Category Archives: Business

The Dead Man Fund

(Lambert/Archive Photos)

Jack El-Hai | Longreads | November 2017 | 7 minutes (1,672 words)

In 1989, Morningstar, Inc., an advisory service, issued a strongly worded and unusual recommendation to its clients who had placed money with a firm then called the Steadman Funds (later known as the Ameritor Funds). “We urge you to cut your losses and get out,” Morningstar counseled. Doubtless, some investors heeded this advice. Many couldn’t, though, because they were dead.

A few years ago, the fate of Ameritor— nicknamed “The Dead Man Fund” — and its unfortunate investors, became entangled with the history of my house. An envelope had landed in our mailbox containing a check in the amount of $10.32 made out to one Anna Mae Heilman. She was nobody we knew, but the name rang familiar to me for some reason. With the check was a letter explaining that the money was a final settlement of Heilman’s investment of 171 shares in the Ameritor Security Trust mutual fund, which had closed down.

It didn’t take long for me to remember how I knew Heilman’s name. When we bought the house, we acquired its abstract, a thick and crumbling packet of legal documents that chronicled more than a century of transactions involving the property. Heilman’s name was in there. She and her husband had owned our house for several years ending in 1971.

Heilman’s tiny payout at a rate of only six cents per share seemed strange, so I began looking into the history of Ameritor and the circumstances of the Heilmans’ sale of our house. I then learned of two terrible misfortunes that afflicted one family. Read more…

The Business of Building a Country’s Brand

AP Photo/Sergei Grits

Flipping through a magazine — if you’re like me and still do that — you’ll often encounter a colorful advertisement beckoning you to visit some place like Montenegro or Switzerland. “Belarus,” the slogan says. “Hospitality beyond borders.” But do you even know where Belarus is? What images does its name conjure? At The GuardianSamanth Subramanian tells the story of a whole sector of the marketing industry outside tourism, whose machinations remain invisible to consumers, but whose work shapes our opinions about place.

Many people associate Mexico with drugs, China with pollution, and Russia with spies and snow, but each country has so much more to offer than those social ills. A host of marketing firms now work with nations, regions and cities to sculpt their public image, crafting an identity that either polishes preexisting rough edges, or builds one from scratch from history, character and potential. To attract visitors, a place must be safe and full of activities, but tourism is not rebranding’s only objective. Some places want to reposition themselves on the map of public opinion. They want to increase their status and respect among their neighbors. Many want foreign investment, and to attract business, they must appear flourishing and stable.

Nation-building requires more than writing taglines and designing logos. It requires psychology, and firms can conduct years worth of research and interviews to identify how to fix image problems or make places like Primorsky Krai visible in the first place. As with all marketing, some part of the image is a lie, and branding’s inherent manipulations don’t always work. Example A: Gaddafi’s Libya. As Subramanian asks in his piece: What makes a nation a nation?

Of all their projects, the Grands are proudest of Tatarstan, which has bolstered their reputation among the people who run Russia’s regional governments. The government of Tatarstan, a republic of around 4 million people in south-western Russia, was convinced it wasn’t getting the recognition it deserved, either in Moscow or overseas. In 2013, they hatched a plan to promote the region’s heritage.

When Instid was hired, the government merely wanted a thick book, with glossy photos and text about the artefacts in Tatarstan’s museums. The Grands expanded this meagre vision. They reached into the period of the Bulgar kings, who ruled this region between the seventh and 13th centuries, and distilled a set of attitudes and values that had persisted into modern-day Tatarstan. The people were perfectionists, the Grands decided. They honed their skills and craftsmanship continuously, they were competitive, and valued pragmatism; they also bore a sense of loss about their past, and they prized the material over the spiritual or the intangible.

The products of such study – lessons from medieval history, or patter about “mastery,” “decisiveness” and “speed” – can seem amorphous, or even concocted. But they lent structure to some of Tatarstan’s initiatives, Alex Grand said. Schools and universities folded these cues into their syllabuses; architects based blueprints on them. In their annual reports, government officials took to naming sections after the values the campaign celebrated. The tourism sector, which was never encouraged as warmly as industry, received a dose of state enthusiasm: its own ministry, more funds, better training.

