. While Americans still consume coffee at a far greater rate than tea, their taste for leaves versus beans is growing. Data from the Tea Association USA says America’s interest in tea has grown by 16% over the past five years.

Schultz isn’t concerned about cannibalizing his current business, however, noting that caffeine junkies who jones for a Starbucks to start their day are unlikely to be big tea drinkers. To that end, there’s no Starbucks branding in this first Teavana bar, nor will there be. There’s no coffee on offer, and the drinks are sold as either 12- or 16-ounce servings rather than “tall” or “grande”.

“Don’t you think that’s the right choice?” asks Schultz, gesturing around the chai-scented room, its back wall home to a stenciled quotation mentioning “alchemy”, “wisdom” and “a tea journey.” Teavana’s zen branding extends to its logo: a yogi, cross-legged, holding a mug of tea.

Analysts aren’t convinced Starbucks can do for tea what the company has done for coffee since its 1971 debut, but they’ll be watching closely. “This is Starbucks trying to make a boring category — tea — interesting,” said Brian Sozzi, CEO of Belus Capital Advisors.

“I don’t believe Teavana will ever grow into what the Starbucks brand has become for one simple reason: tea lacks the major caffeine count,” he added. “That sounds silly, but the bottom line is that in this day and age of frantic tech-driven lifestyles, people want to run on 100 mg of caffeine, and they will trade taste to make that happen.”

Wedbush Securities analyst Nick Setyan is slightly more bullish on Starbucks’ big move. “If anyone can create a demand for a product, it’s Starbucks,” he said, noting that tea has higher gross margins than coffee.

Schultz still has a way to go if he’s going to sell New Yorkers on tea, as he learned on Wednesday, when he was asked whether Teavana’s tea is kosher. “It will be. It hasn’t been certified,” he said. “No rabbi has come in to bless it yet!”

I coined a phrase to define this world we live in where everyone has an opinion and there are a multitude of ways to express that opinion. I call it, “The Feedback Society.”

Whether on a consumer review site like Yelp; in the ‘comments’ section of an online publication; or something as simple as calling your congressperson, it’s clear that everyone has an opinion and they are eager to share it with as many people as possible.

The vast majority of these are anonymous postings—or as I like to tell my celebrity clients, “Writing on a bathroom wall.” I actively discourage them from reading it knowing that they can be toxic, mean-spirited and just plain hurtful. As their representative I do take into account the whole of the feedback, so I have an idea of how a story is being received.

Certainly a public relations person is tasked with presenting a client to the public, but equally important is letting the client know what kind of environment they are stepping into and how their news is being received.

President Obama has access to some of the most sophisticated opinion analysts in the world. And while he can certainly take heart in the fact that his own approval rating held steady at about 44 percent during the government shutdown while Republicans were plummeting; it is equally clear that the rollout of the Affordable Care Act (aka Obamacare) has been a real shit show.

His problems didn’t begin with the rollout; they began with a lame effort at selling Obamacare to the American people. His lack of clear targeted messaging and inability to get people behind it at the grass roots level made it easy prey for his political opponents.

Even people who clearly stood to benefit from provisions in the act expressed their hatred for it. His own ham-handed PR rollout was further denigrated by the opposition who took, and still take, every opportunity to demonize the law and its provisions.

Despite losing the PR battle, POTUS won the war. The Affordable Care Act is the law of the land, passed by both houses of Congress and signed by the President. It has the added bonus of being vetted by the U.S. Supreme Court and found lawful.

The official rollout of the Affordable Care Act coincided with the shutdown of the U.S. government by Congress on October 1. Defunding Obamacare was the major incentive for shutting down the government and, ironically, opposition to the shutdown made the act more popular than it had been.

What was clear from the beginning of the rollout was that the online systems to handle a massive rollout of complicated and sophisticated data was just not in place and the system crashed.

Despite multiple news reports that 476,000 Americans have applied for the coverage, no one seems to have access to accurate information. Additionally, this bill was, in part, designed to simplify the health care coverage process.

The inability of the government to handle this system supported the opponents’ argument that it’s just too big and complicated for the government to handle and would be better dealt with by private industry.

On Monday, President Obama held a news conference, which some referred to as an ‘infomercial,’ to discuss the state of the law.

To his credit, he didn’t sugarcoat the problems and expressed his own believable and apparent frustration with the technical aspects of the rollout.

Not surprisingly, his political opponents are using the glitches to heir own advantage. Senate Republican leader Mitch McConnell tweeted that a visit to the Obamacare website made a trip to the Department of Motor Vehicles seem pleasant.

While millions stand to benefit from the provisions of Obamacare, the system is dependent on people, indeed millions of people, signing up for the system. When the system designed to manage that doesn’t work, the result is chaos, frustration and a huge political opportunity for opponents.

And if The Affordable Care Act cannot attract the critical mass it needs to make the numbers work, it could be a very costly program.

I’m glad the President owned the problem. But what’s more important is that he owns the solution. Because, unless he gets an effective and efficient system in place to access the new provisions, The Affordable Care Act and the benefits possible to tens of millions of uninsured Americans will go down as his greatest folly and a huge failure for any future government program that dares to think big.

