Part 1
Part 2
Friday, April 24, 2009
Tuesday, April 14, 2009
Monday, April 13, 2009
Car Charging Company Coulomb Dreams of 2010 Profit
Despite the fact that we're just seeing electric cars roll on the road, Richard Lowenthal, CEO of Coulomb Technologies tells us selling charging stations for electric cars will be a profitable business in a year and a half.
Coulomb sells charging stations for electric cars to businesses and cities. It makes its money selling charging stations for between $2,000 and $4,000. It then charges drivers around $720 annually to use the stations. Of that, Coulomb keeps $120 to cover its maintenance costs, and the city or business keeps the rest. This way a city pays off the cost of the station it bought, and usually profits, and Coulomb can pay for round the clock data centers that watch over the charging stations.
Coulomb raised $3.75 million in January from Estag Capital and Lowenthal says the company is looking to raise more. He anticipates $2 million in revenue for 2009, and profitability coming by 2010, when Coulomb should be selling 520 charging stations a month around the world. And that's before electric cars really start rolling around. When that happens, Lowenthal thinks the company is positioned to take advantage.
Why start a company for charging stations, when there aren't many electric cars out there?
We came into existence because every automaker is planning on a electric car. They're coming in the next 1-3 years, yet look at Chevy Volt, the prototypical electric. The idea is that you plug it in the garage at night. The first 40 miles is all electric, then the rest is gas. The average American goes 29 miles, so that's great as it gets us off fuels, but there's 247 million cars, but only 50 million garages. There was a plug in hybrid study at UC Davis, and it found people want to charge twice a day. When they're sleeping and when they're working.
We build charging stations for people that live in apartments and condos, also. In San Francisco, the primary model is replacement of a parking meter. You put in our product, so the people in San Francisco who park curbside have a place to charge their car. In San Jose, it's different, they asked us to develop product that mounts on light poles, and we have a few different locations for those.
Obama says we'll have 1 million electric cars by 2015, we think that's light, but you'll need at least 2 charging stations for every vehicle. So, if he's right then 2 million stations in the US alone.
How much does it cost to install?
It costs $3,000 for a station on average, it varies from $2,000 to $4,000. Somebody like San Jose or San Francisco or Cisco or Google will buy stations. We sell them for between $2,000 and $4,000, that's how we make our money. Then we have a subscription service to pay for charging minutes. Users go on our website, put in their credit card, we send them a key fop, which they use to activate the charging station to charge their car. We pick up money from driver, but we don't make any money from charging for the minutes, 80% of that money goes back to operators, like the cities who own the stations and the property. They usually profit from it.
So far we have 15 customers--cities, businesses. We installed our first network in December in San Jose. We have over a hundred drivers signed up. They use our system for free for 2009. It's a teaser year for people to charge their cars. We are learning a lot, figuring out how to charge people best. Our plan is to have people pay for $720 for the year to charge their cars. Of that we keep $120, and the rest goes to the operators.
What's the difference between your operation and Better Place, who also want to set up charging infrastructure?
Better Place owns the battery and has a custom car, and searches for clean energy to charge the whole thing. We just make best networked charging station. I have no interest in owning batteries, we are equipment provider. The other thing, we have the only networked station, so you can go onto a Google map and find every station and see what's free and what's broken, what's being used. Our operating center monitors the stations 24 hours a day. We have features that help people if they forget to plug the car in, we send alerts. All our stations are integrated with the smart grid.
Why aren't your stations near gas stations?
The cars that come out all take between 4 and 8 hours to charge. Since cars are parked 8 hours a day it shouldn't matter, the model is not go to station and charge up, when working, you want to be parked at a charging station. So a place like Google has charging stations for employees. So far there are no standards for quick charging, it's still experimental. But when it become standard, popular, we'll be ready. And we can sell our infrastructure to gas stations.
If I charge my car overnight, how do I know some prankster won't just yank the plug?
Well, there are two kinds of plugs. Standard for high powered where cable is permanatly attached, the cord comes with the car. When I pull up to the station, I plug in and it locks it so you can't get it out without the key fop. Still with the Prius, they can unplug from the bumper. Then we alert the driver and the operator of the station, that's something we can do because of networking.
So you have people constantly working?
