Rent the Runway Takes Flight Monday, May 2 2011 

May 2, 2011, 9:00 am

Rent the Runway Takes Flight


When Rent the Runway, a New York start-up hoping to make high-end fashion as accessible as renting a movie from Netflix, first introduced its service in late 2009, it wasn’t clear how successful the venture would be.

Would women want to rent designer dresses by mail the same way they do movies or books?

As it turns out, the answer seems to be yes.

In the past 18 months, since Rent the Runway came out of its beta testing phase, it has enticed a million members to join the service. Each week, another 40,000 new members sign up, the company said. The company has raised $16.5 million from venture capitalists, and grown from a few employees to 51 staffers, prompting a move to larger offices in downtown New York.

The company has also expanded its closet to 135 from 25 different designers, attracting larger fashion labels like Vera Wang and Calvin Klein, and adding jewelry and handbag offerings.

But perhaps the most important marker of success is that the company began generating a profit at the end of March.

Jennifer Hyman, who co-founded the service with Jennifer Carter Fleiss, a friend and classmate from Harvard Business School, said this time of year — when women are looking for new dresses for proms, summer weddings and other festive events — is a busy time for them. But she said she believes the recent momentum is a sign that customers are satisfied with their experiences, and encouraging friends and colleagues to sign up as well.

“There is a seasonality to our business, but the recent growth is more than that,” she said. “We are in the business of selling an experience, helping make an occasion more memorable, and people enjoy telling their friends about us.”

Ms. Hyman acknowledged that the growth has not come without some bumps in the road.

“Over the last two months, our orders have quadrupled,” she said. “There’s been unprecedented growth, and there have been some issues where we haven’t been able to ship everything that was ordered.”

For example, she said, the company shipped 10,000 items last week alone and had trouble filling 2 percent of those orders.


American Apparel in new bankruptcy warning Sunday, Apr 3 2011 

1 April 2011 Last updated at 20:47 GMT

American Apparel in new bankruptcy warning

American Apparel store
American Apparel has seen sales fall and raw material costs rise

The US clothing chain American Apparel has said that there is “substantial doubt” the firm can continue as a going concern.

But although the wording appeared in its financial statement for the fourth quarter, the company’s controversial founder played down the warning.

The company has been criticised for sexually overt advertising. Its founder is fighting sexual harassment charges.

Shares were hard hit after the statement but closed barely changed.

American Apparel, which has 273 stores and 12,000 employees worldwide, reported sales down by 8.9% at $144m (£89.4m).

The statement said: “2010 was an extremely challenging but productive year. We suffered the after-effects of a major labor disruption resulting from an immigration intervention in 2009.”

In that year a number of its employees were found to be illegal immigrants.

‘Extraordinary challenge’It said the disruption to its production schedule led to “significantly higher production costs” per unit and late deliveries of products to stores and wholesalers.

It also referred to what it called “extraordinarily challenging world-wide economic conditions” and higher raw material prices.

It said there was “substantial doubt that the Company will be able to continue as a going concern” and that it could be prevented from borrowing under its credit agreements.

The annual report said the company may determine that it is in its best interests to file for a pre-packaged, pre-arranged or other type of Chapter 11 bankruptcy.

But the founder, Dov Charney, played down the warning.

He told the Reuters news agency that the warning was a formality, saying: “We have to put it as a risk factor if it’s in the realm of possibility, even if it’s one in 1,000.”

American Apparel has been expressing doubts about its ability to continue as a going concern since last August.

Competing for Summer Internships, Using a Twitter Contest Friday, Mar 25 2011 

Competing for Summer Internships, Using a Twitter Contest


Published: March 24, 2011

A VENERABLE agency has turned to a new form of communication to find its annual batch of interns in a shift that underlines how Madison Avenue is seeking to change the way it reaches out to everyone, from consumers to potential employees.

Mark Manalaysay is one of the summer interns chosen by Campbell Mithun.

Genette Sekse is another intern chosen. Both she and Mr. Manalaysay said the competitors shared a lot of camaraderie.

Campbell Mithun, an agency founded in Minneapolis in 1933 that is part of the Interpublic Group of Companies, is to announce on Friday the names of the six young people who have been chosen to intern there this summer. For the first time in the six years that the intern program has been offered, agency executives turned to a nontraditional method of accepting and assessing applications.

The intern search was conducted through Twitter, which applicants were asked to use to make their cases of why they wanted one of the six paid internships in four areas: account management, creative, media and technology. The internships are to begin on June 6 and run for 10 weeks.

In honor of the favorite number of a Campbell Mithun founder, Ray Mithun, the competition is known as the Lucky 13. To reflect that, the applicants were asked to submit 13 comments on Twitter in 13 days, from Feb. 13 through 25.

The applicants were asked to tag their comments with the hashtag #L13. That is Twitter-talk for adding the phrase “#L13” to every comment so that anyone with a presence on Twitter can find all the comments, whenever and by whomever they were posted.

Campbell Mithun also created a Twitter feed, using the handle @the_Lucky_13, to keep those interested abreast of the process.

Initially, 425 people registered as applicants, agency executives said, and more than 300 submitted comments on Twitter. A committee of 37 Campbell Mithun employees, called the Lucky 13 Twitter response team, sifted through thousands of comments to identify 32 finalists, who were interviewed in person or through Skype. The six interns, several from Minnesota, were chosen from the finalists.

