November 29, 2023

Small-Business Guide: With Its Technology Aging, a Company Reinvents Itself

Started in 2002 and based in Nashville, Emma had grown quickly. By 2010, it had 90 full-time employees and 30,000 clients. It had recently passed $10 million in sales, but an awareness had begun to set in that its hardware system — built before the cloud even existed — was showing signs of strain. Capacity was running low and programmers had to navigate several layers of the system to update existing features or introduce new ones. These concerns crystallized at the conference when the Emma executives listened to Google employees discuss their plans for Gmail.

Hearing how innovative and agile Google’s software was and how many programmers the company could deploy, the Emma team began to question everything about the company’s ability to compete. “It became fairly obvious that we had to do something,” Mr. Smith said. But how were they going to rethink and rebuild the company while continuing to serve existing customers?

The first step, Mr. Smith said, was to “declare war on our technical-to-nontechnical staffing ratio.” Within a year Emma had ramped up its roster of developers from 20 to 41 — or nearly half of its full-time employees. “If we were to make this a world-class software company,” Mr. Smith said, “we needed to bolster our resources and look and staff up more like a software company.”

Next, the company considered a plan, outlined by consultants already on retainer, that was intended to extend the life of Emma’s existing system. But with a price tag of $250,000, the plan offered little more than a costly Band-Aid. As Mr. Smith and his team considered their options, they found themselves returning to the same question: What would Emma do if it were starting fresh?

Re-engineering both their platform and their products would take time, an anticipated 12 months, and it would cost money. They did not even try to put a price on the project. “It felt more like a commitment to a new way of operating than a one-time project,” Mr. Smith said.

They also knew that any transition process would bring glitches and delays and the real possibility that clients would flee. For an extended period, the company would not be able to adjust its system or processes; it would be stuck with all of the worst aspects of the old platform.

But if Emma did not rework its system, the company would lose long-term competitiveness, leading to a loss not only of existing clients but of future ones as well. In the end, Mr. Smith determined it would be riskier not to start over, noting, “Big fear beats little fear every time.”

When Mr. Smith looked for other small companies that had rebuilt their technology infrastructure, he found few templates. “I will say none of them had taken on the whole thing and certainly not in such a relatively short period of time,” he said.

One that came close is Stratose, a company offering health care cost-containment services in Atlanta. Ten years ago, it completely rewrote its own system, which its president, Tina Ellex, called “the Big Bang theory,” a tough process that required huge blocks of time and a dedicated team. Ideally, Ms. Ellex said, she would have preferred a modular approach. “Anybody would,” she said. “I’ve not seen a lot of companies do a complete rewrite.”

At Emma, the project took 18 months, six months longer than anticipated. And it cost $4.5 million. Preliminary research and design began in the summer of 2010. The company relied primarily on its own engineers and developers, hiring a small outside team to build one set of e-mail tools.

The principle operating guideline was to design a flexible system that would remove the need to do anything like this again. “We didn’t know what the marketplace would look like in five years,” Mr. Smith said. “Also, we didn’t know how databases would evolve in five years either. We couldn’t design for the future, but we could design something that could adapt to what the future will bring.”

Emma chose an application program interface design and a service-oriented architecture, which enabled it to produce and execute updates and new features. The design allows internal services to connect with each other as well as with outside services, which it had little ability to do previously. Emma also re-engineered its database structure to take advantage of cloud-based storage like Amazon’s S3 and new technologies like Redis and CouchDB.

Article source:

Bloomberg Media Recruits a New Chief From The Atlantic

On Monday, Bloomberg will announce that Mr. Smith, the president of Atlantic Media, will be named chief executive of the Bloomberg Media Group. He will report to Daniel L. Doctoroff, chief executive of Bloomberg. Andrew Lack, who managed the media division for five years, will become chairman.

After joining The Atlantic in 2007, Mr. Smith developed a reputation as an aggressive promoter of digital media who was able to reconfigure a 156-year-old magazine into a genuine multiplatform property.

In a letter to the staff about Mr. Smith’s departure, David Bradley, the owner of Atlantic Media, credited Mr. Smith with bringing the company to profitability for the first time under his ownership; doubling revenue; and creating a number of successful digital start-ups, including The Atlantic Wire and Quartz.

His quick results at the Atlantic Media Company drew the attention of executives at Bloomberg, who began talking to him at the end of last year.

“We know that every part of media is being disrupted by technology, and we need someone who understands that,” Mr. Doctoroff said. “Justin can drive things forward here because he has an incredibly digital sensibility with a unique understanding of the confluence of journalism and multiple platforms.”