We have a 24-7 data center, most of it is automated. If a non-subscriber still wants to get a charge thats when the data center gets called. We have 14 people in our head quarters, our sales force are all independent distrobutors, covering 46 states and we have installers in all those states. In the other 4 states cover with direct staff in valley, We have European distribution, the way we sell our product is dist.
We have distributors, but we don't pay them, they get paid on the margin. We sell them the stations at a slight discount, then they sell them to municipalities or businesses. They sell installation and maintenance, we probably have 100 people working for us but we only pay 14.
What does the low price of gas do to your business?
The motivation for buying electrics shifts. Two years ago it was avoiding carbon dioxide, last summer it was the high price of gas, and now because of Obama it's to avoid importation of oil. While the motivation has changed, remember it costs you 2 cents a mile on electric, versus 12-13 cents on gas, and we're less than half the price of gasoline. With us it's just about 5 cents a mile.
How does the recession hurt your business?
So far it's been 100% positive. There's a 50% tax credit for our electric charging stations, which puts our stations on a big sale. It made everyone hurry up to purchase them. There's also a big rebate on electric cars. The stimulus bill that was passed as a result of the recession gives funds to cities who can buy our stations at a discount. It's all been extremely positive for us, so we like the recession because its been a help. We don't like to say that, because the recession hurt so many people, but it's helped us.
How does the stimulus help you?
There's a tax credit for infrastructure, for buying charging stations. There's a 50% tax credit for municipalities purchasing electric car infrastructure.
When do you think you'll be profitable?
We are on target to be profitable in October of 2010. To do that, we need to sell 520 stations a month. We're on plan to do that, we made our first quarter plan. And that happens without any real cars out there. That just starts in the fourth quarter of 2010, that cars will be out there. We're going to do about 2 million in revenue this year, next year, I don't want to talk about, because we're out there raising money, but this year we're on track for $2 million in revenue. We make our money selling stations.
What happens if nobody uses the stations? How does that hurt your business?
It's an addressed concern. We don't like to get ahead of the electric cars, we don't want empty stations. We just had a significant announcement in Chicago, where we had a solar powered charging station installed for the municipality. Just one sends a signal that Chicago wants electric cars, it shows a model. It establishes a model for a few stations for the city. Obviously, we don't want empty stations. That will cause a backlash. But right now, they're policy statements by municipalities, that show a city is dedicated to electric cars.
Coulomb sells charging stations for electric cars to businesses and cities. It makes its money selling charging stations for between $2,000 and $4,000. It then charges drivers around $720 annually to use the stations. Of that, Coulomb keeps $120 to cover its maintenance costs, and the city or business keeps the rest. This way a city pays off the cost of the station it bought, and usually profits, and Coulomb can pay for round the clock data centers that watch over the charging stations.
Coulomb raised $3.75 million in January from Estag Capital and Lowenthal says the company is looking to raise more. He anticipates $2 million in revenue for 2009, and profitability coming by 2010, when Coulomb should be selling 520 charging stations a month around the world. And that's before electric cars really start rolling around. When that happens, Lowenthal thinks the company is positioned to take advantage.
Why start a company for charging stations, when there aren't many electric cars out there?
We came into existence because every automaker is planning on a electric car. They're coming in the next 1-3 years, yet look at Chevy Volt, the prototypical electric. The idea is that you plug it in the garage at night. The first 40 miles is all electric, then the rest is gas. The average American goes 29 miles, so that's great as it gets us off fuels, but there's 247 million cars, but only 50 million garages. There was a plug in hybrid study at UC Davis, and it found people want to charge twice a day. When they're sleeping and when they're working.
We build charging stations for people that live in apartments and condos, also. In San Francisco, the primary model is replacement of a parking meter. You put in our product, so the people in San Francisco who park curbside have a place to charge their car. In San Jose, it's different, they asked us to develop product that mounts on light poles, and we have a few different locations for those.
Obama says we'll have 1 million electric cars by 2015, we think that's light, but you'll need at least 2 charging stations for every vehicle. So, if he's right then 2 million stations in the US alone.
How much does it cost to install?
