From Homeless to Billionaire

An Interview with John Paul DeJoria, owner of Patrón Spirits and co-founder and CEO of John Paul Mitchell Systems

John Paul (J.P.) DeJoria is one of the great stories of achieving the American Dream. 20 years after being homeless he was able to buy a seat on the New York Stock Exchange. Along the way he built two iconic companies — John Paul Mitchell Systems and Patrón Spirits. Today, JP has a personal net worth of over $4 billion; but perhaps his most significant contribution is his business philosophy which is at the intersection of helping the world, helping people individually and creating profit… all with a genuine smile on his face. He’s definitely having fun. I recently sat down with JP …

What was your childhood like?

We grew up in downtown L.A. in the Echo Park area. We didn’t know that we were really going through tough times because everybody was going through the same thing. I remember once in junior high school, on a Friday, my mom came home from work and said to my brother and I: “You know, between us, we have only 27 cents, but we have food in the refrigerator, we have our little garden out back, and we’re happy, so we are rich.”

Talk about the initial visions behind Patrón Spirits and John Paul Mitchell Systems?

With John Paul Mitchell Systems, we wanted to sell only to hairdressers, but we wanted something different. We came up with a shampoo that required only one wash to save time and money, and a conditioner that you left in. This acted as a sculpting lotion for the hairdresser, protected against the heat of a blow dryer, and helped neutralize chemicals on hairdressers’ hands. We knew we wouldn’t do what other companies did; many said they would only be in the professional hairdressing industry, but went full-retail when they got big. In fact, today, 31 years later, if you ever see a Paul Mitchell product in the drug store or supermarket, it’s counterfeit or black market. We stayed true to our word.

As for Patrón, we wanted to produce the smoothest tequila people had ever tried; tequila that didn’t get you really sick the next day; something you could sip. That was our vision: to have something that could one day be an ultimate premium tequila. People would treat themselves by having Patrón. Once people in every segment of society are turned on to Patrón, they become hooked, because Patrón is not only an ultra premium high quality tequila, but also it’s one that’s made with a lot of love.

Very different business models … are there similarities?

If you are involved with Patrón Spirits or Paul Mitchell Salon hair care products, you’ve got to love the product, you’ve got to love your customer, and you’ve got to love the planet: it’s our culture. We hire people with that attitude because if you don’t love what you do, within three months, you could leave us. At John Paul Mitchell Systems – the older of the two – we’re 31 years old, and our turnover has been less than 30 people in 31 years!

By loving yourself, you’re going to be a happy person. A lot of people don’t like themselves for whatever reason. Being able to communicate with a loved one that you haven’t talked to in a while because of some communication break makes their life and your life in a much better place. Now, you’re getting along, and people are in more harmony.

So the love helps us a lot because no matter what you do – whether it’s shipping, manufacturing of products, or putting ingredients in – you always make sure you do it the best because you love who your customer is and what you stand for.

What’s your advice to entrepreneurs?

What I’d like to tell everybody is that there are two things. One, be prepared for a lot of rejection. People saying “no” to the service or the product you want to sell. People saying, “Oh, it’s too difficult. I don’t to do it.” If you knock on 100 doors and they all say “no,” on door 101, be just as enthusiastic.

The second thing is that the big difference between successful people and unsuccessful people is that successful people do all the things unsuccessful people don’t want to do. Whatever business you’re in, make sure the quality of your product is so good that people will want to reorder or do business with you again. This way you have sustainability, even though you may not have any money for advertising.

What is the role of the American Dream in society?

I see it as very powerful, and I believe it is important that people don’t forget about it. When I listen to the news, I wonder why they are telling people that we’re in the worst economy and society we’ve seen since the Great Depression. In 1980, when we started our company, everything was worse than it is today: inflation was 12.5 percent, interest rates were 18 percent or more, unemployment was 10.5 percent, our hostages were still held in Iran, and you had to wait in line around the block to get gasoline. People need to realize that regardless of the economy, if you believe in yourself, your service, and your product – and tell enough people about it – it will get picked up.

I was unfortunately homeless on two occasions, so when I started John Paul Mitchell systems in 1980, I lived in my car for the first two weeks. At that time I knew things were difficult, but I did believe that what we had was unique and different. A lot of people say 10 to 15 percent of the economy is off, but what about the 80 to 85 percent that isn’t?

Has wealth changed you?

Wealth has changed me in a big way because I no longer go to bed at night and struggle to fall asleep, wondering if I have bills to pay.