“We’ve been wanting to shake up the process for some time,” said Debbie Fischer, vice president and human resources manager at Campbell Mithun, which has about 275 employees who work for clients like Famous Footwear, General Mills, Hefty, Land O’ Lakes, Supervalu and Toro.

Given “the increasing digital nature of our day-to-day work, we thought it would be appropriate to add a digital component,” Ms. Fischer said, particularly with an effort aimed at 20-somethings.

“Everyone in this generation is on social media,” she added.

The results “exceeded our expectations,” Ms. Fischer said, both in the quantity of applications — about double from last year — and the quality.

And “we were surprised in the level of engagement of the candidates with one another,” she added, which was enabled by conducting the hunt on Twitter.

“For the first time, everything was out in the open; they knew who their competition was,” Ms. Fischer said, which led to the applicants “stepping up their game.”

Mark Manalaysay, a junior at the Savannah College of Art and Design in Georgia who will be one of the six interns, echoed her comment.

“It was very public, which kept it very interesting,” said Mr. Manalaysay, 21. “We’ve actually been very social with each other.”

“It’s a ‘people of our age’ type of deal,” he added, laughing. “We were giving out our Twitter and Facebook.” Mr. Manalaysay, an aspiring art director, will be a creative intern.

Another of those selected, Genette Sekse, 22, said she found the unconventional way of applying “a lot more appealing than writing a cover letter or sending a résumé.”

“And it was fun checking out the competition,” she added. “We started tweeting each other: ‘That was a really cool thing you submitted. I’ve got to beat that.’ “

Ms. Sekse, who is from Norway, will be a media intern at Campbell Mithun. She is a junior at St. Olaf College in Northfield, Minn.

The four other interns are: Cory Etzkorn, a junior at the University of Minnesota, technology; Connor Johnson, a junior at St. Olaf, media; Vince Koci, a senior at the University of Minnesota, creative (copywriter); and Natalie Neal, who graduated from St. Olaf last year and is now a volunteer teacher at the International School in Moshi, Tanzania.

Campbell Mithun is among several agencies that are adding social media to the mix to interest students in advertising as a potential career.

For instance, DDB Brazil, part of the DDB Worldwide unit of the Omnicom Group, sponsored a contest for Brazilian students. The winner, Lucas Cabral Maciel of the Federal University of Rio de Janeiro, has been sent to nine countries in 99 days with a requirement to report continuously in social media like Twitter (@99NOVAS) on interesting cultural trends he finds along the way.

And the last two Advertising Week events in New York featured a contest called the Big Ad Gig, which offered the winners paid, monthlong freelance stints as copywriters and art directors at agencies like Atmosphere Proximity, part of the BBDO Worldwide unit of Omnicom; Crispin Porter & Bogusky, part of MDC Partners; and Ogilvy & Mather Worldwide, part of WPP.

Among the materials contestants were asked to submit were video clips to be uploaded to YouTube. Some freelancers were later hired by the agencies for which they worked.

Campbell Mithun plans to offer internships for summer 2012, Ms. Fischer said, adding that it was too early to discuss what part social media would play in the process. “You’re just going to have to stay tuned,” she said.

The Wristwatch Is Reimagined. Will Young Shoppers Care? Sunday, Mar 20 2011 

Digital Domain

The Wristwatch Is Reimagined. Will Young Shoppers Care?

Published: March 19, 2011

HOW many tiny keypad buttons can fit on one wristwatch? At least 28. That’s the number that Hewlett-Packard packed onto its first watch, the HP-01, in 1977. It was such a strange hybrid of watch and algebraic calculator that calling it a mere watch or a calculator would not do it full justice. So HP called it a “wrist instrument.”


H.P.’s 1977 “wrist instrument

It was a commercial flop.

Years later, the cellphone would become an ubiquitous, multifunctional device that, incidentally, showed the time. As a result, many people younger than a certain age have never acquired the habit of wearing a wristwatch. That’s hardly news, but here’s what does surprise: H.P. and a few other companies are talking up wristwatches again, almost as if the cellphone had never appeared. It’s an idea that strikes me as oblivious to the consumer electronics landscape.

Last month at an H.P. event in Shanghai, Phil McKinney, the chief technology officer of the company’s personal systems group, displayed the MetaWatch, a prototype developed by Fossil that he described as the first generation of “the connected watch.”

This version has Bluetooth, but the long-term vision is to give it the wireless capability to be the hub of every Internet-ready portable device you own — phone, laptop, tablet. The MetaWatch would be “the mobile Wi-Fi hotspot on your wrist,” Mr. McKinney said in the presentation.

The Allerta inPulse.

During an interview this month, he told me that he gave a talk in 2006 about his conception of the “connected watch” of the future. At the time, wireless carriers were saying that all kinds of digital devices, including laptops, would join cellphones in having their own built-in wireless radios for connectivity.

“Why not take all the radios and aggregate them into one device?” he suggested then. That one device would be the wristwatch.

It was an idea, nothing more. But last year, Mr. McKinney said, he received a call from Fossil. Executives there had heard his 2006 presentation, had been captivated by the vision, and had set about building two prototype watches — one with hands and another with digital numbers. It was the one with hands that he showed in Shanghai.

In our conversation, I told him that so little information could be displayed on the watch’s face — there is a small, scrollable window at the top and another one at the bottom — that it seemed nearly useless. But he said it would be enough for alerts, able to notify the wearer, for example, “when you’ve got 4 more e-mails, 3 Facebook updates and 10 Tweets.” He said buttons on the watch could be programmed to dispatch canned responses.

