October 20, 2017

Now, Your Financial Advisers Will Have to Put You First (Sometimes)

In the meantime, here are some things consumers need to know when shopping for financial advice and investments.

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What does the rule cover, and what is effective now?

The basic obligations of the rule are in effect, which means brokers and advisers must meet a “professional standard of care,” and they must put customers first.

The rule covers most retirement accounts, including individual retirement accounts and workplace accounts like 401(k) and some 403(b) plans. Advisers making recommendations on those accounts, and on rollovers from workplace plans into I.R.A.s, are required to charge reasonable fees, and they are not permitted to make misleading statements about investment transactions, their compensation or any conflicts of interest.

But many accounts, including 403(b) accounts for government workers like teachers and church-related plans, are not covered and are still subject to ill-advised and high-cost investments. A plain brokerage account packed with mutual funds or a 529 plan, for instance, would not be covered either.

The old rules still apply there: Brokers are only required to recommend “suitable” investments, which means the product can make the adviser more money at the customer’s expense, even if there is an option that performs identically but is less expensive.

What immediate changes can I expect with my current accounts or when opening new ones?

Advisers may recommend new or different types of mutual funds or annuities that are better for investors. For instance, new classes of mutual fund shares — including “clean shares,” which charge management fees but not distribution fees — were created in response to the rule, according to the Consumer Federation of America. Some annuities have been cleaned up, the group said, offering lower fees and shorter surrender periods — the amount of time before the funds can be withdrawn without penalties.

Critics of the rule have said that putting customers first will be too expensive, and financial advisers may need to drop smaller accounts. If that happens, “take a moment to count your lucky stars,” said Barbara Roper, a consumer advocate with the federation who has been tracking the fiduciary issue for decades. “A firm that will only advise you if it can profit unfairly at your expense is not where you want to keep you money.”

Are the rules enforceable?

The fiduciary standard will not be legally enforceable on I.R.A.s until next year, when financial professionals with conflicts of interest will generally be required to sign a contract with customers. That contract could require the I.R.A. investor to settle any claims in arbitration, but it must give investors the right to bring a class-action claim in court.

But if an adviser recommends rolling money from, say, a workplace retirement plan into an I.R.A. and a consumer believes the adviser had a conflict of interest, the consumer could pursue legal action now. The Department of Labor has indicated, however, that it will bring enforcement actions only when it does not see a good-faith effort to comply with the new rule.

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What if I want to work with an adviser who will act as a fiduciary with all of my money?

You might ask the adviser to sign a fiduciary pledge, something we published several years ago after a certified financial planner circulated the oath in an email:

I, the undersigned, pledge to exercise my best efforts to always act in good faith and in the best interests of my client, _______, and will act as a fiduciary. I will provide written disclosure, in advance, of any conflicts of interest, which could reasonably compromise the impartiality of my advice. Moreover, in advance, I will disclose any and all fees I will receive as a result of this transaction and I will disclose any and all fees I pay to others for referring this client transaction to me. This pledge covers all financial services and advice offered.

X________________________

Date_____________________

Such a pledge is likely to bolster your case in court or arbitration, legal specialists said.

Since then, The Committee for the Fiduciary Standard, an advocacy group, suggested asking advisers to sign an oath of its own, which can be found on its website.

The adviser’s reaction to any pledge will be a good indicator of how he or she operates and whether he or she is the type of adviser who always acts as a fiduciary, with all of your money, no matter the type of account. Going through this exercise “will raise awareness,” said Tamar Frankel, a professor at Boston University School of Law who reviewed the pledge. And, she added, it could help change the culture.

Does this apply to my existing retirement investments?

The rule applies largely to new advice and investment recommendations. So it may be wise to have an adviser review your situation to see if it can be improved — or to see if you’re paying too much. For example, if an adviser recommends continuing to invest in an expensive mutual fund that you’ve been contributing to each month, the new standard would apply, explained Micah Hauptman of the Consumer Federation. That means the recommendation must be in your best interest, and the adviser could not make any misleading statements and or charge more than “reasonable compensation.”

But if an investor simply continues to buy that same mutual fund based on an old recommendation, the adviser would only need to ensure that the investor is being charged reasonable compensation in the future, he explained.

What else should I ask my adviser?

There are too many questions to list here, but some of the most pertinent involve compensation: How much are you being paid, and by whom? Do you plan to make any changes in our relationship in light of the new rules? For a thorough list of 21 questions to ask advisers, read Ron Lieber’s column on the topic.

Where can I find an adviser who has the fewest conflicts of interest?

All advisers generally have some sort of conflict of interest. But choosing advisers who do not make money based on the sale of a product and are instead compensated for their time, similar to how lawyers are paid, eliminates some of the more glaring problems. Other professionals charge flat fees or a percentage of the assets they manage.

You can find such advisers through the Garrett Planning Network, the National Association of Personal Financial Advisors, and XY Planning Network.

Some firms have decided to stop charging commissions on investments and to move customers to accounts where investors pay a fee for advice. Investors will need to evaluate whether the new cost structure makes sense for them.

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Article source: https://www.nytimes.com/2017/06/08/your-money/now-your-financial-advisers-will-have-to-put-you-first-sometimes.html?partner=rss&emc=rss

The Workologist: Stuck in the Middle (With Good Ideas)

It does sound as if you occupy a distinct spot in your organization’s culture, and as a result, you may be uniquely situated to spur improvements. But before you proceed, make sure you don’t fall prey to Irreplaceable Me Syndrome.

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That’s the Workologist’s name for a common malady: the well-intentioned belief that only you can assure the brightest future for your enterprise. (Usually this manifests itself in the form of guilt about quitting a longtime job for a plainly better opportunity.) Keep this in mind, because you’re teetering on the edge of trying to solve problems that are not your responsibility. Managers should not require a mole to understand workers’ views — and workers should not make their futures contingent on someone else’s intervention, however benevolent. Finally, being “friends” with co-workers can be a mixed blessing, so make sure you’re careful to separate professional responsibility from personal obligation.

Perhaps next time a lower-level employee expresses a legitimate grievance, you should encourage that person to formulate a way to make his or her views known to someone who can actually do something about the problem. You may even have strategic advice about which manager would be best to approach, and how. But either way, bear in mind that what feels like gathering useful intel about how an organization can be improved can very easily cross over into listening to aimless venting and grievance gossip. That’s very human, but the person it helps least is you.

You can also consider ways to translate the critiques you’ve heard into suggestions to higher-ups that won’t involve betraying confidences. (Floating possible solutions is always better than listing problems.) If you’re worried that you’ll be perceived as abusing your inside knowledge, you can road-test your thoughts: “That’s a good point about problem X, and I’m on good terms with manager Y, so what if I suggest solution Z — without mentioning any names?”

The upshot is that you need to make sure you’re thinking about your position the right way. It may be an opportunity — both for the enterprise, and for you. But don’t allow yourself to feel obligated to every constituency in the organization. That’s not an opportunity; it’s a burden.

Supervising Friends, Ethically

I was recently promoted to a new midlevel supervisor position, and several of the people I now oversee are good friends. I think they are doing excellent work, but I’m concerned that I not show special treatment. How does one supervise friends ethically? ANONYMOUS

Asking this question is a good sign. After all, it’s easy to assume your judgment and decisions are unimpeachable. Pausing to reflect shows a degree of thoughtfulness that will serve you well.

Still, you don’t want to overthink this — and end up behaving in response to your perception of others’ perceptions. It may be more useful to take a step back and frame the situation a little differently. For some input on that, I spoke to Lolly Daskal, a longtime leadership coach and consultant and the author of “The Leadership Gap: What Gets Between You and Your Greatness.

“I’ve bumped up against this a lot,” Ms. Daskal said, adding that, as with many challenges that come with a promotion, managers often focus on short-term how-to tactics.

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She suggests a different emphasis: Think about the bigger picture. This means establishing your credibility and decisiveness with all of your charges. “Invite them in, one by one,” she continued, explain your approach and vision, acknowledge that you’ll need each person’s support, and ask for feedback. Include everyone, and everyone should feel empowered and engaged.

Ms. Daskal’s broader message is that grappling with core values shouldn’t wait until there’s a dilemma: “You have to establish who you are going to be when you first start your career,” she said. But it’s never too late to start thinking that way.

And it sounds as if you’ve already done so. “This person has self-awareness, which is already one step ahead of the game,” Ms. Daskal said. It’s more typical to declare, “This is what I’m going to do,” than to back off, assess the circumstances, and ask, “How do I best handle this?” That’s what you’re doing. The trick is: You have to keep doing it, and you’ll be fine.