Second of all, I can do a lot for people all around the world because of the wealth, and that makes me very, very happy. When we first started John Paul Mitchell Systems, I believed that we had to help inner city youth. We started the Blazer House in Downtown L.A., which became a neutral ground for the gangs, a place to go after school or receive tutoring. Today, it’s on a much larger scale. But we believed in those days; we can change things, and we did. Whether it’s constructing houses in New Orleans, orphanages and nursing homes in Mexico, or other projects we’re doing on a global basis, we can change society. I think we – and all of our customers and staff – benefit more because we get to know we are doing something that’s making a change. We’re stepping forward with all people in helping their lives to become better. To sum it up … success unshared is failure.

http://blogs.forbes.com/robertreiss/2011/06/03/from-homeless-to-billionaire-2/

How to fly Private Jets at Airline Prices

For the first class crowd, a private jet is the ultimate upgrade. But buying or chartering is too expensive for all but a few. So how do you get to fly on a business jet for business-class prices?
Fly empty sectors
The first option is to buy a seat on a ‘deadhead’ positioning flight. After a chartered plane has delivered its VIPs to their destination it has to fly empty back to base or onto its next pick-up point. Some charter companies offer seats on these flights at surprisingly low prices.
Around 40 percent of all private jet flights operate empty so there are rich pickings if you’re savvy about it.
Of course, you lose the flexibility of picking the time and route but you get all the other amenities like private terminals, comfortable seats and the ‘master of the universe’ feeling.
Check out AirPartner’s Empty Sector site. (They have a royal warrant to fly the Queen so you could be sitting in her seat one day.) They have flights from Van Nuys to Nice, France, Amsterdam to Kieve as well as shorter European hops for up to 75% off. A quick online search for ‘empty leg’ or ‘deadhead flights’ will reveal many other providers.
My own experience of this was exciting and disappointing in equal measure. My wife and I took a deadhead flight from Biggin Hill to the South of France a few years ago. The plan was to fly to Nice, which is where we booked our hotel but at the last minute, the plane had to go to Genoa and so we had to take a two-hour trip on a grotty Italian train to get to our final destination. It was like a glamorous night out that ends in the gutter. But for a few hundred pounds, the adventure was worth every penny. (But I prefer to fly myself when I can.)
Resurrect DayJet
A second option disappeared in 2008, when DayJet stopped trading. They were using Eclipse 500 very light jets to fly from smaller airports in Florida. They promised ‘pay-per-seat, on-demand’ travel. Members could request a flight from point a to point b and they would get confirmation and a price. However, if other members bought empty seats on that flight, the cost would go down. A clever booking system orchestrated the schedule, prices and availability. It’s a good idea. James Fallows wrote a great article about it in The Atlantic. The technology lives on and perhaps this business model will reappear.
Social flights
What happens if you combine Groupon or Facebook with jet charter? You get Social Flights. Organise a group of friends or join an existing group to book a private jet at a lower price. Or at least, that’s the theory. Fast Company wrote about them recently. The site today listed 22 flights with seats starting at $150 each. If they get enough trips and enough members to make it viable, it could be a great way to experience private aviation.
http://blogs.forbes.com/matthewstibbe/2011/05/19/deadhead-flights/

To M.B.A. or Not To M.B.A.?

I was a nontraditional M.B.A. candidate. At my business school the liberal arts majors were nicknamed "poets," but I'm pretty sure I was the only one who spent most of college actually writing poetry. My economics education was comprised of one high school summer class, where a typical day involved watching the movie Wall Street and then discussing it for 15 minutes.

If that doesn't paint a clear picture of my background, let me add that I had used Microsoft ( MSFT - news - people ) Excel exactly four times before business school: once to make the invite list for a barbecue, once for a housewarming party and twice to make the grocery lists for those events. As far as I could tell, Excel's major feature was columns. Columns.

But in other ways, I wasn't all that unusual. More and more, women like me are heading to business school as a way to give themselves the tools and credibility to realize their vision--whether to start a socially responsible business, lead a nonprofit or change systems and institutions to better serve people.

If you are a woman who wants to do meaningful work and contribute something positive to the world, and think an M.B.A. might help you do it, here's my verdict on the pros and cons of the experience.

The Upside

I balanced out my brain
Two years immersed in business school balanced me out as a person. Before, I was comfortable with creating a vision, but unsure how to execute. I was comfortable with words, but avoided doing heavy lifting with numbers. After business school, I was as comfortable with strategy and implementation as with vision. I never grew to love math, but I could deal with it just fine. My classmates with more traditional backgrounds also balanced their brains, though in different ways: finance geniuses took classes about the "people side" of business. People who knew big companies learned about start-ups, and vice-versa.
I learned to see the big picture
Through the business school curriculum, I was trained to see organizations from the CEO's point of view. I learned how to understand an organization's big picture, think about strategy at the highest level and see how all the functional pieces fit together and support (or don't support) that big picture. That's been invaluable to my career.