It costs $3,000 for a station on average, it varies from $2,000 to $4,000. Somebody like San Jose or San Francisco or Cisco or Google will buy stations. We sell them for between $2,000 and $4,000, that's how we make our money. Then we have a subscription service to pay for charging minutes. Users go on our website, put in their credit card, we send them a key fop, which they use to activate the charging station to charge their car. We pick up money from driver, but we don't make any money from charging for the minutes, 80% of that money goes back to operators, like the cities who own the stations and the property. They usually profit from it.
So far we have 15 customers--cities, businesses. We installed our first network in December in San Jose. We have over a hundred drivers signed up. They use our system for free for 2009. It's a teaser year for people to charge their cars. We are learning a lot, figuring out how to charge people best. Our plan is to have people pay for $720 for the year to charge their cars. Of that we keep $120, and the rest goes to the operators.
What's the difference between your operation and Better Place, who also want to set up charging infrastructure?
Better Place owns the battery and has a custom car, and searches for clean energy to charge the whole thing. We just make best networked charging station. I have no interest in owning batteries, we are equipment provider. The other thing, we have the only networked station, so you can go onto a Google map and find every station and see what's free and what's broken, what's being used. Our operating center monitors the stations 24 hours a day. We have features that help people if they forget to plug the car in, we send alerts. All our stations are integrated with the smart grid.
Why aren't your stations near gas stations?
The cars that come out all take between 4 and 8 hours to charge. Since cars are parked 8 hours a day it shouldn't matter, the model is not go to station and charge up, when working, you want to be parked at a charging station. So a place like Google has charging stations for employees. So far there are no standards for quick charging, it's still experimental. But when it become standard, popular, we'll be ready. And we can sell our infrastructure to gas stations.
If I charge my car overnight, how do I know some prankster won't just yank the plug?
Well, there are two kinds of plugs. Standard for high powered where cable is permanatly attached, the cord comes with the car. When I pull up to the station, I plug in and it locks it so you can't get it out without the key fop. Still with the Prius, they can unplug from the bumper. Then we alert the driver and the operator of the station, that's something we can do because of networking.
So you have people constantly working?
We have a 24-7 data center, most of it is automated. If a non-subscriber still wants to get a charge thats when the data center gets called. We have 14 people in our head quarters, our sales force are all independent distrobutors, covering 46 states and we have installers in all those states. In the other 4 states cover with direct staff in valley, We have European distribution, the way we sell our product is dist.
We have distributors, but we don't pay them, they get paid on the margin. We sell them the stations at a slight discount, then they sell them to municipalities or businesses. They sell installation and maintenance, we probably have 100 people working for us but we only pay 14.
What does the low price of gas do to your business?
The motivation for buying electrics shifts. Two years ago it was avoiding carbon dioxide, last summer it was the high price of gas, and now because of Obama it's to avoid importation of oil. While the motivation has changed, remember it costs you 2 cents a mile on electric, versus 12-13 cents on gas, and we're less than half the price of gasoline. With us it's just about 5 cents a mile.
How does the recession hurt your business?
So far it's been 100% positive. There's a 50% tax credit for our electric charging stations, which puts our stations on a big sale. It made everyone hurry up to purchase them. There's also a big rebate on electric cars. The stimulus bill that was passed as a result of the recession gives funds to cities who can buy our stations at a discount. It's all been extremely positive for us, so we like the recession because its been a help. We don't like to say that, because the recession hurt so many people, but it's helped us.
How does the stimulus help you?
There's a tax credit for infrastructure, for buying charging stations. There's a 50% tax credit for municipalities purchasing electric car infrastructure.
When do you think you'll be profitable?
We are on target to be profitable in October of 2010. To do that, we need to sell 520 stations a month. We're on plan to do that, we made our first quarter plan. And that happens without any real cars out there. That just starts in the fourth quarter of 2010, that cars will be out there. We're going to do about 2 million in revenue this year, next year, I don't want to talk about, because we're out there raising money, but this year we're on track for $2 million in revenue. We make our money selling stations.
What happens if nobody uses the stations? How does that hurt your business?
It's an addressed concern. We don't like to get ahead of the electric cars, we don't want empty stations. We just had a significant announcement in Chicago, where we had a solar powered charging station installed for the municipality. Just one sends a signal that Chicago wants electric cars, it shows a model. It establishes a model for a few stations for the city. Obviously, we don't want empty stations. That will cause a backlash. But right now, they're policy statements by municipalities, that show a city is dedicated to electric cars.
