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Amazon's headquarters bake-off puts it in the corporate-welfare spotlight

Jeff Bezos, founder and CEO of Amazon, during opening day ceremonies at the company's campus in Seattle on Monday, Jan. 29, 2018. Credit: Mike Kane/Bloomberg

In September 2017, Amazon.com became America's most eligible corporate bachelor when it announced plans for a second headquarters. More than 200 cities across North America fell over themselves trying to woo the e-commerce giant and the 50,000 well-paying tech jobs on offer. The more shameless attempts to win Amazon's attention included Arizona trucking a cactus to Seattle and a Georgia town offering to rename itself, yes, Amazon.

Exactly one year later, negotiations with 20 finalist cities from New York to Los Angeles have retreated behind closed doors. Instead of public displays of affection, Amazon is fending off barbs sharper than the prickers on that 21-foot saguaro cactus. As the world's second-most valuable public company weighs the tax breaks and other goodies proffered by eager suitors, it stands accused of being a corporate welfare leech that should be giving the government and its workers more rather than further milking taxpayers to expand. As the world's wealthiest individual, Chief Executive Officer Jeff Bezos also makes a tempting target.

Vermont Senator Bernie Sanders has accused Amazon of forcing its warehouse workers onto food stamps because it doesn't pay them enough; he proposed levying a tax on large employers to help fund government assistance (the bill is called Stop Bad Employers by Zeroing Out Subsidies Act—or Stop BEZOS).

Meanwhile, increasing numbers of states are reviewing whether companies are honoring their pledges to create jobs and generate economic activity. As the HQ2 bake-off drags on in private, Amazon gives its critics more ammunition and time to fire away.

"The Bernie Sanders bill shows how much Amazon's brand has been tarnished by this headquarters search process," says Greg LeRoy, executive director of Good Jobs First, which monitors government investments in businesses. "The way they launched this public auction was really ham-handed. It was an obvious grab for the maximum tax break, and now they're under the microscope."

Amazon declined to comment for this story. In a blog post responding to Sanders, the company said it created 130,000 new jobs last year and that employees receiving food stamps include those who work part-time or only worked at Amazon for brief periods. The company defended its treatment of workers, saying its full-time U.S. warehouse employees earn more than $15 an hour on average, including stock and incentive bonuses. The company also says it has invested more than $100 billion in the U.S. since 2011 and created more than 200,000 full-time jobs with benefits.

The Sanders bill is unlikely to go anywhere so long as the Republicans control Congress. But more and more states are taking a closer look at trading tax breaks for jobs. Politicians eager to attract employers to their cities and towns during the Great Recession later discovered that perhaps they had given away too much and received too little in return. Among the notable boondoggles: "The Buffalo Billions" corruption scandal in New York where money meant for economic development instead allegedly went to allies of Gov. Andrew Cuomo. And in 2010, the Rhode Island Economic Development Corp. issued $75 million in bonds as part of a package to lure video game company 38 Studios away from Massachusetts in a deal that went bust and resulted in federal fraud charges.

Such blowups prompted several states to tighten controls, including Pennsylvania, Texas, Colorado, Illinois and Georgia, collectively home to seven Amazon finalist cities. Texas, for instance, withdrew or clawed back more than $30 million in incentives to 16 companies that failed to create the jobs pledged, according to a 2017 legislative report. California, New York, New Jersey and Massachusetts—also among the Amazon finalists—are among 22 states that lack robust oversight of government investments in business, but that group is shrinking, according to a 2017 study by The Pew Charitable Trusts.

"Over the past six years, we've seen vast improvement," says Josh Goodman, a researcher at Pew. "Lawmakers are saying we need good information to understand how these programs are working and how they can be improved."

Amazon is likely to welcome greater scrutiny of the economic splash made by its second headquarters, eager to steer the narrative from corporate welfare to job creation. The company has pledged to invest $5 billion over 18 years and said compensation including benefits would average about $100,000 for the 50,000 jobs expected. The company has said it will make a decision this year and has otherwise been mum. Atlanta, the Washington, D.C. region, Philadelphia and Austin are among the places considered front-runners by Moody's Analytics and others that analyzed the finalists based on Amazon's criteria, which included a large labor force, proximity to an airport and a good education pipeline.

Most offers from the finalist cities remain private, but the scope of the project makes it an inevitable "mega-deal" in the billions of dollars. New Jersey has offered a package worth $7 billion to lure Amazon to Newark. Maryland is dangling $6.5 billion in tax incentives to get Amazon to set up shop in Montgomery County. Such offers prompt concerns that cities and states could overspend. Amazon has the strongest support in Atlanta, Indianapolis and Pittsburgh, according to a poll conducted in April by Elon University, and the strongest opposition in Denver and Austin.

In the Seattle region, Amazon employs 45,000 people and the company says it has created an additional 53,000 jobs, pushing the city's unemployment rate below four percent and fueling one of the hottest real estate markets in the country. Yet even in Seattle, the company is under attack and was the primary target of a payroll tax meant to raise money for affordable housing and programs for the city's growing homeless population. The city council approved and quickly revoked the tax after Amazon threatened to halt hiring in Seattle and shift it elsewhere, highlighting yet another benefit of having a second headquarters.

The city that wins Amazon's investment—even if it offers billions—will probably get a bigger tax base, climbing wages and property values and better job opportunities , says John Boyd, principal of The Boyd Company, a corporate site-selection firm in Princeton, New Jersey.

"This is the largest project in economic development history, and the city that wins Amazon will reap benefits for years," Boyd says. "The danger Amazon faces is the longer this drags out, the greater the PR risk in this populist climate."

—Bloomberg News

Source: http://adage.com/article/digital/amazon-s-hq-bake-puts-corporate-welfare-spotlight/314854/

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S&P cuts Italy’s outlook to ‘negative’ but affirms credit rating

Italy escaped another rating downgrade after S&P Global Ratings on Friday affirmed its credit rating but lowered its outlook to “negative” from “stable”, noting the government’s policies are “weighing on the country’s economic growth prospects, a critical driver of government debt-to-GDP trajectory”.

S&P left its rating at BBB, or two notches above junk status while the negative outlook signals the rating agency could lower its ratings over the next 24 months.

“In our view, by crowding out investment in the private sector, the government’s economic and budgetary plan risks weakening Italy’s economic growth performance,” S&P said.

“At the same time, in our opinion, the plan represents a reversal of Italy’s previously sustained fiscal consolidation path and partly undoes past pension system reform. As a result, we no longer expect Italy’s government debt to GDP to continue on a downward path.”

S&P forecast a 2019 budget deficit of around 2.7 per cent of GDP, compared with the government’s target of 2.4 per cent.

Italy’s populist Eurosceptic government wants to hike public spending, a move which puts it on collision course with Brussels because of European Union fiscal rules which limit member states’ budget deficits.

Earlier this week the European Commission rejected Rome’s budget in an unprecedented rebuke; Italy’s government was given three weeks to come up with alternative proposals, but ministers have insisted that they will not do so.

S&P’s decision came a week after rival rating agency Moody’s downgraded Italy by one notch, leaving it one step above junk territory.

Moody’s gave Italy a ‘stable’ outlook, bucking investors’ fears that it would leave the outlook as ‘negative’ — a move that would have been widely interpreted as signalling that Italy was on track to fall below the junk threshold.

Two other rating agencies, Fitch and DBRS, are not scheduled to update their ratings until next year.

Fitch rates Italy as two grades above junk with a negative outlook.

DBRS, a less well-known agency whose views are nevertheless taken into account by European Central Bank policymakers, rates Italy as three notches above junk with a stable outlook.

As the third-largest economy in the eurozone and its biggest issuer of sovereign debt, Italy’s position in investment-grade bond indices is vitally important.

Any move towards junk status puts that position at risk, and downgrades could trigger huge capital flows as investors are forced to rearrange their portfolios.

The major indices require Italy to be rated as investment-grade by at least two of the three biggest rating agencies, or by either Moody’s or S&P.

The ECB is not able to buy junk-rated debt as part of its quantitative easing programme, another factor which makes further downgrades for Italy so perilous.

Sovereign credit downgrades have consequences for the capital base of Italy’s banks too.

“The bonds held by the banks could be ineligible as collateral to obtain ordinary funding from the Eurosystem,” said Eric Dor, director of economic studies at IESEG School of Management in France, who warned that “Italy is currently a perfect illustration of the pernicious loop linking the risk of the banks of a country and the risk of the sovereign bonds”.

Source: https://www.ft.com/content/a8fd6508-d92d-11e8-a854-33d6f82e62f8

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Stock Market News: Nasdaq Walloped As Netflix Dives 5%; Disney Leads Dow

Stock market news was abundant again Friday, but sellers dictated the action, with the Nasdaq composite down 2% in afternoon trading. Wall Street weighed another big drop in oil prices, a hotter-than-expected reading on wholesale inflation and strong earnings from Dow component Walt Disney (DIS) and Ubiquiti Networks (UBNT).

X

The Dow Jones industrial average fell 0.9%, weighed down by weakness in Caterpillar (CAT) and Cisco Systems (CSCO). Results from Cisco Systems are due Wednesday after the close. It was featured in the latest Earnings Preview column as a possible call-option trade.

The S&P 500 gave back 1.2% and the Russell 2000 small-cap index lost 1.9%. Volume on the NYSE was tracking higher than Thursday. Nasdaq volume was slightly lower but seemed to be picking up the pace.

In economic news, wholesale prices jumped 0.6% in October, well above the consensus estimate of 0.2%. Core prices, which exclude food and energy costs, increased 0.5%, also above the consensus estimate of 0.5%.

U.S. crude oil futures took another hit, falling below $60 a barrel. Crude was down just over 1% to $59.93 a barrel. Slowing growth in China has hurt the price of oil, as output in the U.S. continues to boom. The Energy Information Administration on Wednesday said that U.S. production climbed by 400,000 barrels a day to a record 11.6 million barrels last week.

In stock market news today, FANG stocks faced more selling pressure with Netflix (NFLX) getting the worst of it. Shares were down 3.5%, perhaps hurt by news that Walt Disney plans to launch its Disney+ streaming service in 2019.

In related stock market news, Wall Street liked the look of Disney's earnings report. Disney stock reclaimed a 118 buy point but early gains faded. Shares still rose 2% to 118.20.

Ubiquiti Networks (UBNT) was another bright spot, up 14%. The stock broke out powerfully over a 101.43 buy point, helped by strong earnings.

Leaderboard name Ulta Beauty (ULTA) extended gains after shares reversed higher in impressive fashion Thursday. Shares were volatile early Thursday as the company's annual analyst and investor day got underway, but the stock ended with a gain of nearly 5% after falling 5.3% intraday.

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Source: https://www.investors.com/market-trend/stock-market-today/stock-market-news-nasdaq-slumps-netflix-stock/

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Dow Jones Futures: Intel Warning Is Bad Sign For Stock Market; Amazon Earnings Soar

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Source: https://www.investors.com/market-trend/stock-market-today/dow-jones-futures-intel-warning-amazon-stock-market-rally/

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Government may help IL&FS, acquire some of its assets: Nitin Gadkari

NEW DELHI: Road transport and highways minister Nitin Gadkari said the government may help the debt-ridden Infrastructure Finance and Leasing Services (IL&FS) without naming the company.

“There's a big company in infrastructure sector that's been facing financial woes. We'll try and see that the projects undertaken by it are completed. We could also acquire some of its good assets,” the minister said while speaking at an event organised by All India Management Association.

IL&FS has defaulted on some of its debt obligation.

The minster said 400 stalled highway projects worth Rs 3.85 lakh crore have been saved from becoming non-performing assets in last four years.

The minister said that government is working on making the biofuel available to bring down India's dependence on imported fuel.

Speaking on the controversy related to Rafael deal, Gadkari said that opposition leader Rahul Gandhi was doing a disservice to the nation by opposing the deal.

“No wrongdoings have been done in proposed acquisition of fighter jets from France. Also, government has no role in getting Anil Ambani into this deal,” Gadkari said.

While attacking Congress President Rahul Gandhi, the minister said it’s only people in Pakistan who want him to be the Indian Prime Minister.

Source: https://economictimes.indiatimes.com/news/economy/finance/government-may-help-ilfs-acquire-some-of-its-assets-nitin-gadkari/articleshow/65973494.cms

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Hitching a Ride on the Digital Nomad Express

Late last year, my friend James Clark wrote me to say that VietJet intended to open a direct flight from Ho Chi Minh City, Vietnam, to Chiang Mai, Thailand.

He dubbed it “The Digital Nomad Express.”

I LOL’d.

So when it recently came time for a visa run, I decided to buy a ticket.

I was excited for my first return trip to Saigon since 2015. I’ve spent a lot of time in the city over the years, and I wasn’t surprised to find that many things are changing for the better (check out James’ suggestions for the future).

Not surprisingly, the Digital Nomad Express wasn’t so full of digital nomads. The flight was mostly made up of tourists, travelers, business people, students, and monks.

But here’s the thing, even if Digital Nomads were onboard, I’d be having an increasingly difficult time trying to identify them. The remote work lifestyle is starting to go more mainstream.

Nomads are amorphous, transitory, and easy to confuse with entrepreneurs, or expats, or ya know, people doing their thing.

What is it, anyway, that makes a Digital Nomad?

Here’s an idea:

The archetype at the core of the digital nomad identity is that of the backpacker or traveler. So you might say: earn like an entrepreneur or freelancer, and live like a backpacker or traveler and boom: digital nomad.

This helps to explain a lot of things: like why digital nomads generally don’t stay digital nomads for long, or why successful entrepreneurs who simply travel often or live somewhere strange often loath being lumped in with the label. There are many downsides to living life like a traveler.

A lot of digital nomads would make their lives a lot easier if they simply thought of themselves as expats and declared – and invested in – a home. Pick up a book or two about the local history, find a friend or hobby that has something to do with the place you’ve come to, and when somebody asks you how long you’re sticking around just saying “I live here.”

The truth is behind most traveler’s facade there is some kind of home– it’s where they store their stuff and where they go when they’re sick. Maybe it’s their parents place or a friend’s. They’re moving around to fun and cheap cities for a high quality of life, but are still ultimately anchored to somewhere they’re confident the mail will turn up.

Digital Nomads vs. the Location Independent Entrepreneur

The location independent entrepreneur, who lives outside of their home country, takes cues from an expatriate. And those who’ve stayed in their place of birth are simply carving out a way of life that looks much like wealthy people would live a generation before – snowbirding, doing 9 then 3, or simply traveling a great deal for business or leisure.

Anyway, for this one weekend, I wasn’t worried about categories. I was going to digital nomad my face off.

I was in full on travel mode. I traded in what has become a laughable camel caravan of luggage for a sleek carry on only digital nomad setup:

Of course, Saigon and Chiang Mai have long been pillars in the community of readers here at TMBA. The both have a lot of the things entrepreneurs and digital nomads (and now, increasingly, remote workers) love:

Great value for the money.

Easy to get an apartment and basic life amenities setup.

Strong local entrepreneurial culture with cosmopolitan elements to the city.

Nice coffee shops and bars.

And perhaps most importantly, other digital nomads.

Saigon is something of a shrine to capitalism. You can see and feel it everywhere. The energy of the city is hustle. It whispers “make something of yourself.” 

You can see it happening in front of your eyes. Look around and you can spot loaves of bread moving through the streets, from baker, to bike taxi, to vendor or restaurant. Look up and you’ll see ambitious construction projects dotting the city.

It’s a funny juxtaposition given all the communist symbols everywhere.

Saigon changes so fast…

Most co-working spaces around the city are populated by locals.

It’s only been three years since I left, but so many things in Saigon have changed.

The first thing I noticed: District 1, the central area, smelled different.

I guess some people might be tempted to say it smells better, but not me.

For me, Vietnam’s cities smell of a unique mix of incense, exhaust, waste, and food being prepared and distributed on the street. In my mind, it’s inextricably tied to career freedom itself.

I know that might sound nuts, but Vietnam was the theatre of a formative travel experience for me in 2001. When I returned to the U.S., it was part of what I dreamed about when peeking over my cubicle wall in 2006, wondering if I’d ever get out.

(I did.)

What started as an adventure in 2008 – returning to Vietnam to source products, hire remote workers, and EAT – has turned into a life. Some of the folks who I went on adventures with have gone on to prove that it’s possible to build wealth and interesting careers while having a great deal of location and time freedom.

The businesses and careers they’ve created would have been very hard to even imagine 10 or 20 years ago, let alone execute. It’s encouraging for me to see so many old friends doing so well, doing things their own way. When you’re building things that are unprecedented – say, insisting that even though you’ve got 100+ employees, you’re going to stay 100% remote, it’s easy to get tempted to replicate the way “experts” did before.

But these folks, some of whom I first met in HCMC, are proving that in this day and age it’s possible to build things on your own terms and, in a small way, contribute to what work and career might look like for others in the future.

***

I spent my first day in Ho Chi Minh city strolling around. I’d missed this. Chiang Mai, for all it’s virtues, isn’t the nicest place for a stroll.

I was excited to see somebody thought it was a good idea to dedicate an entire walking street to book sellers and cafes.

And that the options to caffeinate your journey continue to expand on the already impressive cafe culture:

This was a hot chocolate that had spicy bits and cinnamon.

And of course, I ate. I’d bet the average truck driver in Vietnam is exposed to more delicious food than the average upper middle class American.

My first meal was perhaps, fittingly, my favorite dish of all time. Simply, Pho Bo.

We ensured to stay hydrated.

* **

That evening I caught up with somebody TMBA listeners will be familiar with, David Hehenberger the founder of Fat Cat Apps and Landing Cube.

David was one of the first TMBA Apprentices back in the day, and has since gone on to found 3 successful companies, grow a team, and serve as a mentor for apprentices in his own companies. David’s been based in Saigon for 6 years now, and is one of my favorite people to hang out with. We joked about all sorts of things, and had the nerdy conversations that only internet entrepreneurs can appreciate.

ME: “Have you considered just SWASing your SaaS?”

DAVID: “Funny you mention that, my apprentice suggested such a move last week.”

That evening, instead of going home at a reasonable hour, I took a motorbike taxi to the nightlife walking street of Bui Vien, ground zero for backpackers and travelers in Southern Vietnam. I’m glad I went. It’s changed dramatically, but it’s still the lovable crazy melting pot it’s always been.

The next day, James and I took a walking tour of the Tao Dien area in District 2.

We went in style.

We got to see so many new buildings going up across the city.

When I first moved to Saigon, District 2 was known as the place where expat families who had fancy jobs located to ensure their kids got a access to good schools and lived in large homes in gated communities. What started as a suburb with good housing has gradually morphed into something resembling Seminyak in Bali.

I noticed whiffs of La Jolla, California as I walked past the swish spas, beauty salons, cafes, and eateries with food offerings (Poke, Vegan, BBQ) that Westerners would be well familiar with. James pointed out a Yoga Teacher’s Training School, indicating once and for all that District 2 intends to make Western expats feel right at home.

We (that’s James in the photo) opted to have a fancy brunch with some other entrepreneurs.

I drank a double shot of espresso and three glasses of Champagne. It cost me an arm and a leg! That’s Tao Dien living I suppose.

After a siesta, that walk was hot!, I snuck in a few more bowls of Vietnamese food, which were priced more reasonably. Here’s one of my favorites, a dish from the center of the country called Mi Quang. It’s the “Dac Biet” or special version, meaning in most cases they pull out all the stops. In this case, all the stops were all the fun bits from a chicken plus some delicious Viet style sausages.

James sent me off early on Sunday with a classic breakfast of rice dumplings called Bahn Cuon. We discussed future plans to meetup and spend a week together with other bright folks. I walked with a full stomach and a good deal of insight into the projects I’m working on.

For me, it’s easy to get caught up in a routine and day to day of running a business. Often, I resist the idea of taking a weekend away. My mind often prefers the idea of staying on plan.

In the end though, I rarely regret shaking things up and hopping on a plane.

Sure, I got a little behind on some projects, but what I got was so much more valuable. Adventure, ideas, inspiration, and consolidating friendships.

For me, these are the best part of being a digital nomad. If we agree that the DNA of the nomad comes from generations of travelers, adventurers, and backpackers, then the MO of the digital nomad shouldn’t be finding great places to open a laptop, but finding great places to close them.

Dan

PS, it’s never been easier to live and work remotely. Check out our newest project, Dynamite Jobs.

Source: http://www.tropicalmba.com/hitching-a-ride-on-the-digital-nomad-express/

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The Never-Ending Journey: In Search of Product-Market-Fit

Intro

Many potentially great companies fail each year because, while they have an incredible product, they don’t figure out how to get it to market fast enough. Figuring out how to reach customers and break through to Product-Market-Fit remains one of the hardest parts of building a successful startup.

This post introduces a four stage framework and checklist for founders to use when searching for Product-Market-Fit (P-M-F) and exploring the early phases of finding a repeatable sales process. It will help you 1) initiate understanding of the market landscape and the pain point you’re solving, 2) learn how to gain access to initial customers and start to understand your machine, 3) prove out the market and underlying components of the machine, and ultimately 4) scale to gain market share. It also provides a measuring system to determine whether you have reached Product-Market-Fit.

For this post I interview Guy Cohen, the CRO at a New York startup called Wonder, to talk about their search for Product-Market-Fit (P-M-F) and the checklist he built along the way.

Like many companies, Wonder had a product that could be used by many verticals. But to find P-M-F, Guy knew that they would have to go vertical by vertical, as the buyer persona, business benefits delivered, positioning, messaging, pricing, etc. would need to be different for each vertical. In itself, this is one important lesson to be learned in the journey for P-M-F, and it follows the highly regarded recommendations of Geoffrey Moore’s book “Crossing the Chasm”. (If you are not familiar with Crossing the Chasm, I recommend that you read this short summary.) To cross the chasm, Moore recommends that you focus on a single market, a beachhead, to win domination over a small specific market and use it as a springboard to expand into neighboring markets.

As Guy searched for P-M-F he developed a framework to make the process for all future verticals more scientific and repeatable, so as to not repeat the same mistakes twice. This framework can be applied to many different companies, across verticals, so that you can more systematically approach and define what P-M-F looks like for your company.

David: Tell us about Wonder and how you approached getting to P-M-F?

Guy: Wonder is an on-demand research service that gives you instant access to the intellect and fact-finding skills of a distributed network of thousands of analysts, at the push of a button. Throw any project at us, large or small, and we’ll turn around answers in 24 hours or less (example: “How are Millennials incorporating technology into their healthcare decisions?”). We help you collect the dots so you can spend more time connecting them.

In our search for P-M-F, we’ve always adhered to this mantra: “you want to be a painkiller, not a vitamin – vitamins are nice-to-haves, but people can’t live without painkillers.” We had a product we believed solved a real pain point, we just didn’t know who felt the pain most, and how best to reach them. Wonder is ubiquitous both vertically and horizontally — it’s used by everyone from teachers to consultants to lawyers to recruiters. This presented us with the difficult challenge in that we had endless verticals and roles to explore, and lack of focus generally leads to failure when there are so many shiny toys to chase. We had to be laser focused on 1-2 verticals to gain initial traction.

David: How did you go about selecting the first verticals, and what factors did you score, to help decide the finalist?

Guy: The first thing we did was build a list of 15 different verticals we thought had this ‘pain’ and then cold called hundreds of firms in each to ask every question they’d be willing to answer. We learned about their day-to-days to see how we might fit into their workflow and after stress testing the various markets, 2 quickly stood out. We then put ourselves in a box and sprinted towards figuring every part of the machine for those verticals. We’re almost 2 years in and the learning never stops.

There were hundreds of factors for us to score each vertical on, but we ultimately boiled the selection process down to 3 primary criteria:

Frequency & magnitude of pain: those who felt the pain most and most often should have the highest propensity to pay for a solution.

TSAM (total segmented addressable market): a non-negotiable we answered before exploring any of the verticals was: “Is this market big enough?” We dug deep to find out how many companies there really were and how best to reach them… we tried to avoid looking for a fluffy number that would normally be used to impress VC’s. It didn’t matter if there were five million Biotech firms globally, if we could only find contact info and details for five thousand that was our TSAM until we found more tangible leads we could add to our CRM. This question is crucial because if there are only 300 companies in our TSAM, it wouldn’t matter how much of a pain point we were solving — unless we were selling 8 figure deals the market wouldn’t be meaningful and we’d be lead poor in months.

Inelastic demand: pricing, as we’ll discuss below, is a fickle art and because we had no idea what the right strategy was we wanted to ensure we had a market that was relatively inelastic. Like most other startups, we were guilty of underpricing in the early days and wanted to avoid getting locked into markets that wouldn’t be able to afford future increases.

Then we used targeted outbound selling to reach these verticals. Some startups begin by selling to inbound leads but we chose not to — inbound is an incredibly effective engine (if perfected) but because we wanted to reach a very particular kind of prospect (targeted, and in a particular vertical), outbound was far more effective.

David: How did that evolve into your spreadsheet framework?

Guy: As it became time for us to start thinking about our next vertical we sat down and wrote out all the things we learned from the first market and that’s how the spreadsheet was born.

Disclaimer: There is no panacea — every company has a different product, with a different vision, and a different strategy to achieve that vision. What we’re about to describe is a generic and repeatable framework for anyone who is trying to find P-M-F in the early days of building a B2B SAAS company. Only fools would try to compress years of learning into a few pages of conclusions. We proceed.

Click HERE to access the Google Sheets document.

This living and constantly updating formulae is the amalgamation of learning through mistakes, observing, reading, and speaking to people much further along and more intelligent than we are. We initially built it for ourselves as our checklist manifesto for things we had to know before deploying resources into each new vertical (to ensure we didn’t scale prematurely). After speaking with David I realized what we built is actually a standard checklist other B2B startups can use before scaling a sales team or dipping into new markets. We’ve borne witness to so many startups repeating the same mistake: following a round of funding they immediately think the sliver of P-M-F they have is repeatable and has the same funnel metrics and go-to-market strategy as every other vertical they want to tap. So they hire 50 reps only to realize that the HR function at private equity firms is completely different from HR in the Fortune 1000.  We’ve tried to dose ourselves daily with Munger’s salient advice: “It is remarkable how much long-term advantage people like us have gotten by trying to be consistently not stupid, instead of trying to be very intelligent”.

Amazing companies fail each year because they have have an incredible product but don’t figure out how to get it to the market fast enough. We hope this checklist helps you expedite your process.

David: Tell us about the framework.

Guy: Our checklist is divided into 4 phases:

Initiate

Gain Access

Dry Run

Deploy

Below you’ll find the timelines, goals, and key learnings from each phase:

1. Initiate

Timeline: Days 1-90

Goal: Understand basic market landscape, what pain point your product solves most, and who your initial targets are.

David: Here are two slides that I like as they show where you are at the start of trying to figure out a predictable and repeatable sales process, and what things look like at the end:

What I like about your Initiate Phase is that coming out of it, you have clarity on the following:

Who to call on initially

What is their use case

What messaging will best work for them

And some initial thoughts on how to go about reaching them

2. Gain Access

Timeline: 91 – 180 days

Goal: Land initial clients & start to understand the machine.

Key Learnings: Gaining access will bring about some of the hardest days but you finally start to hear the golden word (‘Yes’) and it makes all the ‘No’s’ worth pushing through. The main goal of this phase is to have enough confidence to know that it’s worth pouring more fuel into the machine to see where it will break. At this point you’ve only tested your hypothesis across a small sample size and you should be able to solidify the following before testing with a larger n:

Funnel metrics that make economic sense (even if you have to extrapolate)

What’s the average and median CAC, LTV, and ACV across your first cohort of clients

What kind of quantifiable business benefit they get from using your product

What kind of price point they are likely to accept

What cadence structure ensures highest access and close rates

3. Dry Run

Timeline:  181- 365 days

Goal: Prove out the market and the underlying components of the machine.

Key Learnings: We found the Dry Run phase to be the rockiest part of the journey and at times can feel like you’re in a raft barreling down a class 5 rapid ping-ponging from river bank to river bank while you iron out the kinks. This is where the real calibration happens. While the waters are tough pedagogues they provide some of the most valuable lessons along the journey.

By the end of this phase you should gain significant clarity on the early mechanics of your machine:

How accurate were your hypotheses across all components of the machine?

Was the sales cycle closer to 7 weeks instead of 3 weeks?

Do companies with legal teams have extended sales cycles?

Which funnel metrics have the greatest areas for improvement and what levers can you toggle to move them in the right direction?

What did you miscalculate and what’s the best workaround?

What does the post-sale hand off and onboarding process look like?

What are you hearing (qualitatively) on pricing relative to the value of your offering?

4. Deploy

Timeline: 365 days +

Goal: Scale the sales team to execute and gain market share in this vertical.

Key Learnings: looking back from the peak of the Deploy phase will leave you with an entirely new level of learning. At this point you should most importantly be able to determine your ability to scale, and at what rate.

The biggest ticket items you’ll walk away with clarity on:

Size of the market: after hearing from thousands of prospects and gaining a better understanding of what exact pain you’re solving and who’s willing to pay, how big is the actual segmented market?

Ideal user / buyer: you’ll also have a better idea of what type of firm (size, specialty, jargon used, etc.) fits the perfect profile as they’ll have the highest close / usage rates.

Hiring / Training: what do your machines look like for hiring & training and what types of candidates fit your ideal profile? More importantly — what types of candidates should you stop hiring more of?

How do you shorten the learning curve for new hires to ramp them up faster?

Pricing: what have you heard? Are you getting pushback 10% of the time, or 90% of the time that you’re too high? (they generally won’t tell you if it’s too cheap)

Further certainty (or uncertainty) around machine mechanics: are the deviations from your hypothesized funnels getting closer to where you’d like them to be?

*you’ll notice many of the steps / questions are repeated at each stage of scaling as your sample size increases and your job is simply to re-evaluate and prove or disprove your original hypotheses.

Measuring Product Market Fit

David: How did you think about measuring Product-Market-Fit?

Guy: It felt strange to us that there wasn’t some quantifiable way to measure how good (or poor) a job we were doing at figuring out Product-Market-Fit. Out of all the articles we’ve read most don’t address the fact that P-M-F is a 2-part equation: the first side of the equation addresses Pre-Sale, and the second is for Post-Sale. Both are vital and if either is neglected you risk a great deal (we made that mistake). One thing we’ve witnessed is companies hire amazing reps who can sell a ice to an Eskimo so accounts are flying off the shelf, but they don’t find out until much later (weeks /months) that nobody is actually using their product as utilization and churn are lagging metrics. Because of this we’ve struggled with and have tried to create a framework that allows us (the community of bold entrepreneurs) to have the best shot at leading indicators for whether or not we are walking the line for P-M-F on the Post-Sale side (we believe this is in fact more important than the Pre-Sale equation in the long run).

Click HERE to access the P-M-F (Directional) Calculator

This is still a work-in-progress and will be different for every product and every vertical. To keep things simple, we chose what we believed to be the most important variables in the early days to avoid churn (growth and virality were luxuries for phase 2 — step 1 was making sure we didn’t lose clients we worked so hard to acquire). The thinking here is that if you’re in the right market solving for the right pain point you should have a good close rate, a decent sales cycle, and sticky end usage, and we believed there should be some equation for that.

We then assigned acceptable ranges (and corresponding values) for each variable as a warning system in case we had miscalculated something. Multiplying our coefficients by respective values left us with the sum of their parts: a score greater than 50% meant we are in the right forest but had work to do on clearing the path forward (offering, pricing, messaging, etc). A score below 50% on either equation gave us directional indicators of what we needed to focus on solving, or if we were in the wrong market altogether. We know this is oversimplified but mediocrity often hides in what’s unquantifiable and we believed it’s better to have an imperfect indication than none at all.

You will need to adjust the ranges and variables to suit your product and market. (e.g. your average sales cycle may be 9 months based on your ACV / market while another service might be shooting for a 2 week sales cycle). Take this equation and make it completely your own — that’s the point.

—

David: What were the key lessons you learned from your first vertical that you wish you’d known beforehand?

Guy: A few immediately come to mind:

Talk & listen to users / buyers: you can’t find out through email marketing. It’s vital to hear their voice and understand the market challenges and opportunities through real conversations — call as many people as you can and get them to open up.

Test your Pricing: as we learned in the Lessons of History, “Total perspective is an optical illusion. We must operate with partial knowledge”. We didn’t get it right the first, or 2nd, or 3rd time and it’s one of the most critical components to success. We treated it more like an R&D function that constantly needed to be tested and tweaked until we achieved the results we were satisfied with.

Find a CEO with a clear long term vision: so much of this P-M-F journey is dependent upon what you’re ultimately trying to achieve as a business. I was blessed to partner with a founder who trusted the process as we wandered through the desert. Make sure you are completely aligned and leave no room for miscommunication on plans and expectations.

Everything is better in 2’s: we’ve always tried to avoid single points of failure. For example if you hire a single rep and they tell you this market doesn’t work, that’s your only reference point and you can’t be certain if it’s that rep or the market itself. We’ve always tried to do things in 2’s and it’s saved us more than once.   

Books: Winning the Brain Game, The Sales Acceleration Formula, Never Split the Difference (3 must-reads)

David: Any final thoughts for other entrepreneurs starting their journey?

Guy: We’ve heard a handful of entrepreneurs claim they “found” P-M-F as if it’s the last horcrux that leads to a happy ending, but Alan Watts famously said “you cannot walk off with a river in a bucket. If you try to capture running water in a bucket, it is clear you do not understand it and that you will always be disappointed, for in the bucket the water does not run.”

We prefer to think of P-M-F as a perpetual river that evolves over time and takes turns you could have never imagined, and only the paranoid survive this trying journey.

Here’s to surviving!

For those interested in learning more about Guy, I asked him to tell us a bit about himself

Guy: Everything I learned about work ethic and tenacity can be traced back to my parents.

Having a love affair with numbers growing up naturally led me into accounting and then finance before I caught the startup bug. I joined the team at Seeking Alpha and as we grew the company I had the fortunate privilege to work directly for the founder and CEO; it was the greatest 2 years of learning I could have ever hoped for.

Along the same timeline my close friend Justin was building Wonder and he eventually hooked me — I was sold on the product and his vision and couldn’t imagine not working on this massive challenge, and so our journey began.

Source: https://www.forentrepreneurs.com/search-for-product-market-fit/

[jokerepair74-blog]

Rupee strengthens. Should RBI worry?

Cometh the hour, cometh the idea. This phrase is apt for the latest USD-INR swap auction conducted by the Reserve Bank of India. The runaway success of the auction — with banks bidding for $16.31 billion against $5 billion that the central bank proposed to buy — shows that the tool was well-crafted, in a manner that benefits all stakeholders.

Besides obvious benefits such as providing liquidity, such an auction also helps signal the RBI’s intent that it will not allow a runaway appreciation in the rupee.

With the Indian currency doing a volte face in its performance, becoming one of the best performing emerging market currencies this year, from being among the worst performing, the central bank has been quite busy trying to control undue volatility in the rupee.

The rupee is likely to vie for the RBI’s attention for the rest of 2019 too, given that many of its drivers are now turning positive.

The swap

The RBI’s primary intention in using the forex swap was to inject liquidity in the system ahead of the elections and financial year-end, without resorting to further open market operations that tend to impact market interest rates. The ₹34,561 crore that the RBI plans to inject into the system could also boost consumption ahead of the election, thus keeping sentiment upbeat.

Banks seem to have lapped-up the offer because they can currently borrow dollars at a lower rate from international market and thus stand to gain by lending the dollars to the RBI at around 3.8 per cent annual return.

The weighted average premium of ₹7.91 for the bids was quite close to the three-year forward premium in the forex market. The immediate benefit of the swap has been lower hedging costs.

The swap, however, will not have a direct impact on the rupee spot rate; it only impacts the forward premium. But the move will help signal to the forex market that the RBI is scanning its arsenal to find innovative solutions to current issues, which include reining in the rupee.

The rupee strengthens

The rupee lost 8.9 per cent in 2018, led by increasing crude oil prices and rapid foreign portfolio outflows, only to reverse sharply higher to gain 1.9 per cent in the first quarter of 2019.

Sharp rupee depreciation may cause a furore among economists, but it does not put undue pressure on the Centre to take action.

This is because many companies have a natural hedge against their imports through their exports and the common man impacted by costlier imports does not have any voice.

But an appreciating rupee is greeted with a far less tolerant attitude. The exporters, who have a strong lobby, believe that the rupee needs to keep depreciating in order to make their goods competitive in overseas markets.

The recent strengthening of the rupee made the central bank intervene actively in the forex market to curb the rise. This is borne by the forex reserves increasing since the beginning of this calendar, to hit $405 billion recently.

What’s changed for the rupee?

The downward pressure on the USD-INR exchange rate eased since last September, when the rupee hit a low of 74 against the greenback. There seem to be some medium-term shifts in the drivers of the rupee that need to be taken note of.

The dollar rally, that pressured the rupee, appears to have ended. The dollar index rallied from 89 in March 2018 to 97 by December 2018, fuelled by the Federal Reserve’s aggressive interest rate hikes — four in 2018 with guidance for another three in 2019.

But the sharp sell-off in US equity market towards the end of 2018 coupled with threat of economic slowdown has made the Federal Reserve pause its rate hikes and adopt a more dovish stance. With expectations of the Fed staying on hold until June, the dollar index has cooled a little, to 96 levels.

The spectre of a slowdown in global growth has also been haunting other central banks. The ECB and the Bank of England too have decided to maintain a more benign monetary policy. As monetary conditions have eased in global markets, foreign portfolio flows into emerging markets, including India, have picked up.

The Indian equity market has received $6.3 billion of net inflows so far in 2019, a sharp contrast to net outflows worth $4.3 billion in 2018. Indian debt market flows have also turned slightly positive after witnessing outflows worth $6.9 billion in 2018.

Another factor that needs to be noted is that the rupee typically performs better in periods when global growth slows. Between June 2010 and 2011, as global growth fell from 5.7 to 4.3 per cent, the rupee appreciated from 46.44 to 44.6 against the dollar. Similarly, between December 2006 and March 2008, global growth declined from 4.9 per cent to 3.03 per cent, but the rupee strengthened from 44.2 to 40.1.

But once the global slowdown gathers pace, the rupee too begins declining; probably due to FPIs pulling out money and the adverse impact on exporters.

The IMF’s global growth and trade numbers have been on a downward trajectory since 2017. Since slowing global demand brings down commodity prices, India stands to benefit as it is a net importer. The Thompson Reuters commodity index is down from the recent peak of 200 recorded in June 2018 to 184 currently. This is conducive for our trade deficit.

Given the increasing possibility of a chaotic Brexit and a long drawn US-China trade war, central banks could be more cautious with their monetary tightening in the immediate future, thus keeping foreign flows strong.

The global slowdown is also likely to prolong, thus keeping commodity prices soft. The RBI could continue to mop up the incoming dollars to build its reserves. Besides this, it might also have to pull some other tricks out of its hat, akin to the dollar-rupee swap.

Source: https://www.thehindubusinessline.com/opinion/columns/rupee-strengthens-should-rbi-worry/article26655092.ece?_escaped_fragment_=

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Ultra Miami 2019 Day One Was Disastrous For Transport, Awkward In Construction

You don't know what you've got until it's gone. For 20 years, the City of Miami had an international symbol of dance music's colorful and ever-evolving culture, but after one day of Ultra Music Festival's new home on Virginia Key, it's not clear how much of that dignity remains.

Following UMF's 2019 debut on Friday (March 29), social media is rife with photos, videos and frustrated commentary as tens of thousands of attendees were forced to walk two-and-a-half miles across the Rickenbacker Causeway following a complete breakdown of transportation logistics.

Traditionally, about 50,000 people attend Ultra each day, and most wandered away from stages after the event's 2 a.m. curfew to find wildly disorganized pick-up points due to a lack of infrastructure or instruction as to how or where to line up for free shuttles. Add to that a sprawling festival map that includes a minimum 30-minute walk between two distinct arenas, sound bleed between main stages and a palm tree fire, and two things become obvious: the City of Miami has greatly undermined and disrespected a 20-year cultural institution, and Ultra Music Festival organizers refused to accept the logistical reality of their move.

Ultra issued the following statement about the situation on social media Saturday (March 30):

"Last night, many of you experienced challenging transportation conditions leaving the festival. This is unacceptable and inconsistent with the high standards you have come to expect from us. For this, we are sorry. As you might expect, we have already been working cooperatively with our city and county partners to promptly address and resolve these issues. We look forward to offering you a significantly improved transportation experience today and throughout the weekend, and we appreciate the opportunity to earn back your confidence and trust."

The mess started when the City of Miami refused to renew Ultra's contract to operate in its long-time home of Bayfront Park. In 2001, a one-day version of the festival moved from South Beach to downtown Miami. From 2012 to 2016, the festival operated three days in the downtown space, fitting an average of seven stages of electronic music representing a variety of styles. Iconic acts from Kraftwerk to Avicii and Snoop Dogg played the event. Swedish House Mafia famously used Ultra Miami as its official debut, highly-publicized final show and its big reunion five years later.

The event attracted thousands of attendees from around the world, but wealthy condo residents -- who live in buildings younger than Ultra itself -- complained about the noise and traffic. The City sided with their interests when refusing to update the event's contract a few months after Ultra's big 20-year anniversary celebration. Ultra had begun selling $400 three-day GA tickets for the 2019 event days prior. In November, the City approved Ultra's move to Virginia Key, wherein it would take residence across the Miami Marina Stadium parking lot and Historic Virginia Key Beach Park.

Event organizers had four months to properly plan and produce the show. It was not enough time, apparently.

In the last four months, there was much talk of environmental safety measures and how free shuttles would bus fans to the event from downtown. Less was said about stage organization and how Ultra would mitigate a rush of eventgoers leaving the island on said shuttles when the festival ended at 2 a.m. each night. Shuttles began bussing fans to the new Virginia Key site at noon on Friday. Wait times at three various hubs ranged from five to 20 minutes, and things seemed to run smoothly.

Once on site, fans were met with two musical options. The Main Stage, Worldwide Stage, UMF Radio Stage and Live Stage were crammed together in the Miami Marine Stadium parking lot, a space of about 15 acres compared to Bayfront Park's 32. The asphalt space lacked identity, and felt more like a carnival than an idyllic escape. Acts such as Marshmello, Skrillex and Boys Noize's duo Dog Blood, ODESZA and Jai Wolf were scheduled to headline the spaces that first night.

When standing on the side of any of these stages, it was impossible not to hear the booming bass of the other three, especially in the small cluster of the Live, WorldWide and Radio stages. The noise clashed in fans' ears as a mish-mash of beats. deadmuau5 is meant to give his massive cubev3 stage production a worldwide debut Saturday night (March 30), but it seems quite apparent that only a few thousand people who fit inside the tented Live Stage area will be able to enjoy the show.

Meanwhile, the second half of the festival map, dubbed “Resistance Island,” features loads of green space in a spread-out environment that used lighting, jungle stage design, island oasis motifs and decorated hang-out spaces to create that environmental festival fantasy. Carl Cox's iconic Megastructure was found here as well as two other stages. It boasted performances from house and techno favorites Black Coffee, Loco Dice and Adam Beyer.

Resistance Island was a great example of what Ultra on Virginia Key could be. The caveat? Walking between Resistance Island and the main stage arena was at minimum a 30-minute trek along the highway. It all but forced attendees to pick a side and stick to it.

Awkward venue aside, the real struggle came when fans tried to leave. Virginia Key is connected to mainland Miami by the Rickenbacker Causeway, a solitary highway. Some lucky partiers who left early in the night may have caught shuttles back to the mainland. Ride share apps were restricted from the area, and there was no parking for individuals on the island. The only way back was to take a free shuttle provided by Ultra.

Unfortunately, there were no barriers constructed to clearly demarcate shuttle lines, and there were no barriers between the sidewalks and the highway road. Thousands of tired ravers huddled into large crowds. Many spilled out into the road, the only thing between them and moving busses being the shouts of frustrated workers. Many decided to walk the two-and-a-half mile highway bridge back to Miami, but others chose to wait up to two hours for shuttles without knowing the shuttles themselves had been suspended due to heavy pedestrian traffic on the open highway roads.

Fans took to Twitter and Instagram to post videos and pictures of tens of thousands of Ultra attendees making the long trek. People were still walking back as late at 4 a.m. Many people joked about sleeping on the side of the road or swimming to shore. Once on the mainland, thousands continued to walk more miles toward hotels, as rideshare drivers canceled pickups in the hectic space. The hashtags #ISurvived and #FyreFestival2 started to trend.

Ultra has not made any public statement on social media or otherwise. (Billboard Dance reached out to Ultra for comment, but there has yet been no response.) Videos of a palm tree on fire at the festival site have surfaced with no explanation of cause or damage sustained. Ultra's most recent tweet, updated 14 hours ago, reads “your primetime necessity at #Ultra2019” with a picture of a woman pouring Absolut Elyx Vodka.

As of now, Ultra is planned to continue 2 p.m. to 2 a.m. Saturday and Sunday, March 30 and 31. Many have said they enjoyed the show itself, but how many fans will make the trek back is to be seen.

See more of the pictures and videos posted to socials below.

Source: https://www.billboard.com/articles/news/dance/8504853/ultra-miami-2019-day-one

[jokerepair74-blog]

Stocks Turn Open Lower; Walmart Jumps, NetEase Surges On Amazon Deal

Stocks dragged out of the starting gate Tuesday, despite an earnings-fueled jump by Walmart (WMT) stock, reports of a NetEase (NTES)/Amazon.com (AMZN) deal in China and two leading stocks making early breakouts.

X

The Dow Jones Industrial Average and the Nasdaq composite both sit on eight-week rallies heading into the holiday-shortened week. Walmart stock fired up the early earnings calendar, rising sharply after reporting fourth-quarter results. Tower Semiconductor (TSEM) and Navient (NAVI) also rallied on earnings.

China's NetEase (NTES) veered almost 4% higher, on reports that Amazon.com would merge its China-based import business with NetEase's shopping platform.

Intercept Pharmaceuticals (ICPT) spiked on positive clinical trial results. Among stocks near buy points, IBD Leaderboard stocks Ciena (CIEN) and Wix.com (WIX) both leaned toward possible opening-bell breakouts.

The Dow Jones industrials sagged 0.3%, but quickly trimmed that loss to less than 0.1%. The Nasdaq Composite traded a fraction lower, while the S&P 500 hung 0.2% into the red.

On the Dow, Walmart stock rose more than 3%, while McDonald's (MCD) gained nearly 1% on an analyst upgrade. NetEase topped the Nasdaq 100. Navient soared to the top of the S&P 500, followed by rebounding California utility PG&E (PCG).

Stock Futures: Dow Jones Eyes New High

With the Dow Jones Industrial Average and the S&P 500 back above their 200-day moving averages, eyes this week will be trained on on the Nasdaq composite. The Dow ended Friday with a healthy 3% cushion above its 200-day line, and is already pushing toward 26,000 — trading less than 1% from that new target.

The S&P 500 had climbed 1% back above that level, a gain that could quickly disappear. The index could potentially face some additional resistance around 2,800, the mark at which its last two advances above the 200-day line failed.

The Nasdaq ended last week just at the 200-day moving average. All three indexes have not traded above their 50- and 200-day levels at the same time since October.

Small-cap stocks also are a market segment to watch this week as key benchmarks test resistance. The Russell 2000 ended Friday 1% from its 200-day moving average. The S&P Smallcap 600 was a bit less than 2% from its 200-day line.

The Dow is 4.1% from hitting its first fresh high since October. The S&P 500 is 5.9% off its September high mark. The Nasdaq remains 8.7% from its higher mark, set in August.

For more detailed analysis of the market's current uptrend, read the Big Picture.

Walmart Stock: U.S. Comp Sales Surge

Walmart shares bolted nearly 4% higher after the Bentonville, Ark.-based retail giant reported a hefty earnings beat. A 2% revenue gain stopped just short of some analyst estimates, while topping others. Comparable store sales popped 4.2% vs. estimates for a 3.2% gain. U.S. comparable store sales surged 6.8% — reportedly their best performance in nine years.

The gain moved Walmart stock to the top of a buy range above a 99.45 cup-with-handle base buy point. The buy range runs through 104.42.

Reported: NetEase, Amazon Set To Merge Units

China-based NetEase gained almost 4% in heavy early trade. Early news reports out of China indicated Amazon planned to merge its China import unit, Haiwaigou, with NetEase's Koala online shopping platform. The combination was reportedly an all-stock deal, signed before the end of 2018, according to Reuters and China's Caijing.

NetEase is scheduled to report fourth-quarter results after the market closes on Wednesday. Amazon shares rose 0.5% at the start of trade.

China Trade Talks Resume

Global markets were effectively flat, moving within narrow ranges on Tuesday. China stocks rallied sharply on Monday, rebounding from Friday's losses and boosted by strong January credit data.

Low-level China trade talks resume in Washington today, with higher level negotiations scheduled for Thursday. The March 1 deadline so far remains in place, with U.S. tariffs on China-made imports valued at $200 billion scheduled to increase from 10% to 25% beginning March 2. President Trump has said he may extend the March 1 deadline.

Opening Bell Breakouts: Wix.com, Ciena

Website tools maker Wix powered up 2.4% at the opening bell. That put the Israel-based software developer in a buy range above a 121.55 buy point in a five-month cup base.

Trading volume swelled more than 40% above the stock's 50-day average as it crossed above the buy point.

Ciena — a maker of optical networking gear based in Hanover, Md. — jumped 4% in opening trade. That was enough to blow the stock past an ascending base buy point at 40.26. Shares remained in the buy range above that buy point.

YOU ALSO MIGHT LIKE:

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How Many Growth Stocks To Own? Here's The Best Path To A Big Return

Source: https://www.investors.com/market-trend/stock-market-today/stock-futures-weak-walmart-stock-surges-china-trade-talks-resume/

[jokerepair74-blog]

Episode 836: The 13th Hole

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Source: https://choice.npr.org/index.html?origin=https://www.npr.org/sections/money/2018/09/07/645689694/episode-836-the-13th-hole

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Striking Teachers in Denver Shut Down Performance Bonuses – Here’s How That Will Impact Education

Yves here. While in theory, measuring and paying for performance is desirable, once you get outside areas like sales, it is very difficult to measure performance (trust me, there are academic papers which explicitly say that 100 years+ of experience with performance review systems shows them to have failed).

By Nathan Favero, Assistant Professor of Public Administration & Policy, American University School of Public Affairs. Originally published at The Conversation

Editor’s note: Denver teachers reached a tentative deal on Feb. 14 that ended a three-day strike.

Besides raises of 7 to 11 percent, one of the concessions they won was the end of performance-based pay, which they said was unreliable and led to unacceptably low base pay.

Nathan Favero, an education policy expert at American University, answers three questions about the effectiveness of performance-based pay and how its elimination will impact education in Denver.

How did performance affect teachers’ pay?

While teachers’ base salaries were mostly determined by their education levels and teaching experience, in Denver public schools, teachers also got substantial bonuses based on a number of other factors, including performance.

The main performance-based bonus went to teachers in schools where students performed particularly well on standardized tests. If a school was designated as high-achieving, then all teachers in that school received the bonus that year. The size of bonuses for teachers working in recognized schools varied from year to year, but amounts have been as large as US$5,100 per teacher.

Under early versions of the district’s bonus pay system, teachers were also recognized individually for good performance. However, these individual performance bonuses were largely done away with in 2015. Teachers still received individual performance evaluations every year, but in most schools, these evaluations did not affect teacher pay, except when a teacher was found to be severely deficient.

Even after 2015, individual performance pay was still used in one set of schools. Every year, the district identified 30 “highest priority” schools. Teachers in these schools could receive bonuses based on individual performance evaluations. These evaluations rated teachers based on several data sources, including students’ standardized test scores, surveys filled out by students, achievement of student learning goals set by the teacher and classroom observations conducted by school leaders or peers.

How effective is pay-for-performance?

Research teams based at the University of Colorado at Denver and the University of Colorado at Boulder have concluded that the pay-for-performance system had few effects on students.

One analysis found that performance incentives caused a tiny increase in math scores, but even these small gains were offset by slight drops in reading and writing scores. Other analyses found no evidence of any effecton standardized test scores.

Despite lackluster results on standardized tests, Denver’s pay-for-performance system may have helped a bit when it comes to retaining teachers. One analysis estimates that the city retained up to 160 teachers per year who otherwise would have quit if it wasn’t for the performance pay system. Given the fact that the district had 3,700 teachers at the time of the study, this means about 4.3 percent of Denver’s teacher workforce was potentially retained because of the pay system. Another analysis indicates that the retained teachers were better-than-average teachers, which makes them particularly important to the district.

Across the nation, other school districts have had similar experiences with pay-for-performance. On average, teacher pay-for-performance systems seem to produce a small improvementfor students, though not always.

The limited success of Denver’s performance pay system may be due in part to its complexity. Researchers found through surveys and interviews of teachers that many of them did not know exactly how bonuses could be earned or even had wrong information. Many teachers also felt that the bonus system was unfair and that the individual performance evaluation could sometimes be manipulated by, for example, setting easily achievable goals to be assessed with an administrator at the end of the year.

So what changes under the new contract?

Under the new labor deal, almost all pay-for-performance is eliminated. Instead of paying bonuses to teachers in schools with impressive standardized test scores, $750 bonuses will be paid to teachers in up to 10 schools selected by a committee for excellence in areas such as health education, counseling services and community engagement. The agreement specifically states that these awards cannot be based on teacher performance evaluation data or school report cards that contain standardized test scores.

The deal also eliminates bonuses tied to individual performance evaluations for teachers in high-priority schools. Extra pay for teachers in hard-to-staff schools will continue. However, all teachers working in these schools will receive the same bonus, regardless of their performance evaluation.

Teachers have asked for a pay system that is more predictable. The revised pay system should give them more certainty at the beginning of the year about how much they can expect to make. Students and administrators will have to hope that the district can continue to retain high-quality teachers despite the elimination of performance bonuses that may have helped persuade some of these teachers to stay in the district in the past.

This entry was posted in Banana republic, Dubious statistics, Guest Post, Income disparity, Politics on February 22, 2019 by Yves Smith.

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Source: https://www.nakedcapitalism.com/2019/02/striking-teachers-denver-shut-performance-bonuses-heres-will-impact-education.html

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British Airways boss apologises for 'malicious' data breach

British Airways boss apologises for 'malicious' data breach

7 September 2018

Image copyright Getty Images

British Airways's boss has apologised for what he says was a sophisticated breach of the firm's security systems, and has promised compensation.

Alex Cruz told the BBC that hackers carried out a "sophisticated, malicious criminal attack" on its website.

The airline said personal and financial details of customers making or changing bookings had been compromised.

About 380,000 transactions were affected, but the stolen data did not include travel or passport details.

"We are 100% committed to compensate them, period," Mr Cruz told the BBC's Today programme.

"We are committed to working with any customer who may have been financially affected by this attack, and we will compensate them for any financial hardship that they may have suffered."

BA said the breach took place between 22:58 BST on 21 August and 21:45 BST on 5 September. Shares in BA parent group IAG closed 1.4% lower on Friday.

Communication

Mr Cruz also told the Today programme: "We're extremely sorry. I know that it is causing concern to some of our customers, particularly those customers that made transactions over BA.com and app.

"We discovered that something had happened but we didn't know what it was [on Wednesday evening]. So overnight, teams were trying to figure out the extent of the attack.

Media playback is unsupported on your device

Media captionBritish Airways' chairman and CEO says affected customers will be 100% compensated

"The first thing was to find out if it was something serious and who it affected or not. The moment that actual customer data had been compromised, that's when we began immediate communication to our customers."

BA said all customers affected by the breach had been contacted on Thursday night. The breach only affects people who bought tickets during the timeframe provided by BA, and not on other occasions.

Mr Cruz added: "At the moment, our number one purpose is contacting those customers that made those transactions to make sure they contact their credit card bank providers so they can follow their instructions on how to manage that breach of data."

The airline has taken out adverts apologising for the breach in Friday's newspapers.

BA data breach: What do you need to do?

By Simon Read, business reporter

Image copyright Reuters

What data was stolen?

"It was name, email address, credit card information - that would be credit card number, expiration date and the three digit [CVV] code on the back of the credit card," said BA boss Mr Cruz.

BA insists it did not store the CVV numbers. This is prohibited under international standards set out by the PCI Security Standards Council.

Since BA said the attackers also managed to obtain CVV numbers, security researchers have speculated that the card details were intercepted, rather than harvested from a BA database.

How did hackers get in?

It isn't totally clear how hackers boarded BA's website and app - but cyber-security experts have some suggestions.

How did hackers get into British Airways?

What could the hackers do with the data?

Once fraudsters have your personal information, they may be able to access your bank account, or open new accounts in your name, or use your details to make fraudulent purchases. They could also sell on your details to other crooks.

What do I need to do?

If you've been affected, you should change your online passwords. Then monitor your bank and credit card accounts keeping an eye out for any dodgy transactions. Also be very wary of any emails or calls asking for more information to help deal with the data breach: crooks often pose as police, banks or, in this instance they could pretend to be from BA.

Will my booking be affected?

BA says none of the bookings have been hit by the breach. It said it has contacted all those affected to alert them to the problem with their data, but booked flights should go ahead.

Will there be compensation for me?

If you suffer any financial loss or hardship, the airline has promised to compensate you.

'Terribly concerning'

Jorg Herrera, from Amersham in Buckinghamshire, received an email from BA last night having booked tickets with the airline last month.

"I have six cards linked to my BA account," he told the BBC. "I have no idea how much of my information has been stolen.

"I will have to go to each of my credit card providers, cancel the cards, and all the direct debits, etc, related to those cards. This will take a long time, something I have to do with no help from BA.

"This whole thing is terribly concerning and really annoying."

Data duty

BA could potentially face fines from the Information Commissioner's Office, which is looking into the breach.

Rachel Aldighieri, managing director of the Direct Marketing Association, said: "British Airways has a duty to ensure their customer data is always secure. They need to show that they have done everything possible to ensure such a breach won't happen again.

"The risks go far beyond the fines regulators can issue - albeit that these could be hefty under the new [EU data protection] GDPR regime."

Under GDPR, fines can be up to 4% of annual global revenue. BA's total revenue in the year to 31 December 2017 was £12.226bn, so that could be a potential maximum of £489m.

The National Crime Agency and National Cyber Security Centre also confirmed they were assessing the incident.

'Flesh wound'

This is not the first customer relations problem to affect the airline in recent times.

In July, BA apologised after IT issues caused dozens of flights in and out of Heathrow Airport to be cancelled.

The month before, more than 2,000 BA passengers had their tickets cancelled because the prices were too cheap.

And in May 2017, problems with BA's IT systems led to thousands of passengers having their plans disrupted, after all flights from Heathrow and Gatwick were cancelled.

"It does not indicate that the information systems are the most robust in the airline industry," Simon Calder, travel editor at the Independent, told the BBC.

However, he does not think BA will be affected in the long term by the breach.

"The airline has immense strength. Notably it's holding a majority of slots at Heathrow, and an enviable safety record, so while this is embarrassing and will potentially cost tens of millions of pounds to resolve, it's more like another flesh wound for BA, rather than anything serious."

Have you been affected by BA's data breach? Email haveyoursay@bbc.co.uk.

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Source: https://www.bbc.co.uk/news/uk-england-london-45440850

[jokerepair74-blog]

No proposal to amend GPF rules to permit withdrawal for second house: Govt

NEW DELHI: There is no proposal to amend the GPF Rules for government employees to allow them a second withdrawal for acquiring another house, the Lok Sabha was informed Wednesday.

"In accordance with General Provident Fund (Central Services) Rules 1960, withdrawal by a Government Employee up to 90% of the amount standing at credit in the General Provident Fund is permissible for building or acquiring a suitable house or a ready built flat for his/her residence," Minister of State for Personnel Jitendra Singh said in response to a question.

He said according to the existing rules and instructions, if a government employee has already availed withdrawal from GPF for building or acquiring a house or flat, GPF withdrawal for a second house is not permissible.

"There is, at present, no proposal to amend the GPF Rules to allow a second withdrawal for acquiring another house," he said.

Source: https://www.livemint.com/money/personal-finance/no-proposal-to-amend-gpf-rules-to-permit-withdrawal-for-second-house-govt-1563370262232.html

[jokerepair74-blog]

The Standard of Review for Dell’s IPO

Dell Technologies Inc. (Dell) has been planning to eliminate its tracking stock (Class V common; NYSE: DVMT) through a merger with a wholly-owned subsidiary that effectively converts the outstanding DVMT shares into a new class of publicly traded Dell common stock. Each DVMT share (which collectively track about half of VMware Inc. [1]) will be cancelled and converted into the right to receive, at the election of the holder, either: (1) 1.3665 shares of Dell Class C common stock, which will be listed on the New York Stock Exchange, or (2) $109 in cash, without interest (subject to a $9 billion cap) (the DVMT Exchange). [2]

However, many tracking stock holders have been reluctant to support the DVMT Exchange. [3] On October 15, activist shareholder Carl Icahn released an open letter to DVMT shareholders disclosing that he had increased his stake from 1.2 percent (as of June 30) to 8.3 percent and that he will do everything in his power “to stop this proposed DVMT merger” including, possibly, offering “a competing partial bid that provides partial liquidity without forcing a merger.” [4]

The DVMT Exchange will only pass if holders of a majority of the outstanding DVMT shares (excluding shares held by Dell affiliates) vote in favor of the transaction—not a simple majority of those in attendance at the special meeting. [5] Despite the uncertainty about the level of DVMT shareholder support for the transaction, Dell had been planning to move forward with it. As of last week, the company still expected to file its definitive proxy statement by the end of this month, around which time it was also planning to also announce the date for its special shareholder meeting, which was expected to occur before the end of this year.

It is too early to say whether the Icahn letter will change that. However, in his letter, Icahn argued that the DVMT shares are massively undervalued and that the DVMT Exchange would amount to a “grand expropriation” of about $11 billion of value—the full discount at which the DVMT shares are trading relative to their stake in VMware [6]—by Michael Dell and Silver Lake.

Icahn is claiming that, were Dell to pursue a traditional IPO followed by a charter-authorized conversion of the DVMT shares into Class C shares, he thinks courts will find that such a conversion “was pursued in retaliation against DVMT stockholders.” Because it would be “tainted by coercion,” Icahn thinks such a “forced IPO conversion” would be evaluated under entire fairness and DVMT stockholders would have “valid claims for substantial damages” that could take “many years” for Dell to fight out in court.

Explaining the “Forced IPO Conversion”

On October 3, Dell filed a Form 8-K disclosing that “as a potential contingency plan in the event that the DVMT Exchange is not consummated, Dell has met with certain investment banks to explore a potential initial public offering of its Class C Common Stock.” [7] We previously wrote about how Dell’s charter provides that once Dell’s Class C stock is publicly traded, Dell’s Board of Directors may (at any time and without any other approval) decide to convert all of its outstanding shares of DVMT into Class C stock, pursuant to a conversion formula set out in the charter. [8] The formula is based on the trailing 10-day volume-weighted average price (VWAP) for the Class C and the DVMT, so that at the time of conversion, the Board will know the exact conversion ratio. [9]

Because of how the formula works, if the DVMT share price drops even a small amount relative to the Class C price during the applicable period (reducing the amount of Class C stock a DVMT holder would receive upon conversion), that could create selling pressure that would further reduce the conversion ratio. This risky spiral is something that DVMT investors presumably want to avoid (see our February 9 report “What Could Happen If a Dell IPO and Anticipated Tracking Stock Conversion Reduces the Value of the Tracking Stock”).

Icahn describes Dell’s consideration of a traditional IPO of its Class C stock as “an empty and ridiculous IPO threat” given that, among other things, it could trigger “up to $20 billion of backflowing shares that could hit the market following a forced conversion of DVMT stock.”

Entire Fairness Might Now Apply to the DVMT Exchange

Under Delaware law, [10] in a transaction with a controlling shareholder, the following six requirements must be satisfied in order to avoid application of entire fairness:

The controller must condition the procession of the transaction on the approval of both a special committee and a majority of the minority stockholders;

The special committee must be independent;

The special committee must be empowered to freely select its own advisors and to reject the transaction;

The special committee must meet the duty of care standard in negotiating a fair price;

The minority shareholders must be fully informed; and

The vote of the minority shareholders must not have been coerced.

This last requirement—no coercion of the minority shareholders (in Dell’s case, the DVMT holders)—could be in jeopardy now that Dell is floating the possibility of a traditional IPO plus a charter-authorized conversion. One could argue that by re-raising the IPO plus conversion option, Dell is attempting to coerce (or, at the very least, pressure) the DVMT shareholders into voting to approve the DVMT Exchange.

Dell’s Board (aka Michael Dell) exclusively controls the timing of a DVMT into Class C conversion and can authorize it when the conversion ratio is most advantageous to Dell and least favorable to the DVMT holders.

A reasonable investor may feel pressured into voting in favor of the DVMT Exchange rather than rolling the dice and giving Dell the discretion to convert its shares following an IPO of the Class C.

We tend to agree that the timing of Dell’s consideration of a traditional IPO as a potential contingency were the DVMT Exchange not approved has jeopardized the application of the business judgment rule and created an argument that entire fairness applies.

Would Entire Fairness Apply to the IPO?

Under Delaware law, a decision by Dell’s Board to IPO the Class C, in and of itself, generally would not be subject to any form of heightened scrutiny—that is, it should be reviewed under the business judgement rule. There are independent business reasons for doing an IPO (e.g., deleveraging, providing liquidity, acquisition currency, etc.), and the decision to IPO, by itself, does not result in the DVMT holders losing their shares. Nevertheless, if a DVMT holder could prove that the IPO was timed in such a way as to purposefully drive down the value of the DVMT stock prior to a conversion of the DVMT into Class C, the shareholder may have a claim against the Board.

Under Dell’s charter, the conversion of DVMT into Class C occurs “[a]t the option of the corporation” (essentially at the option of Dell’s Board). Michael Dell, who is not only the CEO of Dell, but also the Chairman of its Board, has seven of the 13 total votes on the Board, which means that the decision to convert the DVMT to Class C belongs exclusively to him. [11] Mr. Dell is also the majority stockholder. [12]

Because the conversion mechanic is in the charter, that means DVMT holders are deemed to have acquired their shares with full knowledge that this decision was not delegated to the capital stock committee. Also, the decision to convert, if made when optimal for the DVMT shareholders, almost by definition will be made when suboptimal for the Class A, B and C holders, and the Dell Board still owes a fiduciary duty to them, further complicating the entire fairness analysis. Even though this transaction might otherwise implicate heightened scrutiny under Delaware law, as a result of these facts (and other arguments), that outcome is not clear-cut.

The Tax Implications of Icahn’s Potential Partial Bid

Both the DVMT Exchange (where the exchange precedes the IPO) and the traditional IPO plus conversion alternative (where the IPO precedes the exchange) would likely constitute nonrecognition transactions under the tax rules, meaning that neither Dell nor the DVMT shareholders (assuming they elected all stock in the DVMT exchange) would have to pay any tax.

But if Icahn were to announce a competing tender offer (giving DVMT shareholders that want to sell the opportunity to get cash without forcing all DVMT shareholders out in an exchange/merger), participating DVMT shareholders would recognize capital gain or loss on the sale. For foreign investors who might otherwise be inclined to participate in the DVMT Exchange, selling all of their shares to Icahn would eliminate any risk of dividend withholding tax.

While an Icahn tender could marginally increase Icahn’s leverage over Dell’s Board, such leverage would be largely a matter of optics given that DVMT shareholders currently only have a say over three of the 13 votes on the Board, and even then, they only have about 26 percent of a say (as DVMT only makes up about 26 percent of all of Dell’s outstanding common stock). [13]

Endnotes

1The Class V stock is intended to track the economic performance of about 61% of Dell’s economic interest in the Class V Group, which as of Aug. 3, consisted solely of about 331 million shares of VMware or about 81% of the outstanding equity interest in VMware, according to Dell’s Form 10-Q filed Sept. 11 (and 61% of 81% equals about 50%) (https://www.sec.gov/Archives/edgar/data/1571996/000157199618000034/delltechnologiesq2fy1910q.htm).(go back)

2Dell’s outstanding shares of Class A Common Stock, Class B Common Stock and Class C Common Stock will not be converted or exchanged in the DVMT Exchange and will remain outstanding following the completion of the merger and the DVMT Exchange. If all DVMT holders elect stock, Dell estimates that it would issue a total of approximately 272,420,782 shares of Class C Common Stock, which would represent approximately 30.7% of Dell’s total common stock on a fully diluted basis outstanding immediately after the DVMT Exchange, and approximately 4.6% of the total voting power of Dell’s outstanding common stock. If DVMT holders elect more than $9 billion of cash (the cap), Dell estimates that it would issue a total of approximately 159,590,507 shares of Class C Common Stock, which would represent approximately 20.6% of Dell’s total common stock on a fully diluted basis outstanding immediately after the DVMT Exchange, and approximately 2.8% of the total voting power of Dell’s outstanding common stock.(go back)

3On Oct. 5, a Sept. 27 letter from a Dell shareholder to Dell’s Board was released to the public. In it, a registered investment advisor asked Dell to increase the consideration by 20 percent (from $109 in cash or 1.3665 shares of Class C to $130.80 in cash or 1.6398 shares of Class C, preserving the $9 billion cash cap). (See https://www.sec.gov/Archives/edgar/data/1040198/000090266418003638/p18-1878px14a6g.htm.) In addition, shareholder advisory firm Institutional Shareholder Service Inc. (ISS) issued a report Oct. 5 indicating that a DVMT Exchange at an increased price would be a better option than the traditional IPO plus charter-conversion alternative.(go back)

4Icahn’s Oct. 15 letter to DVMT shareholders, “Icahn Beneficially Owns Over 16.5 Million Shares, or 8.3%, of Dell’s DVMT Stock; Icahn Will Vote AGAINST Dell’s Proposed DVMT Merger,” (https://www.sec.gov/Archives/edgar/data/921669/000114420418053722/tv504782_ex-1.htm).(go back)

5According to amendment no. 2 to Dell’s preliminary proxy statement/prospectus dated Oct. 4, “If you fail to vote or abstain from voting on the adoption of the merger agreement or the amended and restated certificate of incorporation of the Company, the effect will be the same as a vote against the Class V transaction” (https://www.sec.gov/Archives/edgar/data/1571996/000119312518293366/d681091ds4a.htm).(go back)

6As of Sept. 5, there were about 199 million DVMT shares outstanding, which collectively represent an economic interest in about 61.1% of 331 million shares of VMware (or about 202.241 million shares of VMware). Using Icahn’s recent trading prices for DVMT ($91.74) and VMware ($141.29), the DVMT shares are collectively trading at about $18 billion when they represent an economic interest in VMware that is worth about $29 billion, a difference of about $11 billion.(go back)

7The Form 8-K went on to state that “[t]here is no assurance that the Board will determine to proceed with an initial public offering of its Class C Common Stock in the event that the DVMT Exchange is not consummated,” (https://www.sec.gov/Archives/edgar/data/1571996/000119312518291390/d633285d8k.htm). On Oct. 4, Dell filed an amendment to its preliminary proxy statement that also addressed this contingency plan: “Since the announcement of the DVMT Exchange, the Company has conducted meetings with various Class V stockholders. In those meetings a number of Class V stockholders expressed concerns regarding the economic terms of the DVMT Exchange. The board of directors and the Special Committee continue to believe that the DVMT Exchange is in the best interests of the Class V stockholders and the Company remains committed to the DVMT Exchange. However, in light of such feedback and the continued strength of the Company’s financial and operational performance, in late September 2018, the Company began to re-evaluate an initial public offering of the Class C Common Stock as a potential contingency plan in the event that the DVMT Exchange is not consummated. As part of that evaluation, representatives of the Company and Silver Lake Partners recently met with certain investment banks to explore a potential initial public offering.”(go back)

8 See Section 5.2(r) “Conversion of Class V Common Stock into Class C Common Stock at the Option of the Corporation” of Dell’s fourth amended and restated certificate of incorporation, dated Sept. 6, 2016: https://www.sec.gov/Archives/edgar/data/1571996/000119312516703370/d253636dex31.htm.(go back)

9The formula also applies a conversion premium (20 percent if converted in the first year following the IPO, 15 percent if converted in the second year and 10 percent thereafter) to the trailing 10-day VWAP of the DVMT divided by the trailing 10-day VWAP of the Class C over that same period.(go back)

10Kahn v. M&F Worldwide Corp. (Del. Supreme Court Mar. 14, 2014).(go back)

11See pages 212, 256 and 257 of Dell’s Oct. 4 amendment to its preliminary proxy statement.(go back)

12See pages 212 (“Mr. Michael Dell, who is Chairman of the Board and Chief Executive Officer of the Company, and his wife’s trust together beneficially owned common stock representing approximately 66.2% of the total voting power of our outstanding common stock as of August 31, 2018, through ownership of Class A Common Stock and Class C Common Stock.”) and 271 of Dell’s Oct. 4 amendment to its preliminary proxy statement (reporting beneficial ownership of 350,859,401 shares of Class A Common Stock and 526,921 shares of Class C Common Stock).(go back)

13 https://www.sec.gov/Archives/edgar/data/1571996/000119312518293366/d681091ds4a.htm and https://www.sec.gov/Archives/edgar/data/1571996/000157199618000034/delltechnologiesq2fy1910q.htm(go back)

Source: https://corpgov.law.harvard.edu/2018/11/19/the-standard-of-review-for-dells-ipo/

[jokerepair74-blog]

FSSAI to notify packaging norms soon

In a bid to further strengthen regulatory framework on food contamination on account of sub-standard packaging materials, the Food Safety and Standards Authority of India (FSSAI) has finalised its new packaging regulation, which is expected to be notified in the next few days, according to sources.

Apart from plastics, the regulation will aim to comprehensively define standards for use of various other packaging materials such as glass, metal and metal alloys and paper and cardboard, among others.

Earlier, packaging and labelling norms had been clubbed together under one regulation. Now, FSSAI will notify a separate regulation which will solely focus on setting norms for materials used for packaging, preparation, storage, wrapping, transportation and sale or service of food products.

The sources said the food safety regulator intends to incorporate packaging standards set by BIS (Bureau of Indian Standards) in its own packaging regulations so that they become mandatory and legally-binding on the packaged food industry.

The new packaging regulations will also set specific migration limits for contaminants such as barium, zinc, cobalt, iron, lithium among others which are found in certain packaging materials such as plastic. Migration limits determine the maximum permitted amount of a contaminant substance leached from a material that may come in contact with food products.

Last year, FSSAI had conducted a joint study with the Indian Institute of Packaging to look into the impact of chemical contamination from packaging materials such as plastics, paper and metal and metal alloys. The findings of the study have been used to determine these migration limits, sources added.

The food safety regulator will also give its own recommendations for the kind of packaging that should ideally be used for storage and sale of various food commodities in the new regulations. For instance, in the case of packaging of sweetening agents such as honey, use of glass bottle with metal caps, PET containers, plastic laminated tubes and plastic-based thermoformed containers among others, are part of the draft recommendations.

The regulations are also likely to look at provisions to check on the use of newspaper and recycled material for wrapping and transporting food products.

Source: https://www.thehindubusinessline.com/economy/fssai-to-notify-packaging-norms-soon/article25765711.ece?_escaped_fragment_=

[jokerepair74-blog]

The man behind Vande Bharat Express

'This is not just Make in India; this is much more than that. Right from design to delivery, everything was done in India.'

IMAGE: Sudhanshu Mani, right, then general manager, Integral Coach Factory, explains Train 18's -- now the Vande Bharat Express -- control panel to then Railway Board chairman Ashwani Lohani. Photograph: PTI Photo

There were many sceptics in India when the Integral Coach Factory started building an engineless fast train. Nobody believed that India could build a world class train on its own.

In December 2018, Train 18, India's fastest engine-less train was flagged off from Chennai and now, the train, renamed the Vande Bharat Express, has started operating between New Delhi and Varanasi.

The man behind Train 18 is Sudhanshu Mani, then the general manager at ICF. He retired in December 2018 soon after the train started running.

"Here in India, we are so devoid of success stories that when we have a success story, we are so dismissive of it," Sudhanshu Mani tells Rediff.com's Shobha Warrier, explaining how the idea was conceived and how it materialised.

A few days ago you tweeted your mobile number asking 'all the doubting Thomases and trollers' to call you if they had any doubts about how Train 18 was fully made in India. Were you hurt or angry by any adverse comment that made you tweet that way?

I was not hurt at all. I was not angry also. We worked hard at ICF with excellent team spirit and we came out with a world class product in a very short time.

We know what we have done. My second in command at ICF and the commissioner of railway safety among many others were on board when the train touched more than 180 km/hr for a long stretch.

Now, somebody made a video and forwarded it to many people without knowing what it was. That doesn't change what we have done or diminish the achievements of ICF.

After seeing that particular video, I was not hurt, but wanted to clarify what we have done if anyone had any doubts.

Just because there is a doctored video does not diminish the fact that the train did not achieve what it was meant to.

I wanted to tell all those people who made fun of our achievements through a doctored video that, 'Call me, I will you what we have achieved'.

On the first day of the train's commercial run, it developed a technical snag and there were many people ready to deride the achievement. For example, businesswoman Kiran Mazumdar Shaw tweeted that it showed the lack of engineering and the technical abilities of those at ICF. How do you respond?

I will not respond individually to anyone. Usually, when you develop a train of this magnitude and importance, we have a rigorous field trial run on the surface for a month or two. This could not be done as there was so much hype around the train and the country was waiting for it.

I am not saying there is something wrong, but usually there is a field trial before it commences commercial services. So, in the first two months, you may expect a few glitches which the team at ICF will address.

In one to one-and-a-half months, the train will become perfect.

Here in India, we are so devoid of success stories that when we have a success story, we are so dismissive of it. I am not saying all are like this, but there are some. Their reaction does not matter.

ICF will address all the problems in the first month or two strongly. After that, I don't think there will be any issue.

One problem I see is that the train is designed for a fenced track so that cattle do not come to the track.

If you do not have a fenced track, you keep a guard in front, but we didn't want to have a guard in front and spoil its look and the aerodynamics performance of the loco. So, we decided not to have a guard in front.

You had said that in 1981, after you joined the Indian Railways, you had this desire to make an engine-less train in India like the ones you saw in other countries...

It was in the early '90s that I felt that the trend all over the world was to go for engine-less trains. But there were various issues including departmental rivalries which prevented it from happening.

When I became the GM of ICF, I understood the capability and the innovative spirit of the staff of ICF.

Then I decided that we were going to do it, and do it entirely on our own without any transfer of technology from any foreign company.

That was the spirit with which the staff of the Integral Coach Factory worked and we delivered the product.

You said you had this idea in the '90s itself, but you could go ahead only in 2016. Did you try to do it earlier too?

Let's say, yes, I did.

I knew it was the trend the world over and we could not stop it, maybe we could delay it. It was bound to happen.

So, as soon as I was in a position to use my power to do it, I did it.

When I became the GM in August 2016, I took 2, 3 months to determine what our ability was and when I found that we were good to do it on our own, I told the staff that we would do it.

Getting the sanction of the ministry was my job and through the kindness of the then chairman of the Railway Board, Mr (A K) Mittal, we got the sanction. And with the help of the staff, we achieved it.

You wanted it to be fully made in India. How was it building it from scratch?

The first thing is the concept or the design. We hired three consultants when we realised that there were areas we were not capable of.

One consultant was for car body processes and supervision, the second was for the design of the 180 km/hr capable bogey and the third was for interior design. They worked with our team at ICF.

The plan was that our people would design under their guidance so that the design would become our intellectual property rather than we enter into a contract with somebody else.

Did you build everything at ICF itself or did you buy some parts from other places also?

We were sure that all the components would be made either by ICF or industries in India.

How did you manage to build the train in a short span of less than two years?

Yes, we built the entire train in 18 months.

The sanction came in April 2017. Everyone in the team told me, 'You are giving us the leadership now, but you will retire in December 2018. Will the continuity be maintained after you leave?'

I told them we were Indians and we worked hard. We would build the train before I retired. We had only 20 months to finish the work.

So, everyone worked hard including industry and the consultants. And in 18 months, the train was ready to start moving.

Which is a record time!

Yes, the world over, for a new train to be developed from the time you get the letter of acceptance to the prototype to be delivered, it takes 33, 36 months. But we could do it in 18 months. That was because of the excitement everyone had at ICF had.

How challenging was the entire process of building a high speed train in India?

It was, of course, challenging both in respect to designing and delivering. That's because of the timeline we had imposed on ourselves. There was a daily challenge as we had so many groups.

In fact, apart from the chairman, most people at the Railway Board were sceptical. Many were in favour of import as they felt it could not be done in India.

We had lots of challenges all along, but the team I had had the confidence.

I was very fortunate to have a very good team, particularly the design team. We had good industry support too.

Which was the most challenging part on the entire journey?

The bogey which can carry a train at 180km/hr had never been designed in India. We were not fools, that's why we got consultants to design the bogey.

Once the design was done, it was all manufactured in India.

This is the model we should follow because this is not just Make in India; this is much more than that.

Right from design to delivery, everything was done in India.

All the interiors were done by a company in Chennai.

The entire car body was done in ICF itself with some sourcing of components from companies in Chennai and Hyderabad.

The propulsion system was from a company in Hyderabad.

Assembly and a lot of manufacturing was done at ICF itself.

Only some components which could not be manufactured in India like the seats, the contactless door, the plug doors and the brake system, were imported.

The design, conceptualisation and the intellectual property is with India, with ICF.

The train was to run at 180km/hr. were you sceptical about whether our tracks would be able to handle it?

No. We knew about our tracks. The need of the hour is for India to have more and more 160 km/hr tracks.

We have delivered a product for the future. Track upgradation needs a lot of money and time. But the product is ready for tomorrow.

In fact, this train is good enough for 200 km/hr with some changes. Tomorrow, if India decides to make 200 km/hr tracks, the product is ready here in India itself. We need not import.

In space technology, we are fourth in the world, but why is it that we are far, far, behind in our railways and trains from the rest of the world?

That's a large question, but the message that has gone with the development of this product is that there is a lot that can be done in India and we are capable.

It is only a matter of removing our doubts and going for it.

Out of 10 things we try, seven may succeed and three may not but that should not prevent us from trying.

The message I want to send is that it can be done in this country and we should exploit this talent and excitement that we have in our country.

India is a leader in technology services. Now that you have built a world class product in India, do you think we can be a force in manufacturing too in which we lag behind?

That's what I am saying. There is a lot we can do in manufacturing. In fact, not only manufacturing, in conceptualising and designing, and then engineering it to manufacturing. That can also be a forte provided we have the confidence.

You feel confidence is what is lacking in the manufacturing sector?

Let me limit to the railways. Indian Railways and the industry aligned with it have a lot more knowledge and lot more capability to do much more than what they do today.

How did you feel when the train started moving on the tracks?

It happened in Chennai and it was a great feeling. But the high point was when the train crossed 180km/hr.

The chief mechanical engineer from ICF was on the train along with the others. The moment the needle crossed 180, he sent me a text with a video and the video went viral because it showed a bottle of water shaking only slightly.

There was a wave of happiness at ICF. It was our baby and we were all very happy.

Why were you not on the train?

On the first run, I was not on the train due to some reasons. I had small journeys one or two times later. I have not had a major journey in the train yet. But there were others from our team there.

Do you consider this as the high point of your career with the railways?

The pleasure was doing this project and once it is done, one has to move on to other projects. Yes, it is undoubtedly the high point of my career.

Now that you have achieved something big like this, would you continue to be associated with the Indian Railways like Mr E Sreedharan?

Mr E Sreedharan is a great man and the entire country knows what he has done.

Why only in Railways, in any field if I come across something meaningful, anything that tells our countrymen that we are not behind others, I will be willing to do that.

We may not be the best, but we must try to be the best. That's the spirit I would like to work in.

Source: https://www.rediff.com/business/interview/the-man-behind-vande-bharat-express/20190219.htm