Gained credibility

No question: I gained a lot of credibility through the degree. Even in the nonprofit sector, my M.B.A. gave me authority and a common language with donors and board members, who were often business people.

Developed relationships with amazing women
The women I met in business school were very different from my other friends. Many work in very corporate, male-dominated environments. They have a passion for business. They are smart, adventurous can do-ers who anyone would be lucky to have on their team. Right now they are doing things like figuring out the market viability of a new medicines, starting management consulting offices in Africa and overseeing divisions of major Internet companies…while running marathons on the weekends. They inspire me and enrich my life. And yes, I developed many wonderful friendships with great men as well.

Connections and resources
It's often said that the best reason to get an M.B.A. is the network.If you are planning to go into a typical M.B.A. career (investing, management consulting, etc.) that network is particularly valuable, because you'll meet many people relevant to your career. If you are planning a less traditional M.B.A. career--such as one in the nonprofit sector--the network may be less valuable, but it's still a significant asset.

On the Other Hand: M.B.A. Myth-Busting
"I'll still be able keep up with everything in my life"
Most M.B.A. programs (even part-time ones) are intense and immersive. Most women I know set out with great intentions to keep in good touch with family and friends, stay well-rested and in shape, take time to reflect on their experience and all of that good stuff. Most of us failed miserably. It can be done, but it takes good boundaries and real commitment.

"I'll find the answer to, What should I do with my life?"

A lot of people go to business school with the idea that the classes, internships and time out of the workforce will allow them to figure out what they want to do with their lives. For most people I know, business school didn't do that. The intensity of the M.B.A. experience, the early start of recruiting for jobs and the nature of career services at most business schools are not conducive to that.

"What should I do with my life?" is a really important question. It gets answered by setting aside time to do the real work of identifying your interests, strengths and lifestyle needs, and by having the courage to face the truth about what is and isn't important to you--what really makes you happy. It's about looking inward and stepping into a more authentic you. It's about finding the courage to do that. Business school can't do that for you. Business school can't even help you do it.
"Once I have an M.B.A. then I’ll be able to…."

Sometimes women who want to change the world think they need a particular degree or education to before they can start that organization or business, before they can feel more confident, exercise more leadership or speak up about their ideas. That's a cop out.
An M.B.A. has many wonderful benefits, but many women also use it as cozy way to postpone stepping out of their comfort zones, owning their abilities now and taking some risks to pursue their dreams. Ask yourself: are you doing that? Pay attention to the answer--the one that comes from your gut not from your head.

For me, the training I received was more than worth it, for all the reasons outlined above. What an M.B.A. can offer is very valuable and tangible: skills, knowledge, connections--and the degree itself.
If you are looking to business school for more than that--for end to insecurities or a roadmap to pursuing your dreams, be careful. Only you can give yourself that, and you can give yourself that starting now.

Tara Sophia Mohr, a 2006 graduate of the Stanford Graduate School of Business, is a coach and writer. You can receive her free goals guide, "Turning Your Goals Upside Down and Inside Out (To Get What You Really Want)" here. Follow her on Twitter @tarasophia.

http://www.forbes.com/2010/08/23/mba-business-school-education-forbes-woman-leadership-networking_3.html 







 
 

Synthetic CDOs: Where's The Love?

Bob McTeer is a fellow at the National Center for Policy Analysis. He was also President of the Dallas Fed for 14 years. 