Cramer: Stewart Interview Was "A Complete And Utter Ambush"!
Cramer is not. He told told the Ohio State Lantern his interview on the Daily Show last month "was a complete and utter ambush" and that host Jon Stewart did not "comport himself as a gentleman."
Cramer's rant:
He told my staff that it was going to be fun, convivial, no clips, but [it] doesn't matter, he's a comedian, he can do whatever he wants.
Was it a fair fight? No, it wasn't even a fight. I came on with the idea of taking a high road approach and discussing the issues, obviously [Stewart] came on strictly to try to humiliate me. It was brutal.
Was he stand-up? Absolutely not.
Did he comport himself as a gentleman? Hardly. It was a deposition; he wants to be a prosecutor.
His goal was just to humiliate and destroy me and probably get me fired, and last I looked, I still have a show.
It was a 20 minute interview, he picked the worst eight minutes to make me look as horrible as possible. It's his show, he can do whatever he wants. If he comes on my show, it'll be a fair discussion, but he's not gonna come on my show, because he's all about his [ratings] numbers.
Cramer's rant:
He told my staff that it was going to be fun, convivial, no clips, but [it] doesn't matter, he's a comedian, he can do whatever he wants.
Was it a fair fight? No, it wasn't even a fight. I came on with the idea of taking a high road approach and discussing the issues, obviously [Stewart] came on strictly to try to humiliate me. It was brutal.
Was he stand-up? Absolutely not.
Did he comport himself as a gentleman? Hardly. It was a deposition; he wants to be a prosecutor.
His goal was just to humiliate and destroy me and probably get me fired, and last I looked, I still have a show.
It was a 20 minute interview, he picked the worst eight minutes to make me look as horrible as possible. It's his show, he can do whatever he wants. If he comes on my show, it'll be a fair discussion, but he's not gonna come on my show, because he's all about his [ratings] numbers.
CompUSA Is Back, Taking Cues From Apple
Welcome back, CompUSA!
The once-bankrupt electronics store is opening dozens of new stores (mostly in Florida), and operating with a new plan: Copy part of what made the Apple (AAPL) store successful.
Well, CompUSA isn't going with the Apple Store's stark minimalism, but they are making all of their floor demo computers available to the public, and connecting them to the Internet, Wired reports. That should encourage people to actually play with the products, start to lust after them, and loiter in the store. The ability to check Facebook on a demo Mac is part of what's made the Apple Store such a popular hangout -- all the while introducing people to Apple products.
We like the idea a lot, and a big part of our frustration with the old CompUSA (and big-box electronics stores in general) has always been that PC floor models tend to be turned on, but locked with a password-protected screen saver, preventing anyone from getting to know the computer.
And maybe the timing is right for a CompUSA comeback. One of CompUSA's biggest rivals, Circuit City, is now gone. At least some of the people who were buying things at Circuit City are now going to Best Buy (BBY) instead, but those customers can just as easily be CompUSA's.
The once-bankrupt electronics store is opening dozens of new stores (mostly in Florida), and operating with a new plan: Copy part of what made the Apple (AAPL) store successful.
Well, CompUSA isn't going with the Apple Store's stark minimalism, but they are making all of their floor demo computers available to the public, and connecting them to the Internet, Wired reports. That should encourage people to actually play with the products, start to lust after them, and loiter in the store. The ability to check Facebook on a demo Mac is part of what's made the Apple Store such a popular hangout -- all the while introducing people to Apple products.
We like the idea a lot, and a big part of our frustration with the old CompUSA (and big-box electronics stores in general) has always been that PC floor models tend to be turned on, but locked with a password-protected screen saver, preventing anyone from getting to know the computer.
And maybe the timing is right for a CompUSA comeback. One of CompUSA's biggest rivals, Circuit City, is now gone. At least some of the people who were buying things at Circuit City are now going to Best Buy (BBY) instead, but those customers can just as easily be CompUSA's.
Tuesday, March 17, 2009
NEWSPAPERS, HAIL AND FAREWELL
NEWSPAPERS, HAIL AND FAREWELL by Michael S. Malone
Newspapers, ave atque vale.