The move will give Mr. Smith significant scale and a connection with Bloomberg’s lucrative terminal business, which produces revenue that allows the company to invest aggressively in media properties. The company has had success in moving from a linear television business to a more diverse model of video distribution, while the acquisition of Businessweek gave Bloomberg an editorial cachet it historically lacked.

Even with those successes, the media division has long been treated as a marketing amenity for subscribers to the terminal business. Despite its recent growth, the media division has struggled to gain a consumer base for its properties, which include television, print, radio, mobile, events and digital media.

The company was heavily criticized several months ago after revelations that some of its reporters had used the Bloomberg terminals to gain access to data about its users, prompting Eric T. Schneiderman, attorney general of New York, to begin looking into the practice, The Wall Street Journal reported.

The company’s assets — its success, its size and a hard-driving business culture — might make bringing about change difficult. But Mr. Smith said the fit was a natural one.

“If you look at the entrepreneurial roots of this company and its history of market disruption and innovation, I think it is the best positioned media company there is,” he said. The theory that large companies cannot innovate, he said, “has not been historically true at Bloomberg.” He added, “This is a company where you can take big risks with longer horizons.”

Before joining Atlantic Media, Mr. Smith opened the American edition of the British newsmagazine The Week in 2001. Before that, he was head of corporate strategy for The Economist in London, Hong Kong and New York. He also founded Breaking Media, a collection of Web sites that includes Above the Law, Dealbreaker and Fashionista.

Mr. Smith has no experience in the television business and said he would work closely with Mr. Lack in that area. He said he was interested in creating new products, including ones aimed at the global market, while bringing additional digital muscle to Bloomberg’s existing businesses.

Eric Schmidt, executive chairman of Google, met Mr. Smith at one of Atlantic Media’s conferences and they became friends.

“How many people have really managed to be successful in digital media?” Mr. Schmidt said in a phone call. “Everyone has tried and few have been successful. Justin is one of them. He is moving very fast, but this is the next logical step. It’s a serious gain for Bloomberg.”

This article has been revised to reflect the following correction:

Correction: July 28, 2013

An earlier version of this article incorrectly said that the New York attorney general was investigating how reporters at Bloomberg had gained access to customer data. There is no formal investigation as this time.

Article source:

Ben Smith, The Boy Wonder of Buzzfeed

Ben Smith, editor in chief of Buzzfeed, stood to the side and smiled, staring at his iPhone as he swiped through e-mail messages and retweeted something about Gov. Bobby Jindal of Louisiana.

What is BenSmithing? To the Republicans who coined the term last year, it refers to writing an article that supposedly tackles a Democratic Party scandal, but is actually intended to dismiss the issue, something they believe Mr. Smith has often done for President Obama.

But to Mr. Smith’s Buzzfeed colleagues, the term has become an absurdist catchall they use to poke fun at their boss. Sometimes BenSmithing is to share dirty pictures over Snapchat. Other times BenSmithing is to dance a clumsy version of the Funky Chicken.

Are any of them true? “I have in fact sent Katie Notopoulos a creepshot on Snapchat,” Mr. Smith said by e-mail the day after the party, referring to his fellow Buzzfeed editor.

Maybe he’s joking. But Mr. Smith, polite and mild-mannered as he is, has been known to shock people before. In December 2011, he announced that he was leaving Politico, the insiderly political site at which he had been a star blogger since 2007, to take the top editorial job at Buzzfeed, a site better known for cat GIFs and dorky “listicles” (articles in list form, like “33 Animals Who Are Extremely Disappointed in You”) than political muckraking.

“It just wasn’t a place for a political reporter to go,” said Josh Benson, a founder of Capital New York, a news site founded by some of Mr. Smith’s former colleagues from The New York Observer.

“But there’s an ‘on the other hand,’ ” Mr. Benson said, “which is that it didn’t surprise me one bit. He’s got that entrepreneurial thing. He’s not content to make the doughnuts.”

Mr. Smith, 36, has long had a reputation for doing things his own way. Before Buzzfeed, he was known for pulling city politics into the digital era with The Politicker, a blog he started for The Observer in 2004. While other print reporters were waiting for deadlines to share the news, Mr. Smith had the then-novel idea of publishing what he knew on the Web and letting readers leave comments, producing a lively and often indecorous forum that transfixed Gotham’s power brokers.

“It’s not just that he did it first, he did it well,” Mr. Benson said.

