New York-based sandcastle artist Calvin Seibert just returned from a 10-day trip to Hawaii where he completed a number of his abstract, geometric sandcastles. You can see more of his recent work here. Week-End Reading: http://philippemora.us > Also, find more on my pinterest boards. > By Philippe Mora See More: http://www.thisiscolossal.com/2014/02/new-geometric-sandcastles-from-calvin-siebert/
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Facebook is paying much more for WhatsApp than it did for Instagram. On Wednesday, Facebook announced the latest move in its quest for mobile social domination: it plans to buy popular messaging app WhatsApp for $16 billion in a cash and stock deal.
Techbubble 2.0: The irrational exuberance that quite a few sense here in Silicon Valley certainly reminds us of the first tech bubble of the 1990s. Deja vu all over again ? The current string of acquisitions with valuations defying gravity certainly echoes the acquisition of Geocities by Yahoo in 1999, or Microsoft acquiring WebTV in 1997. Same rationale then and now: it's all about land grab. Oh really ? I am not particularly convinced that emerging markets adoption of WhatsApp, a free app, will translate in dollars and sense for Facebook. No barriers to competition, except perhaps the carriers who will have certainly the last word on anything that happens on their networks. Who remembers that little Israeli startup called ICQ ? Messaging was already hot in the 1990s or was it. ICQ was gobbled by Yahoo for a billion. Geocities was shut down in 2001. WebTV was shut down in 1999. Gains never materialized for Yahoo and Microsoft. And then the pop, when San Francisco transformed itself almost over night from boom town into a dead zone with the mother of U-haul shortages, ever and of course the best traffic in decades - at least something to be looking forward to. -By Philippe Mora. [Thank You MIT Technology Review | By Rachel Metz 02.20.14] If that sounds like a heck of a lot of money, it should. Facebook says it will pay $4 billion in cash and $12 billion in stock for WhatsApp, which lets users avoid paying SMS messaging fees by sending messages to others straight through its app (the app works on a variety of mobile platforms, iOS, Blackberry, Android, and Windows Phone). WhatsApp’s founders and workers will get an additional $3 billion in restricted stock units that vest during the four years after the deal is done, Facebook says. You might be thinking, “That’s like 16 Instagrams!” Well, on the face of it, yes. Facebook spent $1 billion for Instagram back in 2012, when it was the hottest photo-sharing app around—at the time, it seemed like an obscene amount of money. But Facebook obviously thinks WhatsApp is worth far more, and some of the numbers it shared about WhatsApp’s users indicate why. WhatsApp has 450 million monthly users, 70 percent of which (so, 310 million) use the service daily. Instagram, by comparison, currently has one-third as many monthly active users. Facebook also noted that the number of messages being sent through the company’s service is “approaching the entire global telecom SMS volume” (according to telecom market researcher Informa, this was expected to total 19.5 billion last year). And the app continues to bring in over a million new users each day. That’s the kind of growth that Facebook can’t ignore if it wants to remain a leader in the social networking and communication space, and the company knows it. As more and more users migrate to messaging apps like WhatsApp, it behooves Facebook to own the hottest of the bunch. Smartly, it’s keeping the WhatsApp brand, as it did with Instagram, which will likely help it keep up its growth. But beyond the question of whether or not WhatsApp is worth the money Facebook is eagerly shelling out for it, another is bound to emerge as the acquisition moves forward: what’s the next WhatsApp? [Read More: http://www.technologyreview.com/view/524956/why-facebook-thinks-whatsapp-is-worth-16b/] The latest recession and the prolonged recovery have constrained career growth. Each era has its own senior-executive profile. A century ago many of the largest, most powerful corporations were led by entrepreneurs—Henry Ford, for example, who had founded his automaker, and Alfred P. Sloan, whose company had been acquired by General Motors. By the 1920s professional managers were hopping from company to company to fill high-level management positions. By the 1950s lifelong employees of corporations were working their way up the ladder to claim the top jobs. -Philippe [Thank You HBR | by Peter Cappelli, Monika Hamori, and Rocio Bonet March 2014] The executive profile continues to evolve. In “The New Road to the Top” (HBR January 2005), two of us (Cappelli and Hamori) compared leaders in the top 10 roles at