Mr. McKinney, who is 50, said that young consumers who are unaccustomed to wearing watches would still find the MetaWatch appealing. They’d use it, he said, for purposes other than timekeeping. “I hit a button and — boom — I’m checked in at Foursquare,” he offered as an example.

Has Fossil, the watch’s developer, tested the concept on focus groups or done other market research? Does it have definite plans to bring it to market? It’s not clear. Fossil declined a request for an interview or for comment. Marshal Cohen, chief retail analyst of the NPD Group, does not see the product’s appeal. The MetaWatch, he said, “was the right idea — five years ago.”

“But we now have a communications hub: the smartphone,” he added. “Technology has passed the MetaWatch by.”

Over all, the casual-watch market in the United States has hardly shriveled. According to NPD’s data, the industry had sales of about $2.35 billion in 2010, up 4 percent from 2008. In those two years, sales were up 33 percent within the 35-to-44 age group and 104 percent for those 65 and older.

Sales to the 18-to-24 age group, however, fell 29 percent. And Mr. Cohen says he doesn’t think that many of today’s young adults will ever adopt the watch-wearing habit.

Catherine Moellering, executive vice president at Tobe, a retail consulting firm, does see a new interest in watches among 11-to-17-year-olds, but she says it derives from novelty.

“The watch had disappeared so completely to these young consumers that today they could discover watches as if they had never been around before,” she said. Still, she said, this inexpensive accessory has uncertain prospects of leading to a lifetime habit.

Watches have always been a fashion accouterment as well as a utilitarian instrument. But Ms. Moellering sees young consumers paying less attention not only to watches, but also to the entire world of fashion. Fashion “is not as exciting as technology,” she said. “No store at the mall is as full as the Apple Store.”

Apple does not sell a watch, but you can buy watchband kits from LunaTik that are designed to hold a current-generation iPod Nano on the wrist. But the Nano has no wireless capabilities.


ANOTHER company, Allerta, has a Bluetooth-enabled watch that can be programmed to show alerts and brief text messages — not unlike those imagined by Mr. McKinney — that draw upon a nearby smartphone or PC.

But do we need alerts? Messages of all kinds are coming into our smartphones — we know that without having to check. So wearing a second device to tell us to look at the first device seems superfluous.

Such a watch will supply information about information. Meta indeed.

Randall Stross is an author based in Silicon Valley and a professor of business at San Jose State University. E-mail:

A version of this article appeared in print on March 20, 2011, on page BU3 of the New York edition.

A Changed Starbucks. A Changed C.E.O. Monday, Mar 14 2011 

A Changed Starbucks. A Changed C.E.O.

Stuart Isett for The New York Times

Some Starbucks locations, including one in downtown Seattle, have been updated to make them feel more like a neighborhood shop.

Published: March 12, 2011

Ramin Talaie/Bloomberg News

Starbucks is expanding in new directions, with ventures like instant coffee.

RAISE your hand if you remember when Starbucks seemed cool.


Think back. To before the planet groaned with 17,000 Starbucks shops. Before the pumpkin spice lattes and the Ciao Amore CDs. Before the Strawberries & Crème Frappuccino ice cream, the Starbucks cream liqueur, the Pinkberry-inspired Sorbetto.

In short, to before Howard D. Schultz and his trenta-size ambition turned a few coffeehouses here into the vast corporate Empire of the Bean.

The world has often seemed three espressos behind Mr. Schultz — which is why the low-key guy sitting in his office here doesn’t quite seem like Howard Schultz.

Did he just say “but”? As in, “We have won in many ways, but …”? Was that a “we” instead of an “I”? A note of humility?

Yes, this is Howard Schultz: the man who willed Starbucks onto so many street corners — and then, for a moment, looked as if he might lose it all.

Not even Mr. Schultz could have predicted how Starbucks would change our culture when its first shop opened here, in Pike Place Market, on March 30, 1971. Like it or not, Starbucks became, for many of us, what we talk about when we talk about coffee. It changed how we drink it (on a sofa, with Wi-Fi, or on the subway), how we order it (“for here, grande, two-pump vanilla, skinny extra hot latte”) and what we are willing to pay for it ($4.30 for the aforementioned in Manhattan).

But during the depths of the recession, Starbucks nearly drowned in its caramel macchiato. After decades of breakneck expansion under Mr. Schultz, tight-fisted consumers abandoned it. The company’s sales and share price sank so low that insiders worried Starbucks might become a takeover target.

So, after an eight-year hiatus, an alarmed Mr. Schultz returned as chief executive in January 2008. He shut 900 shops, mostly in the United States, drastically cut costs and put the company back on course.

Friends and colleagues say this hellish experience left Mr. Schultz a changed man. Starbucks, these people say, is no longer “The Howard Schultz Show.” The adjective that many use to characterize his new self is “humble” — a word that few would have applied to him before.

“Everything Starbucks did in the past, more or less, had worked,” Mr. Schultz said in an interview in January at the company’s headquarters, with a view of Puget Sound south of downtown Seattle. “Every store we opened was successful, every city, every country.”

He continued: “Growth had a life of its own — and that’s O.K., when you’re hitting the cover off the ball every time, but at some point, nothing lasts forever.”