But as we bid you good-bye, just remember: in the digital age the death of an industry usually plants the seeds of its resurrection.
The last two weeks saw what may prove to be the tipping point in the history of newspapers. The Rocky Mountain News became the first major U.S. newspaper to close in the face of declining circulation and revenues created by competition from the digital media. Close on its heels may be the equally venerable San Francisco Chronicle, which announced that it would soon be seeking a buyer . . .and failing that, may go out of business.
This bad news is just the latest in what has been a long, sad downward spiral by the newspaper industry through most of this decade. The newspaper industry gave up denying that anything was wrong about five years ago, abandoned the fantasy that this was a temporary setback two years ago, and now - like a terminal patient completing the Kubler-Ross cycle - has all-but resigned itself to imminent oblivion.
And, if things keep going the way they have, that’s a pretty accurate prognosis.
I was one of the very first people in the national media to predict the death of newspapers (though Time editor Daniel Okrent gave a prescient speech on “The Death of Print” in 2000) . I did so in this column in March, 2005. Here’s what I wrote:
“So, let’s finally come out and say it: Newspapers are dead. They will never come back. By the end of this decade, the newspaper industry will suffer the same death rate — 90-plus percent — that every other industry experiences when run over by a technology revolution.”
I was a little ambitious in that prediction, but not by much. There isn’t a single major newspaper in this country that isn’t in serious financial trouble. Even the industry’s annual convention was canceled this year. And waiting in the wings, not far behind the RMN and Chron, are at least another dozen papers on the brink - with the next to go likely the Seattle Post-Intelligencer. And you can now buy a share of New York Times stock for less than the price of its Sunday paper.
I also wrote this:
“Before it is all over, the number of “newspapers” left in America will probably be less than 10 — and they might not be individual papers but rather new entities created out of the current large chains.”
Frankly, these days that prediction - especially if we’re talking major metropolitan papers (small local papers are still doing pretty well) - almost seems too optimistic.
As they say about leading the pack, it’s always a good way to get shot in the back. And I took my fair share of arrows, many of them from veteran reporters who either dismissed my notions as absurd (‘People will always want to read the morning paper with their coffee’) or as calling down the Furies (‘Articles like this certainly don’t help matters’). I wonder how many of those commentators are still in the business today, and how many still believe those arguments.
The reason I was confident then in my predictions was not out any animus towards newspapers - on the contrary, as I’ve written here before, I’m a fourth generation newspaperman. I love newspapers. And some of the most satisfying moments in my career have been sitting in a café on a Sunday morning watching people around me reading something I’d written. No, what made me certain about this unfolding scenario were my experiences in the electronics industry. Over the years I’d seen one traditional industry after another, all of them seemingly permanent, be destroyed by the arrival of the digital revolution.
In almost every case - adding machines, arcade games, printing, letter writing, typing, LP records, clocks and watches, even older electronics businesses - these once-giant industries had been so annihilated that they were almost erased from our memories, supplanted by wholly new industries defined by microprocessors, mass customization and Moore’s Law. Once I saw Google News and first great blogs, it was obvious to me that this same destruction was about to happen to newspapers - and that the real challenge was to overcome sentiment and tradition and look this transformation straight in the eye and accept the full implications of what I saw. The death of newspapers seemed impossible, but so did the death of typewriters. You had to bet on technology, wherever it led.
And in newspapers, it has led us to where we are now. The ‘death of newspapers’ is now generally assumed; it has become the common view that soon there won’t be any major newspapers left in this country, with local papers soon to follow once Craigslist gets around to setting up shop in their backyards.
But that isn’t what technology is telling us. Once again the scenario presented by technology departs from the received view.
What the history of technology tells is that at some point the slaughter stops. What remains are a handful of survivors. Some, like the handful of companies that still make typewriters, will cater to a small surviving pool of traditional customers. These companies will never be as big as they once were, and eventually they will slowly fade away, but for a generation or two it will still be a very profitable existence being a big fish in small pond. In newspapers, USA Today seems to have the greatest chance of ending up here (while the New York Times, which wants this slot, will never make it).
The other survivors will be very different - indeed they will look almost nothing like their former selves. They may bear the names of once famous newspapers, but that will be the only resemblance. Technology revolutions are like black holes: what comes out looks nothing like what went in.