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Article source: https://www.nytimes.com/2017/06/08/jobs/stuck-in-the-middle-with-good-ideas.html?partner=rss&emc=rss

Entrepreneurship: How Much Did That Zipper Cost? With Transparency Pricing, You Know Everything

For instance, a black organic cotton print T-shirt, advertised as vegan, organic and skin-friendly, costs about $110 (in the European Union, a price that includes the value-added tax) or $90 (elsewhere, without that tax). Among the extensive details customers can learn about the shirt online are that the hang tag (67 cents) is made of 100 percent wood-free cellulose and buffered with calcium carbonate, and the T-shirt itself was knitted and assembled in Germany and cost the retailer about $13.50. (All prices were converted from euros.)

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Mr. Pieters explained by email that his decision to present his products this way stemmed from his time at a major fashion house.

“I saw how the companies I worked for and others would move their production from Belgium or France to Vietnam or India, but would still be asking the same prices they asked before,” he said. Other ethical concerns, like fair wages, also informed his decision, Mr. Pieters said.

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At Elizabeth Suzann in Nashville. Elizabeth Pape, the owner, used a blog post to get specific not only about what it takes to produce one of her garments, but also about the economics of running her business. Credit Kyle Dean Reinford for The New York Times

Scott Gabrielson, who got the idea for his accessories and leather goods company, Oliver Cabell, while working on his M.B.A. at Oxford, said the ability to sell directly to consumers online had a big influence on his decision to use transparency pricing. He wanted to show that, by eliminating brick-and-mortar and other built-in costs, clothing sellers could save shoppers money.

“By cutting out traditional wholesale, you can sell directly to consumers and have a much higher quality product for a much lower price point — the pure economics make that work,” Mr. Gabrielson said.

One of his biggest challenges, however, has been convincing shoppers that the goods he sells are worth the cost, particularly when all that people have to go on are the pictures on his website.

Such skepticism may be on the wane, however, as consumers migrate online from malls and brick-and-mortar retail stores. Natalie Grillon, founder of Project Just, which collects ethics and sustainability data on fashion brands, said she thought transparency pricing would give a leg up to retailers that used it.

“We’ve lost the understanding of the value of the clothes we buy,” Ms. Grillon said. “Pricing transparency and stories behind the scenes help the shopper navigate the decision to pay for a more expensive product.”

For some clothing companies, price transparency is used as a one-off or occasional tool. Take, for example, the New York-based men’s wear brand Noah, which says it tries to merge “the rebellious vitality of skate, surf and music cultures with an innovative appreciation of classic men’s wear.”

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Brendon Babenzien, Noah’s owner, said consumers had gotten “very used to paying inexpensive prices for things.” To help them understand the industry, he broke down the production and pricing details of a signature product, his two-toned parka.

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This parka retails for $448. The zippers, Velcro, snaps and drawcords come from Italy and cost an aggregate of $16.88. Mesh from Japan costs $2.18 per jacket. A custom label is 75 cents, and sewing and assembly are $122.29 — among other costs.

Mr. Babenzien’s aim is to open shoppers’ eyes to the true cost of making high-quality clothes.

At the opening of a store in London, Mr. Babenzien wrote on his website: “This kid basically walked straight up to me and asked me why one of our jackets costs so much. In his hand, he held a taped seam, water-resistant jacket that I had taken part in making several years ago. He loved it.”

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Elizabeth Pape, the owner of Elizabeth Suzann and an advocate of pricing transparency. Credit Kyle Dean Reinford for The New York Times

The “kid,” Mr. Babenzien said, asked him: “This jacket has taped seams and cost less than the Noah jacket, which doesn’t have taped seams. Why is that?”

At this point, the store owner said, “I was salivating at the chance to talk about it.”

He told the shopper that “the things we make generally will last longer than other items that are designed to expire quite quickly,” that “cloth often determines the life of a garment” and that “the old saying, ‘you get what you pay for’ is very, very real.”

Going forward, Mr. Babenzien said he planned to use cost breakdowns strategically, in cases when a product might appear to be costlier than a customer might expect.

Other retailers have had similar frustrations. Elizabeth Pape, owner of the women’s retail clothing company Elizabeth Suzann, says the easy availability of cheap clothing has made consumers contemptuous of costlier items, even if they will last longer.

In a blog post, “Money Talk,” on her brand’s website, Ms. Pape gets specific not only about what it takes to produce one of her garments, but also about the economics of running her business. As discount companies like HM, Zara and Forever 21 started undercutting the prices of places like Gap, J. Crew and Macy’s, those companies cut their prices to compete.

“This has created the perfect environment for the pervasive view of clothing as disposable,” Ms. Pape wrote.

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By contrast, the $185 Artist Smock that she discusses in her blog post is “cut and sewn to order, just for you, in our Nashville studio.” The smock is made from $31.74 worth of material. Labor — including cutting, sewing and washing — comes in at $20.89. Labor and material wastage, which she describes as time used to take breaks and leftover scraps of material that inevitably go unused in the production of the garment, costs $10.53, which brings the total cost of producing the smock to $63.16.

Some shoppers care more about the conditions under which clothing is produced and less about the pricing breakdown. Page Perrault, 28, a banking analyst based in Athens, Ga., who shops at both Elizabeth Suzann and Everlane, an online retailer that advertises “radical transparency,” likes to see why brands price items the way they do. But she doesn’t consider the practice a driving factor in her purchases. “It’s nice to have, but it’s not required,” she said.

Vincent Quan, a professor of business management at the Fashion Institute of Technology, sees the practice as valuable to some consumers — particularly those who are environmentally conscious — but probably of limited use to people who cannot afford to pay extra for finer clothes. “Is pricing transparency transferable to larger brands?” he asked rhetorically.

Correction: June 7, 2017

An earlier version of this article misspelled the surname of the owner of the men’s wear brand Noah. He is Brendon Babenzien, not Babenzian.

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Article source: https://www.nytimes.com/2017/06/07/business/smallbusiness/transparency-pricing-retail-clothing.html?partner=rss&emc=rss

Corner Office: Barbara Corcoran on the Power of a Positive Attitude

My mother would have made a great drill sergeant. She had amazing organizational systems. She had two sock drawers in the kitchen. The upper drawer had a blue label that said “Boys,” and the bottom drawer was a pink label that said “Girls.” Inside the boys’ drawer were navy socks, all one size. The girls’ socks were all white, all one size.

My mother was also great at figuring out the best qualities of her kids and only focusing on those. She never criticized us. All she did was compliment us on what we did well. It taught us to have a positive attitude about ourselves, and it also taught us to look at the light in people.

And your father?

My father worked two jobs his whole life, mostly as a printing-press foreman. On weekends, he played with us, and he was the best playmate. He taught us the joy of being in the moment and being silly.

He was a hard worker, but we also learned insubordination from my father. He hated every boss he ever worked for except one. He constantly got fired. But he was our hero. Out of my nine siblings, only one works for somebody. Everyone else has their own business.

A lot of C.E.O.s I’ve interviewed come from large families.

Growing up in a large family is like growing up in a town. Everybody takes on a role. You learn to deal with different personalities. Everybody’s got to mesh, so you get training early on for getting along with people. It’s a great advantage.

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The other thing about a large family is that you learn to get over yourself. My mother never helped us. It was like: “Get over yourself. Get back on the dishes.”

You also learn independence in a large family. You’re pretty much taking care of yourself, so you grow up fast.

What were you doing outside of class?

I had my first job when I was 11. I had 22 jobs before I started a real estate brokerage business when I was 23.

When you went to college, did you have an idea what you wanted to do for a living or for a career?

I couldn’t believe I even got into a college. My grades weren’t that good. I had dyslexia. School was like one long jail term for me. I hated every minute of it. My idea of hell on earth was being asked to read aloud, and hearing the kids giggle. I learned shame, which can take anybody down.

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So I spent six hours a day daydreaming in class. I just gave up by third grade. But my mother’s response was to say: “Don’t even worry about it. You have a wonderful imagination. You’ll learn to fill in all the blanks.” That was powerful for me, and I leaned on that for the rest of my life.

Early management lessons for you, particularly as you built up your real estate agency, the Corcoran Group?

I took to management like a duck to water. It was in my blood. Every single thing I’ve done is just a business version of what my mom did on the home front.

When I hire people, I just look for the light in the person, to see what’s good about them. I can spot it a mile away. And I never read a résumé until after the interview because you never know who wrote it, and you can be fooled by it. If you read a résumé, the interview is nothing but a business small-talk session confirming stuff you just read.

So I’ll just ask: “What do you like? Tell me about your mom. Where did you grow up? What’s your hobby? What was your favorite job? Why?”

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I’m also trying to figure out if they’re happy, because unhappy people don’t accomplish a lot. I’m also looking for their energy, and if they’re going to be able to see the possibility in anything I propose. Those are the major cards. They cover 90 percent of successful people in the workplace.

If you could ask somebody only one question in a job interview, what would it be?

Tell me about your family. If their family couldn’t give them a positive attitude, there’s nothing I can do that’s going to change it. Early on, I hired a couple of people who had all the markings of great salespeople, but they were not happy people.

I learned that if you have just one unhappy person in a pool of 30 happy people, you feel that weight. I couldn’t wait to get them in my office to tell them they had to leave. I loved firing complainers.