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How Cinnabon Perfected Its Recipe

Perhaps you’re shopping at a mall, or making your way toward your gate at an airport when you’re suddenly greeted by a familiar scent: a swirl of cinnamon, sugar, and cream cheese frosting. It’s a scent that belongs to the “world famous” bakery chain Cinnabon, which opened its first shop in Seattle three decades ago. In Seattle Met, Allecia Vermillion takes us through the bakery’s origins and explains how a businessman named Rich Komen, his son Greg, and a restauranteur named Jerilyn Brusseau (nicknamed “Cinnamom”) came up with their famous cinnamon roll recipe:

The first order of business was perfecting a dough both pillowy and able to hold its shape. When rolls came out of the oven, Rich would descend from his third-floor office and thoughtfully chew one while a roomful of people watched. “I learned to fail exceedingly well,” Jerilyn remembers.

Batch after batch. Rejection after rejection. “I can’t tell you how many times I tried something and said, ‘This is fantastic!’” Greg remembers. “Dad would come in and spit it out.” Always with insightful commentary, of course.

A major breakthrough came courtesy of their spice supplier, who pointed out that cinnamon isn’t just cinnamon. Like wine or coffee, there are different varieties, and cinnamon from different regions, even different elevations, yield their own distinct flavors. Rich asked a rep to school the group on this seemingly innocuous baking spice. They landed on Korintje cinnamon, harvested from the bark of trees that grow at very high elevations in Sumatra. It delivers cinnamon’s familiar punch, but tends toward the sweet and amiable, rather than that devilish bite that punctuates red hots or schnapps.

Here, at last, was Rich Komen’s elusive cinnamon hit.

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What Happened to eBay?

It was musical theatre camp in the early aughts, and my summer camp was putting on an abridged performance of My Fair Lady. Looking back, I definitely had a crush on the slightly older girl who played the lead, but at the time I attributed her allure to her bohemian fashion sense — so unlike my middle school classmates! — and her killer voice. Let’s call her Nellie, because that was her name. I must’ve gone home and regaled my mom with stories of Nellie’s outfits, because my next memory is my mom and I sitting cross-legged on the guest room bed, scrolling through listings of fringed vests and flared denim. It was my first time on eBay, and I was hungry for love, bargains, and screen time. Until now, secondhand shopping was done in-person at Goodwill and the Salvation Army, and my only online auction experience happened on Neopets. eBay enchanted me, and I trawled it for hours on end. I never bought anything; I didn’t have a credit card or parental permission to spend hundreds of dollars on pilling Abercrombie polos, but browsing was all I needed.

That’s all changed. I haven’t peeked at eBay in years, and apparently I’m not the only one who’s forgotten it exists. At Racked, Chavie Lieber reports that eBay is struggling to keep up with its resale market competition, primarily Amazon Marketplace and sites like Poshmark, ThredUp, and the Real Real. What happened to make eBay this way? Was it the strangely ugly user interface? The lack of a luxury authentication process? And what does the future of eBay, if there is one, look like?

One of those things that so many brands want is scale: eBay is enormous. It has 171 million users, with 1.1 billion listed items at any given time. But it’s also no longer the only game in town…It’s dedicated to remaining an online marketplace — nothing more than a platform on which buyers and sellers can interact — a position that’s hard to justify as it’s become less enticing to both kinds of users. It hasn’t invested in warehouses or inventory; it hasn’t introduced competitive shipping programs. It now needs to both differentiate and elevate itself, and then it must communicate all of that to the customer…

eBay also thinks it’s positioned to acquire Millennial and Gen Z customers who have largely ignored the site. “Younger customers don’t have misperceptions of eBay — they don’t have any perceptions,” says [Suzy Deering, eBay’s chief marketing officer]. “We’re not even in their awareness at all.”

The company’s research has found that a younger audience wants unique products and “is searching for items that push against conformity.” In this way, Deering believes eBay can be something of a foil to Amazon: “People felt like they were becoming anti-human because Amazon is so habitual, but that isn’t us. If you love Converse, you come to our site because there’s every color, every graffiti-ed version, vintage. You’re not going to get that if you go onto Amazon or into a department store.”

 

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Mexico’s Manufacturing Sector Will Survive With or Without America

AP Photo/Ivan Pierre Aguirre

In the late 1960s, Jaime Bermúdez Cuarón, an engineer from a wealthy family, decided to build factories on his cotton fields in northern Mexico. Over time, he, low wages and trade agreements helped turn Juárez into a city of 400 factories that employ 300,000 people, and gave rise to similar industrial areas along the border. People call Cuarón the godfather of Mexico’s manufacturing sector.