each of the Fortune 100 companies in 1980 with those in 2001, noting a sharp decline in the “lifer” model and a corresponding uptick in rapidly advancing young executives who spent less time with any one employer. Here we have extended our analysis to 2011. Perhaps the most noteworthy changes are demographic. Since our previous study, the percentage of executive women has risen quite a bit, as has the percentage of leaders educated outside the United States. Other interesting developments stem from the global recession in 2008. Because the economic crisis roiled financial institutions the most, causing them to restructure, long-established corporations such as AIG, Bank of America, and Freddie Mac are bringing in more senior executives from the outside than they did a decade ago. Companies such as Caterpillar, Procter & Gamble, and UPS, whose businesses are more stable, have been promoting leaders from within. Executives’ age and length of tenure are both on the rise—trends that we wouldn’t have predicted before the crisis but that seem perfectly logical in its wake: In such uncertain times, leaders have understandably been hesitant to leave their organizations for new opportunities. Companies, too, have exercised caution, sometimes holding on to even underperforming executives to maintain stability. Attributes at the top also reflect some broader trends within the Fortune 100 over the past three decades, such as a decrease in heavy industry and energy companies, which have fewer women at all levels of management, and a proliferation of health care and retail companies, which have more women. Our most striking findings have emerged in four areas: career trajectory, education, diversity, and hierarchy within the senior ranks. We’ll explore each in turn. Career Trajectory The decline of lifelong employees is remarkably steep. Despite the prevalence of sophisticated executive development and succession planning programs, less than a third of the 2011 Fortune 100 leaders had started their careers with their current employers. That’s down from 45% in 2001 and more than 50% in 1980. The decrease has accelerated in recent years, even though length of tenure is moving in the opposite direction. Why the discrepancy? Because two global recessions made people less likely to change companies. The latest recession and the prolonged recovery have constrained career growth. The 2011 executives took longer than the 2001 group to get to the top, mainly because they had advanced more slowly throughout their careers. On average, they had spent almost a year longer in each role than their counterparts from a decade earlier—although a small number had been stuck in the same jobs a disproportionately long time, and those at the very top had advanced faster than others. The 2011 executives had been with their current employers longer than the 2001 group—a development that holds true at all levels of management in the United States. Data from the U.S. Bureau of Labor Statistics show that managers in 2012 had been with their employers about 12% longer, on average, than managers a decade earlier. (That’s about the same tenure increase we found in our research on senior executives.) And as a CareerXroads survey shows, since 2008 large U.S. corporations have been more inclined than they were back in 2001 to fill vacancies from within. All that said, we see no reason to think that these recession-related developments will continue as the economy improves. And the numbers vary considerably by company in any case. Leaders shot to the top fastest at Google, where their time from entry level to the executive suite averaged 14 years. At the other end of the spectrum, Hewlett-Packard and ConocoPhillips leaders took about 32 years to work their way up. As one would expect, time to the top correlates with age. Members of HP’s 2011 executive team—among the six oldest in the Fortune 100—were over 58, on average. Google’s executives, at 46, were the youngest. In fact, Jill Hazelbaker, Google’s head of corporate communications, is the youngest executive in our data set and the one whose path to the executive suite was fastest. In 2011, at the age of 30, she moved directly into that role from the world of electoral politics, where she had been campaign spokesperson and then national communications director for John McCain’s 2008 U.S. presidential run and served as one of his closest advisers. It’s hard to imagine any corporate career advancing so rapidly, even at Google, but political organizations—less structured than companies—offer unusual opportunities for leaders with ability and drive. Differences in tenure by company are even more dramatic. In 2011 Sears executives had been with their employer only three years, on average, and Chevron executives, 33 years. The 20 companies that