You’ve heard hundreds of pitches in your years on “Shark Tank,” and invested in dozens of entrepreneurs. What are you listening for?

The same thing I’ve always listened for: attitude. I’m looking for someone who, after the Hollywood of “Shark Tank” fades away, is going to stay the course, and always figure out a way to succeed.

The minute I make a deal with someone, I put a photo of them in a matted frame on my wall. They look beautiful. They’re like my kids on my walls.

But the minute I hear them sounding like a victim on the phone, I hang up, walk over to the wall and I flip their picture upside-down. They’ll never succeed. Victims don’t succeed.

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Article source: https://www.nytimes.com/2017/06/02/business/barbara-corcoran-shark-tank.html?partner=rss&emc=rss

Entrepreneurship: LED Bike Lights Target Night Riders and ‘Burners’

“My colleagues love them and love recommending them,” said Christopher Kisicki, a cycling associate at the flagship store in Seattle of REI, the sporting goods retailer. “We can’t keep them in stock,” he said.

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Monkeylectric does $1 million in sales annually. There is the Christmas rush and in summer, the Burning Man bump.

“I hate to say it, but it’s almost mandatory to have them on your bike at Burning Man,” said Jefferson McCarley, manager of the Mission Bicycle Company, which builds custom bikes in San Francisco.

Monkeylectric’s market is a niche one, but growing: As of 2015, 885,000 people commuted on bicycles in the United States, up from 488,000 in 2000, according to the Census Bureau. And biking in the dusk or dark is clearly very dangerous. According to the National Transportation Safety Board, bicycle deaths occur most often from 6 to 9 p.m.

In an unscientific survey along San Francisco’s Market Street one night last week, most cyclists had front lights and weak red reflectors on the back (as required by law), but no side lights. Few bicycle lights are as eye-catching or noticeable to motorists as Monkeylectric’s lights. They are sold in 500 stores and on Amazon, which offers many similar-looking products for much less money.

Mr. Goldwater calls many of those products knockoffs. Every year, he said, he saw a half-dozen more companies based in China with look-alike lights that sell for $10 or $15. Mr. Goldwater, who holds five patents on bicycle lighting, refers to them as “toys,” although some consumers fail to see the difference.

Cheaper lights, Mr. Goldwater said, tend to be dim, not very durable and not waterproof.

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Monkeylectric’s founder, Dan Goldwater, said that when he started making his products, “I couldn’t imagine how I could make a commercial project out of it.” Credit Christie Hemm Klok for The New York Times
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Phillip Yip, Monkeylectric’s top engineer. Credit Christie Hemm Klok for The New York Times

James Hill, a worker owner at Missing Link, a cooperative bicycle shop in downtown Berkeley, who monitors bike lights when he is in his car, recalled being at a stoplight with his wife late one afternoon when they watched a cyclist whip across the road, with “very impressive lights,” he said. “A lot of inventions are terrible,” he said. “A lot of them are great.”

Monkeylectric lights “are arguably the best way to be seen” by motorists, he said.

Janelle Wong, operations manager at the San Francisco Bicycle Coalition, a nonprofit advocacy group with 10,000 members, has Monkeylectric lights on three of her five bicycles. “It’s an affordable way to light up a bike,” she said.

A few miles away in Emeryville, a company called Revolights also sells LED bicycle lights. It makes bright front-wheel lights that illuminate the road ahead, and red taillights that blink when a cyclist slows down and that can be used as turn signals. A Bluetooth version gives speed, distance, tracking and weather alerts. Revolights, which sell for $149 to $249, are sold at REI, in bike shops and on the company’s website.

Bicycle lights by Revolights. Video by Revolights

The co-founder of Revolights, Kent Frankovich, a 33-year-old mechanical engineer, began his quest for a better bike light after pedaling into a pothole one night while commuting from Stanford University where, among other things, he helped design a solar-powered freezer. Before entering the bicycle business in 2011, he was a researcher at a biorobotics lab and at the NASA Jet Propulsion Laboratory, helping build an instrument that identifies rocks and soil on Mars.

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Despite his product’s benefits, Mr. Frankovich said, “It’s a hard sale.” Many cyclists are minimalists, reluctant to add anything to their simple mode of transportation.

That a product improves safety is insufficient. It has to be cool, Mr. Frankovich said. “Who in the world doesn’t know a helmet will save your life?” he said. Yet many cyclists reject them because “they think they look dorky.”

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At several bike stores contacted for this article, sellers said they liked Revolights, but considered them on the expensive side, particularly for cost-conscious consumers who buy modestly priced bikes.

But that is not a problem at the Mission Bicycle Company, the custom bike shop that builds $999 bicycles. Revolights are “fashion forward, high-tech lights,” said Mr. McCarley, the manager. “Our customers appreciate minimalism.”

Years ago, the Mission Bicycle Company shared a Kickstarter campaign with Revolights, but today, Mission Bikes is developing an LED wheel light to be built into its bikes.

Before Mr. Goldwater started Monkeylectric, he considered his art project “a Ferrari.” The market was there, but, he said, “I couldn’t imagine how I could make a commercial project out of it.”

His early work would become a precursor for Monkeylectric’s high-end product that, when spun, shows video clips of, say, a swimming fish or a running dog — for $1,000.

When Mr. Goldwater got started, there was already one LED bicycle light company, Hokey Spokes. Carole Barnes, who with her husband, Richard, bought the business in 2005, said they had since “lost our enthusiasm.” They sell a few hundred lights a year, she said.

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Mr. Goldwater started working on his product 12 years ago, when he was an electrical engineer at the MIT Media Lab researching smart paint and self-assembling robots. He made what he calls “a monumental art piece” — the bicycle with kaleidoscope wheels he rode at Burning Man. For an electrical engineer who cycles, adding LEDs to wheel spokes “is a coming-of-age project,” Mr. Goldwater said.

The appeal is obvious: “When you spin, the effect is much greater than when you started,” he said.

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For an electrical engineer who cycles, adding LEDs to wheel spokes “is a coming-of-age project,” Mr. Goldwater said. Credit Christie Hemm Klok for The New York Times

Lights on rotating wheels create what scientists call persistence of vision, which is an illusion. When bicycle wheels with LED lights rotate, our eyes perceive moving light as a continuous image.

Monkeylectric has gone to the Kickstarter well three times. The last time, it raised $248,331, many in preorders for new lights that automatically turn on when rotated in the dark.

Mr. Frankovich, the founder of Revolights, holds six patents on bicycle lighting. He has raised funds on “Shark Tank,” Indiegogo and Kickstarter.

Both companies have marketed their products on Facebook, Instagram and other sites. But Mr. Frankovich said that nothing compared with “street viral marketing” — cyclists pedaling dark streets, with wheeled illumination.

“Every bike is a little billboard for us,” he said.

Correction: May 31, 2017

An earlier version of this article misstated part of the name of a bicycle shop in downtown Berkeley. It is Missing Link, not Missing Links. And an earlier version of a picture caption misstated the surname of Monkeylectric’s top engineer. He is Phillip Yip, not Ye.

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Article source: https://www.nytimes.com/2017/05/31/business/smallbusiness/led-night-bike-lights.html?partner=rss&emc=rss

Corner Office: Elisa Steele on Trusting Your Instincts

How have your parents influenced you?

My dad has been a huge influence. He’s very focused on what’s important, and prioritizes incredibly well. You have to know what’s important to you, and make decisions against those things. You have to stay focused on your vision.

My mom is the most caring person I’ve ever met. She really cares about other points of view, what it means to have a relationship, and how you commit to each other.

When you went to college, did you have an idea of what you wanted to do for a career?

I knew exactly what I wanted to do. I wanted to run a hotel. I grew out of that really quickly and decided I wanted to go into sales.

My first job was as an associate account executive. I was assigned to a more senior person, and got bored quickly because my job was really just to follow her around.

About a month into a job, I realized that all of the account executives had their key accounts and their dog accounts. And they didn’t spend any time with their dog accounts, because they focused on the ones that were growing.

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So I went to the sales manager and said: “Why don’t you give everybody’s dog accounts to me, and I’ll go see if I can do something with them. They don’t want to spend time with them, and I’m bored.” He agreed to the idea, and suddenly I was sitting there at my little cube, and I had 20 dog accounts.

I met with each one of them, and most of them said: “We haven’t heard from you guys in a long time. Good to see you.” I turned some of those accounts into revenue-producing accounts.

What about early management lessons?

A big moment came when I was promoted to a general manager role. I was in my late 20s, and I had responsibility for everything in the unit — sales, technical support, customer service, H.R., marketing.

It was a high-pressure situation, because the unit was really underperforming. I walked into my first management staff meeting, and there were nine white men over the age of 40, and they were all looking at me like, “Really?”

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What did you do?

I walked in, and literally did not know what I was going to say. I sat down, looked at the team and said, “We’re going to get to work.”

Whatever they thought of me, they had been there, and the results weren’t good, so they were going to have to give me a chance. We figured out who was good at what and started making progress.