It’s that forward-thinking mentality that helps add some clarity to the Smith-Buzzfeed marriage. Buzzfeed, which was started in 2006 by Jonah Peretti, a founder of The Huffington Post, operates on the philosophy that social media sites like Facebook and Twitter are America’s new front pages and that the content people view online is determined more by what their friends share than what is found on the home page of a news organization. As such, the distinction between Web ephemera like baby videos and traditional journalism has all but disappeared.

Mr. Smith, who was born and raised on the Upper West Side, appears to fit right in so far. He has brought political reporting to Buzzfeed without betraying its signature attitude. The site’s year-end roundup of political stories was titled “The 15 most OMG Buzzfeed Politics Stories of 2012,” and its most popular political post of the year was “A User’s Guide to Smoking Pot with Barack Obama.”

Not that it’s all LOLs and pot smoking. On Mr. Smith’s fourth day with the company, Buzzfeed broke the news that Senator John McCain would endorse his former rival Mitt Romney, a significant scoop in the minute-to-minute world of campaign reporting. And last July, the reporter Rebecca Elliot published a deeply reported investigative article on the conditions at a hospital in Afghanistan that was being financed by the United States government.

Article source:

Hollywood Makes Its Case for ‘Zero Dark Thirty’

LOS ANGELES — Hollywood is pushing back, at least a little, against the Washington power players and others who have put the squeeze on “Zero Dark Thirty.”

In the last week, Mark Boal, who is a producer of the film and wrote the screenplay, hired Jeffrey H. Smith, a prominent lawyer who specializes in domestic security and First Amendment issues, Mr. Smith confirmed on Friday. His mission is to represent Mr. Boal with regard to any approach from Congress or the executive branch in connection with their inquiries into the film’s depiction of torture in the hunt for Osama bin Laden.

Meanwhile, Christopher J. Dodd, the president of the Motion Picture Association of America, raised a warning on Friday for those who are calling for investigations into the film.

“There could, in my view, be a chilling effect if, in the end of all this, you have a screenwriter or a director called before an investigating committee,” Mr. Dodd said. He stressed that he was speaking for himself rather than for the association’s member studios, including Sony Pictures, which released “Zero Dark Thirty.”

Mr. Dodd, who served five terms in the Senate before retiring in 2010, said he could not recall another movie being so heavily scrutinized by the government. He expressed concern that the military or other government agencies that have routinely helped filmmakers might withhold future cooperation rather than risk similar pressure.

“ ‘JFK’ and ‘All the President’s Men’ were controversial,” Mr. Dodd said, noting that neither of those films seemed to draw the same level of attention from lawmakers.

Three senators — Dianne Feinstein of California, Carl Levin of Michigan and John McCain of Arizona — have publicly criticized “Zero Dark Thirty” because they believe it sent a message that torture was an effective tool in the hunt for Bin Laden. In a Dec. 19 letter to Michael Lynton, the co-chairman of Sony Pictures, they asked the studio to act to change that impression, without specifying what they expected it to do. (The film had a limited theatrical run late last month, and was released more broadly on Jan. 11.)

In two letters sent in December to Michael Morell, the acting director of the Central Intelligence Agency, the senators, citing their affiliation with the Select Committee on Intelligence, asked that the agency provide information and documents about its contact with the filmmakers.

On Friday, Mr. Dodd said he initially screened “Zero Dark Thirty” at the Motion Picture Association’s Washington headquarters for Ms. Feinstein, whom he described as a close friend. “She had problems with it,” he said.

Ms. Feinstein’s objections have centered on what she has said is a portrayal of the efficacy of torture that is at odds with accounts that have been provided to Congress in the past by intelligence operatives.

In the meantime, Mr. Smith, a former general counsel of the C.I.A. who has represented Henry Kissinger, Robert McNamara and other former government officials in security-related matters, confirmed in an e-mail that he represents Mr. Boal.

The government inquiries “raise serious questions about the nature of the cooperation between the government and those who seek to make films about sensitive and important issues,” Mr. Smith said in a brief statement.

To date, he said, Mr. Boal has not been contacted in connection with the inquiries.

Last week Kathryn Bigelow, the film’s director, made her strongest public statement to date about the torture controversy.

“Those of us who work in the arts know that depiction is not endorsement,” she said in a statement published in The Los Angeles Times. “If it was, no artists would be able to paint inhumane practices, no author could write about them and no filmmaker could delve into the thorny subjects of our time.”

Torture, she added, “is a part of the story we could not ignore.”

The criticism of “Zero Dark Thirty” has extended beyond Washington and included members of the film industry. Last weekend, as Hollywood gathered for the Golden Globe Awards, the actors David Clennon, Edward Asner and Martin Sheen — all members of the Academy of Motion Picture Arts and Sciences — were organizing a public condemnation of the film for what they have called its “tolerance” of torture.