have been in the Fortune 100 since 1980—the most firmly established of the great corporations—still had at least one foot in the Organization Man era even in 2011. Almost half their senior executives were lifers. At Chevron and UPS, that was true of 90% of top-team members. David Abney, for example, began his career at UPS Airlines in 1974, as a part-time package loader. He advanced through various operational roles to become president of the SonicAir subsidiary in 1999. From there he was promoted to president of UPS International in 2003 and to COO in 2007. Mary Barra, who led global product development at General Motors when we collected data (she’s now the CEO), has spent her entire 33-year career at GM. Of course, not all leaders at those 20 corporations fit that pattern. The exhibit “Shift in Lifers from 1980 to 2011” shows considerable variation. Ford and Caterpillar, for example, had even more lifers at the top in 2011 than in 1980. But other companies have seen sharp decreases. At Honeywell the proportion of lifers fell by 80 percentage points. Thirteen of the Fortune 100 companies, including PepsiCo and Bank of America, had no top executives in 2011 who had begun their careers there. Education Over the past 30 years we’ve seen executives’ education levels rise. About 65% of the leaders in 2011 held graduate degrees, compared with 62% in 2001 and 46% in 1980. Companies with the most MBAs in their senior ranks included Sears (75%), Sunoco (70%), and Disney (63%). Leaders at AT&T, Merck, and Freddie Mac were the most highly educated, with 19 years of schooling, on average. Where did the senior Fortune 100 executives attend college? The proportion with an Ivy League bachelor’s degree dropped from 14% in 1980 to 10% in 2001 but then held steady. In 2011 Merck had the highest percentage of Ivy baccalaureates, at 50%, with Freddie Mac, Microsoft, and Amazon tied for second place at 44%. As the charts below show, those holding bachelor’s degrees from private non-Ivies (and, to a lesser extent, from Ivies) lost considerable ground to graduates of public universities in filling the top jobs over the past three decades. That may be because most of the 2011 executives attended college in the 1970s, when the resources and status of state schools were near their peak. At the graduate level, however, the Ivy League more than held its own: Almost a quarter of the executives holding MBAs had graduated from business school at Columbia, Cornell, Dartmouth, Harvard, Pennsylvania, or Yale. Among C-suite executives the proportion was 36%. The MBA Analysis The two most common measures of a business school’s prestige are whether it’s an Ivy League institution and how it fares in the landmark Businessweek MBA rankings. We used the 1988Businessweek list because most of the executives with MBAs in our sample had earned their degrees around that time. On that list the top 10 schools, in rank order, were: Northwestern (Kellogg), Harvard, Dartmouth (Tuck), Pennsylvania (Wharton), Cornell (Johnson), Michigan (Ross), Virginia (Darden), North Carolina (Kenan-Flagler), Stanford, and Duke (Fuqua). Of the executives we studied, 28% had received their MBAs from one of those schools. We then expanded our definition of “elite” to include the next 10 schools on the 1988 list: Chicago (Booth), Indiana (Kelley), Carnegie Mellon (Tepper), Columbia, MIT (Sloan), UCLA (Anderson), UC-Berkeley (Haas), NYU (Stern), Yale, and Rochester (Simon). We found that more than 40% of the 2011 executives’ MBAs came from the 20 schools. But this alternative measure did not change our main conclusions: Leaders in top-tier positions tend to have more elite MBAs than those in other tiers, and the proportion of elite MBAs is higher among outside hires than among executives promoted from within. Diversity As noted, diversity among senior executives has increased. Leaders in 2011 were much likelier to be women or to be educated outside the United States than leaders in previous years, although both groups are still far from achieving parity with U.S. men. Women are slightly more likely to work in the financial services, health care, and retail industries than elsewhere. They’re prominent in the executive ranks of consumer products and, surprisingly, aerospace companies. At the corporations that have the most female executives—Target, Lockheed Martin, and PepsiCo—women hold half the senior management jobs. The substantial increase in female executives has not played out equally across organizations, however. The exhibit below shows the full range of change. Seventeen of the Fortune 100 still have no women in their top 10 roles. In the 2011 data set, more women than men had graduate degrees, but the difference wasn’t statistically significant, even by type of degree. For example, 31% of men and 32% of