At Bloomberg Businessweek, Lauren Etter tells Cuarón’s story and the way American manufacturers came to rely so heavily on Mexico’s factories, called maquiladoras, to build everything from medical devices to car parts. Trump called NAFTA “the worst trade deal ever made,” but Juárez’s industries are starting to rely less on America as they used to, so Cuarón believes Mexico will fare well despite president Trump’s loco rhetoric about border walls and NAFTA.

Martinez says the city is undergoing perhaps one of the most uncertain periods in its history. And that largely has to do with a man to the north.

Maquiladoras haven’t been a direct topic of the recent Nafta negotiations, but the industry is in the crosshairs of the administration, whose trade delegation argues that Mexico’s low wages and poor working conditions create unfair competition for American business. Even the slightest upward adjustment to wages in the maquiladoras or tweak in labor laws could threaten the industry’s advantages. But Juárez has strengths it lacked even a few years ago. Companies around the world are constantly prowling for lower production costs, and it’s now cheaper to hire a worker in Mexico than in China. In 2000, Chinese workers earned half of what Mexican workers did, adjusted for productivity. By 2014, Mexico’s adjusted labor costs were 9 percent lower than China’s, according to an analysis by the Boston Consulting Group.

For decades almost every maquiladora in Juárez was owned by a U.S. company. Today the figure is 63 percent. Japanese companies own 8 percent, German companies 7 percent. Other owners are from China, France, South Korea, Malaysia, Sweden, and Taiwan, according to María Teresa Delgado, president of Index Ciudad Juárez, a trade group that represents the maquiladora industry. “The Trump experience, it really opened our eyes,” she says. “At first we were all kind of nervous because we thought the world would come to an end. But there is a bright side to every dark side, and that’s what we found out. … We’re more global than we were a few years ago.”

 

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The Sacred Right of Universal Narcotic Entitlement

Julie Rinaldi, left, and Lynn Locascio, right, both of Tampa, Fla., react as names are read of people who have died from OxyContin abuse. Rinaldi's daughter, Sarah, died at 17 from taking OxyContin. (AP Photo//Bristol Herald Courier, David Crigger)

The Sackler family funds top-tier museums (the Met, the Tate, the Smithsonian), universities (Princeton, Cambridge), and scientific research institutes (the Mayo Clinic, the National Academy of Sciences). Where does their cash come from? Writing in Esquire, Christopher Glazek tells us: pharmaceuticals — these days, largely OxyContin, which generates over a billion dollars in sales each year on the back of a campaign built on misleading both doctors and the public about its addictive potential. Over 200,000 people have now died of OxyContin overdoses, and many more from heroin after first becoming addicted to opioids via Oxy.

The Sacklers have experience turning an addictive drug into a household name. In the 1960s, family patriarch Arthur Sackler did it with benzodiazepene:

In the 1960s, Arthur was contracted by Roche to develop an advertising strategy for a new antianxiety medication called Valium. This posed a challenge, because the effects of the medication were nearly indistinguishable from those of Librium, another Roche tranquilizer that was already on the market. Arthur differentiated Valium by audaciously inflating its range of indications. Whereas Librium was sold as a treatment for garden- variety anxiety, Valium was positioned as an elixir for a problem Arthur christened “psychic tension.” According to his ads, psychic tension, the forebear of today’s “stress,” was the secret culprit behind a host of somatic conditions, including heartburn, gastrointestinal issues, insomnia, and restless-leg syndrome. The campaign was such a success that for a time Valium became America’s most widely prescribed medication—the first to reach more than $100 million in sales. Arthur, whose compensation depended on the volume of pills sold, was richly rewarded, and he later became one of the first inductees into the Medical Advertising Hall of Fame.

Later, the company would do the something similar with OxyContin and pain, when it “rebranded pain relief as a sacred right: a universal narcotic entitlement available not only to the terminally ill but to every American.”

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Nestlé Is Sucking the World’s Aquifers Dry

Nestle takes about 25 million gallons of water a year from the San Bernardino National Forest under a permit that expired decades ago. (Jay Calderon/The Desert Sun via AP)

At Bloomberg Businesweek, Caroline Winter visits Nestlé’s bottling plant in Mecosta County, Michigan to analyze how the multinational corporations targets small communities with promises of jobs, and buys up public land to gain control of water resources. Nestle sold $7.7 billion dollars worth of bottled water last year, making it the world’s largest bottled water company. It made that money partly by paying a pittance for its product. Nestlé pays the U.S. Forest Service only $524 a year to draw 30 million gallons of public water in San Bernardino, California, and Nestlé pays the city of Evart, Michigan just $250,000 a year for its water. Consumers drink bottled water because they assume it’s safer than tap, but that makes us complicit in what many analysts and activists warn is the gradual privatization of water. These multinational corporations don’t have the public’s best interests in mind, activists warn. If anybody should own water, it’s the public.

Nestlé has been preparing for shortages for decades. The company’s former chief executive officer, Helmut Maucher, said in a 1994 interview with the New York Times: “Springs are like petroleum. You can always build a chocolate factory. But springs you have or you don’t have.” His successor, Peter Brabeck-Letmathe, who retired recently after 21 years in charge, drew criticism for encouraging the commodification of water in a 2005 documentary, saying: “One perspective held by various NGOs—which I would call extreme—is that water should be declared a human right. … The other view is that water is a grocery product. And just as every other product, it should have a market value.” Public outrage ensued. Brabeck-Letmathe says his comments were taken out of context and that water is a human right. He later proposed that people should have free access to 30 liters per day, paying only for additional use.

Compared with the water needs of agriculture and energy production, the bottled water business is barely responsible for a trickle; in Michigan, it accounts for less than 1 percent of total water usage, according to Michigan’s Department of Environmental Quality (DEQ). But it rankles many because the natural resource gets hauled out of local watersheds for private profit, not used in the service of feeding people or keeping their lights on. There’s also, of course, the issue of plastic pollution.

In the U.S., Nestlé tends to set up shop in areas with weak water regulations or lobbies to enfeeble laws. States such as Maine and Texas operate under a remarkably lax rule from the 1800s called “absolute capture,” which lets landowners take all the groundwater they want. Michigan, New York, and other states have stricter laws, allowing “reasonable use,” which means property owners can extract water as long as it doesn’t unreasonably affect other wells or the aquifer system. Laws vary even within states. New Hampshire is a reasonable-use state, but in 2006, the municipality of Barnstead became the first nationwide to ban the pumping of its water for sale elsewhere.

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Keeping Black Farm Families Connected to the Land in Michigan

AP Photo / Gosia Wozniacka

Owning land provides families with a legacy and, hopefully, some stability, but how do farmers keep their family farming their land? At BuzzFeed, Bim Adewunmi talks with blueberry farmers around tiny Covert, Michigan, to see what life is like for farmers of color. Only 1.46% of America’s farmers are black. Many Covert growers inherited their profession and have enjoyed a rewarding rural life, steady income and something to give to their children, and land, as one farmer tells Adewunmi, is power. But they still struggle to interest their kids and grandchildren in the job.

Farming is physically demanding, financially risky, costly and tenuous, and the market, like the weather, is constantly shifting. When parents raise their kids to go to college, save money and have more opportunities at their disposal, it isn’t surprising that younger generations leave home to work instead of stay on the family farm. As one farmer said, “We worked hard to show our kids what we considered a better life, and they’re taking advantage of those opportunities. They’re doing exactly what we told them to do.”

“He worked on the Hawkins farm for a time,” she says of her husband. “He always loved blueberries, so when we bought this place, he put his own blueberries out there. They’ve been here since 2001, I believe.” Harold died of cancer a few years back, and Carol assumed responsibility for the business. It is safe to say, however, that she never wanted to be a farmer. “If this wasn’t right here at the house,” she says, gesturing out of her kitchen windows, “I would’ve sold it a long time ago, is all I can say. It was my husband’s thing. I was just… I didn’t wanna be a farmer.” She giggles, but it’s a laugh filled with resignation. When I press her about the potential significance of holding on to her late husband’s legacy, she holds firm. “Uh-uh. I keep it because it’s here at the house. You see, it’s a ‘U,’ right here. And I just don’t want anybody else out there. So that’s why I keep it. And it does pay for my son’s college, the berries. So…” This time when she trails off, her laugh is knowing.