Photo: Chip Somodevilla/Getty Images

Gartner reported that PC shipments totaled 80.3 million units in Q3. Subtracting an estimated 4.4 million Macs yields an estimated 75.9 million Windows PCs. (The total will be less than this as some PCs will not ship with Windows).

This total is lower than the total shipped in the same period of 2008.

The graphs above show the Gartner data and the split between tablets and PCs. (Tablet and Mac data for Q3 is not yet available).

If we include all iOS and Android devices the “computing” market in Q3 2008 was 92 million units of which Windows (including Windows Mobile or Windows Phone) was 90% whereas in Q3 2013 it was 269 million units of which Windows was 32%.

Any guesses on what this market will look like in 2018?

By Adam Pasick @adampasick October 10, 2013

Whistle while you learn. Reuters/Stringer

Updated with comment and detail from Foxconn.

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Foxconn believes that students are the future, at least judging by its deal with China’s Xi’an Institute of Technology to expose more than 1,000 of them to the educational experience of working on an assembly line (link in Chinese) for Sony’s forthcoming Playstation 4.

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Engineering students from Xi’an Institute of Technology were told that if they didn’t participate in the internship program, they wouldn’t receive six course credits, effectively making it impossible for them to graduate, according to Hong Kong’s Oriental Daily and the Chinese site Tencent Games, as translated by Games in Asia.

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Foxconn told Quartz that after an internal investigation it determined that the XIT students at its Yantai factory complex were assigned to night shifts and overtime, in violation of the company’s policies. “Immediate actions have been taken to bring that campus into full compliance with our code and policies,” the company said in a statement, including “reinforcing the policies of no overtime and no night shifts for student interns, even though such work is voluntary, and reminding all interns of their rights to terminate their participation in the program at any time.”

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Foxconn maintains similar internship programs “at many locations” in China, the company added, to provide students “with the opportunity to gain practical work experience and on-the-job training that will support their efforts to find employment following their graduation.” Sony did not immediately respond to a request for comment.

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Even if the students are only working day shifts, the educational value of the internship sounds dubious. Students perform the same hours and work as paid Foxconn workers—gluing together parts, applying stickers, and boxing up cords. Foxconn says they also earn the same salary as entry-level workers.

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Foxconn has struggled with China’s shrinking labor force, and founder Terry Gou acknowledged this weekend that finding enough workers to fill his factories was becoming a major headache.

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“The young generation don’t want to work in factories, they want to work in services or the internet or another more easy and relaxed job,” he told the Financial Times. “Many workers are moving to the services sector and, in the manufacturing sector, total demand [for workers] is now more than supply.”

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Enlisting interns has become a go-to move for China’s largest private employer, which employs more than 1 million people. Foxconn, also known as Hon Hai Precision Industries, was previously criticized for a similar deal in which students from the Huaiyin Institute of Technology were pressed into working on the iPhone 5 assembly line. Foxconn countered then, as now, that the students were “free to leave at any time.”

By Tim Fernholz @timfernholz October 11, 2013

JP Morgan devoted $9.3 billion to legal expenses last quarter, driving its net loss of $380 million.  Its legal troubles took up 39% of its total revenue in the same period, by far the company’s largest single expense.

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That’s right: The largest bank in the United States spends more money fighting and paying off legal and regulatory challenges than it does paying its staff, buying securities or paying rent on its 5,600 Chase retail bank branches.

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What does your largest expense say about your business? Ideally, the biggest cost should get at the heart of what the firm does. Goldman Sachs’ largest expense was compensation and benefits for its (in)famous talent. Apple’s largest expense in its most recent quarterly report was on sales, largely new stores and employees. General Motors’ largest expense is building cars.

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For the first time, the bank revealed its total expenditures on legal costs. Since 2010, JP Morgan has devoted $31 billion to legal problems, spending $8 billion on settlements and reserving $23 billion for future costs. That’s almost half of its net earnings ($57.5 billion) in the same period, keeping in mind some of those reserves can be returned to stockholders if settlements and legal fees turn out to be less than expected. The exhaustive list of all the civil and criminal investigations JP Morgan is dealing with—from Libor to the London Whale to the Madoff ponzi scheme—could lead to the largest bank fine in history, some $11 billion. That would be on top of the the $3.7 billion the company has already paid this year. Settlement talks are ongoing.

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The bank avoided reporting losses of $932 million by saving $542 million less this quarter to cover the costs of future defaulted loans. This reflects an improving US economy—fewer people are defaulting on loans—but it also reflects a scramble at the bank to cover the costs of its near-constant run-ins with regulators and prosecutors. Those are costs its normal businesses just can’t cover. The financial industry has been more than happy to overlook JP Morgan’s law-breaking under Jamie Dimon as long as it has been profitable, but it may not take too many quarters of losses to change that tune.

Sourcehttp://qz.com/134534/jp-morgan-is-spending-more-on-fines-and-lawyers-than-on-employee-salaries/