women held MBAs; 8.48% and 8.52%, respectively, held PhDs. Slightly more women than men had other master’s degrees and JDs. The greatest gender divide was in undergraduate Ivy League degrees: Almost twice as many men as women had bachelor’s degrees from Ivy schools (11% versus 6%). Things evened out at the graduate level, though: The percentage of Ivy MBAs was about the same for both sexes. Women in the 2011 group had secured their executive positions about three years earlier in their careers than the men—but few of them had risen to the very top, as was true for the 2001 group. Only 5% had made it to the highest-level positions, compared with 17% of the men. Women in top-tier positions had taken an average of 28 years to get there, compared with 29 years for men. Those in middle-tier positions had taken 23 years to get there, compared with 26 years for men. They had been promoted sooner in each previous job—after an average of four years, compared with five years for men. This was true in 2001 as well. (See “Three Tiers, Three Profiles.”) Why? We think the women ascended faster because they were riding a different elevator. Middle-tier female executives, for example, had held primarily function-specific roles, such as chief legal officer, general counsel, or SVP of human resources. Their male colleagues had held more of the general management positions that typically feed the very top executive jobs. Average tenure in 2011 was about the same for men and women within tiers, as was the percentage of those who had begun their careers with their current employers (28% of women and 31% of men). But the percentage of male lifers dropped sharply from 2001 to 2011; for women, the decline was much subtler because fewer female lifers existed to begin with. America’s continued progress will be driven by creativity, manufacturing excellence, abundant energy, and large capital reserves. Whereas some countries might enjoy the effects of one or two of these forces, no country but the U.S. has all four going for them. For the first time since the Great Recession, the economic winds are at our backs. -By Philippe Mora
[Thank You HBR | By Joel Kurtzman 02.08.14] Despite evidence to the contrary, Americans like to think our nation is about to be eclipsed. When I was a boy, people worried the Soviet Union would bury us. (How’d that work out?) Early in my career, a lot of commentators were sure Japan was on its way to becoming number one. Now it’sChina’s turn to pull ahead. I have nothing against China, or any other country. But overtake the United States? Not for a while. I’ve been watching the global economy for decades, and it seems to me that growth in the United States is about to speed up, while growth in the emerging markets is slowing down. I make that statement in light of four powerful forces which are at work in the United States and which no other country can duplicate. American creativity remains unsurpassed. Manufacturing is undergoing a renaissance, building on a strong base. New technology has turned the U.S., however improbably, into the world’s largest energy producer. And capital is abundant. American Creativity If you doubt the force of America’s creativity, take a walk through the Kendall Square area of Cambridge, Massachusetts. In the shadow of MIT, there are dozens of large biotech and life sciences companies, and many dozens of startups. The neighborhood has become one of the most dynamic research centers in the world for the biosciences. Because of Kendall Square’s concentration of talent, and its infrastructure, Novartis, the giant Swiss pharmaceutical company, moved nearly its entire research center here from Switzerland. When the French pharmaceutical company Sanofi bought Cambridge-based Genzyme, for $17 billion, it made Cambridge the Paris-based company’s most important research hub. These commercial companies are surrounded by academic research centers at MIT and Harvard and by a complex of private, non-profit research centers like the Broad Institute, the McGovern Institute, and many others, all working to transform medicine and extend the frontiers of science. Other countries would love to have a cluster of research institutions like those located in Cambridge. And the fact is, Cambridge is just one of several such clusters in the United States. There is the Bay Area, encompassing the Universities of California at San Francisco and Berkeley as well as Stanford; the area around San Diego; Research Triangle in North Carolina; the area around Austin and Houston Texas; the I-95 corridor in New Jersey; as well as Seattle and many other areas of the country. Manufacturing Renaissance Americans are also fond of telling each other, “we don’t make anything here anymore.” The need to renew manufacturing was a big issue in the Presidential