May 26, 2017

Getting Online Products to Their New Owners

For the husband-and-wife owners of Lollacup, a maker of specially designed sippy cups, the moment of truth came about 36 hours after a segment about their company was shown in April 2012 on “Shark Tank,” the ABC reality show. At the time, the Lims, parents of young daughters, were handling their own fulfillment — the packing and shipping of products ordered online — from their Pasadena, Calif., living room.

After the show was broadcast and their daily orders doubled to 800, the Lims decided something had to change. “We had boxes piled everywhere,” Ms. Lim said. “We were begging friends and family to come over and help, bribing them with wine, and we still couldn’t keep up.”

It was then that they made a choice common among early-stage e-commerce vendors: they decided to outsource their orders to a third-party logistics provider, known in the business as a 3PL, in exchange for a percentage of revenue. In this case, that was about 3.5 percent of each retail sale and 7 percent of each wholesale order, not including delivery costs.

The challenge of fulfilling orders is one of those problems that all e-commerce companies want to have, until they do, at which point it can swallow margins, alienate customers and even sink a business if not managed carefully. “In a world where customers have more choices online, most businesses realize you need to be able to get your product to them quickly and cheaply to stay competitive,” said Bob Halpin, a consumer solutions consultant with United Parcel Service, who helps U.P.S. customers improve their fulfillment operations.

The pressure on small businesses to manage fulfillment costs stems from expectations in the marketplace generated by large retailers, especially Amazon. The online giant has 40 large fulfillment centers around the United States that it uses to offer free two-day shipping to its Prime subscribers, and it is now building five new facilities that are expected to enable it to deliver many items the day they are ordered.

Some smaller e-commerce sites have responded with something of an if-you-can’t-beat-them-join-them attitude, turning to Fulfillment by Amazon, a program that lets them use the retailer’s state-of-the-art distribution system to ship items not even sold by Amazon. But it typically charges more than a standard 3PL provider, about $6 per sale for a product with the approximate size and weight of a sippy cup.

Other businesses treat fulfillment as something of an existential exercise, one subject to constant reappraisal and revision. Several months after the Lims signed on with their 3PL provider, for example, they took another look at the arrangement. Not only were they spending about $8,000 in monthly 3PL fees, they were enduring far more shipping mistakes. They priced other options, and they realized they could improve quality control and save money by shifting final assembly to their manufacturer and bringing inventory and shipping back in-house, this time to a 2,500-square-foot warehouse staffed by one new employee.

“We’re probably going to save about $50,000 this year doing it this way,” Ms. Lim said. “Once we went the 3PL route, it could have been easy to say, O.K., that’s done. But instead we kept questioning and evaluating. We still are.”

While no two in-house fulfillment operations are the same, certain principles apply. In most successful operations, warehouse space is divided into a section for bulk inventory and an area where product can be found quickly to fill orders, a process known as pick-and-pack. One trend Mr. Halpin said he had noticed in recent years was the heightened sophistication of the off-the-shelf software products that are used to manage aspects of the process. At Lollacup, for example, the company’s online store is powered by an e-commerce package from Shopify, which exports inventory data to the Lims’ QuickBooks program, and interfaces with ShipStation to print shipping labels and generate the right amount of postage.

Driven by Amazon and other major e-commerce sites, shipping has become a costly loss leader for many smaller sites. Jimmy Beans Wool, an $8 million-a-year seller of knitting yarn based in Reno, Nev., for instance, charges a flat rate of $4 on all orders and offers free shipping on purchases of more than $75, which ends up costing the company about $370,000 a year. “We consider it just part of our marketing costs,” said Laura Zander, who founded the business with her husband, Doug. But those costs could be twice that amount, she said, if not for a secret weapon she deploys: the United States Postal Service.

The Postal Service may have a reputation as an antiquated drag on the federal budget, but it is surprisingly competitive in order fulfillment, especially with standard-size packages that weigh less than a pound. (The post office’s competitive advantage falls off sharply on packages weighing over three pounds.)

Using first-class mail, Jimmy Beans can ship a package of yarn anywhere in the continental United States for $2 to $4 and expect it to arrive within two days (compared with $5 to $7 with FedEx or U.P.S. ground). Because the Postal Service also provides shipping materials free, the company saves $1 more per box and 30 cents on every envelope. For high-volume customers like Jimmy Beans, the post office will even print the packaging with the customer’s own logo, again for free. “I mean, how cool is that?” Ms. Zander said. “I love America!”

What is more, because post office distribution centers are open six days a week until 10 p.m., Jimmy Beans can accept orders on Saturday — the most popular ordering day of the week for its knitters — package them and drop them off at the distribution center by Saturday evening, confident they will be in East Coast homes by Monday. “A lot of our customers tell us they can’t get over that we’re able to do that,” Ms. Zander said. “To them, it’s almost like magic.”

Some businesses have lowered shipping costs by borrowing a page from Amazon and opening multiple fulfillment centers. The reason has to do with the zoned shipping policies employed by carriers that divide the country into seven zones and charge higher rates for packages that cross zones. Even a company like Adagio Teas, with just shy of $10 million in annual sales, has found that it pays to operate two fulfillment warehouses, one at its headquarters in Garfield, N.J., and another in Fresno, Calif. Michael Cramer, chief executive of Adagio, explains that before his company opened the second facility, shipping a $60 order of iced tea to the West Coast cost $30. Now it is just $10.