Other lessons?

Early on, I questioned my instincts. I wanted to follow the book. I was the student. I assumed everyone knew more. There were times when I didn’t follow my instincts and made mistakes. I realized in hindsight that if I had followed my instincts, there would have been a different outcome.

So my biggest lesson is to follow your instincts. You know better than anybody else.

Pet peeves?

My biggest is people who show up not prepared — you didn’t do your homework, you don’t know what the competition is doing, you don’t have a point of view. Don’t do that. Please come prepared. The other one is that it’s “we,” not “I.”

How do you hire?

I tend to hire for team dynamics, energy and hunger — how much do you want to win? If you want to win together as a team, then it’s less about you and more about us, and more about the bigger picture.

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I ask a lot of situational questions, like: “Tell me about a situation when things felt really dire, like it wasn’t going to work out the way you planned. What did you do? How did you do it? Who did you do it with? What was your thinking at the time? Would you do it again?”

I ask about their experiences because I think it’s really hard to talk about experiences and not tell the truth. How did that experience make you feel? How did the team feel? How did people react to that? People tend to be very honest, because it’s their own experience, as opposed to responding to some abstract question.

What are you listening for?

I’m listening for empathy and desire. I’m listening for decision-making skills — how quickly were you able to decide to do X versus Y? How long did the situation go on?

Decision-making skills are super-important. In any industry, you move so fast. We have to make decisions every day. I also listen for how you make decisions, not just that you can make them. Are you autocratic? Or are you team-oriented about those decisions? That’s very important.

I also end most of my interviews with, “So what did I not ask you that you need to answer to tell me the best about yourself?”

What career and life advice do you give to new college grads?

Don’t let anyone else tell you who you are or what you can do. Follow your instincts.

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Article source: https://www.nytimes.com/2017/05/26/business/elisa-steele-jive-software.html?partner=rss&emc=rss

Retiring: Older Women and Medical Marijuana: A New Growth Industry

“Everyone was pulling baggies out of their Gucci and Louis Vuitton purses, and I thought, ‘Why are we sneaking around like guilty teenagers?’” Ms. Moss said.

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In 2015, she started a business called AnnaBis, a line of aroma-controlled handbags, clutches, vape cases and other pot-related accessories. Soon after, she began publishing cannabis-friendly travel guides exclusively for women — becoming one of a small but growing number of older women who are marijuana entrepreneurs.

“What other industry is growing so fast there’s the opportunity and low cost of entry?” Ms. Moss said. “Entrenched opportunities already have their systems set up. This hasn’t been created yet.”

Her story is typical of the women in their 50s, 60s and 70s who have started up businesses in the world of pot. Inspired partly by their own use of the drug for pain relief, or by caring for others who use it for their own aches, these women see viable business opportunities and view their work as therapeutic for their customers.

“It’s definitely a trend,” said Troy Dayton, the chief executive and a co-founder of the Arcview Group, an investment and market research firm that focuses on the cannabis industry.

“A lot of women have this family recipe, or they were making a certain kind of tincture for a loved one who was suffering. Now that pot is legal, they’re like, ‘Wow, that thing you were making for Grandma could be a real product.’”

According to Mr. Dayton, the market for legal recreational and medicinal marijuana in North America hit $6.7 billion in 2016, a 34 percent rise from the previous year. Marijuana Business Daily, a trade publication, reported in 2015 that women comprised about 36 percent of executives in the legal-marijuana industry, compared with 22 percent in senior roles in other areas.

Since the industry is still finding its way, there is no “built-in institutional bias against women of any age,” said Nancy Whiteman, 58, a co-owner of Wana Brands of Boulder, Colo., which sells sour gummies, salted caramels and other products laced with THC, marijuana’s main psychoactive ingredient.

“In a lot of other industries, there are hundreds of years of history of who is successful and who is not, and there are glass ceilings to be broken,” Ms. Whiteman said. “But there’s no norm here. Everyone is figuring it out together.”

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Jeanine Moss started AnnaBis, which sells pot-related accessories. Credit Coley Brown for The New York Times

Cannabis start-ups are particularly appealing to older women who have had long careers. They are “smart businesswomen who see opportunities,” said John Hudak, a senior fellow at the Brookings Institution who has written the book “Marijuana: A Short History.”

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These are women, Mr. Hudak said, “who have the type of background and skill sets that lend themselves to be highly useful in an industry like this: lobbying, consulting, finance, operations.”

That is exactly what Jane Heatley discovered. In 2010, Ms. Heatley, who owned a real estate title company for 30 years, moved from Barnstable, Mass., to Corona del Mar, Calif., to care for her mother after a stroke. Cannabis helped her mother’s indigestion and depression, and it lightened her pill use. So Ms. Heatley, 66, got licensed to be a primary caregiver in California, which included learning about medicinal marijuana.

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After her mother died in 2012, she moved back east and applied for a license to open a dispensary. “I thought, for the last stage of my life, I’d like to do something to give back,” Ms. Heatley said. “How much of a glow can you get from a real estate transaction?”

She is now the president of the William Noyes Webster Foundation, a nonprofit that is authorized under Massachusetts law to develop, operate and manage medical marijuana dispensaries. She is set to open two in the fall.

Other entrepreneurs, like Frances Sue Taylor, 69, are specifically targeting seniors. She has been teaching older people about medical marijuana for the last six years and plans in the next few months to open a dispensary in Berkeley, Calif., just for people 50 and up.

There seems to be a market for such services: A study of 47,140 participants released in December, based on responses to the National Survey on Drug Use and Health, found that cannabis use among adults ages 50 to 64 had increased nearly 60 percent from 2006 to 2013, while use by people 65 and older had risen 250 percent.

Ms. Taylor, a former Catholic school principal, used to think marijuana was a “hard-core drug like crack or cocaine,” she said. “If someone would have told me 12 years ago that I’d be an advocate for cannabis, I’d say, ‘You’ve been smoking too much.’”

But now? “I get so much gratification from this work, and it’s so rewarding to see people get healed,” she said. “My life is better than ever. I’m healthy, and I’m starting a new business at 69.”

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Lyn Kusher, 66, is the founder of Ma Kush’s Natural, which is based in Encinitas, Calif., and sells soaps, lotions, balms and edible cannabis treats. A mother of three, she had previously worked as a sales representative and pharmacy technician.

Like Ms. Moss, she arrived at her calling through pain. About four years ago, after hip-replacement surgery, Ms. Kusher began massaging coconut oil infused with THC into her side. It helped. So did homemade “protein balls” — peanut butter, sunflower seeds, protein powder and 15 milligrams of THC.

It occurred to her that her products might have the same effect on other people. Soon, she got certified to sell balms and bake mixes to dispensaries in San Diego.

“I’ve always grown plants and flowers and herbs, because I like growing,” said Ms. Kusher, who has a greenhouse filled with 30 pot plants of six different varieties. (Coincidentally, “kush” is a term among pot smokers for a high-grade strain of cannabis.)

Ms. Kusher said she was doing better than she had ever imagined, physically and financially. “This is the first time in my life I can completely support myself and my lifestyle,” she said.

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Article source: https://www.nytimes.com/2017/05/25/business/retirement/retiring-older-women-marijuana-entrepreneurs.html?partner=rss&emc=rss

The Workologist: Welcome Aboard! And by the Way: I Quit

Since you explicitly mention hiring for “your team,” I assume that working with you may be part of what the job seeker finds appealing about this new position. If so, think of ways to soften that: Make sure recruits meet other managers and team members, making it clear that they should feel good about working for this organization in general, not just a specific individual. The idea, as you think through any particular case, is to consider the process from the applicant’s point of view — and how you would want to be treated in the same position.

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All of that said, you can be responsible only for the aspects of the process that are under your control. While it’s jarring when someone who just hired you immediately moves on (it’s happened to me), that is also part of the reality of the work world, in plenty of fields. (And after all, any given hiring manager may also be transferred, or even fired.) Operate according to a genuine belief that this new employee and the organization will ultimately prove a good match. That way, any unpleasant surprise will fade, and the relationship will take its course whether you’re in the picture or not.

Newbie’s Time Off

I am graduating college and will soon be starting my first job. My family has an annual beach vacation and reunion, and this year it is scheduled about five weeks after my job’s start date. I am debating whether it is appropriate to ask for three or four days off so soon, especially because I am aiming for a small promotion at the four-month mark.

My manager has mentioned that this company does not have specified limits for time off (number of days or seniority), so I do not think that there is any company protocol that would prevent me from taking the time. I do not want to make a bad impression, but I would really like to be able to see my extended family. Would you suggest sending an email to my manager as soon as possible, waiting until a few weeks after I start, or just accepting that fact that I will not be going to the beach this year?

SYLVIA, BOSTON

While it may not hurt to ask — if you frame it very carefully — you should be prepared to gracefully accept a “no.”