That push prompted a public response by Amy Pascal, the co-chairwoman of Sony Pictures, who called it “reprehensible.” Jessica Chastain, the film’s star, was honored as the year’s best dramatic actress at the Golden Globes, and the movie has received five Oscar nominations from the academy, including one for best picture. Ms. Bigelow was not nominated for a directing Oscar, leading to speculation that the torture controversy had worked against her selection.

After the Golden Globes, Mr. Boal flew to Europe to promote “Zero Dark Thirty” as it opened in Britain and France.

In a series of e-mails, Mr. Boal said he found the reception to the movie there to be “much smoother” than in the United States.

European interviewers appeared to regard the torture controversy more as a reckoning among Americans than as something that directly involved them, he said.

And in France, he said, a number of interviewers compared the film’s airing of the torture issue “favorably to France’s allergy to and even censorship of” movies about its role in Algeria’s war for independence.

“We might bicker,” Mr. Boal said, “but at least we face the past in my country. Sorta.”

Article source:

DealBook: Activist Fund Takes Aim at Office Depot

An Office Depot in Hoboken, N.J.Robert Caplin for The New York TimesAn Office Depot in Hoboken, N.J.

Starboard Value, an activist hedge fund, said on Monday that it had taken a 13.3 percent stake in Office Depot, and it called on the struggling retailer to shift its strategy to one that reduces spending, focuses on smaller stores and sells noncore assets.

In a public letter to Office Depot’s board, Starboard said that its stake made the hedge fund the company’s biggest shareholder. It argued that Office Depot had significantly trailed competitors like OfficeMax and Staples in both operating and earnings margins, as well as stock price performance.

While Starboard acknowledged that Office Depot’s management had already taken some steps to improve the company’s performance, it argued that the efforts had yet to bear fruit.

Related Links

“While these initiatives represent a step in the right direction, they clearly have not been adequate enough, as is evidenced by the dramatic decline in profitability and underperformance compared to peers,” Jeffrey C. Smith, Starboard’s chief executive, wrote in the letter.

One potential way to raise money — or “unlock value,” in hedge fund parlance — is for Office Depot to sell its 50 percent stake in its Mexican joint venture, which Starboard claimed had been ignored by investors. Mr. Smith estimated that the holding could be worth more than $900 million, exceeding Office Depot’s market value of $704.4 million.

The news of Starboard’s letter was first reported in The Wall Street Journal.

Shares in Office Depot were up 10.5 percent in premarket trading on Monday.

Article source:

DealBook: Former Banker Promises Inside Peek at Goldman Sachs

Greg Smith's memoir is set for publication on Oct. 22.Greg Smith’s memoir is set for publication on Oct. 22.

Wall Street has plenty of worries heading into autumn, including the stability of the euro zone, persistent United States unemployment and the historically volatile October stock market.

Goldman Sachs has an additional concern: Greg Smith’s book.

Mr. Smith’s memoir, “Why I Left Goldman Sachs,” is set for publication on Oct. 22. The release date comes just seven months after Mr. Smith publicly resigned from the bank with an opinion article in The New York Times detailing his disappointment with Goldman’s business practices that reflected, more broadly, a corrosive culture at the nation’s largest banks.

Greg Smith's book advance was close to $1.5 million, according to people with direct knowledge of the negotiations.Herman EstevezGreg Smith’s book advance was close to $1.5 million, according to people with direct knowledge of the negotiations.

The article struck a nerve. Within 24 hours, it had more than three million views online. Publishers clamored for the rights to a book. Grand Central Publishing, a division of the Hachette Book Group, secured a deal, offering Mr. Smith an advance of close to $1.5 million, according to people with direct knowledge of the negotiations.

Mr. Smith’s book comes at an inopportune moment for Goldman, which has largely disappeared from the spotlight after a wave of negative publicity damaged the bank’s reputation. It paid $550 million to settle a civil case brought by the government over a controversial subprime mortgage product that it sold to clients. An insider trading scandal has ensnared the firm, with a member of its board facing prison time and at least two other executives under investigation. And its depiction as a blood sucking “vampire squid” in a Rolling Stone article captured the public’s imagination, helping to make Goldman a symbol of Wall Street’s dark side.

But in recent months, Goldman has steered clear of the negative finance stories dominating the headlines, most notably the huge trading losses at JPMorgan Chase and the growing scandal involving certain banks’ manipulation of interest rates.