If they are smart, some of the newspapers that survivor that survive this Great Shakeout have a chance to come all of the way back and be major players in the next wave.
But to do so, they have to recognize that everything has now changed - and they have break from their past, recognize the utterly changed nature of the marketplace, and embark on a radically new strategy.
How? First of all: Don’t try to preserve what you were. It’s now too late. Look instead to what you must be in ten years, and get there in five. And for the next two years, do whatever it takes to survive.
What does that mean? Well, surprisingly it means: Forget computers. Newspapers have already lost that battle. Instead, move on - and target the next platform. My gut tells me that the future of news delivery is to e-Books, like Kindle, and even more, Smart Phones. So rebuild your paper for those platforms - automatic downloading of the daily news directly to e-books, and powerful new navigation and social networking (i.e., story reporting and sharing) tools for the phone.
It also means a new business model. The blogosphere has made one major mistake: it has yet to create a truly viable revenue model. And that represents a huge opportunity. Advertisers are still wary of the Web because they don’t see yet a vehicle that produces strong, verifiable results. That’s also the reason why (besides all of that capital equipment, like presses and buildings) that newspapers didn’t just migrate to the Web two years ago - it would have led to massive revenue losses. But newspapers have now taken those losses anyway, so accept the inevitable. A revenue model will emerge for the Web, so take your lumps now, shrink to 10 -20 percent of your original size, sell the buildings and presses, move exclusively to the Web, and get ready for the market to take off.
And, as long as you are thinking outside of the box, go all of the way. Why doesn’t a consortium of newspapers buy Craigslist, leave it intact, and divvy up the ads by region? Why not team up with the largest local TV station and become its integrated video-print website? Or better yet, buy one of those emerging Web aggregators - the Huffington Post, Pajamas Media, etc. - and embed yourselves within them. They’re going to be your future competitors anyway, so co-opt them now.
Finally, figure out a way to hang on to all of that reporting talent you have so indifferently tossed away. Turn them into contractors for a couple of stories per month, or put them on retainer. But don’t lose them - because five years from now there will be land rush on reporting talent to fill the new ‘newspapers’. So tie them up now.
In the end, it’s all about surviving short term, and starting over under the new rules long term. We will always need newspapers because we need news. But as to what form this transformed medium will take is as yet unknown. But we do have some ideas - and it is those ideas that America’s dying newspapers should now embrace, not wistful dreams of the past.
Newspapers, ave atque vale.
But as we bid you good-bye, just remember: in the digital age the death of an industry usually plants the seeds of its resurrection.
The last two weeks saw what may prove to be the tipping point in the history of newspapers. The Rocky Mountain News became the first major U.S. newspaper to close in the face of declining circulation and revenues created by competition from the digital media. Close on its heels may be the equally venerable San Francisco Chronicle, which announced that it would soon be seeking a buyer . . .and failing that, may go out of business.
This bad news is just the latest in what has been a long, sad downward spiral by the newspaper industry through most of this decade. The newspaper industry gave up denying that anything was wrong about five years ago, abandoned the fantasy that this was a temporary setback two years ago, and now - like a terminal patient completing the Kubler-Ross cycle - has all-but resigned itself to imminent oblivion.
And, if things keep going the way they have, that’s a pretty accurate prognosis.
I was one of the very first people in the national media to predict the death of newspapers (though Time editor Daniel Okrent gave a prescient speech on “The Death of Print” in 2000) . I did so in this column in March, 2005. Here’s what I wrote:
“So, let’s finally come out and say it: Newspapers are dead. They will never come back. By the end of this decade, the newspaper industry will suffer the same death rate — 90-plus percent — that every other industry experiences when run over by a technology revolution.”
I was a little ambitious in that prediction, but not by much. There isn’t a single major newspaper in this country that isn’t in serious financial trouble. Even the industry’s annual convention was canceled this year. And waiting in the wings, not far behind the RMN and Chron, are at least another dozen papers on the brink - with the next to go likely the Seattle Post-Intelligencer. And you can now buy a share of New York Times stock for less than the price of its Sunday paper.
I also wrote this:
“Before it is all over, the number of “newspapers” left in America will probably be less than 10 — and they might not be individual papers but rather new entities created out of the current large chains.”