To get in the right mind-set, think about this from your new manager’s perspective. He or she may wonder why, if this is so important, it didn’t come up in the interview process. After all, it’s an annual event, not some just-announced one-off occasion that you couldn’t have anticipated. And given that it happens every year, the manager may further wonder if you couldn’t just skip it this one time — or at least settle for a visit that didn’t require four days off — out of excitement for or engagement with your new job.

Maybe you have good answers; maybe the company really does have a laissez-faire attitude about days off. And maybe you have other reasons for confidence in that rather ambitious goal of earning a promotion in just four months, let alone whether this may undercut it.

But certainly emailing your request before your first day sounds like the wrong tactic; that will come across as though you’re still negotiating after accepting an offer. If you bring this up, do it in person, soon after you start. That way you can make sure it is coming across as a humble inquiry, not a presumptuous and tone-deaf demand. You can also more clearly gauge the reaction — and this soon into a new job, I suggest dropping the request if you detect any hint that it’s going over poorly. More important, if you accept and understand the possibility of a “no,” you will not be so disappointed. And maybe you will be pleasantly surprised.

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Article source: https://www.nytimes.com/2017/05/25/jobs/welcome-aboard-and-by-the-way-i-quit.html?partner=rss&emc=rss

Feature: Jared Kushner’s Other Real Estate Empire

So Warren was startled in January 2013, three years later, when she received a summons from a private process server informing her that she was being sued for $3,014.08 by the owner of Cove Village. The lawsuit, filed in Maryland District Court, was doubly bewildering. It claimed she owed the money for having left in advance of her lease’s expiration, though she had received written permission to leave. And the company suing her was not Sawyer, but one whose name she didn’t recognize: JK2 Westminster L.L.C.

Warren was raising three children alone while taking classes for a bachelor’s degree in health care administration, and she disregarded the summons at first. But JK2 Westminster’s lawyers persisted; two more summonses followed. In April 2014, she appeared without a lawyer at a district-court hearing. She told the judge about the approval for her move, but she did not have a copy of the form the manager had signed. The judge ruled against Warren, awarding JK2 Westminster the full sum it was seeking, plus court costs, attorney’s fees and interest that brought the judgment to nearly $5,000. There was no way Warren, who was working as a home health aide, was going to be able to pay such a sum. “I was so desperate,” she said.

If the case was confounding to Warren, it was not unique. Hundreds like it have been filed over the last five years by JK2 Westminster and affiliated businesses in the state of Maryland alone, where the company owns some 8,000 apartments and townhouses. Nor was JK2 Westminster quite as anonymous as its opaque name suggested. It was a subsidiary of a large New York real estate firm called Kushner Companies, which was led by a young man whose initials happened to be J.K.: Jared Kushner.

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When Americans were introduced last year to Ivanka Trump’s husband and the nation’s prospective son-in-law in chief, it was as the preternaturally poised, Harvard-educated scion of a real estate empire whose glittering ambitions resembled Donald Trump’s own. In 2007, Kushner Companies, run at the time by Jared and his father, Charles, bought the aluminum-clad skyscraper at 666 Fifth Avenue for a record-breaking $1.8 billion; they are now seeking partners for a $12 billion plan to replace it with a glass tower that would be 40 stories taller. In 2013 they acquired 17 buildings in Manhattan’s East Village for about $130 million, and three years later they spent $715 million on a cluster of buildings owned by the Jehovah’s Witnesses on prime land in Brooklyn’s fast-developing Dumbo district.

But the Kushners’ empire, like Trump’s, was underwritten by years of dealing in much more modestly ambitioned properties. Jared’s grandfather Joseph Kushner, a Holocaust survivor from Belarus, over his lifetime built a small construction company in New Jersey into a real estate venture that owned and managed some 4,000 low-rise units concentrated in the suburbs of Newark. After taking over the business, Charles expanded Kushner Companies’ holdings to commercial and industrial spaces, but the company’s bread and butter remained the North Jersey apartment complexes bequeathed to him by his father.

In the mid-2000s, the company began to sell off the more than 25,000 multifamily rental units it owned, culminating in a 2007 sale of nearly 17,000 units for $1.9 billion. The sale — near the peak of the housing boom, just months before the crash — was impeccably timed, but it also reflected a shift in the attentions of what would soon be a three-generation real estate dynasty. Charles, a major Democratic Party donor, had returned late the previous year from a brief stint in federal prison after pleading guilty to 18 counts of tax evasion, witness tampering and illegal campaign donations. Back at the helm of the company, he began to shift its focus from New Jersey to New York City — and prepared to pass the reins to his son Jared, who had just received a degree in law and business from New York University.

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Baltimore-area properties owned by Kushner Companies. Credit Philip Montgomery for The New York Times

But amid the high-profile Manhattan and Brooklyn purchases, in 2011, Kushner Companies, with Jared now more firmly in command, pulled together a deal that looked much more like something from the firm’s humble past than from its high-rolling present. That June, the company and its equity partners bought 4,681 units of what are known in real estate jargon as “distress-ridden, Class B” apartment complexes: units whose prices fell somewhere in the middle of the market, typically of a certain age and wear, whose owners were in financial difficulty. The properties were spread across 12 sites in Toledo, Ohio; Pittsburgh; and other Rust Belt cities still reeling from the Great Recession. Kushner had to settle more than 200 debts held against the complexes before the deal could go through; at one complex, in Pittsburgh, circumstances had become so dire that some residents had been left without heat and power because the previous owner couldn’t pay the bills. Prudential, which was foreclosing on the portfolio, sold it for only $72 million — half the value of the mortgages on the properties.

In the following months, Kushner Companies bought another 1,700 multifamily units in similar markets, according to the trade publication Multifamily Executive. Unlike the company’s big New York investments, the complexes were not acquired with an eye toward appreciation — these were not growing markets, after all — but toward producing a steady cash flow. “Our goal is to keep buying and incrementally growing — they’re good markets where you can get yield,” Jared Kushner told Multifamily Executive in October 2011, predicting that the net income for the year’s purchases would be $14 million within a year. The complexes buttressed the Kushner portfolio in another way, he said: They would serve as a hedge against an upswing in inflation he believed was looming on the horizon.

A year later, in August 2012, a Kushner-led investment group bought 5,500 multifamily units in the Baltimore area with $371 million in financing from Freddie Mac, the government-backed mortgage lender — another considerable bargain. Two years later, Kushner Companies picked up three more complexes in the Baltimore area for $37.9 million. Today, Westminster Management, Kushner Companies’ property-management arm, lists 34 complexes under its control in Maryland, Ohio and New Jersey, with a total of close to 20,000 units.

Kushner’s largest concentration of multifamily units is in the Baltimore area, where the company controls 15 complexes in all — which, if you assume three residents per unit, could be home to more than 20,000 people. All but two of the complexes are in suburban Baltimore County, but they are only “suburban” in the most literal sense. They sit along arterial shopping strips or highways, yet they are easy to miss — the Highland Village complex, for example, is beside the Baltimore-Washington Parkway, but the tall sound barriers dividing it from the six-lane highway render its more than 1,000 units invisible to the thousands traveling that route every day.

The complexes date mostly from the 1960s and ’70s, when white flight from the city was creating a huge demand for affordable housing in Baltimore County. They were meant to exude middle-class respectability — unglamorous but safe and pleasant enough, a renter’s Levittown. Since then, however, they have slipped socioeconomically, along with the middle class itself, into the vast gray area of the modern precariat — home to casino workers, distribution-warehouse pickers, Uber drivers, students at for-profit colleges. Although most of the tenants I met in a series of recent visits to the complexes pay their own rent, ranging from about $800 to $1,300, some of them receive Section 8 assistance, as Kamiia Warren did; Baltimore County has no public housing for a population of more than 825,000, so these and similar complexes have become the de facto substitute.

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Kamiia Warren at Cove Village, the Kushner Companies property in Essex, Md., where she once lived. Credit Philip Montgomery for The New York Times

At the time of the 2012 Baltimore purchase, Kushner raved about the promise of the low-end multifamily market. “It’s proven over the last few years to be the most resilient asset class, and at the end of the day, it’s a very stable asset class,” he told Multifamily Executive. He said things were proceeding well in the Midwestern complexes he purchased a year earlier. “It was a lot of construction and a lot of evictions,” he said. “But the communities now look great, and the outcome has been phenomenal.”

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Kamiia Warren still had not paid the $4,984.37 judgment against her by late 2014. Three days before Christmas that year, JK2 Westminster filed a request to garnish her wages from her in-home elder-care job. Five days earlier, Warren had gone to court to fill out a handwritten motion saying she had proof that she was given permission to leave Cove Village in 2010 — she had finally managed to get a copy from the housing department. “Please give me the opportunity to plead my case,” she wrote. But she did not attach a copy of the form to her motion, not realizing it was necessary, so a judge denied it on Jan. 9, on the grounds that there was “no evidence submitted.”