Nuts.com, a $20-million-a-year e-tailer of nuts and other snacks, has gone even further — with advanced software systems, scores of white-suited warehouse employees, and a whirring labyrinth of conveyors snaking among shelving towers 20 feet high in a 55,000-square-foot-warehouse. And now Jeffrey Braverman, the chief executive, is considering leaping to the next level.

He is in talks with the German manufacturer of a system that eliminates the need for workers to move between locations to gather products. Instead, the shelves bring the products to them. “It’s like a giant vending machine with a brain,” he said. “Whenever an order comes in, these enormous lifts automatically go up and down and back and forth and grab the right shelf and bring it to the packing area.”

After it is installed, the system, Mr. Braverman said, could save the company more than $500,000 a year. “If the bid comes in at less than $2 million,” he said, “I think I’m going to do it.”

Article source: http://www.nytimes.com/2013/09/26/business/smallbusiness/selling-on-the-web-and-seeking-reliable-shipping.html?partner=rss&emc=rss

Bezos Is a Hit in a Washington Post Newsroom Visit

Over the course of the day, he gave some indication of the kind of journalism that interested him, answered questions about the Post’s coverage of Amazon and did not disguise his interest at the intersection of his businesses, telling an afternoon meeting that “it should be as easy to get a subscription to The Post as it is to buy diapers on Amazon,” according to one employee who attended the meeting.

The two-day visit was Mr. Bezos’s first trip to The Post since he agreed to buy the paper in early August for $250 million. Before the deal closes in October, Mr. Bezos made the visit to chat with employees from both the business and editorial sides about his plans for the company. By the end of his visit late Wednesday, Mr. Bezos seemed to have won over employees who posted photographs of him, speculated on how many electronic devices he had in his pockets, liberally quoted his thoughts on the news business on social media and gave him the hashtag #bezospalooza.

“He charmed the room of 20 hard-bitten journalists,” said Jeffrey Leen, The Post’s investigations editor, who attended a lunch meeting with Mr. Bezos. “He was a big supporter of investigative reporting, which warmed my heart. He already has a very good grasp of our business. It was, all in all, a very impressive performance.”

Mr. Bezos started the day Wednesday with an hourlong breakfast with Bob Woodward in the ninth-floor publisher’s private dining room, where the two men dined on a fruit plate, poached eggs, spinach, coffee and orange juice. Mr. Woodward said in an e-mail after the meeting that through the breakfast, “Jeff Bezos explained the thinking behind his reasoned and careful step-by-step process in deciding to buy The Post.”

Mr. Woodward added, “I was struck by how wide-ranging and methodical he is. He voiced strong, even intense, optimism about the future of The Post, and I suspect he will be calling on everyone here to pitch in with extra amounts of energy, focus and creativity.”

Mr. Bezos then met for a little more than an hour for coffee with about 20 reporters in a neighboring ninth-floor conference room and talked about how he defined success.

“What’s been happening over the last several years can’t continue to happen,” he said.

Mr. Bezos told reporters that the paper should focus on delivering important, compelling stories to its readers. If it does that, advertisers will come, he said. Several reporters said that message left them upbeat after the meeting, convinced that Mr. Bezos was committed to high-quality journalism.

“You got the feeling that he is not here to just take The Washington Post brand name and turn it into something else,” said one reporter who attended and spoke anonymously. “This is not somebody who is in a panic trying to make a profit for next year. He wants to solve it in a way that will endure for decades.”

For lunch, Mr. Bezos met with senior editors for a buffet of chicken, salmon, salad and cookies. Mr. Bezos mentioned that some of The Post’s recent coverage that he had found especially intriguing included the articles “9 Questions about Syria you were too embarrassed to ask“, and the obituary of a bouncer at The 9:30 Club, a well-known Washington club.

In the late afternoon, Mr. Bezos met with the entire newsroom in the first-floor community room for a question-and-answer session that lasted an hour and 20 minutes. That was the most widely chronicled event, with employees posting Twitter messages and comments — or what they called “Bezosisms” — every few minutes. Mr. Bezos answered questions about why he decided to buy The Post and why he would be interested in buying a newspaper when Amazon had a reputation for being slow to answer reporters’ questions.

Erik Wemple, the Post’s media reporter, quoted him on Twitter as saying, “I’ve always felt that the most powerful minds in the world can hold powerful inconsistencies.”

Toward the end of the session, Mr. Bezos addressed more difficult questions like the possible conflict of interest between The Post and Amazon’s contract for computer work with the Central Intelligence Agency. One employee, who attended the session but did not feel comfortable speaking on the record about his future owner, said that while Mr. Bezos “danced around” his answer, he added that he expected The Post to aggressively cover this relationship.

Mr. Bezos may have offered his most assuring comments when asked about his thoughts on journalism’s future. In a post, Cara Ann Kelly, The Washington Post’s Style Web producer, quoted him as saying, “If it’s hopeless — I would feel sorry for you guys — but I wouldn’t want to join you.”

Article source: http://www.nytimes.com/2013/09/05/business/media/bezos-is-a-hit-in-a-washington-post-newsroom-visit.html?partner=rss&emc=rss

CBS Returns, Triumphant, to Cable Box

The agreement between the two sides restored the CBS network and its related channels, including Showtime, to millions of cable subscribers largely in three major cities: New York, Los Angeles and Dallas. The outcome underscored the leverage that the owners of important television content, especially sports like N.F.L. football, retain over distributors like cable systems. The looming National Football League season, which starts this week, includes key games every week on CBS.