It’s hard for me to enjoy a good fight if I don’t have a dog in it, so to speak.
I spent much of last Tuesday watching the TV in a Washington hotel room trying to decide whether I had a dog in the Goldman Sachs attack. Which side would naturally be my side--my home team? Who were the Cowboys?
Finding my side was more difficult than I expected. As I settled in, Goldman started off as the slight favorite if, for no other reason, than the other side featured bullying senators sitting on their thrones casting stones at their modern-day Christians. (Forgive me. I know it's not the best fit.)
But, somehow, I found it difficult to fit synthetic CDOs into my good-guy basket. I taught money and banking in night school many years back when it was a simpler subject:
"Financial intermediaries serve the purpose of channeling our saving into the most productive investments, thus contributing to maximum economic growth. They are an essential part of the market pricing and allocation mechanism."
The home team tried to say something like that with their references to market making and by pointing out that they gave market participants the opportunity to select their desired level of risk. Their desired level of risk?
Who desires risk? I guess they meant the desired level of return which is positively correlated with risk. But why didn't they say it that way? I couldn't think of the rhetorical pothole they were trying to avoid. Then I remembered that Goldman people are smarter than the rest of us, so I shouldn’t worry my pretty little head about it.
As a person who "believes in the market," I knew that if the market rewarded Goldman as handsomely as it apparently does for creating things like synthetic CDOs there must be a great demand for that service. You don’t make gobs of money selling what no one wants to buy. They are so valuable, they must have some value. Right? Well, they do give people the opportunity to buy risk.
Somehow, my mind wandered back to my class in the history of economic thought--in the sections before Adam Smith--in the dark ages. Before Adam Smith were the Mercantilists, who wanted to export everything, import nothing, and accumulate the difference in gold. Gold was the measure of the wealth of nations. King gold! The king is dead. Long live the king.
Along with the Mercantilists were the Physiocrats, who likened an economy to the blood circulatory system and, more to the point here, believed that the only true measure of the wealth of nations (still lower case) was agricultural output. The farmers created all the wealth, and all others were parasites. We didn’t spend much time on the Physiocrats.
Extending beyond agriculture wasn’t hard. Nonagricultural goods are also good. Manufacturing is good. Services are good also. Remember time and place utility? That’s what makes a $75 meal in a restaurant a better deal than the $5 supper at home.
Once you get comfortable with services in concept, financial services aren't too much of a stretch. After all, we've got to channel those savings into investment. How many people does it take to do that, I wonder? What percentage of GDP should finance be, do you think?
I don’t know much, but I do know that last question was a loaded question that nobody who "believes in the market" would touch with a 10 foot pole. The markets themselves answer such questions and we would reveal our lack of faith in the markets if we even speculated on such "should be" questions. We just don't do normative.
Well, I didn't think so, but, recently, I had a very unusual experience that I still haven't figured out. I attended a forum for economic bloggers and all the participants appeared to be true believers. At a break-out session, someone asked how big the finance sector should be, implying that ours may have grown too big somehow. I waited for the axe to fall, or, at least, for someone to go get soap to wash out the offending mouth. But neither happened. Instead, a discussion ensued that was premised on the possibility that the market had let it get too big. I couldn't believe it.
That discussion preceded the televised discussion of synthetic CDOs last Tuesday. You start to rationalize the great social value in CDOs, but then the "synthetic" part demands your attention. Billion dollar bets on nothing?
This line of thinking caused me to reflect on whether I should become a Physiocrat after all. I can see the value in ham, eggs and pork bellies, all properly hedged of course.
But just as I was about to head down that road, the Chairman of the Senate Committee had the Chief Executive Officer of Goldman bent over the ropes. The Chairman was coming in for the kill while the CEO struggled to recover from the damage of his rope-a-dope defense. Wasn’t it true that Goldman had a huge short position, essentially betting against the housing market and America? Well, the large short position was matched--pretty much--by a large long position. The "net" position wasn’t so large.
That made some sense to me, but the Chairman said he didn't want to talk about net positions, or long positions. He just wanted to talk about the gross short position. But the shorts were there because of the longs. Or was it the longs were there because of the shorts? Probably both. Anyway, what matters is that risk management requires being on both sides of the trade.
By the way, let's talk about market makers and market making. No, let's not talk about that. Let's just talk about your big short against America.
I'm not real sure who's on the side of the angels in this particular debate, but I am sure which side thinks I'm stupid, along with the rest of you out in television land. Well, stupid is as stupid does. And that’s all I have to say about that.

http://blogs.forbes.com/streettalk/2010/05/02/synthetic-cdos-wheres-the-love/

Business Cards 2.0

Dave Stevens is a consummate networker. As program and events manager for the Chamber of Commerce in Mountain View, Calif., he attends several events a week, collecting stacks of business cards. When he returns to his office, however, he pitches the cards, opting instead to add his new contacts on the corporate social networking site LinkedIn.

"If I'm connected to someone on LinkedIn, I'll always have a way of finding them," says Stevens. "If you rely on a business card and the person moves on, you'll get nothing but a bounced e-mail." The updated information travels with Stevens via a mobile version of LinkedIn that synchs his new connections to the address book on his Palm Pre smart phone.

Stevens isn't the only person tossing business cards into wastebaskets. Frustrated with the limitations of paper, workers around the globe are experimenting with digital ways to exchange contact information. Entrepreneurs, in turn, are racing to develop Web sites and mobile software that ease the process.

In Pictures: Business Cards 2.0

Since card-swapping generally occurs away from desks and computers, most of the proposed solutions are mobile applications. One example is DUB, a service for sharing mobile business cards that is available on BlackBerrys and iPhones, as well as handsets that run Microsoft's ( MSFT - news -people ) Windows Mobile and Google's ( GOOG - news -people ) Android operating systems. DUB's digital cards resemble paper ones, but are interactive, with support for active links to profiles on sites like Facebook, Twitter and LinkedIn.

To connect, DUB users simply press a "locate" button in the application. It uses global positioning technology (GPS) to match users, then stores the cards' contact information in the phone's address book. If a DUB user wants to connect to a non-member, he or she can send a digital invitation.