Frankly, these days that prediction - especially if we’re talking major metropolitan papers (small local papers are still doing pretty well) - almost seems too optimistic.
As they say about leading the pack, it’s always a good way to get shot in the back. And I took my fair share of arrows, many of them from veteran reporters who either dismissed my notions as absurd (‘People will always want to read the morning paper with their coffee’) or as calling down the Furies (‘Articles like this certainly don’t help matters’). I wonder how many of those commentators are still in the business today, and how many still believe those arguments.
The reason I was confident then in my predictions was not out any animus towards newspapers - on the contrary, as I’ve written here before, I’m a fourth generation newspaperman. I love newspapers. And some of the most satisfying moments in my career have been sitting in a café on a Sunday morning watching people around me reading something I’d written. No, what made me certain about this unfolding scenario were my experiences in the electronics industry. Over the years I’d seen one traditional industry after another, all of them seemingly permanent, be destroyed by the arrival of the digital revolution.
In almost every case - adding machines, arcade games, printing, letter writing, typing, LP records, clocks and watches, even older electronics businesses - these once-giant industries had been so annihilated that they were almost erased from our memories, supplanted by wholly new industries defined by microprocessors, mass customization and Moore’s Law. Once I saw Google News and first great blogs, it was obvious to me that this same destruction was about to happen to newspapers - and that the real challenge was to overcome sentiment and tradition and look this transformation straight in the eye and accept the full implications of what I saw. The death of newspapers seemed impossible, but so did the death of typewriters. You had to bet on technology, wherever it led.
And in newspapers, it has led us to where we are now. The ‘death of newspapers’ is now generally assumed; it has become the common view that soon there won’t be any major newspapers left in this country, with local papers soon to follow once Craigslist gets around to setting up shop in their backyards.
But that isn’t what technology is telling us. Once again the scenario presented by technology departs from the received view.
What the history of technology tells is that at some point the slaughter stops. What remains are a handful of survivors. Some, like the handful of companies that still make typewriters, will cater to a small surviving pool of traditional customers. These companies will never be as big as they once were, and eventually they will slowly fade away, but for a generation or two it will still be a very profitable existence being a big fish in small pond. In newspapers, USA Today seems to have the greatest chance of ending up here (while the New York Times, which wants this slot, will never make it).
The other survivors will be very different - indeed they will look almost nothing like their former selves. They may bear the names of once famous newspapers, but that will be the only resemblance. Technology revolutions are like black holes: what comes out looks nothing like what went in.
If they are smart, some of the newspapers that survivor that survive this Great Shakeout have a chance to come all of the way back and be major players in the next wave.
But to do so, they have to recognize that everything has now changed - and they have break from their past, recognize the utterly changed nature of the marketplace, and embark on a radically new strategy.
How? First of all: Don’t try to preserve what you were. It’s now too late. Look instead to what you must be in ten years, and get there in five. And for the next two years, do whatever it takes to survive.
What does that mean? Well, surprisingly it means: Forget computers. Newspapers have already lost that battle. Instead, move on - and target the next platform. My gut tells me that the future of news delivery is to e-Books, like Kindle, and even more, Smart Phones. So rebuild your paper for those platforms - automatic downloading of the daily news directly to e-books, and powerful new navigation and social networking (i.e., story reporting and sharing) tools for the phone.
It also means a new business model. The blogosphere has made one major mistake: it has yet to create a truly viable revenue model. And that represents a huge opportunity. Advertisers are still wary of the Web because they don’t see yet a vehicle that produces strong, verifiable results. That’s also the reason why (besides all of that capital equipment, like presses and buildings) that newspapers didn’t just migrate to the Web two years ago - it would have led to massive revenue losses. But newspapers have now taken those losses anyway, so accept the inevitable. A revenue model will emerge for the Web, so take your lumps now, shrink to 10 -20 percent of your original size, sell the buildings and presses, move exclusively to the Web, and get ready for the market to take off.
And, as long as you are thinking outside of the box, go all of the way. Why doesn’t a consortium of newspapers buy Craigslist, leave it intact, and divvy up the ads by region? Why not team up with the largest local TV station and become its integrated video-print website? Or better yet, buy one of those emerging Web aggregators - the Huffington Post, Pajamas Media, etc. - and embed yourselves within them. They’re going to be your future competitors anyway, so co-opt them now.