One thing hasn’t changed: the man dreams big. In that same interview, Mr. Schultz spoke of expanding into still more products and in markets like China. He is pushing, of all things, a brand of instant coffee. The words “Starbucks Coffee” were just removed from the company’s green mermaid logo because he wants to waltz his brand up and down the grocery aisles. On Thursday, he announced that the company had struck a deal with Green Mountain Coffee Roasters to distribute Starbucks coffee and teas for Keurig single-serving systems. Shares of Starbucks jumped nearly 10 percent on the news, reaching their highest level since 2006. The stock closed at $36.56 on Friday.

Mr. Schultz and his colleagues say Starbucks will keep its feet on the ground this time, but some outsiders have doubts. Detractors say Starbucks long ago ceded its role as a gourmet tastemaker to become a “billions-and-billions served” chain like McDonald’s. Starbucks — “Charbucks,” to those who complain that its heavily roasted coffee tastes burned — will never rekindle the old romance, these people say.

“Has anybody said they came back because people love the coffee again?” asks Bryant Simon, a history professor at Temple University and author of “Everything but the Coffee: Learning About America From Starbucks.”

“They came back because they’re remaking themselves as a brand that competes on value, largely — a brand that’s everywhere, easily accessible, predictable,” Mr. Simon says.

HOWARD SCHULTZ, now 57, is a tall, sinewy man with a toothy grin and a silky sales pitch. He rarely sticks to script, preferring to speak off the cuff, whatever his audience. In conversations, he leans in, locks eyes and gives the impression that, right now, there is no one else in the world he would rather be talking to. When he speaks of “soul” and “authenticity” and “love,” you could almost forget that he runs a multibillion-dollar business that has become an uneasy symbol of globalization. Or that the British actor Rupert Everett once likened Starbucks to a metastasizing cancer.

The story of Mr. Schultz’s life and career has been told many times, not least by Mr. Schultz. (His second book, “Onward: How Starbucks Fought for Its Life Without Losing Its Soul,” is to be published on March 29.) But some highlights bear repeating:

He grew up poor in the Bay View housing projects in Canarsie, Brooklyn, received a football scholarship to Northern Michigan University and, after a variety of jobs, joined the fledging Starbucks in 1982, as head of marketing. Inspired by Italy’s coffee culture, he left Starbucks and opened his own coffee shop. Then, in 1987, he bought Starbucks, which at the time had all of six shops. By 1995, Starbucks had 677 shops. By 2000, it had 3,501, and that year Mr. Schultz stepped aside as C.E.O.

And so it went for Starbucks, one success after another, until the recession hit and exposed the company’s overreach to the world.

In December 2007, Mr. Schultz was worried that the Starbucks brand was losing its luster, and he and the board decided that in the new year, they would push aside Jim Donald and announce that Mr. Schultz would return as C.E.O. That month, Mr. Schultz, his wife, Sheri, and their two children flew to Hawaii for their annual getaway.

But on the beach in Kona, he just couldn’t relax. He kept checking the company’s daily sales figures and was horrified to see that they were falling by double digits.

Also in Hawaii then was his friend Michael Dell, who had recently returned to run Dell Inc. On a long bicycle ride along the coast, Mr. Dell told Mr. Schultz that when he returned to Dell, he wrote what he called a “transformational agenda.” Mr. Schultz then created his own plan for Starbucks.

His goals were to fix troubled stores, to rekindle an emotional attachment with customers and to make longer-term changes like reorganizing executives and revamping the supply chain.

(Page 2 of 4)

He returned to Seattle, handed copies of his plan to the company’s senior executives and posed the big question: Are you in, or are you out? Eight of those top 10 executives have since departed.

Stuart Isett for The New York Times

Some Starbucks locations, including one in downtown Seattle, have been updated. New stores are being decorated with local woods and art, to make them feel more like a neighborhood shop.

“What the company needed then was what he used to be to us — the innovation, the refusal to not be a champion,” says Troy Alstead, the chief financial officer. “A lot of people were questioning, in that span before he came back, ‘Were we done?’ And Howard came back, and it wasn’t even a question anymore.”

MR. SCHULTZ usually rises at 4 a.m., without an alarm, downs a Starbucks Sumatran coffee at home, followed by a short double latte or espresso macchiato from one of two Starbucks stores he visits on his way to work. He arrives in his office by 6:30.

Friends and colleagues agree that he is as fanatical as ever about Starbucks. Millard Drexler, the chief executive of J. Crew, recently e-mailed Mr. Schultz to complain that the coffee lids at a Starbucks on Astor Place in Manhattan kept spilling coffee on his shirt. Mr. Schultz’s reply: “On it.”

Mr. Drexler, who has a habit of e-mailing C.E.O.’s with complaints, says: “I can give you many more examples when they say, ‘I’ll send this to a research department or a gatekeeper.’ ” But, he says of Starbucks, “to have that kind of quality control they have around the world is pretty extraordinary.”

It was on such a morning in early 2008 that Mr. Schultz was convinced he had a product that would re-energize the company’s tired sales. It was called Sorbetto after the Italian for “sorbet,” and the drink was a twist on Pinkberry, the frozen yogurt chain in which Mr. Schultz is an investor.

Mr. Schultz had flown to Italy to taste the ingredients of his new product and thought he had the next Frappuccino. By that summer, 300 Starbucks locations in California were bathed in pink to promote the new drink. Starbucks had shipped in ingredients from Italy, and Mr. Schultz had primed investors.

But customers didn’t like the sugary concoction. And neither did Starbucks baristas, who had to spend an hour and a half cleaning the Sorbetto machines at the end of their shifts. A few months later, Mr. Schultz abandoned Sorbetto.