Manoj Ramnani, founder of DUB's parent, DubMeNow, estimates that 500 people download the application every hour onto BlackBerrys on days it is featured in BlackBerry App World. (It helps that the application is free.) In coming weeks, the 14-month-old company plans to unveil an application forNokia's ( NOK - news -people ) Symbian platform, expand internationally, announce deals with a large group of universities, associations and tradeshows and release more Web-based tools, including desktop widgets and a toolbar for Microsoft Outlook. Within several years, Ramnani hopes DUB will be the mobile address book of choice, with full support from wireless carriers.

The idea isn't far-fetched, says Adam Nash, LinkedIn's vice president of search and platform products. "Business cards are a bad proxy for what people really want [when they network], which is a relationship," notes Nash. "We can do so much better than these static snapshots in time."

LinkedIn is also angling to be the de facto way people exchange contact information on phones. It currently offers iPhone and Palm applications and will introduce one for the BlackBerry soon, according to Nash.

People who don't own smart phones or don't want to deal with downloadable applications can also go digital. Several companies, including a Denver-based startup called Contxts, let people exchange credentials by text message, using usernames and online profiles. "Business cards are so 2007," says Contxts founder Danny Newman. "Our goal is to be the simplest way to exchange contact data." The service, which has close to 100,000 "alpha" users, is still in a test phase but will open to the public by March.

There are also a burgeoning number of scanning applications for people who don't mind collecting business cards, but want to digitally store the data on them. These applications rely on phone cameras and special software to capture names and numbers off paper cards.

Several scanning applications can decipher a type of technology known as 2-D barcodes that encodes images and text in a pictoral barcode format. That can be useful because some companies, such as Nokia, print 2-D barcodes on their business cards.

The most unusual response to the business card conundrum may be token-based business cards. Companies like Switzerland's Poken and Mingle360 in the U.S. sell small, plastic devices that beam data through wireless sensors (RFID and infrared). To transmit information, users point or touch their devices. The tokens generally cost around $20 and can clip to a keychain or work badge.

Eventually, business card data could be infused into various gadgets just as wireless connectivity is being embedded in a range of electronics. Poken founder Stephane Doutriaux plans to apply Poken's technology to other devices, including jewelry and accessories. "Maybe you'll touch your earring to someone's watch or belt buckle," he says. "The ability to connect could be in anything."

http://www.forbes.com/2010/01/13/social-media-digital-technology-cio-network-business-card.html?feed=rss_home

Using The Cloud For Business

Why the cloud is much more than a technology phenomenon.

Jan Baan

Jan Baan, founder of Baan Corp., was present at the creation of enterprise resource planning. While leading the ERP software company from 1978–98, Baan observed what worked well and what failed as companies automated their business processes using a datacentric approach. For the past 10 years, Baan has spent his time and more than
250 million euros ($360 million) of his money on Cordys, a software company that creates what Baan calls a business operations platform. In this Q&A, Baan examines what the cloud means for business, what went wrong with ERP, and how a business operations platform delivers flexible automation of business processes that can be optimized through cloud computing.

Forbes: Why are companies getting the cloud wrong?

Baan: If you want to get the cloud right, put away the slide decks on virtualization and infrastructure and start thinking about who you should be working with and how to work with them, and then think about how you can support that better than ever before. Too many people look at the cloud as a technology phenomenon when they should look at it as a business opportunity and an accelerator for collaboration. The cloud is an environment for creating ways of doing business that are radically different from monolithic ERP-based processes. The age of command-and-control in business technology is over. You empower the knowledge worker through collaboration.

What does the cloud really mean for business?

Business processes should be the core element in the cloud, not Word documents or e-mail. Everything in the cloud should grow out of an inherently collaborative business process. You have to think beyond the business processes in your company to linking your customers' customers to your suppliers' suppliers, and draw them all together in a common end-to-end business process. You can create those relationships much faster now, but people aren't taking advantage of it. They are still very much in the ERP paradigm, which can be limiting. The cloud allows everyone to focus on their own processes, share them with others, and add some individual elements to their own processes and optimize them.

Some of these same promises about end-to-end business processes were made about ERP when it was new. What went wrong?

In the ERP world, everything is data-centric. Data is king, and business processes became embedded in data silos. Many big companies have created stovepipes that are isolated from each other, with business processes stored in the data. The vendor's best practices are then overlaid on the processes. Those stovepipes are still isolated, trapped on premise. That inhibits innovation.

What is your vision of making the cloud work for business?

I don't want to imply that everything has to be on the cloud. The optimal situation is a combination--a kind of composition between legacy systems and the optimized business process from the business and its partners, and it lives in the cloud.