“Why I Left Goldman Sachs” promises to be a tell-all of Mr. Smith’s 12-year career at the bank. His article in The Times described Goldman as a once-vaunted institution that had lost its way. He wrote that that when he first joined the bank as an intern in the summer of 2000, it obsessively put its clients’ interests first. But over time, Mr. Smith said, Goldman devolved into a “toxic and destructive” culture that put profits before principle. His former colleagues mocked their clients, he said, derisively referring to them as “muppets.”

“I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival,” Mr. Smith wrote. “It makes me ill how callously people talk about ripping their clients off.”

Not everyone embraced Mr. Smith’s missive. Mayor Michael Bloomberg of New York dismissed the piece as “ridiculous,” calling it nothing more than a nasty letter from a disgruntled employee. It also spawned numerous parodies on the Internet, including “Why I am Leaving the Empire,” by Darth Vader of “Star Wars.”

David Wells, a Goldman Sachs spokesman, minimized the significance of the book. “Every day, some young professional, after a decade in a post-collegiate job, reassesses his or her career and decides to move on and do something else,” he said in an e-mailed statement. “Others can better judge whether Mr. Smith’s particular career transition is of unique interest.”

Grand Central has planned a robust print run of 150,000 copies in hardcover and expects to sell a sizable number of copies in e-book format, given the audience for the book.

“Many people on Main Street distrust Wall Street right now, yet few can put their finger on why,” Jamie Raab, publisher of Grand Central, said in a statement. “Greg Smith’s candid account of his years at Goldman Sachs does just that.”

A big selling point of Mr. Smith’s book is that it is about Goldman, which has long been a subject of fascination because of its immense profits and political connections. Also, within the hushed confines of the bank, a code of silence has always prevailed, so an insider’s account is especially tantalizing. Several nonfiction releases about Goldman have had some success, most recently the bestseller “Money and Power,” by William D. Cohan, but the bank has never been the focus of a tell-all.

Yet many in the publishing industry, including several people who met with Mr. Smith in March, have their doubts, and question whether the book has the makings of a best seller. Was Mr. Smith, a midlevel derivatives salesman who failed to become a managing director and had no one reporting to him, privy to Goldman’s inner workings? Does he have access to the firm’s previously untold secrets?

While Mr. Smith’s opinion article became rich fodder for critics of Wall Street banks and the reckless lending and business practices that led to the global financial crisis, it was largely devoid of specific details. Whether the 288-page book fills in the blanks remains an open question. Grand Central will distribute the book with the secrecy of a Bob Woodward publication, with bookstores instructed not to display any copies until its release. Adding to the suspense surrounding the book’s publication date, Mr. Smith has not done any interviews or made media appearances since the the article was published.

People familiar with the contents of Mr. Smith’s book say that while it shines an unsavory spotlight on the ways of Wall Street, it is not just a finger-wagging polemic. Instead, much of the memoir details the whole of Mr. Smith’s Goldman’s career, from when he joined the firm during the frothy dot-com boom to the grim days of the financial crisis.

A summary of the book on Amazon suggests hints at some of the book’s details: “From the shenanigans of his summer internship during the technology bubble to Las Vegas hot tubs and the excesses of the real estate boom; from the career lifeline he received from an NFL Hall of Famer during the bear market to the day Warren Buffett came to save Goldman Sachs from extinction, Smith will take the reader on his personal journey through the firm, and bring us inside the world’s most powerful bank.”

Grand Central considers the book a potential successor to “Liar’s Poker,” Michael Lewis’s firsthand account of the freewheeling antics of Salomon Brothers’s bond-trading desk during the 1980s. Other Wall Street memoirs – including “F.I.A.S.C.O.” by Frank Partnoy, a former Morgan Stanley salesman, and Lawrence McDonald’s “A Colossal Failure of Common Sense,” a tale about Lehman Brothers – have not sold nearly as well as “Liar’s Poker,” which has sold more than two million copies.

Mr. Smith turned his book around quickly, eschewing a ghostwriter and writing his own first draft. He did get some assistance from a professional writer, who provided advice and helped him polish the manuscript, said Jimmy Franco, a spokesman for Grand Central. The book’s editor is John Brodie, a former journalist and editor at Fortune magazine.

Once the book is released, the 33-year-old Mr. Smith, a South African native who lives in New York, is expected to do television and radio interviews, though no specific appearances have been announced. He has no plans for a traditional book tour with signings and readings.

One possible television spot is on “The Colbert Report.” Back in March, Stephen Colbert, the show’s host, mocked Mr. Smith for including in his op-ed that he won a bronze medal in table tennis at the Maccabiah Games in Israel.

Joked Mr. Colbert: “Way to reinforce the stereotype that Ping-Pong players control the banking industry.”