election of 2012. It might surprise you to learn that the United States remains the world’s preeminent producing nation, responsible for about 20 percent of the world’s goods – a little more than China produces. China leads the world in low-margin electronics assembly, textiles, and some types of machinery; the United States, on the other hand, is a high-end producer. The average person assumes we don’t make anything because we don’t make a lot of what a typical consumer buys. Instead, we make jet turbines, helicopters, sophisticated airliners and business jets, electric generators, radar, chemicals and plastics, satellites, and all kinds of weapons. Despite years of flat or declining budgets, the United States has retained its lead in space. Private companies like SpaceX are building some of the world’s most sophisticated and efficient rockets (and will resume launching people into space), while Orbital Sciences and the United Launch Alliance retain the lead in satellites. Evidence abounds that even more manufacturing is coming to the United States. A new wave of it began before the crash in 2008, stopped while the world caught its breath, and is now resuming. The domestic automobile industry is in the midst of upgrading its manufacturing plants, foreign auto companies are expanding in the U.S., and companies like General Electric are making more of their white goods domestically. And what’s behind America’s return to manufacturing? Two things … An Energy Bonanza First, America’s energy bonanza has changed the equation. This makes the United States, for many chemical companies, the preferred place to manufacture. Germany’s BASF, the world’s largest chemical company, has been investing $1 billion a year in the United States to expand its facilities and take advantage of America’s cheap natural gas to use as a feedstock. Dow Chemical is expanding its investment in the U.S. for the same reason. How cheap is America’s natural gas? Over the past year, it has on average cost around $4 to buy a million BTUs worth of natural gas in the U.S. The same amount of natural gas cost about $14 in Europe, $15 in China, and about $16 in Japan. Not only can natural gas be used as a feedstock for chemicals, fertilizers, pesticides, paints, plastics, and cosmetics, in 2013 the Cummins Corp. an engine manufacturer, began building an engine for long-haul trucks optimized to run on natural gas. America’s energy bonanza is not a short-lived phenomenon. It could be with us for a century, perhaps even longer. As it develops, the U.S. will shift from energy importer to energy independent, then to net energy exporter. As that happens, the trade deficit will fall. Indeed, it could even turn positive. Abundant Capital The Great Recession did what recessions tend to do. It shifted debt from the private side of the country’s balance sheet to the public side. The result has been that the government has a lot of debt, while households are in better shape than in decades. Today, households use a smaller share of their incomes to pay off their credit cards, mortgages, and other debts than at any time in the last 35 years. Americans are saving money at very high rates. While households have been trimming down their debt, the value of people’s savings, investments, and retirement accounts has recovered from the recessionary low. In addition, since falling during the Great Recession, home prices are recovering, too. Partly as a result of the slowdown, partly as a result of increases in productivity, and partly as a result of renegotiating their debt at highly favorable rates in the aftermath of the downturn, companies are flush with cash. Although estimates vary, American companies have between $4 and $5 trillion in liquid assets, a sum greater than the size of the German economy. America’s continued progress will be driven by creativity, manufacturing excellence, abundant energy, and large capital reserves. Whereas some countries might enjoy the effects of one or two of these forces, no country but the U.S. has all four going for them. For the first time since the Great Recession, the economic winds are at our backs. I’m not suggesting that the U.S. doesn’t have problems. We certainly have our share. What I will say is that we now have resources available to fix those problems. While I’m at it, I’ll also note the good news that Americans are personally healthier than in decades. It’s enough to make you want to believe in a new American Century. [Read More: http://blogs.hbr.org/2014/02/four-reasons-to-believe-in-a-second-american-century/] JOEL KURTZMANJoel Kurtzman, a former HBR editor and author of over two dozen books, is a senior fellow at Milken Institute and Wharton. His newest book is Unleashing the Second American Century. |
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