“It was hugely important,” an executive involved in the negotiation said Monday night. (The executive asked not to be identified because the participants agreed not to offer details on the agreement beyond the official announcement.) Indeed, Time Warner Cable executives had said earlier that a reason the company decided to remove the CBS stations in early August was because of the recognition that it would lose leverage the closer it got to the N.F.L. season.

David Bank, a media analyst for RBC Capital Markets said, “With the content, especially the N.F.L. and CBS being the No. 1 network in the ratings, you just have to believe they are going to win every time.”

The two sides did not release any specific information on the terms of the agreement. They had battled for exactly a month over an increase in fees CBS was seeking for the right to retransmit CBS stations in the three major cities and some other locations on Time Warner Cable systems. Another crucial issue was whether CBS would retain the digital rights to its content, which it wanted to sell to Web-based distributors like Netflix and Amazon.

Executives on both sides acknowledged early in the talks that CBS was seeking an increase to about $2 per subscriber, up from about $1. Separate statements from the chief executives of each company indicated that the outcome apparently tipped heavily toward CBS. Its president, Leslie Moonves, said in a memo to the company staff that the network had secured virtually all of what it was seeking.

“We are receiving fair compensation for CBS content,” Mr. Moonves said. He specifically included not only additional fees for CBS content, but also the retention of the digital rights.

Glenn A. Britt, Time Warner Cable’s chairman and chief executive, conceded that “we certainly didn’t get everything we wanted.”

CBS did make “some minor concessions” to get the deal settled, the executive involved in the negotiation said. The talks extended until 3 a.m. Monday.

In his statement, Mr. Britt said Time Warner Cable ultimately “ended up in a much better place than when we started,” though he did not specify how. He also again pushed for some kind of change in the rule that granted networks the rights to compensation from cable companies for their programming

“The rules are woefully out of date, are the primary reason cable bills are rising,” Mr. Britt said. “We sincerely hope that policy makers heed that call and take action to prevent these unfortunate blackouts soon.”

Time Warner Cable pressed throughout the monthlong impasse after it removed CBS’s stations from its systems for some form of government intervention, from either the Federal Communications Commission or Congress, but none materialized.

While the acting F.C.C. chairwoman, Mignon L. Clyburn, said on Aug. 9 that she was distressed at the standoff and was “ready to consider appropriate action if this dispute continues,” it continued for another three weeks without her intervening. Several media analysts said early in the dispute that the commission’s options were limited because the right of a station owner to seek retransmission compensation was granted in a law passed by Congress in 1992.

Monday evening, Ms. Clyburn issued a statement saying: “I am pleased CBS and Time Warner Cable have resolved their retransmission consent negotiations, which for too long have deprived millions of consumers of access to CBS programming. At the end of the day, media companies should accept shared responsibility for putting their audience’s interests above other interests and do all they can to avoid these kinds of disputes in the future.”

Both sides hurled accusations during the standoff. CBS executives said Time Warner Cable removed their stations unnecessarily (including Showtime, which requires a separate fee from subscribers) and negotiated in a dysfunctional manner, and Time Warner Cable accused CBS of making exorbitant demands and performing a disservice to all Time Warner Cable subscribers by blocking the CBS.com Web site. But the settlement was ultimately a financial arrangement between two partners, one of which had content the other needed to satisfy its customers.

Mr. Bank said that, if anything, the deal may make it easier for networks to press cable and other distributors like satellite systems to squeeze out more favorable fees, without all the noise and recriminations this dispute inspired. CBS quietly renegotiated a deal with the FiOS bundled Internet phone and television service owned by Verizon in the midst of its conflict with Time Warner Cable.

“I think the Verizon deal happening when it did was not helpful to Time Warner,” Mr. Bank said. “It was probably really damaging.”

Article source: http://www.nytimes.com/2013/09/03/business/media/cbs-and-time-warner-cable-end-contract-dispute.html?partner=rss&emc=rss

Nintendo to Offer Lower-Cost Game Device

Nintendo on Wednesday introduced a new portable gaming system, the Nintendo 2DS. The device will cost $130, or about $40 less than its 3DS sibling, when it is released Oct. 12. It is capable of running all the games made for the 3DS, but without 3-D effects.

For Nintendo, the price drop is a hedge against a future filled with tablet computers made by companies like Apple, Samsung and Amazon.

The growing popularity of tablets among adults means children are increasingly exposed to tablets at an early age. About one-third of American adults own tablets. But that figure rises to about 50 percent among parents with children living at home, according to Pew Internet Research. And games are routinely played on those tablets, making a dedicated gaming device less appealing.

“Forty bucks may not be a lot, but for families it’s a lot,” said Reggie Fils-Aime, president of Nintendo of America, in an interview. Mr. Fils-Aime said the 2DS was intended for the “entry gamer,” especially in families with multiple children.

Also on Wednesday, Nintendo said it would reduce by $50 the price of its console for the living room, the Wii U, which has had disappointing sales. The new price will be $300.

The gaming market has expanded over the last several years thanks in part to smartphones and tablets. The new devices have attracted what analysts call casual gamers — the people who yank out their smartphones and tablets to play games a few minutes on the commute to work, or the toddlers who play Angry Birds at family dinners.

Despite all that competition, Nintendo’s portable gaming device has been doing well.

The 3DS has been the best-selling piece of gaming hardware over the last three months, according to NPD Group. The last, best-selling portable gaming device was the Nintendo DS; with over 150 million units sold, it has become the best-selling portable gaming device in history.