Article source:

Bits Blog: Microsoft’s Patent Strategy Against Android

When Samsung Electronics blinked last week, Microsoft scored another win in its campaign to strike patent-licensing deals with the makers of smartphones and tablets using Google’s Android software.

Samsung, the largest maker of Android products, will pay Microsoft an undisclosed fee for every smartphone and tablet it makes that uses Google’s free operating system. Previously, Taiwan’s HTC, the second-largest maker of phones using Android, struck a patent-licensing deal with Microsoft.

Free, it seems, has its costs.

Google sees Microsoft as the ringleader in a shady cabal of competitors – “a hostile, organized campaign against Android by Microsoft, Oracle, Apple and other companies, waged through bogus patents,” David Drummond, Google’s chief legal officer, wrote in a blog post.

Not surprisingly, Microsoft views things differently. In an interview last Friday, Brad Smith, the company’s general counsel, said what is happening with patents in the smartphone market is merely a rerun of similar episodes in the past.

When Microsoft moved beyond personal computers into corporate, data-center computing, it licensed technology from its predecessors in the business market. In the last decade, Mr. Smith said, Microsoft has paid $4.5 billion in licensing fees to companies including I.B.M., Hewlett-Packard, Sun Microsystems (now part of Oracle), Cisco and Silicon Graphics.

“That’s the way the industry works and has always worked,” Mr. Smith said.

The rise of the smartphone has added a new layer of patent licenses for the cellphone business. The first layer – or “stack” of technology – was the basic radio technology for cellular communication.

The largest patent beneficiary in the radio layer is the leader in that technology, Qualcomm. The company collects about $20 on every smartphone produced, Mr. Smith estimates.

The second layer was media technology, allowing music and video to play on modern smartphones. Those patent-licensing fees are about $3 to $5 a phone, and go to a variety of companies, Mr. Smith said.

The next layer, he said, is the software layer – the computing operating systems that animate smartphones. The companies that have been working on that technology for years, like Apple and Microsoft, went first and developed software ideas that Android builds upon, according to Microsoft and Apple. And Android uses Java software technology, developed by its Sun unit, Oracle contends.

The inventors, Mr. Smith said, deserve to be compensated through reasonable patent royalties. Their claims have stirred controversy, he concedes, but he points out that was true as well of Qualcomm’s initial efforts to charge licensing fees for its radio technology.

“We’re seeing a licensing regime emerging for the software stack,” Mr. Smith said.

Google says the Microsoft campaign is not just bad for Android, but bad for the industry and consumers as well by substituting litigation and patent deal-making for innovation.

Mr. Smith disagreed. “Patent-licensing regimes allow companies to build on the shoulders of others,” he said. “It allows companies to use technology and ideas, after paying reasonable fees. They can spend their resources on new ideas instead of trying to figure out ways to invent around the work done by others. In that way, patent-licensing is very much pro-innovation.”

Article source:

Arch West, Who Helped Create Doritos Corn Chips, Is Dead at 97

Mr. West, who died on Sept. 20 at the age of 97, was a leader of the team at Frito-Lay that developed Doritos corn chips, a Southwestern-inspired alternative to the traditional salted potato or corn chip.

Though the company, Frito-Lay North America, declines to give Mr. West full credit for the chip — “as a company, there’s never one person to invent or is the father or mother of a given product,” said Aurora Gonzalez, a spokeswoman — others do.

“He widely gets the credit for Doritos,” Andrew F. Smith, the author of the Encyclopedia of Junk Food and Fast Food (Greenwood Publishing Group, 2006), said in an interview.

Today, Doritos are Frito-Lay’s second-best seller, after Lays Potato Chips, both nationally and around the world, with total sales of nearly $5 billion annually.

Mr. West died at a hospital near his home in Dallas, his daughter, Jana Hacker, said. By her account, her father got the idea for Doritos in the early 1960s when he was vice president of marketing for what was then the Frito Company. (It is now a division of PepsiCo.) The family, while on vacation in San Diego, stopped at “a little shack restaurant where these people were making a fried corn chip,” she said.

The chip’s tangy taste captured her father’s attention. Back in Dallas, after Frito merged with the H. W. Lay Company, he promoted the Doritos’ production, which began in 1964, using corn tortillas cut into triangles and seasoned with cheese and chili flavorings.

“The ’50s were very boring and bland in terms of snack foods, so this was a taste sensation,” Mr. Smith said. “It came out at just the right time, when Mexican-American food was breaking out of the Southwest and increasingly becoming national cuisine.” In 1962, Glen W. Bell Jr. had opened in Downey, Calif., the first of what would become an international chain of Taco Bell restaurants.