I call it a business operations platform, a bridge between traditional service-oriented architecture and some of the heavy-duty infrastructure and standard components from ERP. Business components are decoupled from underlying technology. The concept of "programming," in which a businessperson conceives of an idea and technologists program something that achieves it, gives way to describing a business process, and the IT landscape responds in kind. There is much more of a "what you model is what you get" feeling to this new paradigm.

What is the role of ERP in this scenario?

Your ERP system, along with a product life-cycle management system, logistics systems and others, can be integrated and used as vanilla components, while being further enhanced by best practices or best processes, achieving a state of operational effectiveness. Take what you have learned through years of experience with ERP and apply it to the cloud.

What are the benefits of getting this right?

Dramatic improvements in business processes, reduction in IT costs, and a radical expansion of partners to help you run your business. Applications in the cloud cost less than 10% of an on-premises application. That means double-digit-percentage cost savings, and, more importantly, a boost to the value stream. Lead time for product creation can be reduced from 60 days to one or two hours. It's already happening. Instead of building a car in six weeks, we can do it in a day.

What stands in the way of this transformation?

First of all, the role of CIO sometimes seems afraid of its own shadow. The CIO should become more of a business leader. Maybe we should change the title Chief Information Officer to Chief Process Officer (CPO).

CIOs with guts are crucial to change. The CEO is too isolated and unaware of the development of these trends, but now the CIO, in the new role of a CPO, could be a tremendous asset to the CEO, providing leadership for changing the company and improving business processes. The value is in aligning IT and business, and the CPO is much more on the business side, not just on the IT side.

Too much attention is focused on technology innovation and not enough on business innovation. When that happens, we add functionality, but also complexity. The technology innovations with real impact are those that reduce complexity.

IT should be democratized in the same way Henry Ford democratized the car. Currently, fully functional IT is only for Fortune 1000 companies with a big budget. In the future, the benefits of IT will be available for everyone. Small and medium-size enterprises are, with the new technology wave of a business operations platform, able to connect their supply chain much faster than Fortune 1000 companies can. Agility is the mantra for today's smart companies.

Social media and cloud computing are exciting because they foreshadow this future.

Dan Woods is chief technology officer and editor of Evolved Technologist, a research firm focused on the needs of CTOs and CIOs. He consults for many of the other companies he writes about. For more information, go toevolvedtechnologist.com.

http://www.forbes.com/2009/12/29/cloud-computing-software-technology-cio-network-woods.html?feed=rss_home

The Decade In Data

Our way of life has increasingly moved into bits and bytes.

BURLINGAME, Calif. -- All around us is evidence that we've been living in a decade ruled by 1's and 0's. A household in the U.S. is now 10 times more likely to have a broadband connection than in 2000. And analog cameras, music and media players have become quaint rarities during this past decade, replaced by their increasingly pervasive digital counterparts.

Here's a list that compares key data points from 2000 to 2009, or the latest available figures.

--Percentage of U.S. households with a broadband connection in 2000: 6.3%

--Percentage of U.S. households with a broadband connection in 2008: 63%

--Number of e-mails sent per day in 2000: 12 billion

--Number of e-mails sent per day in 2009: 247 billion

--Revenues from mobile data services in the first half of 2000: $105 million

--Revenues from mobile data services in the first half of 2009: $19.5 billion

--Number of text messages sent in the U.S. per day in June 2000: 400,000

--Number of text messages sent in the U.S. per day in June 2009: 4.5 billion

--Percentage of U.S. households with at least one digital camera in 2000: 10%

--Percentage of U.S. households with at least one digital camera in 2008: 68.4%

--Percentage of U.S. households with at least one MP3 player in 2000: less than 2%

--Percentage of U.S. households with at least one MP3 player in 2008: almost 43%

--Number of pages indexed by Google in 2000: 1 billion

--Number of pages indexed by Google in 2008: 1 trillion

--Number of Google searches per day in 2001: 10 million

--Number of Google searches in 2009: 300 million, estimated

--Number of total Wikipedia entries in 2001: 20,000

--Number of Wikipedia entries in English in 2009: 3.1 million

--Number of blogs in 2000: less than 100,000

--Number of blogs 2008: 133 million

--Minimum free hard-disk space needed to install Windows 2000: 650 megabytes

--Minimum available hard-disk space needed to install Windows 7: 16,000 megabytes (16 gigabytes)

--Amount of hard-disk space $300 could buy in 2000: 20 to 30 gigabytes

--Amount of hard-disk space $300 could buy in 2009: 2,000 gigabytes (2 terabytes)

http://www.forbes.com/2009/12/27/broadband-text-messages-technology-cio-network-data.html?feed=rss_home

Run With The Gold Bulls

As long as the cost of borrowing money is zero, gold will continue to strengthen and the dollar will continue to weaken.