With the addition of the 2DS, Nintendo now offers three portable devices, including the 3DS and the larger 3DS XL.

Tablets are considered a threat to Nintendo because games can be downloaded for a few dollars, or even free. Nintendo’s strategy has been to make most of its money from sales of the games it produces exclusively for Nintendo devices. Therefore, it has refused to offer its games to makers of tablets and smartphones.

That means famous titles native to Nintendo, like Super Mario or Donkey Kong, could be left to earlier generations. And that’s bad news for the Japanese company.

“The longer that they abstain from those platforms, the longer they risk failing to acquaint children with that stable of characters,” said Ross Rubin, an independent technology analyst for Reticle Research. “Since there is virtually no presence on these screens that kids are starting to increasingly spend more and more time with, Nintendo is going to have to work harder to gain exposure to that audience.”

Mr. Rubin said there were several ways for Nintendo to participate in the mobile market outside of selling games for its own devices — without cannibalizing its own business. The company could offer software that complements its games and systems, like iPad apps that turn the tablet into an extra controller for the 3DS or Wii U. Nintendo could also create lightweight versions of its games for tablets and phones, using them to promote the superior versions of the games available only for Nintendo systems, he said.

For the moment, however, cost-cutting appears to be Nintendo’s answer.

“All we’re doing is making available a device that, for consumers who want a lower price point but want to play all these great games, now you have the opportunity,” Mr. Fils-Aime said. “And we think it’s going to work.”

Article source: http://www.nytimes.com/2013/08/29/technology/nintendo-to-offer-lower-cost-game-device.html?partner=rss&emc=rss

Tool Kit: A Digital Back-to-School Checklist

The days are getting shorter. The swimsuits have been put away. The football season has begun.

That can mean only one thing: The start of the school year is near.

At one time, preparing children for school required buying new clothes and a fresh set of pencils. These days, your child is likely to need Internet access and a laptop even more than a composition notebook.

For parents, the choices can be overwhelming — and expensive. Here are some tips to get started.

FOR THE FAMILY First, you need to prepare your home. Make sure you have robust Internet access. Much homework these days requires children to do research on the Internet, even in elementary school.

And while much of the world is abandoning paper copies — airplane boarding passes can be displayed on a smartphone screen and many stores offer e-mailed receipts, for example — most schools require students to hand in homework in printed form.

Make sure you have a printer at home, as well as a spare printer cartridge and an extra ream of paper. Too many parents discover that sinking feeling when the printer ink runs out the night before a child’s big project is due. Now is the time to stock up on backup supplies.

Also make sure there are multiple ways to back up, save and transfer files between home and school, and the other way around. A 16-gigabyte thumb drive, $10 at Best Buy, for example, might seem low-tech, but it can provide enough storage to get an edited video project off a student’s laptop. Most models can also survive a trip through the washing machine.

To ensure that gadgets have power, invest in spare cables and an extra USB charger, like the PowerGen Dual Port USB Adapter, $9 at Amazon, to increase the chances that your phone and your child’s will be fresh in the morning.

It’s also time to update your browser’s school-related bookmarks, for easy access to the health office or a teacher’s home page. While you’re there, plug in your school’s dates into your shared family calendar.

MIDDLE-SCHOOLERS Middle school is generally when many parents first give a child a smartphone or laptop. According to a Pew survey released this year, nearly half of middle and high school students own these devices.

Amy Dirlam, the technology integration specialist at the St. Joseph Public Schools in St. Joseph, Mich., recommends checking with your child’s school before investing in a device. That is because schools are increasingly providing some sort of hardware to students, she said. In Ms. Dirlam’s district, for example, this fall each incoming sixth-grader will be issued a MacBook Air that will follow them into high school, provided they take care of it.

Chances are, though, you’ll be faced with spending your own money if you want to buy your middle-schooler a computer. For most children, a laptop is a better bet than a desktop because it is portable and can be taken to school or to a library.

The Acer Chromebook, $200 at Best Buy is one of many light, durable Internet-centric appliances built around Google’s Android operating system. These have full keyboards and robust batteries, but limited local storage. That’s a similar issue with many tablet options, like Samsung’s Galaxy Tab 2 10.1 Student Edition, $320, a bundle that includes a keyboard, tablet and docking station.

If you want to add more storage, a USB hard drive like the 1 TB Toshiba hard drive, $75 at BH Photo works for local storage; for individual projects, cloud-based services like Dropbox, Google Drive or SugarSync are free, provided you register and stay within the minimal storage requirements.

Smartphones are becoming a middle school staple — and may provide more than just a social advantage — but be sure your child’s school allows them.

IN HIGH SCHOOL A high school student is more likely to need more technology, particularly the computing power provided by a full-featured laptop for editing video and other jobs that require more storage, a large screen and specialized software.

A Windows 8-based Toshiba Satellite laptop, $365, with 500 GB of internal storage and a DVD drive might be one choice for a high-schooler. At a huge price jump, the light and powerful MacBook Air, $1,000 and up, continues to be the top choice for power, ease of use and durability. You can always add more storage, either locally or online.

The high school years are when apps and gadgets start forming around a child’s interests. If your child is taking an advanced math class this fall, you may be dismayed to learn that many schools still require a specialized calculator, like a TI-84 Plus, $90 at Walmart. You could buy a much cheaper calculator app, but most schools will not allow students to use a tablet or a smartphone when taking a test.

Young musicians might need an app like AccuTune, $1 for Apple devices, and an extra pair of personal earbuds, like Skullcandy 2xl, $10, will come in handy.