The flavorings associated with Doritos “were Mexican-ish,” Mr. Smith said. “No one in Mexico would have consumed such a product, unless they were catering to American tourists.” Still, he added, “Doritos have been popular for almost half a century, so it’s been an incredible invention.”

Archibald Clark West was born in Indianapolis on Sept. 8, 1914, to James and Jessie West. After graduating from Franklin College, near Indianapolis, he served as a gunnery officer in the Navy during World War II. Before joining Frito in 1960, he had worked in advertising in New York.

Besides his daughter, Mr. West is survived by three sons, Jack, Richard and Greg; 12 grandchildren; and six great-grandchildren. His wife of 50 years, the former Charlotte Thomson, died last year.

When their ashes are buried together on Saturday, their daughter said, “We’re going to let everyone toss in a Dorito.”

Article source:

DealBook: Outsiders’ Ideas Help Bank of America Trim Jobs and Costs

A Bank of America branch in Glenview, Ill. On Monday, the bank announced plans to cut jobs and reduce annual costs over the next three years.Tannen Maury/European Pressphoto AgencyA Bank of America branch in Glenview, Ill. On Monday, the bank announced plans to cut jobs and annual costs over the next three years.

As Bank of America executives prepared last week to announce the first phase of their turnaround plan, a group of consultants hurried to complete their recommendations for the overhaul, called Project New BAC.

The 44 senior bank managers and roughly two dozen consultants assigned to the initiative worked through lunch, barely pausing to enjoy the pepperoni, sausage and vegetarian pies that had been ordered from a pizzeria.

On Monday, the bank’s chief executive, Brian T. Moynihan, unveiled the broad strokes of their five-month effort, announcing plans to eliminate 30,000 jobs and cut annual costs by $5 billion over the next three years.

“We don’t have to be the biggest company out there. We have to be the best,” Mr. Moynihan said.

The consulting firms enlisted to help with Project New BAC — EHS Partners and the Promontory Financial Group — are what are known in the industry as bank doctors. Financial firms often turn to these specialists in periods of crisis, seeking out their recommendations on deep and wide-ranging cuts to bolster revenue and eliminate unnecessary expenses.

The idea is that outsiders can find thousands of small savings and inefficient processes that insiders may miss.

Promontory and EHS both have long ties to Bank of America, and to each other.

Eric Holder, who is leading EHS’s work on Project New BAC, and Neil Smith, Promontory’s head consultant on the project, were both members of a team from Tandon Capital Associates that helped the Fleet Financial Group with a similar effort in 1994.

On that project, called Fleet Focus ’94, Mr. Holder and Mr. Smith worked with a team of 50 internal managers known inside the bank as the “Nifty 50.” One of those 50 managers was a budding young lawyer named Brian T. Moynihan.

At Fleet, the consultants recommended cutting Styrofoam coffee cups that cost the company $48,000 a year. Name-brand toner for Fleet’s laser printers was replaced with a generic toner to save $200,000 a year.

In all, Fleet cut annual costs by $300 million and laid off 3,000 workers. The changes helped Fleet’s bottom line and set the stage for an eventual takeover. In 2004, it was acquired by Bank of America for about $48 billion in stock, at the time one of the largest bank mergers in history.

In 1999, Mr. Holder, Mr. Smith and another consultant, Jeremy D. Eden, started their own firm, EHS Partners. They worked on cost-cutting for institutions including Mellon Financial, the PNC Financial Services Group and the Union Bank of California.

But in 2009, Mr. Smith left EHS to start a rival team at Promontory Financial, a large consulting firm that specializes in regulatory and legal work and that helped Morgan Stanley revamp itself as a bank holding company after the financial crisis.

A person with knowledge of the companies who spoke anonymously to avoid angering the firms described Mr. Smith’s split from Mr. Holder as an acrimonious divorce that capped years of tension between the men, making their joint assignment on Bank of America all the more unlikely.

“I can’t even imagine how that works,” the person said. “When you think about the importance of figuring out Bank of America’s issues, that’s hard enough. To add another level of complexity with the consultants working out their own issues is another thing.”

Promontory and EHS declined to comment on their relationship. Bank of America declined to comment on the two firms, and a spokesman said many of the changes made in Project New BAC had come from bank employees rather than from outside consultants.

Since Project New BAC was announced last spring, Mr. Holder’s team from EHS; Mr. Smith’s team, Promontory Growth and Innovation; and another team from Promontory that is focusing on regulatory issues have been working four days a week from the bank’s headquarters in Charlotte, N.C., camping out in cubicles on the seventh floor.