Gold is going into strong hands like hedge funds managed by John Paulson, Paul Tudor Jones, David Einhorn, Eric Mindich, David Hayman--the cream of the crop. Public institutions like central banks in India and China are big buyers too. Momentum on gold is building now, as latecomers climb on the bandwagon.

We're seeing demand for gold all over the world. Pension funds allocate about 5% as protection against the weakening dollar. Chinese citizens are encouraged by their government to hold gold, not dollars. On Nov. 18, Russia's central bank announced it would buy any and all gold its sister organization, the State Depositary for Precious Metals and Gems, was willing to see. Now the Vietnamese central bank has granted quotas to import 10 tons of gold for use by its banking system and gold traders.

In Canada, there have been periodic shortages of gold to use in minting gold coins. Barrick Gold ( ABX - news - people ), one of Canada's giant mining concerns, raised several billion dollars to buy back its hedge on its gold production, an admission it expects gold prices to continue rising.

It will continue rising until there is a concerted move by central banks to defend the dollar, and that is not likely.

Demand for gold is growing faster than supply. In London, market makers trying to settle gold futures contracts with more contracts, not bullion, because there's not enough gold to deliver. Buyers who elect to forego payment in gold are offered cash premiums for doing so. If you really want the bullion, you can buy the ZKB Gold ETF on the Zurich Stock Exchange and take it to the Zurich Cantonal Bank, owned by the Canton of Zurich. There you are given the actual bullion, which can then be stored in Zurich.

The most common and direct way to invest in gold for the average Joe is the SPDR Gold Shares ( GLD - news - people). It's an exchange-traded fund listed on the NYSE that has more than $40 billion of bullion in custody and has sported a 20% annual rate of return since inception in 2004.

Einhorn's hedge fund, Greenlight Capital, owns an interest in Market Vectors Gold Miners ETF( GDX - news - people ), which tracks the shares of gold-mining companies. Einhorn has also bought call options on the metal directly, according to FUNDfire, an investment service of the Financial Times.

Gold also is the darling of the market technicians as it continues to make new highs whenever the dollar shows weakness.

The fundamental truth underscoring this investment is that you can borrow money at zero to hold an asset with no yield but that everybody wants to own right now. Gold is under owned as an investment asset.

As the price of gold nears $1,200 an ounce the shares of publicly owned gold mining companies with a low cost of production also go up. Take Eldorado Gold ( EGO - news -people ) which is a Vancouver-based gold producer operating in Brazil, China, Greece and Turkey. It is one of the lowest cost gold producers in the world, claiming its "cash operating cost" is $297 an ounce; that's more than $800 an ounce less than today's spot price. Eldorado, as well as Compania de Minas Buenaventura ( BVN - news - people ), a Peruvian gold and silver producer, Kinross Gold ( KGC - news - people ) andSilvercorp Metals ( SVM - news - people ), a low cost producer of silver, are among the top holdings of the Midas Fund (MIDSX), a fund focused on metals that has tripled in value since November of 2008. (See: "Picking Gold Stocks.")

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Don't be frightened by talk of a gold bubble. There won't be a bubble unless the cost of money rises sharply, the dollar strengthens and the budget deficits are reduced--scenarios that seem remote. According to Frank Holmes, CEO of U.S. Global Investors ( GROW - news - people ), gold trades 80% of the time in an inverse relationship to the dollar.

"I hate predicting gold prices attached to specific dates, but my gut tells me this current part of the gold bull market, which should last a few more years, is far from over," says my gold guru, Frank Giustra, a Canadian mining entrepreneur from Vancouver. "There is a growing realization that the U.S. dollar and other currencies are not going to offer the safe harbor feature that gold and other hard assets will."

Giustra, who owns gold properties in Canada and Venezuela, holds one-third of his assets in gold bullion. He points out that the massive liquidity in the financial system is even pushing up the price of lumber, even though the housing industry won't recover fully for 18 months. Lumber prices have moved up 50% as from $165 per 1,000 board feet to $235 this week. Or try silver, gold's little brother. It could be a "catch-up" trade, suggests Richard Ross, an Auerbach Grayson technician who says silver could hit a new peak price of $23. It closed at $18.82 on Wednesday.

All that glitters may not be gold, but the metal sure is shining brightly. Put a little sparkle in your portfolio.

http://www.forbes.com/2009/11/25/newmont-kinross-vancouver-personal-finance-investing-ideas-eldorado-gold.html?feed=rss_news

The 10 Questions You Should Never Stop Asking

Marc Kramer, 11.20.09, 05:01 PM EST

Companies run aground for the same basket of reasons, so don't forget the fundamentals.

Marc Kramer

In the early 1990s, I was brought in as an interim president/CEO of two regional monthly magazines. Both are now out of business. It was a trying time--and also one of the great learning experiences of my life.