COLLEGE FRESHMAN A college freshman’s first test? Getting his or her laptop in tune with the school’s network. This is easier said than done, which is why it helps to tap into the expertise found in most college technology departments to help you access the institution’s printers and shared drives. The department can also set up your child’s e-mail account on a laptop and smartphone. Don’t forget to have the student put phones and other devices on the university’s Wi-Fi network, to reduce data charges. Some colleges will lend gadgets like external DVD drives, which may be needed to install specialized software.

Giving a child any device with an Internet connection requires oversight. A sudden wave of adolescent emotion could generate a photo or a social media message that could become what Gail Lovely, a former teacher and owner of Lovely Learning, a consulting firm for schools, refers to as a “digital tattoo” that comes up in a job interview 10 years later.

Ms. Lovely also suggested that phones, tablets or laptops that leave home should be insured and stored in a protective case, and recommended that every parent learn how to limit a child’s access to things like in-app sales and mature-rated content.

Also critical is something that can’t be purchased — a trusting parent-child relationship, and your ability to properly match your child’s growing desire for Internet access with his or her emotional maturity. For that, there is no app.

Article source: http://www.nytimes.com/2013/08/29/technology/personaltech/a-digital-back-to-school-checklist.html?partner=rss&emc=rss

The Boss: What a Board Game Can Teach a C.E.O.

Also on these trips, I got my first taste of business, because my father would take me to properties he managed as a real estate developer. He’d explain how the parties negotiated, the quality of the materials, and the struggles he had with the architect. His was a high-stakes industry because, once you’re committed to a project, you’re on a fixed track, and if the commercial real estate market goes down, everyone knows you’re going to lose money.

I skipped first grade and was first in my class in high school. I’d take courses at lunchtime and belonged to three music organizations simultaneously. I love learning and I love a challenge. At Dartmouth, I took all the economics courses I could once I discovered how much I loved the subject. I won the prize as top economics graduate in my 1994 graduating class.

I was introverted as a child, and computers were a perfect playmate. As I grew, I felt that they were at the forefront of change. I decided that I wanted to be in a constantly changing field with enough dynamism that I could rise quickly. After college, I joined MicroStrategy, a software firm in Tysons Corner, Va., and rose to director of the Enterprise Product Group. I had always wanted to start my own company, but I didn’t think I had enough expertise initially, and I was right. I stayed five years and at 26 I walked away from millions in stock options to start Appian in 1999 with three friends.

Appian automates business processes. Our clients range from Amazon to the Pepco power company to the Department of Veterans Affairs. Enterprise Rent-A-Car uses our software in its Rideshare program for van pool commuters.

About five years ago, I wanted to take the business to the next level, so we obtained $10 million from a venture capital company. We’ve since extended our capabilities to mobile devices and the cloud.

For some years now, I’ve been the host of history nights at my home. We meet about once a month. Each session covers a single year. We started with 1900 and have discussed 71 years in sequence.

I love the diversity of the groups. College friends, C.E.O.’s, Congressional candidates and others with an interest in history take part. We debate what was the most important birth, death, invention, disaster, political event and so forth in the year. We seem to spend an inordinate amount of time on births and deaths.

In my free time, I enjoy playing and writing games. My board game Sekigahara has won three gaming awards. It’s a war game based on Japanese history.

For me, gaming is a means to sharpen my mental life and to increase my abilities. Running a technology organization is full of collaborative accomplishments but there’s very little individuality in it, as much as I seek it. I’m always looking for individual expression. At times I wish I were an artist because my life would be a series of creations.

Playing games has helped me in running Appian. Games are exercises in appraising your position and making decisions. I’m interested in that strength-building behavior. Two hours after you make a decision in a game, it leads to victory or defeat. If you play enough games, you get a sixth sense for the quality of your position. You can see victory or a debacle before it occurs. You intuit how the various factors will accumulate, which helps in making strategic choices in business.

As told to Patricia R. Olsen.

Article source: http://www.nytimes.com/2013/08/18/jobs/what-a-board-game-can-teach-a-ceo.html?partner=rss&emc=rss

Technophoria: When You Can’t Tell Web Suffixes Without a Scorecard

But there soon may be, along with hundreds of other new Internet address suffixes like .bible, .blog, .family, .game, .gay and .pizza.

Since last summer, the Internet Corporation for Assigned Names and Numbers, or Icann, a nonprofit entity that coordinates the Internet address system, has vetted and initially approved 1,574 applications for new “top-level domains” — the letters to the right of the dot. The premise is to give companies and consumers seeking secondary-level domain names — the janedoe in janedoe.com — options beyond the 22 top-level generic suffixes like .com and .biz that are currently available.

“With .com and .net, if you wanted a nice name, it’s all taken,” says Akram Atallah, the president of Icann’s division of generic domains. Icann expects to sign contracts over the next year with companies and organizations to manage the registries for the new top-level domains. The first of these could open for registrations as early as this fall. “The idea,” Mr. Atallah says, “is to provide real-estate availability in the market.”

Google and Amazon have each applied to administer dozens of new top-level domains, including .app, .book, .cloud, .game, .movie and .search. L’Oréal is seeking .beauty, .hair and .skin. Johnson Johnson wants .baby. Donuts Inc., a domain registry company in Bellevue, Wash., filed the most applications, asking for 307 — including .love, .family, .health and .plumbing. Many applicants said they hoped to use the domains as trusted hubs offering authoritative information to the public.