Unsolicited family legacy aside, Carol Baber’s most pressing headache is labor. All her berries are handpicked. Blueberries are graded — the handpicked ones generally get the best price at market, but they are also the most labor-intensive to produce, and picking conditions must be dry (“Nobody wants a wet berry,” Steven tells me, sagely, when I ask), which means picking during the hottest, most arid hours of the day. And that’s before the other maintenance issues that concern a blueberry farmer: weeding, pruning, fertilizing, spraying, and so on. “It’s hard for me because I don’t have any equipment,” Carol says. The Hawkinses help out with spraying (she buys the materials), but “it’s really hard to keep the grass down. So I’m working on trying to get a tractor.”

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Junk Food is 21st Century Imperialism

AP Photo/Leo Correa

From door-to-door deliveries to influencing politics, companies like Nestlé, PepsiCo, and McDonald’s spend big bucks to enmesh themselves in third world markets, and their processed, packaged foods bring obesity and health problems with them.

In the first in a The New York Times series about global obesity, Andrew Jacobs and Matt Richtel report from Brazil, where low-income, isolated residents who once suffered from hunger now suffer from diabetes and heart disease. To impoverished people, the allure of packaged Western food is obvious: it’s inexpensive and more readily available. Although access means more people are getting fed, this sweet, fatty, salty food is not only destroying traditional foodways and changing local agriculture, it’s harming those who subsist on it. One nutrition professor describes the situation in Brazil as “a war between two food systems,” but it’s a war where “one food system has disproportionately more power than the other.” Just as religious missionaries replace indigenous culture with European culture, now we have Western corporations replacing local culture and regional identity with a homogeneous global identity of Coke and Kit-Kit and pudding. To me, the loss of regional identity is as tragic as the increase in obesity. 

Dr. Gibney, the nutritionist and Nestlé consultant, said the company deserved credit for reformulating healthier products.

But of the 800 products that Nestlé says are available through its vendors, Mrs. da Silva says her customers are mostly interested in only about two dozen of them, virtually all sugar-sweetened items like Kit-Kats; Nestlé Greek Red Berry, a 3.5-ounce cup of yogurt with 17 grams of sugar; and Chandelle Pacoca, a peanut-flavored pudding in a container the same size as the yogurt that has 20 grams of sugar — nearly the entire World Health Organization’s recommended daily limit.

Until recently, Nestlé sponsored a river barge that delivered tens of thousands of cartons of milk powder, yogurt, chocolate pudding, cookies and candy to isolated communities in the Amazon basin. Since the barge was taken out of service in July, private boat owners have stepped in to meet the demand.

“On one hand, Nestlé is a global leader in water and infant formula and a lot of dairy products,” said Barry Popkin, professor of nutrition at the University of North Carolina. “On the other hand, they are going into the backwoods of Brazil and selling their candy.”

Dr. Popkin finds the door-to-door marketing emblematic of an insidious new era in which companies seek to reach every doorstep in an effort to grow and become central to communities in the developing world. “They’re not leaving an inch of country left aside,” he said.

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On the Internet, Nobody Knows You’re a Cartoonist Hustling for Money

(Jesse Dittmar for The Washington Post via Getty Images)

A successful media model is often a quiet one, gathering up money from the unglamorous corners of the market, cutting checks for its writers and artists in small but regular amounts. When Bob Mankoff retired from the New Yorker this year after twenty years as the Cartoon Editor, he left behind one of most successful new media models of the era: The Cartoon Bank. It was a database he founded in 1992 and ran from an apartment in Yonkers, and it helped cartoonists license their work for thousands of dollars a month. But when Condé Nast bought the Bank from Mankoff in 1997, the money began to dry up and the model began to fail.

Paste magazine recounts the rise and fall of the Cartoon Bank, which was begun by Mankoff with an $1,800 Apple computer and a $745 scanner, and built into a database with over 20,000 images from 50 cartoonists, categorized by subject: “The market was individual consumers as well as businesses; if you ran a dental association, for instance, you could easily find dental-themed cartoons for your monthly newsletter. Early customers included Bloomberg Financial Markets, which delivered a cartoon to 41,000 subscribers each morning,”

With fees ranging from $100 to $1000 for a single image, cartoonists could start to rely on checks coming in from the Bank, and some cartoonists were receiving residiuals of $30,000 to $40,000 a year. But when Condé Nast took over, things began to break and cartoonists saw a reliable income dwindle to nothing.

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