“Sorbetto, we did too quickly, and that was my fault,” Mr. Schultz says.

The headlong introduction was a mistake, but it was also classic Schultz.

“He likes things moving quickly, he likes people to be decisive, he’s got this energy level, this need for driving and for winning, and I think at times it’s hard for some people to keep up,” says Michelle Gass, the president of Seattle’s Best Coffee, which Starbucks owns. After his missteps, Ms. Gass says, Mr. Schultz has become more disciplined and a better listener.

Mr. Schultz concedes that he can no longer run Starbucks through the Cult of Howard. And he readily acknowledges that he badly misread the economy and underestimated the extent to which his customers would pull back during the recession.

At the time, he says, he had a hard time accepting that Starbucks would become a poster child for excess.

After his return, he halted new store openings and, with a P.R. flourish, closed every Starbucks in the nation for three hours to retrain baristas. The chain ran its biggest ad campaign ever, emphasizing the quality and freshness of its coffee. It ordered baristas to dump brewed coffee after 30 minutes.

But growth in same-store sales dipped below zero for the first time ever, and the company’s share price kept falling. It was a new feeling for Mr. Schultz, like the A student who breezes into college and then gets C’s.

Executives concluded that Starbucks had to close 200 American shops. The board suggested 600. Executives said that if sales and the economy got worse, they would also cut $400 million in costs. The board said no, let’s start cutting costs immediately, while closing locations. Starbucks ultimately closed 900 locations worldwide and cut $580 million in costs. As the decline in same-store sales neared 10 percent, board members asked executives to model what would happen if the sales slide hit 20 percent — which once would have been unthinkable.

(Page 3 of 4)

“Nobody knew where the bottom was,” recalls James G. Shennan Jr., a venture capitalist who has been on the company’s board since 1990. “The general agreement around the table was we better have the doomsday plan.”

In December 2008, almost a year after he returned as C.E.O., Mr. Schultz flew to New York on the company jet. He and his team were scheduled to meet with analysts from Wall Street, where Mr. Schultz, once a darling, was now being doubted as never before.

On the plane, he reviewed the grim quarterly numbers: Profits were underwhelming, and holiday sales looked dreadful. Just before the meeting, the company’s chief financial officer, Pete Bocian, resigned.

Mr. Schultz reread the script for the presentation — and didn’t like what he saw. He worried that the stock price might drop so low that someone would swoop in and buy the company.

He summoned his executives to his Fifth Avenue apartment. Late into the night, around the dining room table, they revised the presentation.

The next day, as the executives rehearsed, Mr. Schultz kept interrupting. Vivek Varma, who had recently joined Starbucks as head of public affairs, told him that he should leave.

No one could remember anyone talking like that to Mr. Schultz. But he left. The next day, he and the other executives painted a somber picture for analysts and laid out the recovery plans. Rather than plunge, the company’s share price rose 20 cents that day.

Over the next year, Starbucks made much deeper and more difficult changes than Mr. Schultz had originally envisioned. By April 2009, same-store sales, though still down from a year earlier, were finally rising. By the holidays, they had turned positive.

INSTANT coffee: the very words leave a bad taste in many people’s mouths. But Starbucks has been developing instant coffee in earnest since 2006. Mr. Schultz says his industry considers instant a “death category.” It is, however, a $20 billion one.

Before he returned, Mr. Schultz complained that if Apple could develop the iPod in less than a year, Starbucks could surely develop an instant coffee in that time. Finally, in January 2009, the new product, Via, was scheduled for a full-scale introduction.

But there was a problem: market research was showing that skeptical customers needed a lesson about instant coffee. Some executives worried that a big rollout might flop. Ms. Gass and a few others told Mr. Schultz that Starbucks should delay Via and introduce it in two cities before going national.

“That was hard for him,” Ms. Gass says. But rather than overrule his executives, as he might have in the past, Mr. Schultz agreed. It turned out to be the right decision. After testing Via in Seattle and Chicago, Starbucks rewrote the plan for a nationwide introduction. For instance, instead of just giving away free samples, which customers forgot in the bottom of their briefcases, purses and backpacks, it prepared Via in the stores and gave customers a blind taste test.

In 2010, sales of Via were over $200 million. The instant coffee is now also sold in grocery stores and in Britain, Canada, Japan and the Philippines.

The methodical introduction of Via offered a sharp contrast to the old Howard Schultz whose gut told him — wrongly — that Sorbetto would be a winner. But he has also gone so far as to embrace big-company ideas like focus groups, which he used to shun. Delegating, and accepting other people’s conclusions, is now easier for him. “There’s been more arguing, challenging and debate in the last two to three years than there’s ever been,” says Mr. Alstead, the chief financial officer.

Mr. Schultz’s take: “What leadership means is the courage it takes to talk about things that, in the past, perhaps we wouldn’t have, because I’m not right all the time.”

Born entrepreneurs are not necessarily born managers. You need creativity and drive to start a company, discipline and delegation to run one. In the last year, people who work closely with Mr. Schultz say, he has shown he can make the leap.

(Page 4 of 4)

Perhaps the bigger question is whether Mr. Schultz can, as he likes to say, preserve Starbucks’s soul, or whatever soul it has left. In a switch, the company is designing new stores with local woods, furniture and art, to make them feel more like a neighborhood shop. It is also buying specialty beans in limited supply, as artisanal shops do.