The proliferation of these suffixes seems fraught for both consumers and companies. It has the potential to confuse online searchers: .car or .cars? baby.toys or toys.baby? It could also prompt companies, at great expense, to register bunches of new brand sites defensively as a way to pre-empt cybersquatters, spoofers and fraudsters.

Some technology veterans and trademark experts view the domain expansion as largely unnecessary.

“You are creating a business, like derivatives on Wall Street, that has no value,” says Esther Dyson, a technology investor who served as the founding chairwoman of Icann. “You can charge people for it, but you are contributing nothing to the happiness of humanity.”

There’s a larger issue at stake, however. Advocates of Internet freedom contend that such an expanded address system effectively places online control over powerful commercial and cultural interests in the hands of individual companies, challenging the very idea of an open Internet. Existing generic domains, like .net and .com, overseen by Verisign Inc., a domain registry, have an open-use policy; that means consumers can buy domain names ending in .com directly from retail registrars like GoDaddy. With a new crop of applicants, however, Icann initially accepted proposals for closed or restricted generic domains, a practice that could limit competing views and businesses.

“It’s a very legitimate competition concern,” says Jon Leibowitz, a former chairman of the Federal Trade Commission who recently joined the law firm Davis Polk Wardwell in Washington as a partner. “The public at large, consumers and businesses, would be better served by no expansion or less expansion” of domains.

In its proposal for .beauty, L’Oréal said it intended initially to reserve second-level domain names — like personal.beauty — for itself, eventually opening up the domain to its own business units, selected licensees and partners. Mr. Atallah said Icann would defer moving on certain contracts while it decides whether to allow closed generic domains.

At the end of last year, there were about 252 million domain names globally registered on the Web. Nearly half used the .com or .net suffix, according to Verisign, which manages those two suffixes and reported revenue last year of $874 million. Industry analysts say additional players in the domain market would be welcome.

“Verisign right now is like the Wal-Mart of the domain space,” says Thies Lindenthal, a postgraduate fellow at the M.I.T. Center for Real Estate, where he studies domain names as virtual real estate. “Other big players may be beneficial, just to increase competition.”

Icann charged a processing fee of $185,000 per domain application, but didn’t limit the number of submissions per company. Donuts Inc. forked over nearly $57 million in fees; it now expects to manage at least the 149 suffixes for which no other entity applied. For other suffixes, like .chat and .golf, which had multiple applicants, interested parties will have to negotiate among themselves or submit to an auction run by Icann.

Donuts plans to open all of its generic domains to public registration, each with its own pricing structure. Even professional-sounding suffixes like .architect won’t be narrowly limited to the traditional definition of licensed practitioners, says Jon Nevett, Donuts’ executive vice president for corporate affairs; after all, in addition to building architects, he says, landscape architects and software architects may wish to use to use an .architect domain name.

“We want to be as open as possible,” Mr. Nevett told me. “We don’t want to have a walled garden.”

Likewise, Charleston Road Registry, a unit of Google, has indicated on its Web site that it plans to open certain of its new suffixes — like .ads, .boo, .dad and .how — to public registration. But in applications to manage other generics like .app, the company has laid out a more restrictive approach, saying it planned to employ its own criteria to assess and approve entities seeking to use those suffixes.

In June, the Association for Competitive Technology, an advocacy group representing more than 5,000 app developers, filed an objection with Icann, arguing that Google’s plan to vet developers seeking an .app domain name could curb competition. The concern, says Jonathan Zuck, president of the advocacy group, is that Google might market the .app domain to consumers as a seal of approval for certain apps, including its own, leaving a mistaken impression that apps not marketed on the domain were inferior.

“We are simply raising public-interest concerns,” Mr. Zuck says. “We’d prefer .app to be wide open, like .com.”

Google declined to comment on its application for .app. Mr. Atallah said an Icann committee was reviewing each objection.

EVEN so, the Internet address oversight body may not have considered deeply enough the larger linguistic and societal ramifications of setting off a land grab for new virtual real estate like .love or .home, says Jacqueline Lipton, a professor at the University of Houston Law Center.

“It’s a private body,” Professor Lipton says, “that is dabbling in this very delicate balance of commerce and expression online that is fraught with pitfalls.”

Article source: http://www.nytimes.com/2013/08/18/technology/when-you-cant-tell-web-suffixes-without-a-scorecard.html?partner=rss&emc=rss

Technology Industry Extends a Hand to Struggling Print Media

But more frequently — and with a boom last week, when Jeffrey P. Bezos, the founder of Amazon.com, bought The Washington Post — the tycoons who have led the digital revolution are giving traditional print outlets a hand.

Call it a sense of obligation. Or responsibility. Or maybe there is even a twinge of guilt. Helping print journalism adapt to a changed era is becoming a cause de jour among the technology elite.

Google, which has been criticized for profiting from news content created by others, began financing journalism fellowships for eight people this year. The founder of Craigslist, the free listing service that helped ruin newspapers’ classified advertising, helped finance a book on ethics for journalists.

A co-founder of Facebook, the social network many young people rely on for news, recently bought New Republic magazine, and the founder of eBay, another classified ad killer, started an online news service in Hawaii. Steven P. Jobs, the former Apple chief executive, went out of his way to advise newspapers how to adapt their products for the tablet era.

“So ironic,” Les Hinton, a former publisher of The Wall Street Journal, wrote in a Twitter post last week about Mr. Bezos, that The Washington Post “should be consumed by a pioneer of the industry that almost destroyed it.”