Finally, figure out a way to hang on to all of that reporting talent you have so indifferently tossed away. Turn them into contractors for a couple of stories per month, or put them on retainer. But don’t lose them - because five years from now there will be land rush on reporting talent to fill the new ‘newspapers’. So tie them up now.
In the end, it’s all about surviving short term, and starting over under the new rules long term. We will always need newspapers because we need news. But as to what form this transformed medium will take is as yet unknown. But we do have some ideas - and it is those ideas that America’s dying newspapers should now embrace, not wistful dreams of the past.
Tuesday, March 3, 2009
Buffett's Stock Picks Are Flat!
No, we don't mean in the good way (who wouldn't kill for flat performance over the past year?). We mean in the round-trip way.
As in: All those stock gains Warren had amassed over the years, including the moonrocket WaPo and Coke stakes, have now disappeared.
At the end of 2007, says hedge fund manager Jeff Matthews, Warren had an embedded gain in Berkshire's stock portfolio of $35 billion. Now, he's flat.
From Jeff Matthews Is Not Making This Up:
Based on the year-end portfolio presented in the letter (and it has changed only modestly over time, but now excludes two stocks, Burlington Northern and Moody’s, in which Berkshire owns 20% and must report its holdings under the equity method,) Berkshire’s entire equity portfolio, which had a $37 billion cost basis and a $49 billion market value at year-end 2008, was, as of yesterday’s market close, worth only about $37 billion...
Now, the calculation itself is fairly straightforward. Since year-end Berkshire’s equity portfolio has suffered losses of close to $1 billion or more in American Express, Conoco-Phillips, P&G, and USB, if the computers here at NotMakingThisUp are correct.
And while some of those losses are certainly temporary, the hits to his financial holdings look more permanent—as does the whopping $5 billion decline in Berkshire's 7% stake in Wells Fargo thus far in 2009.
Virtually every other named holding in Berkshire’s portfolio—including Coke, Tesco, Swiss Re, and even poor old Washington Post—is also down year-to-date.
Consequently, if our math is correct, Berkshire’s equity portfolio stands at roughly $37 billion as of yesterday's market close, dead even with its $37.1 billion reported cost basis at year-end 2008.
And here's another bombshell:
Buffett also disclosed what might go down as the second most surprising disclosure in today’s letter: he had to sell some of Berkshire's stocks to make those headline-grabbing investments in GE, Goldman Sachs and Wrigley.
As in: All those stock gains Warren had amassed over the years, including the moonrocket WaPo and Coke stakes, have now disappeared.
At the end of 2007, says hedge fund manager Jeff Matthews, Warren had an embedded gain in Berkshire's stock portfolio of $35 billion. Now, he's flat.
From Jeff Matthews Is Not Making This Up:
Based on the year-end portfolio presented in the letter (and it has changed only modestly over time, but now excludes two stocks, Burlington Northern and Moody’s, in which Berkshire owns 20% and must report its holdings under the equity method,) Berkshire’s entire equity portfolio, which had a $37 billion cost basis and a $49 billion market value at year-end 2008, was, as of yesterday’s market close, worth only about $37 billion...
Now, the calculation itself is fairly straightforward. Since year-end Berkshire’s equity portfolio has suffered losses of close to $1 billion or more in American Express, Conoco-Phillips, P&G, and USB, if the computers here at NotMakingThisUp are correct.
And while some of those losses are certainly temporary, the hits to his financial holdings look more permanent—as does the whopping $5 billion decline in Berkshire's 7% stake in Wells Fargo thus far in 2009.
Virtually every other named holding in Berkshire’s portfolio—including Coke, Tesco, Swiss Re, and even poor old Washington Post—is also down year-to-date.
Consequently, if our math is correct, Berkshire’s equity portfolio stands at roughly $37 billion as of yesterday's market close, dead even with its $37.1 billion reported cost basis at year-end 2008.
And here's another bombshell:
Buffett also disclosed what might go down as the second most surprising disclosure in today’s letter: he had to sell some of Berkshire's stocks to make those headline-grabbing investments in GE, Goldman Sachs and Wrigley.
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