The garnishing started that month. Warren was in the midst of leaving her job, but JK2 Westminster garnished her bank account too. After her account was zeroed out, a loss of about $900, she borrowed money from her mother to buy food for her children and pay her bills. That February — five years after she left Cove Village — Warren returned to court, this time with the housing form in hand, asking the judge to halt garnishment. “I am a single mom of three and my bank account was wiped clean by the plaintiff,” she pleaded in another handwritten request. “I cannot take care of my kids when they snatch all of my money out of my account. I do not feel I owe this money. Please have mercy on my family and I.” She told me that when she called the law office representing JK2 Westminster that same day from the courthouse to discuss the case, one of the lawyers told her: “This is not going to go away. You will pay us.”

The judge denied Warren’s request without explanation. And JK2 Westminster kept pressing for the rest of the money, sending out one process server after another to present Warren with legal papers. Finally, in January 2016, the court sent notice of a $4,615 lien against Warren — a legal claim against her for the remaining judgment. Warren began to cry as she recounted the episode to me. She said the lien has greatly complicated her hopes of taking out a loan to start her own small assisted-living center. She had gone a couple of years without a bank account, for fear of further garnishing. “It was just pure greed,” she said. “It was unnecessary.” I asked why she hadn’t pushed harder against the judgment once she had the necessary evidence in hand. “They know how to work this stuff,” she replied. “They know what to do, and here I am, I don’t know anything about the law. I would have to hire a lawyer or something, and I really can’t afford that. I really don’t know my rights. I don’t know all the court lingo. I knew that up against them I would lose.”

A search for “JK2 Westminster” in the database of Maryland’s District Court system brings back 548 cases in which it is the plaintiff — and that does not include hundreds of other cases that have been filed in the name of the company’s individual complexes.

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A late-rent notice left on the front door of a Kushner Companies complex in a suburb of Baltimore. Credit Philip Montgomery for The New York Times

A vast majority of these cases have been filed by a single small law firm in the Baltimore suburb of Owings Mills. The law office of Jeffrey Tapper specializes in “collections” work, with an emphasis on landlord-tenant cases. It has represented several other real estate management companies, including Sawyer, which retains a stake in many of the Kushner complexes.

In April, I drove to Owings Mills in hopes of speaking to Tapper. As I waited for him by reception, I overheard an assistant making a call about a new case, saying that the firm would continue to pursue one tenant even if the other person on the lease had filed for bankruptcy. Tapper emerged, a man in his mid-60s with white hair, a paunch and a large smartphone clipped to his belt. Our interview was brief. “I’m not having any conversation with you that has to do with one of my clients,” he said. “I’m not helping you with any of whatever you’re trying to do.”

In the cases that Tapper has brought to court on behalf of JK2 Westminster and individual Kushner-controlled companies, there is a clear pattern of Kushner Companies’ pursuing tenants over virtually any unpaid rent or broken lease — even in the numerous cases where the facts appear to be on the tenants’ side. Not only does the company file cases against them, it pursues the cases for as long as it takes to collect from the overmatched defendants — often several years. The court docket of JK2 Westminster’s case against Warren, for instance, spans more than three years and 112 actions — for a sum that amounts to maybe two days’ worth of billings for the average corporate-law-firm associate, from a woman who never even rented from JK2 Westminster. The pursuit is all the more remarkable given how transient the company’s prey tends to be. Hounding former tenants for money means paying to send out process servers who often report back that they were unable to locate the target. This does not deter Kushner Companies’ lawyers. They send the servers back out again a few months later.

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In March 2009, Joan Beverly, a probation agent, signed the lease for her daughter, Lennettea, for a unit at Dutch Village, a complex on the northern edge of Baltimore. Lennettea moved out a year later, several months before her lease was up. Kushner Companies bought Dutch Village more than two years later. In December 2012, JK2 Westminster filed suit in Baltimore County District Court against Beverly, seeking $3,810.16 — several months of rent it said it was owed, plus about $1,000 in repair costs, including $10 for “failure to return laundry room card.”

That February, Lennettea filed a written court notice explaining that her mother, who was dying of pancreatic cancer, was “in terminal hospice care and is not eligible to work.” She added by way of supporting evidence a letter from the hospice provider to Joan Beverly’s bank, explaining her and her husband’s late mortgage payments on their home: “There has been added financial stress because Mrs. Beverly is very ill at this time.” But JK2 Westminster persisted in seeking a hearing on the suit. In March, a district court judge found in favor of the company — a total judgment against Joan of more than $5,500.

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Dutch Village, a Kushner Companies-owned complex in Baltimore. Credit Philip Montgomery for The New York Times

Joan died two weeks later. Her husband, Tyrone Beverly, a retired longshoreman, requested that the judgment against his deceased wife be removed but was denied. The case remains open in the court database. Tyrone, who was married to Joan for 32 years, told me that he had assumed the judgment had been dismissed and was unaware that it was still listed as awaiting payment. “They just didn’t treat us fair,” he said.

The sweeping nature of the company’s pursuit of tenants was most evident when those tenants were, in fact, prepared to defend themselves. Shawanda Hough moved out of her unit in the Carriage Hill complex in the northwestern Baltimore suburb of Randallstown in early 2012 after black mold worsened her son’s asthma, landing him in the hospital twice. After the maintenance crew tried and failed to fix the problem, she got the rental office’s written permission to move out in advance of her lease. But then Kushner Companies bought Carriage Hill, and a year and a half later, in August 2013, JK2 Westminster filed a lawsuit against Hough, seeking $4,068.53.

Hough fought back. In a court filing, she said that she had kept all of her documentation, and that the company had assured her that it had not lost a dime in rent; she had gone so far as to coordinate the time of her departure with the arrival of a new tenant. JK2 Westminster went ahead with a hearing before a judge a month later, but the judge ultimately found for Hough.

Cases like Hough’s, however, were the exception rather than the rule. Over all, about nine out of every 10 cases brought by JK2 Westminster that I surveyed resulted in judgments against the defendants, who often did not appear in person for the hearings — and if they did, almost never had legal representation. How could it possibly be worth Kushner Companies’ while to pursue hundreds of people so aggressively over a few thousand dollars here and there? After all, the pursuit itself cost money. And it wasn’t happening just in Baltimore — Doug Wilkins, a lawyer in Toledo who has represented some of the complexes bought there by Kushner, told me the company is seeking far more monetary judgments than did previous owners.

When I presented JK2 Westminster’s record of litigation to Matthew Cypher, a Georgetown University business professor who used to work for the real estate giant Invesco, he said it was highly unusual to put so much effort into pursuing former tenants in court. “These people fade into the shadows of the night,” he said. “It’s amazing to me that there’s that much to go after.” Brian Pendergraft, an attorney in Greenbelt, Md., who works on both sides of landlord-tenant litigation, told me he had heard of large property-management companies pursuing former tenants for unpaid rent but not going so far as to pursue tenants who predated the company’s ownership of a complex. “I guess you can do it,” he said, “but I don’t think it’s cool.”

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Dutch Village. Credit Philip Montgomery for The New York Times

But Matthew Hertz, whose Bethesda, Md., firm represents landlords and tenants in similar cases, explained to me that there is a logic behind such aggressive tactics. The costs of the pursuit are not as high as you might imagine, he said — people are not that hard to find in the age of cellphones and easily accessible databases. “If I give my process server a name and phone number, it’s generally enough to trace you,” he said. “If I have a date of birth and Social Security number, it’s even easier.” The legal costs can be billed to the defendant as attorney’s fees, if the terms of the lease allow. And garnishing wages is relatively easy to do by court order, assuming the defendant has wages to garnish.

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As for pursuing former tenants from years before the new company’s ownership of a complex, Hertz said it was hardly different from an investor’s buying a portfolio of mortgages: It’s debt to be collected on. “If you buy someone’s properties, you’re buying their debts, not just their assets. You take the good with the bad, and try to collect on the bad. Even if you only get back 5 percent, you’re making something,” he said. “It’s, ‘I’m buying up this property and if I can collect anything, it’s gravy on top.’ ”

There was, Hertz added, an ancillary benefit to such relentless pursuit: sending a message to current tenants. One way to make sure that tenants are paying their rent and to keep them from breaking leases early — which brings with it the costs and hassles of having to clean apartments and find new tenants — is to instill a sense of fear about violating a lease. “Any landlord takes that into account,” Hertz said. “They know tenants are going to talk to each other. If they say, ‘He’s going to come after you,’ it’s deterrence.”

When Kushner Companies finally responded to my questions about the cases, they essentially affirmed Hertz’s reasoning. As manager for the Baltimore complexes, the company had a “fiduciary obligation” to its ownership partners to collect as much revenue as it could, said Kushner Companies’ chief financial officer, Jennifer McLean, in a written response. She said the company’s legal costs have been “minimal” compared with what it seeks to recover.

McLean declined to comment on several cases, including Kamiia Warren’s. But she said the pursuit of Joan Beverly, the woman dying of cancer, was justified. “This tenant owed the landlord $3,819.16,” she said in the written statement. “As property manager, it’s our job to collect rent payments.”