Technology industry leaders, who “deal in fact and code,” are supporting the press because they value it, said Merrill Brown, director of the School of Communication and Media at Montclair State University and the former editor in chief of MSNBC.com.

“They’re concerned about where the country is going and share a commonly held point of view that what we do is important for democracy,” said Mr. Brown, who is also a partner at the venture capital firm DFJ Frontier.

This union of the press and digital patrons is sometimes awkward. For starters, tech moguls seem to do their best to stay as far away as possible from the news media’s prying questions. Mr. Jobs was famously prickly around the press, while Mr. Bezos has shunned all interviews about his purchase of The Washington Post except for one — with The Washington Post.

Technology’s helping hand has mostly been extended to newspapers and magazines. And some tech-focused companies, like Yahoo, have long been involved in the news business, hiring their own reporters and editors, setting themselves up as direct competitors to traditional news outlets.

On the business side of newspapers, executives have done little to hide their suspicions about the technology companies that are reaching out. Several years ago, while Mr. Hinton was publisher of The Wall Street Journal, he described Google as a “vampire” sucking the blood from newspapers because of how it aggregated news articles on its Google News site.

Frank A. Blethen, the publisher and chief executive of The Seattle Times, scoffed last week at the overtures Craig Newmark, the founder of Craigslist, had made to journalism causes. “He clearly disrupted classified advertising,” Mr. Blethen said. He added dismissively about Mr. Newmark’s efforts in journalism ethics, “and now he’s portraying himself in this public policy realm.”

Many critics of the newspaper industry say its predicament is its own fault for allowing upstarts like Craigslist to outflank it with better methods for advertising automobiles, rental apartments and other merchandise.

Mr. Newmark declined to comment on why newspaper officials blamed him. He said he supported journalism initiatives — media ethics and fact-checking are two pet causes — because he valued news he could trust. He said he was not even convinced that Craigslist had hurt newspaper classified advertising.

“I’m still waiting to see any hard evidence for cause-and-effect,” Mr. Newmark said. “I’ve been paying attention for a long time.”

Mr. Newmark said he donated $42,000 to the Poynter Institute, a journalism school in St. Petersburg, Fla., to host a seminar related to a book Poynter recently published on journalism ethics and for the development of a related Web site.

Brian Stelter contributed reporting.

Article source: http://www.nytimes.com/2013/08/12/business/media/technology-industry-extends-a-hand-to-struggling-print-media.html?partner=rss&emc=rss

A Mogul Gets a Landmark in the Capital

Yet now, from his tech frontier in Seattle, Mr. Bezos has bridged those far-flung worlds by buying The Washington Post.

The purchase price of $250 million is a pittance for a man who ranked 19th on Forbes magazine’s list of billionaires, with an estimated fortune of more than $25 billion. But the deal was still an astonishing move for a magnate who has kept a low profile in politics and has said almost nothing about his interest in newspapers, except that he reads them.

Nonetheless, Mr. Bezos will now have a microphone as powerful as anyone in Washington and outside the West Wing. Keeping with a lot of his tech industry peers, he brings with him a sort of libertarian bent, having supported gay marriage in the state of Washington and fought higher income taxes on wealthy people.

“Of the businesspeople I know, he and Bill Gates are the two most intellectually curious people I know,” said Rob Glaser, the founder of another Seattle technology company, RealNetworks, who has known Mr. Bezos since the 1990s. “It doesn’t surprise me that Jeff would find something with the intellectual depth of The Post an intriguing, compelling thing to be involved with.”

Mr. Bezos, 49, said in a statement on Monday that he would leave the day-to-day operations at The Washington Post to others. But his history — rising quickly as a Wall Street whiz, then starting Amazon.com out of a garage and building it into a retailing giant — is chock-full of cold calculations to improve his company’s fortunes. Many of his decisions have panned out, as Amazon has muscled its way into nearly every corner of retailing, leaving many competitors chafed its his wake.

The purchase of The Washington Post fits into one of the more eclectic — some might say, eccentric — patterns of investing and charitable giving of today’s billionaires. On top of the usual ream of stakes in technology start-ups like Uber and Twitter, Mr. Bezos has indulged his passion for space by financing the recovery from the seabed of an Apollo rocket that carried the first men to the moon.

He is paying for creation of a clock buried in a mountain in West Texas that will tick once a year for the next 10,000 years.

And now, Mr. Bezos — a man known for being an unsentimental businessman — has invested squarely in a sentimental business steeped in tradition. Of course, The Washington Post deal could feed his demonstrated appetite for reinventing venerable industries, from retailing to book publishing. Amazon’s Kindle business has turned Mr. Bezos from a merchant into a media mogul, as celebrated in some circles as another digital disrupter, Steven P. Jobs, Apple’s former chief executive.

Mr. Bezos and Donald E. Graham, The Washington Post’s chief executive, have longstanding connections that may have helped the discussions. As an article on The Post’s Web site noted on Monday, Mr. Graham gave the Amazon chief advice on how to promote newspapers on the Kindle device. And Amazon is an investor in LivingSocial, an e-commerce venture led by Tim O’Shaughnessy, Mr. Graham’s son-in-law.

He has provided few clues about what changes might be in store. In an interview last year, though, he stated that he did not think people reading the Web would pay for a newspaper subscription because they were too trained to get it free. The Washington Post started an online subscription plan this year.

He said in the same interview that there would be no printed newspapers in 20 years. The Washington Post had more than 457,000 subscribers to its daily edition in the first quarter of this year.