One magazine focused on business, and the other on the arts. What the two had in common were the investors, who forced them into a shotgun wedding and put them under one roof. These geniuses (including your intrepid columnist) thought they could squeeze pennies and boost margins by merging the back offices and the sales teams. The editorial staffs couldn't be combined because they required different expertise.

The only magazine experience the holding company's board members had was reading the publications. I knew the newspaper business, but as any media veteran knows, newspapers and magazines (especially monthly magazines) are entirely different beasts--and not just in terms of the physical products. (Just one example: Magazine ad revenue is booked earlier but collected much later; meanwhile, overhead gobbles cash.)

Smart, experienced, highly connected people were involved in this deal. It didn't matter. Why? No one bothered to examine the fundamental realities of the business; no one asked the right questions. Instead, everyone was consumed with generating revenue.

Here are the 10 questions we should have been asking--the same questions that any business owner shouldcontinue to ask, year in and year out:

What is our purpose for existing? A lot of businesses had a purpose when they started, but over time their product, service and market changed. The arts magazine was created to give the Philadelphia area its first publication that focused solely on the arts--theater, opera, ballet and the orchestra.

The business magazine was competing against a variety of daily and weekly business publications, so its purpose was unclear. Was it a local Forbes covering large companies? Was it a local Inc. highlighting small businesses? The editor decided it would be a combination of both approaches--and readers weren't sure what to make of it.

Who is our target customer? We knew the readers of the business magazine were business leaders because we bought lists and sent the magazine for free to C-suite executives--the audience that our advertisers wanted to reach.

Our arts magazine partnered with the local public broadcast station and used its listener base as the profile for its readers. Still, we hadn't truly pegged the age and income of the readers, and thus had a hard time convincing advertisers to support it. Needless to say, it's a lot easier to come up with great ideas and convince people to buy into them if it is clear who is purchasing your product, and why.

Why does anyone need what we're selling? All too often we fall into the trap that people want something because welike it. This is the road to perdition. In our case, there was never a formal survey done to determine if anyone cared whether our magazines existed. We never asked readers/potential readers what they wanted to read. In my 25 years of experience, I have rarely seen a company fail if management literally spoke to customers and gave them what they want.

If there is a need, is it enough to support a profitable business? Although Philadelphia has an orchestra, ballet, theaters, jazz clubs, etc, Philadelphians weren't interested in a magazine that just focused on the arts. When our agreement ended with public broadcast station, there wasn't enough reader interest to attract advertisers.

What were our competitors up to? If we had formally analyzed our competition, we would have seen that one competitor of the business magazine had come up with interesting advertising vehicles, such as paid-for question-and-answer series with profiles of accountants, lawyers and business consultants. These featured professionals were more than happy to pay for the privilege of raising their visibility. Whether you are selling a product or a service, you have to be constantly innovating.

Can you reduce expenses--without harming the product? I found out about six weeks after my arrival that if you lowered the weight of the paper and took the shine off the magazine, you could save a bucket-load of money. Of course, those moves also lowered the quality of the product. When I began my search for a new sales manager, one of the candidates asked me if I had spoken with our printers about ways to reduce costs. Amazingly, our vendors had lots of ideas on how to reduce cost without sacrificing quality, but no one had asked them.

Do we have the right leadership? As companies mature, they require managers with different skill sets. One of our publishers was very experienced at running start-ups at large, well-financed publishing companies; he wasn't used to running on a shoe string. The other publisher, who had never run a company, was used to selling air time, not space in a magazine; when she did sell air, it was for a top-rated established station, not a start-up. (We ended up replacing both publishers.)

Do we have the right employees? There are employees who know how to bring new products and services to life, while others know how to nurture an existing line. We had sales people who were very experienced at selling established publications, but none who had ever launched a title or worked with a small publication. Big mismatch.

How will we continue to drive revenue? The management and board never held a down-and-dirty strategic planning session. We never went to a bar and tossed around ideas with employees. We never invited readers to tell us what we could do better. Companies can't live in vacuums. Chances are, what works today won't work tomorrow--just ask anyone in the media business.

How are your employees holding up? I was so obsessed with finding ways to fix the business that I would walk by everyone as if they were pieces of furniture. I didn't observe their body language or solicit their input, even though was I playing around with their future. I was in my own little world and I didn't notice the anxiety they were dealing with. You have to check the temperature of your employees, let them vent and encourage their honest feedback. These stakeholders are the key to pleasing your customers--and your shareholders.

Marc Kramer is president of Kramer Communications, author of five books and instructor at the Wharton School at the University of Pennsylvania and the National University of Singapore. He can be reached at

marc@kramercommunications.com.

http://www.forbes.com/2009/11/20/ten-key-questions-entrepreneurs-management-kramer.html?feed=rss_news