Whether Starbucks can recapture a neighborhood feel, as Mr. Schultz insists, is anyone’s guess. For many people, especially in areas where carefully made, lighter-roast coffee from the likes of Stumptown and Intelligentsia is trendy, Starbucks has become a place to go for free Wi-Fi, or to use the restroom, or to buy a coffee on the go.

There is a market for a convenient coffee chain, as the recent Starbucks sales rebound shows. But some customers and analysts say that the mass-market approach conflicts with Mr. Schultz’s vision of a global giant that somehow feels local everywhere.

Mr. Simon of Temple University says: “When you’re selling stuff people don’t need, you’ve got to be selling something else, and that’s what Starbucks lost. There’s a kind of dissonance between the messaging and the actual practice.”

Mr. Schultz no longer plans to blanket the United States with new Starbucks stores, sometimes with multiple locations on one block — a practice that inspired a contest on Flickr to see how many Starbucks shops people could fit into a single photograph. Instead, like so many other executives, he has his sights on China. Starbucks already has roughly 430 stores in mainland China and plans to have 1,500 there by 2015. India beckons as well. The company also plans to sell a wider variety of drinks and foods in grocery stores and its own shops, like Kind fruit and nut bars, which Starbucks put on the map.

IT may be difficult to believe, but there was a time when McDonald’s was a novelty. But, like Ray Kroc, who took over a small hamburger business and built it into the most successful fast food operation in the world, Mr. Schultz has learned that growth can be seductive, and that it can exact a price.

Starbucks and its leader are more measured than during his last stint in the corner office. “I think we are very conscious of the things that we have done wrong over the years, particularly when we just got caught up in the growth phase,” says Mr. Shennan, the Starbucks director. “We are not going to do that again under Howard’s management, I tell you, or the current board’s.”

In January, three years after his return, Mr. Schultz stood before 1,100 employees at the headquarters here. Three thousand more from around the world were patched in via Webcast. The company had finished its strongest holiday season ever, and Mr. Schultz had just unveiled its new, “coffee”-less logo. Yet his words were laced with caution.

“We have won in many ways,” he said, “but I feel it’s so important to remind us all of how fleeting success and winning can be.”

Skype To Start Running Ads This Week Monday, Mar 7 2011 

Skype To Start Running Ads This Week

Todd Wasserman 3 hours ago by Todd Wasserman (07/03/2011)

In an attempt to create a new revenue stream, Skype this week will roll out ads from the likes of Groupon, Universal Pictures and Visa.

New advertising will appear in the home page in Skype, according to the company’s blog. Chief marketing officer Doug Bewsher says Skype has already run some test ads via online music service Rdio “in the last month or two.”

In the post, Bewsher says the ads are designed to be unobtrusive and “won’t interrupt your Skype experience.” The company also plans to target the ads based on “non-personally identifiable” demographic data, though users can opt out of sharing such information.

Skype offered the following example of what the ads will look like.

Skype’s move comes after the company mulled over advertising for some time. In May, then-CEO Josh Silverman told The Telegraph the company is challenged to keep Skype-to-Skype calls free and maintain quality of service. That led the Skype team to “seriously consider” including ads from third parties.

Advertising represents an enticing potential source of revenues for Skype. In its prospectus with the SEC, Skype cited advertising as one of its potential sources of income. That led Fortune to conclude that advertising could bring in as much as $200 million in annual revenues for Skype.

Campaigns for a Holiday That Marketers Love Monday, Feb 14 2011 

Campaigns for a Holiday That Marketers Love

Published: February 13, 2011

IF you listen carefully this Valentine’s Day, you may hear men shouting love declarations from a mountaintop in California. But before you start looking at the man by your side and wondering why he’s not doing the same thing, know that the screaming men are were hired by AT&T for the company’s Valentine’s Day promotion.

Mars Chocolate hopes romantics will pay for custom messages on M&M’s to make heartfelt declarations.

AT&T hired “mountain men” to make proclamations of love from a mountaintop.

The campaign, called “Shout your love from the mountaintop,” began Thursday and encouraged users to post declarations of love to an AT&T Facebook page. The mountain men, a group of actors equipped with HTC Inspire 4G phones, are to shout the declarations from the top of Mount Baldy in Southern California from morning to evening on Monday.

“It’s just a fun Valentine’s experience that takes communication to a new level,” said Valerie Vargas, the vice president for advertising at AT&T.

The mountaintop campaign is just one example of how marketers are taking new approaches to the most romantic holiday of the year. AT&T worked with BBDO New York, part of the Omnicom Group and the company’s creative agency of record, on the campaign.

“You do get so tired of clichéd Valentine’s promotions,” said Ralph Watson, the co-executive creative director for AT&T business at BBDO. “We took great pains to make sure we didn’t just have heart stuff.”

Users whose messages were chosen for the campaign will receive a link to a video of the shout that they can send to their friends or post on their Facebook page. The shouts are also being streamed live on the AT&T Facebook page at for the duration of the event.

Last Friday, the company encouraged users to post Twitter messages using the tag “#LoveShout,” which AT&T paid Twitter to promote as a trend. The campaign included digital banner ads and video ads that ran on sites like AOL, CNET, Fox News, MSN and Yahoo.

Several Web videos showing the mountain men in different settings were also posted on the Facebook page in the days before Valentine’s Day. AT&T will also have video messages from the mountain men for participants whose messages did not get shouted.