This year, Mr. Bezos was one of a group that put $5 million into the Business Insider, a news site founded by Henry Blodget. Mr. Blodget rose to fame as a Wall Street analyst in the late 1990s with a wild forecast for Amazon’s shares that came true.

Drew Herdener, a spokesman for Amazon, who works with the Amazon chief on his personal initiatives, said Mr. Bezos was not available for an interview.

Nick Wingfield reported from Seattle and David Streitfeld from San Francisco. Nicholas Confessore contributed reporting from New York.

Article source: http://www.nytimes.com/2013/08/06/business/media/a-mogul-gets-a-landmark-in-the-capital.html?partner=rss&emc=rss

Judge Rules Against Apple in E-Books Trial

“Without Apple’s orchestration of this conspiracy, it would not have succeeded as it did in the spring of 2010,” the judge, Denise L. Cote of United States District Court in Manhattan, said in her ruling. She said a trial for damages would follow.

In a courtroom last month, government lawyers argued that Apple had colluded with five big American publishers to raise prices for electronic books across the publishing market.

The Justice Department had brought the antitrust case against Apple and the publishers a year ago. The publishers all settled their cases, but Apple executives insisted that the company had done nothing wrong.

The antitrust battle underscores the turmoil in the book industry as readers shift from ink and paper to electronic devices like tablets and smartphones, where they can buy content with the push of a button. While the publishers want to embrace new media, they are also trying to protect their profits and retain control of their businesses. Apple’s lawyers noted at the trial that the publishers had long complained that Amazon.com’s uniform pricing of $9.99 for new e-book titles was too low.

In his testimony, Eddy Cue, Apple’s senior vice president of Internet software and services, who was in charge of negotiating deals with the publishers, conceded that Apple opened the door for book publishers to raise prices in its own e-book store. But he said that the company was not intending to push Amazon, the dominant player in the e-book market, to raise its prices, too.

“Amazon could have negotiated a better deal,” Mr. Cue said in his testimony. “They had a lot more power.”

But the Justice Department said Apple’s deal with the publishers left Amazon with no choice but to raise prices. When Apple entered the e-book market in 2010, it changed the way publishers sold books by introducing a model called agency pricing, where the publisher — not the retailer — sets the price, and Apple took a cut of each sale. As a result, the publishers were able to set e-book prices higher. Apple proposed price caps of $12.99 and $14.99.

Apple also included a condition in its contracts, called the most-favored nation clause, requiring the publishers to allow Apple to sell e-books at the same price as the books would be sold in any other store. Apple has said the clause was intended to guarantee that its customers got the lowest e-book prices, but the government argued that it defeated price competition.

The Justice Department said that the publishers used their relationship with Apple, combined with the most-favored nation clause, to threaten Amazon to switch to the agency model so they could raise prices. If Amazon did not agree to those terms, the government said, the publishers intended to withhold their e-books from the retailer until the more expensive hardcover books had been on the market for awhile.

In the trial, government lawyers showed e-mails sent between Apple and the publishers in the weeks leading up to the introduction of the iPad and the opening of Apple’s e-book store.

One e-mail, written by Steven P. Jobs when he was chief executive of Apple, was frequently brought up at the trial. In an e-mail conversation with Mr. Cue about the contracts negotiated with the publishers, Mr. Jobs wrote: “I can live with this, as long as they move Amazon to the agent model too for new releases for the first year. If they don’t, I’m not sure we can be competitive.” The Justice Department said this showed Apple’s intent to help the publishers push Amazon to the agency model so they could raise e-book prices.

But Apple’s lead counsel, Orin Snyder of Gibson, Dunn Crutcher, contended that the note written by Mr. Jobs was a draft. He showed a version of the e-mail that did not have language about forcing Amazon to change the way it sold books. At the trial, it was never fully resolved which version of Mr. Jobs’s e-mail was actually sent to Mr. Cue. But the version presented by the Justice Department indicated that it was written at a later time and was signed “Steve,” suggesting that it might have been the final draft.

Judge Cote said the words of Mr. Jobs were compelling evidence against Apple. They showed that the late Apple chief was aware that the publishers were unhappy with Amazon’s pricing of $9.99 for e-books, and that Apple’s entry would drive up prices across the industry.

In one famous instance, Mr. Jobs made comments to a reporter after he introduced the iPad and the iBookstore in January 2010. When asked why consumers would purchase an e-book from Apple’s store instead of Amazon.com, where e-books were $9.99, Mr. Jobs replied, “The prices will be the same.”

“Apple has struggled mightily to reinterpret Jobs¹s statements in a way that will eliminate their bite,” Judge Cote said. “Its efforts have proven fruitless.”

In his arguments, Mr. Snyder tried to illustrate that the publishers “fought tooth and nail” with Apple before agreeing to the terms, rather than colluding with the company. In support of that argument, he showed e-mails from the publishing executives arguing with Mr. Cue about the contract terms.

On the last day of the trial, Mr. Snyder told Judge Cote that there was much more at stake than the health of the book market. Mr. Snyder said a ruling against Apple could stifle the way retailers do business with media providers, including music labels and movie studios. Retailers negotiating with content providers might feel pressured to “not utter a word” about their discussions with other companies, he said. Businesses negotiating deals with multiple partners often inform each party of what the others have agreed to, he said, so they know they are being treated fairly.

Article source: http://www.nytimes.com/2013/07/11/technology/judge-rules-against-apple-in-e-books-trial.html?partner=rss&emc=rss