The Bank of America managers assigned to work on the project full time have led small teams of bank managers in a division-by-division review of operations. In phase one, roughly 150,000 ideas were submitted by Bank of America employees, and the best were presented to Mr. Moynihan and his management team.

Consultant-led reform programs are common in banking, especially in the case of a company that, like Bank of America, has grown rapidly through mergers and acquisitions. When done correctly, the recommendations can trim fat and make a bank more competitive.

“For a larger bank with so many acquisitions in the past, it makes sense to have someone come look at the process and the overlaps,” said Jefferson Harralson, an analyst at Keefe, Bruyette, and Woods.

The process can be painful. One project led by EHS, a 1999 revamp of the Union Bank of California that was called “Mission Excel,” saved the bank hundreds of millions of dollars and increased profits. But those savings included cutting 1,400 jobs, and the project was reportedly renamed “Mission Expel” by some employees.

“Barnacles grow on a bank, and it’s good to have an outsider come scrape them off,” said Charles Wendel, president of Financial Institutions Consulting. “But one of the great clichés is that you can’t shrink your way to greatness.”

After submitting their final recommendations, the team of consultants and company employees shared drinks on Thursday on a terrace at Bank of America’s headquarters. Mr. Moynihan thanked them for their hard work, which in some cases included relocating temporarily to Charlotte.

But their job is far from over. The first phase focused on Bank of America’s retail side, where many of the most obvious cuts were made. In the next phase, which is expected to begin in late October, EHS and Promontory will look at the commercial banking and wealth management divisions.

“They’re pulling the lower hanging fruit first,” said Mr. Harralson. “There’s more to come.”

Article source:

Vice Media Empire Is Near a Big Infusion of Cash

Today it is a pan-media confederation with a record label, a book label, its own television series and a full-service media agency. It is about to grow larger still with the backing of some of the biggest names and deepest pockets in the media business.

Vice is preparing to announce investment partnerships with Tom Freston, MTV’s co-founder; WPP, the giant media conglomerate; and the Raine Group, a boutique investment firm. To help it expand, Vice has also enlisted William Morris Endeavor Entertainment and its chief executive, Ari Emanuel, to represent the company.

“We’ve kind of been on the periphery for a long time,” said Shane Smith, one of Vice’s founders. “We said it’s time to turn on the jets. We’d reached the ceiling of what we can do on our own.”

To undertake the kind of growth that Vice would like — adding to its news and sports divisions and building large-scale operations in emerging markets like China, India and Brazil — it needed more capital than it was generating on its own. The company has not disclosed the exact size of the investment from its new partners but has put the sum in the high eight figures.

Mr. Freston, WPP and the Raine Group will be minority investors but will all have seats on the Vice board, allowing Vice’s leadership to maintain control over business operations and the creative direction.

Mr. Freston, who bought part of Vice when he was chief executive of Viacom and has enjoyed a close relationship with Mr. Smith ever since, will become an adviser on the company’s expansion.

In an interview, Mr. Freston said Vice’s test would be whether it could grow while maintaining its edge and countercultural appeal.

“One of their challenges as they expand is going to be how they keep true to what made them successful in the first place,” Mr. Freston said. “You don’t want to be a sellout to your sponsors. You don’t want to be chasing increasingly lowest-common-denominator programming. You have to crystallize what you are, not get arrogant, and not necessarily make continual growth your mandate.”

He added: “I do believe their business is at a scale where it can sizably increase without them having to be some sellout, oversized corporate machine, which is what you see so often. I think they can keep their own peculiar way.”

As a magazine, Vice succeeded at being on the fringes of popular culture, chronicling hip bands, fashion trends and the kind of cultural oddities that mainstream publications would find too parochial. Its creators took that sensibility to spawn extensions of the Vice brand, including Vice Films, Vice Books and Virtue Worldwide, a brand strategy and creative development firm that does work for corporations like Intel, Nike and Dell. Vice teamed with MTV to produce “The Vice Guide to Everything,” a 30-minute documentary program that featured topics as disparate as reindeer racing and child soldiers in Sri Lanka. It opened new digital efforts like Noisey, a music site, and Motherboard.TV, a technology site.

Vice now employs 750 people in offices in 34 countries and claims some 2,500 contributors. Mr. Smith said that as a next step, he would like to see Vice build offices in China and India that are on par with its large operations in London and New York. He said he expected the company’s profits to approach $50 million within the next couple of years.

“We’ve come to a crucial point in our existence,” he said. “It’s kind of like Vice has reached its bouncing-off point, our springboard.”

Article source: