business

It’s the recession, stupid

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Tom Mullaney in the Chicago Tribune, examines the fact that Starbucks is closing 600 stores and concludes that it is because it has lost its way from an authentic Italian coffee house (as late as 1988), to eventually become a proto fast food chain.

For a long time, Starbucks has effectively been a store selling coffee flavored deserts. A Venti Chocolate Malt Frappuccino with whipped cream, at 760 calories is equivalent to a BigMac AND Fries.

Despite the best intentions of a CEO inspired by a trip to Milan, a Starbucks Latte is a type and size of milk laden drink that is hardly ever drunk in Italy. By combining fat, sugar and caffeine into a beverage that is part of the cultural ritual of an American morning, they had merged the cravings satisfied by both fast food and soda into a liquid package that therefore seemingly didn’t count as calories, and created a business that would naturally become most profitable as fast food in disguise, due to customer demand rather than corporate conspiracy.

In New York, where foot traffic is high, the main ingredient of Starbucks reveals itself by the sickly smell of accumulated fatty milk spills, rather than fresh coffee grounds.

But the reason why Starbucks is shedding premises and staff is simple: a $5 coffee is an easily dispensable luxury in a recession, period.

Fake Green – Making Money By Pretending to be Eco-friendly

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Many of the product press releases I’m emailed claim a ‘green’ angle which is often false. Today’s is for a July 4th Room and Board special, focusing on American made goods:

“As the 4th of July approaches, we thought it’d be a good time to remind you that more than 85 percent of Room & Board furniture is sourced and manufactured right here in the United States. Room & Board is thinking American-made for America’s birthday!”

“This means a smaller environmental impact as these pieces are shipped entirely within the boundaries of the U.S. Room & Board is committed to sustainability and this means high-quality construction, timeless design and the commitment to American-made as it stimulates local economies and helps to keep our suppliers in business and doing what they do best.”

This does make sense from a local perspective, but it is false to claim it to be ecologically sound. Aside from the fact that an American worker has a much higher carbon footprint that almost any other, and US manufacturing growth (rather than services growth) therefore usually has a negative global impact, there is a bigger problem. Transferring goods by land across the US has a higher energy cost than transferring by sea from Europe. If you live in New York, transportation costs mean it is more ‘green’ to by French wine than Californian. This is counterintuitive and uncomfortable, but its the truth.

Being green is fashionable these days, and unlike in the past, its profitable, so it isn’t merely an act of charity. But if you claim something is green that isn’t, you are benefiting as a result of the environment suffering.

The Huffington Post – run by a former Republican extremist who wanted to dismantle welfare, entirely.

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The leftwing Huffington Post is now the world’s most authoritative blog, according to Technorati.

In the election runup, although publicly known, I wonder how many people realize that the Huffington Post is named after a power obsessed, failed Democrat who was actually a former Republican extremist .

The ‘Huffpo’ has a proprietor who once campaigned as a Republican to the religious right for the dismantlement of welfare because “big government cheats people out of the spiritual rewards of giving to the needy”; who made her fortune from a divorce settlement after marrying a man she knew was gay; who was a follower and financial supporter of a strange religious cult and who paid less than a thousand dollars in tax in a year she campaigned as a Democrat against ‘fat cat’ tax avoiders, while living in an ostentatiously kitsch 6,000 sq. ft. LA mansion.

(I have just finished updating her Wikipedia entry, should you want details)

Arianna Huffington’s political vacillation is statistically unlikely. To paraphrase Wilde, given that it has tended to be in her personal interest – it looks like carelessness.

It is ironic and sad that in an election year, the Left’s most prominent outlet in the Blogosphere is a site run by someone who represents exactly the same cynicism as the media outlet it rails against – Fox News.

I bequeath to you all my dung

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The Guardian today has a good article on why Origins.net’s latest genealogical database is a particular gem, putting online a particularly rich set of English wills from 1470 to 1856. The wills show just what people left to each other, hundreds of years ago, including a Mrs Adowne who was fulfilled when her dying tenant, Robert Sherlocke, granted her “all the soil and dung that I have”.