Those seeking a more subtle approach to declaring their love may take a cue from the M&M character Red, who is being featured in the Valentine’s Day campaign for My M&M’s, the personalized version of the chocolate candies.

The brand, part of the Mars family of food products, promoted the candies through a variety of digital and traditional media, including 15- and 30-second television commercials featuring Red sitting on a bench with an attractive companion who says she loves him, but he can’t say it in return.

“Red has trouble showing his emotional side,” said Jason Lucas, the senior creative director for BBDO New York, the agency of record for My M&M’s. “The only way he can say it is with the candies.”

The full-color ads that ran in print media, including Us Weekly and People magazine and as inserts in Sunday newspapers, featured Red lying in a come-hither pose on a elegant candlelit dining table decorated with scattered rose petals. The words “Be my valentine” were etched on his back.

Other elements of the campaign included radio spots offering discounts on My M&M’s, Facebook ads, banner ads, e-mail promotions and a Twitter handle, MyMMscom, with which followers could share gift ideas and get discount codes for the candies. Users can customize the candies by choosing from 25 colors and adding images or text.

“What better way to celebrate love than to customize it?” said Lauren Nodzak, a spokeswoman for Mars Chocolate North America. The most popular messages are “Be mine,” “You make me melt” and, of course, “I Love You,” Ms. Nodzak said.

Valentine’s Day also prompts people to look for love. Paul Breton, the director of corporate communications at the Web site, said many dating sites tended to have an uptick in visitors this time of year. The company is offering users a free sampling of its service through the month of February. It also is working with the artist Hugh MacLeod on a Facebook application featuring the artist’s love-themed drawings.

“As a company, as a brand, we’re all about creating more love in the world and people finding fun ways to do that,” Mr. Breton said. The Facebook app allows users to post selected drawings by Mr. MacLeod on other Facebook users’ pages or send the art as an e-mail.

Users who “like” the Facebook page also receive a discount on Mr. MacLeod’s artwork. The app will function through the month on the eHarmony pages for the United States, the United Kingdom and Australia, as well as on the Facebook page for, eHarmony’s dating service for same-sex couples.

But the artwork is not limited to being shared with potential lovers. Mr. Breton said the company tried to include pieces that could be sent to friends and family by including cards with messages like “Thank you for … you.”

Mr. MacLeod, who is single, said he considered himself a hopeless romantic.

“Its hard to be a cartoonist if you’re not fundamentally interested in what drives people,” Mr. MacLeod said. “Love is a big driver.”

Solar power farms face cash cut, government warns Monday, Feb 7 2011 

7 February 2011 Last updated at 15:54 GMT 

Solar power farms face cash cut, government warns

Model of a farm house with solar panels in adjacent field Farms threaten to milk the system of cash

The government is acting to stop a proliferation of solar power farms.

It says they threaten to use up too much of the money set aside to fund the new system of “feed-in tariffs”.

These tariffs are the cash subsidies given to people who generate electricity by putting solar panels or wind turbines on their homes.

Energy Secretary Chris Huhne says big solar farms threaten to use up the available cash for homes and small businesses who want to use the system.

Last October planning permission was granted for the UK’s first purpose-built solar farm, in Cornwall, and with up to 6,000 individual panels.

“Because of the risk of an increasing number of large scale solar farms which could push feed-in tariffs (FITs) off track, and the need to give industry added certainty to invest, the coalition is today announcing a comprehensive review into the scheme,” said Mr Huhne.

“Large scale solar installations weren’t anticipated under the FITs scheme we inherited and I’m concerned this could mean that money meant for people who want to produce their own green electricity has the potential to be directed towards large scale commercial solar projects.”

ConcernThe system of feed-in tariffs was first launched in April 2010 by the previous Labour government.

However there has been growing concern that the system might be milked by businesses which simply install solar panels on a large scale over fields.


“This review is exactly the kind of move that will kill off the confidence of investors who have flocked to take advantage of the scheme”

Friends of the Earth

The issue was highlighted in January by the BBC Money Box programme on Radio 4.

“There have been some very ambitious statements from large companies about the size of solar exploitation,” Greg Barker, the Minister for Energy and Climate Change told the programme.

Although the FITS scheme will now undergo a “comprehensive” review, to report by the end of this year, the government said there would be a much quicker enquiry into large scale generators which produce more than 50 kW – the output of about 20 typical homes under the scheme.

Schemes above this size now face a change to their tariffs “as soon as practicable” the Department of Energy and Climate Change (DECC) said.

Existing tariffs for everyone else are scheduled to stay as they are until April 2010, unless the review also reveals “a need for greater urgency,” DECC added.

OutputSo far about 21,000 schemes are registered to take advantage of the FIT scheme, which has just under £400m allocated to it.

The vast majority of these are homes and use photovoltaic solar panels.

Friends of the Earth (FoE) said feed-in tariffs had been a great success and argued they should not be restricted.

“The government should be planning to expand the scheme, not holding a knee-jerk review aimed at applying the financial brakes,” said FoE.

“This review is exactly the kind of move that will kill off the confidence of investors who have flocked to take advantage of the scheme.”

The typical home installation produces about 2.5 kW.

Homeowners are told they can earn £800 a year from their tariff payments, based on the subsidy of 41.3p per kilo watt hour.

This payment is index-linked and guaranteed for 25 years, and households also save an estimated £120 a year from lower heating bills.

However the homeowners who take part have to pay for the cost of installing the equipment, which can be about £10,000.