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Catherine Silver outside her apartment in Dutch Village. Credit Philip Montgomery for The New York Times

In general, “Westminster Management only takes legal action against a tenant when absolutely necessary,” McLean said. “If legal action is pursued, however, the company follows guidelines consistent with industry standards.” She added: “While taking a tenant to court is far from an ideal outcome, that option — and clear rules governing it — must exist as a last resort.”

The Highland Village complex, along the Baltimore-Washington Parkway, is one of Kushner Companies’ largest, a vast maze of lanes and courts lined with rows of short brick-and-siding-fronted homes. Like the other Kushner complexes I visited in Baltimore’s southern and eastern suburbs, it is situated in what was once a predominantly white working-class community, within reasonable commuting distance of the harbor and industrial plants, now defunct, like Bethlehem Steel. In recent decades, many black transplants from the city and Hispanic immigrants have arrived as well, and Highland Village is an unusually integrated place.

The complex, like the others I saw, seemed designed to preclude neighborliness — most of the townhouses lack even the barest stoop to sit out on, and at least one complex has signs forbidding ball-playing (“violators will be prosecuted”). At another complex, kids had drawn a rectangle on the side of a storage shed in lieu of a hoop for their basketball game. The only meeting points at many of the complexes are the metal mailbox stands, the Dumpsters and the laundry room. And the only thing that united many of the residents I spoke to, it seemed, was resentment of their landlord.

They complained about Westminster Management’s aggressive rent-collection practices, which many told me exceeded what they had experienced under the previous owners. Rent is marked officially late, they said, if it arrives after 4:30 p.m. on the fifth day of the month. But Westminster recently made paying the rent much more of a challenge. Last fall, it sent notice to residents saying that they could no longer pay by money order (on which many residents, who lack checking accounts, had relied) at the complex’s rental office and would instead need to go to a Walmart or Ace Cash Express and use an assigned “WIPS card” — a plastic card linked to the resident’s account — to pay their rent there. That method carries a $3.50 fee for every payment, and getting to the Walmart or Ace is difficult for the many residents without cars.

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Tenants who pay after the 5th are hit with late fees that start around $40 to $50 and escalate from there, with court fees usually added on as well. What upsets residents most, though, are not the fees themselves but that the property managers, instead of putting pink or yellow late notices and court summonses discreetly in mailboxes or under doors, post them in public — on the front doors of townhouse units or on lobby walls or lobby doors of apartment buildings. This bothered even tenants who said they always paid their rent on time. “The whole neighborhood knows,” said Marquita Parmely, a truck driver who pays $1,010 a month to rent a townhouse at Essex Park, near Cove Village. Dareck Cromwell, a retiree living at Carriage Hill, told me: “They put them in the windows for everybody to see, to see your business. That’s not right. You don’t put people’s business out like that.”

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Chris Freimiller and Jaclyn Meador at Morningside Park. Credit Philip Montgomery for The New York Times

Compounding these grievances was Westminster’s maintenance of the properties — or lack thereof. Their complexes comprise hundreds of units, but typically have only four or so workers looking after them. Alishia Jamesson, a 30-year-old Highland Village resident, invited me into the small living room of the $842-a-month townhouse she and her fiancé share with her two children. The room was cluttered with bags from Walmart and Dollar Tree, ketchup packets and supplies for the work Jamesson took up after she lost her cashier’s job at Walmart for missing too many shifts for parenting duties: making personalized tote bags and gift baskets for weddings.

Jamesson showed me three large holes in the walls of the townhouse, which Westminster charged her and her fiancé, Keith Riggs, $150 to fix in October but had not yet repaired. “Every time I ask about drywall they say, ‘Oh, well, we only have one drywall person,’ ” Riggs told me. There was also black mold spreading around the bathtub, a large brown stain and crack on the wall adjacent to the stove and a gap in the bathroom skylight that allowed in rain and snow. Jamesson told me that the refrigerator hadn’t worked for more than a month before being replaced; her family had lived on canned food and boxed milk.

Complaints about poor upkeep abounded at the other complexes too. At Highland Village, there was the matter of the vacant unit that burned down one night a couple of months ago: its shell was still standing, attended by nothing but plywood and a tarp. At Essex Park, east of the city, Marquita Parmely, the truck driver, told me she had a mouse infestation that was severe enough that her 12-year-old daughter recently found one in her bed. Parmely also has a 2-year-old with asthma, which is aggravated by allergens in mice droppings. She moved her own bed and other furniture away from the walls to dissuade mice, kept the family’s laundry in tote bags after mice started appearing in the hamper and vacuumed twice a day. Her neighbor told me it took weeks for staff members to replace a rear window that had been shot out by kids with a BB gun.

At the Carroll Park complex in Middle River, Md., Jen Jackson showed me a ceiling leak that was causing a mold problem. At the Whispering Woods townhouses nearby, a resident named Nicole, who asked that I not use her last name, told me she had filed unheeded complaints about loose plastic shutters, one of which finally fell off and hit her in the head. (When I visited Nicole again a few weeks later, she told me that Westminster staff had scolded her for speaking with me and told her not to do so again. A large black pickup followed me and a photographer as we walked through the complex until we left.) In the same complex, Renee Cook showed me the large swath of her downstairs ceiling that had collapsed and the mold and mildew beneath the carpet, each resulting from a leak from her neighbor’s (illicit) washer-dryer.

Asked about such conditions, Kushner Companies said it follows industry standards for maintenance staffing and exterminator visits, and that it and its partners had spent $10 million on upgrades across the complexes. “Despite those improvements, issues still arise, given the age of the properties,” said McLean, the chief financial officer. Shortly after I put questions to the company about specific tenants’ complaints, Cook’s ceiling was repaired.

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Mike McHargue in his living room at Kushner Companies’ Carroll Park complex in Middle River, Md. Credit Philip Montgomery for The New York Times

The worst troubles may have been those described in a 2013 court case involving Jasmine Cox’s unit at Cove Village. They began with the bedroom ceiling, which started leaking one day. Then maggots started coming out of the living-room carpet. Then raw sewage started flowing out of the kitchen sink. “It sounded like someone turned a pool upside down,” Cox told me. “I heard the water hitting the floor and I panicked. I got out of bed and the sink is black and gray, it’s pooling out of the sink and the house smells terrible.”

Cox stopped cooking for herself and her son, not wanting food near the sink. A judge allowed her reduced rent for one month. When she moved out soon afterward, Westminster Management sent her a $600 invoice for a new carpet and other repairs. Cox, who is now working as a battery-test engineer and about to buy her first home, was unaware who was behind the company that had put her through such an ordeal. When I told her of Kushner’s involvement, there was a silence as she took it in.

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“Get that [expletive] out of here,” she said.

Very few of the complex residents I met, even ones who had been pursued at length in court by JK2 Westminster, had any idea that their rent and late fees were going to the family company of the president’s son-in-law. “That Jared Kushner?” Danny Jackson, a plumber in his 15th year living at Harbor Point Estates, exclaimed. “Oh, my God. And I thought he was the good one.”

Jackson said he voted for Hillary Clinton in 2016. Many of the others I spoke with had not voted — in that or any other election. “I’m not a big political person, so I feel like I don’t think I should vote on something I know nothing about,” Alishia Jamesson told me. But eastern Baltimore County was a Trump stronghold, a formerly staunch Democratic territory with many downwardly mobile white voters — and Kushner’s complexes were no exception.

East of the city, I met Chris Freimiller, a 38-year-old resident of the company’s Morningside Park complex, who was smoking Newports in his car before heading to work at a Rite Aid distribution center. Freimiller complained to me about the persistent leaks from the toilet and the ceiling damage it had caused, and about being hit repeatedly with late fees. He told me he voted for president for the first time ever last year — for Donald Trump. His vote, he said, was motivated by “the racial and police issues. How bad it got with Obama and how he seemed to promote the cop-bashing and the racial divide.” Did knowing that he was sending his late fees to Trump’s son-in-law change anything? “Yeah, actually,” he said. “As if they need any more money.”

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Fontana Village, a Baltimore-area apartment complex owned by Jared Kushner’s company.

Credit Philip Montgomery for The New York Times

At the Carroll Park complex, I met Mike McHargue, a private investigator, and his girlfriend, Patricia Howell. “They’re nothing but slumlords,” Howell told me of Westminster Management. “They take everyone’s money.” When I asked if they knew who was behind the company, they said they did not. “Oh, really?” Howell said when I mentioned Kushner’s name. “Oh, really. And I’m a Trump supporter.”

Jared Kushner stepped down as chief executive of Kushner Companies in January. But he remains a stakeholder in the company — his share of company-related trusts is estimated to be worth at least $600 million — and the company says it has no intention of selling off its multifamily holdings. (JK2 Westminster was formally dissolved in December, but Kushner Companies still owns the complexes through other entities; lawsuits against tenants are now typically filed in the names of the complexes themselves.) Because Kushner retains his interest in the complexes, the White House told The Baltimore Sun in February that he would recuse himself from any policy decisions about Section 8 funding, as many of his tenants rely on it for their rent. But even as Kushner now busies himself with his ever-expanding White House portfolio, his company is carrying on its vigorous efforts in court.