Article here.

The wills can be accessed by subscription, here.

Hilarious Ernst & Young Teambuilding Video.

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Beans Beans, who found this leaked corporate video, where a group of dorky Cool-Aid sloshed employees sing along, gospel style, to ‘O’ Happy Day’, puts it well: “Ernst & Young teambuiding video – holy shit I nearly pissed myself” Corporate accountants singing Soul; once more with feeling. I’ve just watched it 5 times in a row and cannot stop, each time there’s one more priceless gem to notice. Effing hilarious.

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The real bubble

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The real buuble. Four words: Hedge Fund Private Equity. I hear these too much. I don’t really understand hedge funds and private equity, but more frighteningly I get the impression that some of the people involved don’t either. My one theory about the rise of Private Equity, is that its a natural reaction against the increase in communication due to things like the Internet, and the reduced arbitrage or spread that it creates as more people have access to information, more quickly. One way of countering this and the recenty tightened financial regulation in the US is to deal in private companies and investment, where the information is more opaque. James Simons, hedge fund manager, earned $1.7 billion last year…. (kottke.org)

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The Obvious Corp – Evan and Biz take back Odeo

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The greening of The Valley, why sustainable companies matter. Evan williams and Biz Stone have taken back Odeo from its backers to form part of a company focused on innovation through multiple products, rather than exit. It’s like a tech. startup version of the recent trend for private equity takeovers of public companies. But it could point to a better model for Internet startups – the model of normal companies like corner stores. Here’s why. [update: The sustainable model is not new, it is the way that almost all companies outside of the bubble-prone technology world work, however, sometimes the bleeding obvious is worth pointing out. Venture backing should be for the exception – for the exceptionally rapidly growing.] The Exit Model Every venture funded tech company is predicated on the idea of ‘exit’, the point where the company is sold to a bigger one or has an IPO, so…

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Gas and Houses are still cheap.

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Average house price in the US, Aug 2006: $230,000 Average house price in the UK, Aug 2006: $376,600 Average gas price per gallon in the US, Aug 2006: $3.04 Average gas price per gallon in the UK, Aug 2006: $6.46 There will almost certainly be a recession in the US soon, caused primarily by inflated gas and house prices. One will continue to go up and the other will crash – a problem for people who own houses and drive cars, i.e. are long in real estate and short on gas. But these prices are actually very, very cheap compared to places like the UK, which didn’t go into recession with much larger costs and similar wages. The principal difference being the rate of consumption. average home sales prices in all regions of the united states

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Why entrepreneurs should ignore markets.

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Old farts like myself, who were tinkering with the Internet in the early 90s will remember that there was a sudden surge in interest in the Internet a year or so before the web. The tendency is to think that the Web was the prime reason for the increased adoption of the Internet, but in fact it is more likely that the Web was actually the result of an evolutionary niche being opened up by the spread of the Internet. Once the Web was born, of course, it did help fuel the growth of the Internet, but like almost any other ‘ecosystem’ from the autocatalytic reactions in a single cell organism, to the money flow in an industrial economy, it was based upon a circular feedback loop, making it difficult to separate the chicken from the egg. The are two other very important examples of cause and effect which were…

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A Venti Chocolate Malt Frappuccino with whipped cream has about as many calories as a BigMac AND Fries. Starbucks – rhymes with?

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The film Supersizeme made a good case for why a diet consisting entirely of McDonalds food could transform your body quicker than Robert De Niro in Raging Bull. Recently evidence suggests that the main culprit may not be fatty food, but sugared, caffeinated water. The beverage industry is scheduled to announce today that it is voluntarily removing high-calorie soft drinks from all schools. This may not be entirely fair. An average 12 ounce can of cola typically contains 120 calories. However its not just sodas that pack in the calories, fruit juices have more and the same size serving of grape juice, an elementary-school lunchroom staple, contains a whopping 165 calories. It doesn’t really matter how healthy, natural or traditional the drink may seem when you are eating or drinking too much. Despite marginal differences in the way we digest different foods, the bottom line is that calories in =…

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