At present the maximum size of an installation under the FIT scheme is five megawatts (5,000 kW).

Imax Finds a Niche in a Digital Future Sunday, Jan 30 2011 

Imax Finds a Niche in a Digital Future

Published: January 30, 2011

DAVOS, SWITZERLAND — Moviegoers in Moscow who do not want to munch popcorn with the multiplex masses will soon have an alternative. At a V.I.P. cinema that is set to open in April, they will be able to watch blockbusters on a large, curved Imax screen while lounging in oversize leather chairs. The cost of a ticket for one of the 80 seats: close to $100.

At a time when many media companies eye the digital future with dread, worrying about how to persuade consumers to buy their products when free information and entertainment abound on the Web, Imax, a Canadian company, not only gets consumers to spend but also gets them to pay a premium.

Imax had a very good recession. Global box office receipts at Imax theaters more than doubled last year, to $546 million from $270 million in 2009. Under agreements with movie studios and cinema operators, the company keeps about one-third of that revenue.

Only a few years ago, Imax was weighed down by debt and scouting around unsuccessfully for a financial rescuer. The turnaround has prompted speculation about possible offers for the company.

Imax has said it is unaware of any reasons for a recent increase in the price of its stock, which is traded in Toronto and on Nasdaq. But Richard Gelfond, the company’s chief executive, was eager to discuss the company’s turnaround, during the World Economic Forum in Davos last week.

At a time when other media companies are reeling from the effects of piracy, Imax benefits from the fact that it offers an experience that is difficult to replicate outside a specially equipped theater. The screens are big — typically 22 meters wide by 16 meters high, or about 72 feet by 52 feet, though some are much larger. Resolution is higher than that of conventional movies.

But the company needed a technological leap to take advantage of those attributes in ways that were practical and financially viable. Starting in 2007, it switched to a digital projection system, replacing analog film prints, which cost $30,000 apiece, with digital versions that cost $175 per theater.

That made it feasible to expand the number of Imax screens, which is expected to reach nearly 600 worldwide by the end of this year, up from fewer than 300 in 2005. Digitization also encouraged Hollywood studios to make blockbusters like “Avatar” available in the Imax format, which used to be known more for nature films and other educational fare.

Some critics say digital Imax movies are not as good as the film versions, offering lower resolution and, sometimes, smaller screens.

But viewers do not seem to mind. The average Imax ticket price in the United States last year was about $13, Mr. Gelfond said, about $5 more than the overall average cinema price.

Imax’s growth has been particularly speedy in countries like China and Russia, where going to the movies makes for a popular night out. In Russia, the number of Imax screens rose to 15 from four last year, while in China, the total doubled to about 100, Mr. Gelfond said.

“There’s not a lot of live sports or music in China, so movies are the place to be,” he said.

Average Imax ticket prices in China are almost as high as in the United States, and Chinese consumers resold seats to “Avatar” for up to $100 on eBay, Mr. Gelfond said.

In Russia, Imax screens produced an average of $3 million in revenue last year, he said. That was the highest average of any market for the company; in the United States, the comparable figure was $1.2 million.

The company developed plans for the new theater in Moscow, which will be run by a local exhibitor, Formula Kino, after hearing that wealthy Russians sometimes liked to buy up every seat in a theater to treat themselves and a few friends to a private screening.

If the theater is successful, Imax plans to open other V.I.P. rooms, in cities like St. Petersburg, Mr. Gelfond said.

“All over the world, people are willing to pay for premium content,” he said. “They want something they can’t get in the home.”

Ryanair challenges Spanish court over boarding passes Monday, Jan 24 2011 

21 January 2011 Last updated at 15:13 GMT

Ryanair challenges Spanish court over boarding passes

Natasha Emerson BBC Radio 4’s You and Yours

Ryanair chief executive Michael O'Leary Ryanair has appealed against a ruling that found it is breaking international law

Ryanair has threatened to turn away passengers arriving at check in without their pre-printed boarding pass unless a ruling from a Spanish court is overturned.

Currently the airline charges £40 for a boarding pass for those who have not printed out their own.

A judge in Barcelona has ruled that the charge is illegal.

The airline said if it lost the appeal it might stop issuing boarding passes to passengers who turn up without one.

In the meantime it would continue to issue passes at check-in on payment of £40.

International lawTwo years ago, Ryanair abolished the traditional airport check-in.

At the time it announced that all passengers must check-in online and print out their own boarding passes – or face the £40 charge.

Judge Barbara Maria Cordoba Ardao ruled that the company was breaking international law by imposing the charge.

Ryanair has instructed its Spanish lawyers to appeal against the ruling, saying it is “bizarre and unlawful”.

‘Absolutely serious’Without the charge, the no frills airline said it would have to re-employ numerous handling agents to issue manual boarding cards for passengers who “forgot” to bring theirs with them.

Simon Calder, the Independent’s travel editor, told BBC Radio 4’s You and Yours that he thinks the airline means business.

“Judging from Ryanair’s previous record of robust reactions to unfavourable court decisions – abandoning airports such as Strasbourg in France and adding a “wheelchair” surcharge to fares after a case involving disabled passengers – it’s absolutely serious,” he said.

“It will dispense with the boarding card reissue fee altogether, and will turn away passengers who arrive at the airport without the agreed pre-printed boarding card.”

Ryanair says more than 99% of people do arrive with a boarding pass and the reissue charge will continue to apply pending the appeal.

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