On April 17, three cases were being held consecutively in Baltimore’s District Court involving tenants of the Dutch Village complex. One was against Catherine Silver, a Morgan State University student who had given notice that she was moving at the end of March — she was fed up with lousy maintenance (among other things, a perpetually clogged toilet and a ceiling leak in her closet). But when Silver went to Walmart to pay her March rent with her WIPS card, the money mistakenly ended up not in the account for Dutch Village but the one for Kushner Companies’ adjacent complex, Pleasantview.

Westminster Management started eviction proceedings. On March 23, a sheriff’s deputy changed the locks on the unit. Silver was traveling at the time — it was spring break — and it was not until March 31 that she was able to explain to a judge what happened and get her keys back. By that point, it was too late to get her possessions into the moving truck she’d rented, and classes had resumed. She stayed in the unit, in which Westminster had turned off the heat and hot water, trying again to plan her departure. But Westminster was now after her for April’s rent, despite the fact that the company had literally barred her from being able to move before April, as she had intended. On April 25, a judge ruled that she needed to pay half of April’s rent, plus court costs: $471.

Westminster had a lawyer from Tapper’s firm, Andrew Rabinowitz, at the April 25 hearing, which lasted more than three hours — all over less than $500. The next day Rabinowitz was back to defend Westminster against Silver’s criminal complaint over the unfounded eviction. This time, he was more accommodating, perhaps because he realized a reporter was present. After conferring with Dutch Village’s property manager, who was also in attendance, Rabinowitz agreed to let Silver have until the end of May to move out, rent-free, as long as she paid for April. Silver asked if she could have her hot water turned back on. He said he would look into it. But when I visited Silver two weeks later, the hot water was still off. The stove was covered with the pots she was using to boil water for bathing.

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On May 10 at the Highland Village complex, a woman was distributing the yellow “failure to pay rent” notices filed with the District Court to tenants who were behind on their May rent. One went up on the door of a man who introduced himself to me as Tommy, a recently divorced house painter with two children, who was at that moment sitting in his pickup truck reading Psalm 91 to gird himself for a visit to traffic court. He said he didn’t know why he kept being hit with late fees and court fees at Highland Village because he was up to date on the rent itself.

Over at Carroll Park, Mike McHargue, the private investigator, had also received a yellow notice and was trying to find out when he needed to come up with money to avoid eviction. So was Chris Freimiller, the Rite Aid worker. He had missed a couple weeks of work with back pain related to a metal bar in his leg from an earlier car accident, and Westminster Management had moved quickly to file for eviction over $722.09 in missing rent, plus $66 in fees. When I arrived, Freimiller was sleeping on the couch after a night shift, and his wife, Jaclyn Meador, was trying to get an eviction date from the constable while their 11-year-old son, Ethan, looked on.

One more yellow notice was affixed at the Highland Park home of Alishia Jamesson, the wedding-basket maker. Her fiancé had left his job as a casino housekeeper to take a job handling Amazon packages near the airport, but his first check hadn’t come through yet. Jamesson was working at Walmart again. The couple’s car tags had expired, so both were enduring long public-transit commutes. No one had come from maintenance. There were still three holes in the wall.

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Article source: https://www.nytimes.com/2017/05/23/magazine/jared-kushners-other-real-estate-empire.html?partner=rss&emc=rss

Prototype: A Lawyer With a Taste for Soy Sauce and a High Tolerance for Pain

Flummoxed by the discrepancy, he researched how soy sauce is made and learned that it is a fermented natural product, like beer, wine or cheese.

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The complexity of its production makes it prime for nuance, he said, but the soy sauces he had tasted up to then were consistently mundane — “analogous to something like ‘Two-Buck Chuck’ or Budweiser.”

He couldn’t understand why people didn’t expect more from sushi condiments. “If someone can pay 15 bucks for one piece of bluefin tuna, they can pay 15 bucks for a bottle of soy sauce that they’re going to put on every piece of fish,” he said he thought.

Soon, Mr. Blum was making trips to far-flung corners of Japan to sample the soy sauces produced by small family breweries with centuries-old traditions. With an interpreter in tow, he met with the owners to discuss their concoctions, and he snapped up small bottles of sauces to try out in sushi restaurants. In tasting more than 150 sauces, he found a wide range of colors, from white to inky black, and flavors that included coffee and chocolate.

Mr. Blum’s initial idea was to start his own brewery in the United States. But making soy sauce takes a long time; brewing a single batch can take two years. (Batch sizes vary depending on the size of the brewery.) So he decided to import artisanal sauces in the hopes of creating a market for them here. Eventually, he would like to start his own brewery.

When Mr. Blum was growing up in Brooklyn in the late 1970s and early 1980s, his family made frequent trips to New York City sushi bars and to Mott Street in Chinatown, which he considers “a proto-foodie scene of the era,” he said. But the soy sauce he tasted back then was never on par with the food itself. He remembers red-capped bottles left out on the restaurants’ tables, filled with bitter, sour liquid emitting a “caustic” aroma.

Mr. Blum’s gusto for food led to a job at a French restaurant when he was in high school, and it has trickled into his legal career. His clients at the Cornerstone Law Group in San Francisco, where he practices business law, include restaurants and food producers. He is a principal of the firm.

When Mr. Blum decided to pursue Shiso as a side business, he continued to spend most of his time working at Cornerstone. It helped that the firm is not set up as a traditional partnership; it is made up of lawyers who work their own cases individually.

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A plant where Jonathan Blum bottled his Shiso soy sauce, which costs $16 to $18 for a 3.4-ounce container. Credit Esme Watson

It gave him more freedom to develop Shiso, including the ability to make trips to Japan that lasted at least two weeks. And it provided a steady source of income, which meant he didn’t need to take on investors.

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Although Mr. Blum has spent the bulk of his legal career advising businesses, starting his own company was more complicated than he had expected.

He could not have anticipated Shiso Soy’s first major setback, which occurred a few years before the trip to the town dump. Just as he was completing the logistics and regulatory paperwork to import sauces from a Japanese brewery in the Fukushima prefecture, the 2011 earthquake and tsunami struck, followed by the worst nuclear meltdown since the 1986 Chernobyl disaster.

Suddenly, his business was in jeopardy, but far worse, he wasn’t sure if the brewery and its owners had even survived.

“I was trying to call them up to see if they were still alive,” Mr. Blum said. “It was terrible. I’d become friends with those people.” They were indeed alive, but “nothing got exported from Japan after that,” he said.

He had to re-evaluate the future of Shiso Soy and decide whether to abandon it or find a new brewery and wait for trade with Japan to resume. He persevered.

“I believe in it,” he says. “I love it. I mean, you suck it up and double down.”

In addition to this passion for his product, Mr. Blum was extremely patient — a trait that benefits anyone trying to set off a new culinary movement, according to Lance Winters, the master distiller at the craft distillery St. George Spirits.

Mr. Winters sees parallels between the soy sauce and spirits industries. After World War II, both became “industrialized commodities instead of something where there’s passion and artistry really driving them,” Mr. Winters said. It took 20 years for consumers to develop a taste for craft gins and vodkas, he noted, because they had grown accustomed to limited options.

To educate St. George’s consumers to a different style of spirits, the company asked bartenders to help with marketing. Mr. Winters believes it will be equally important for Shiso to find “the right sushi chefs who will put this in front of their customers, and say, ‘This is different. This is better. This is what I recommend you use,’” he said.

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But that approach would probably require sushi restaurants to alter their business models. Currently, sushi eaters at restaurants dunk their fish in soy sauce that sits out on tables and is free, just like ketchup at a burger restaurant. The retail price of a gallon of Kikkoman soy sauce is $15; Shiso Soy Sauce is significantly more expensive at $16 and $18 for a 3.4-ounce bottle. For restaurants to carry Shiso sauces, they would probably need to charge for it.

So far, some of his food industry contacts have predicted that chefs might be resistant, Mr. Blum said. He is hiring someone to help market the sauces to chefs and restaurants. For now, he is focused on selling them online with the idea that consumers might take the sauces to sushi restaurants for their personal consumption.

Mr. Winters expects the artisanal soy sauce market to develop faster than craft spirits did, partly because the so-called maker movement is now so robust.

“People are making sausage at home,” Mr. Winters pointed out. “They’re making condiments of their own at home. People are fascinated by process.”

“Whereas before, if people saw a brand they didn’t recognize,” he said, “they would automatically steer away. Now they steer toward it.”

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Article source: http://www.nytimes.com/2016/11/06/business/a-lawyer-with-a-taste-for-soy-sauce-and-a-high-tolerance-for-pain.html?partner=rss&emc=rss