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    Published on: March 7, 2013

    This commentary is available as both text and video; enjoy both or either. To see past FaceTime commentaries, go to the MNB Channel on YouTube.

    Hi, I'm Kevin Coupe and this is FaceTime with the Content Guy.

    I've been thinking and reading a lot over the past week or so about the new dictum from Yahoo CEO Marissa Mayer that all company employees have to work in the office, at least in those cities where Yahoo has offices. In other words, no more working from home, no more telecommuting. The argument seems to be that while people may be productive when working at home, the lack of personal interaction makes them - and the company - less innovative.

    One of the reasons this debate is interesting to me is that I've spent a lot of my life working from home. The first time was in the late eighties. I was a staff writer for the old "Supermarket Business" magazine, my wife was a banker, and we had a small child in day care. But suddenly we lost our childcare, and had to make a quick decision - and my boss, Ken Partch - not a man known for a relaxed or progressive attitude towards his staff - said that I could work from home until we got our childcare situation worked out. Our publisher, Jeff Schaeffer, agreed. So suddenly, I was in what was then brand new territory - I'd make phone calls to research stories, write them on this enormous Leading Edge computer that was on my desk, and then, if I recall correctly, would print out and mail the copy to the office. (I don't think the office had email at the time.) And I did this while feeding our son, going for walks, taking care of the dog, and doing the cooking. I think I was pretty damned productive, and I don't think my writing suffered.

    I eventually went back to the office when we got a nanny, but by 1994, when I became a freelance writer and video producer, I've pretty much always worked from home at least part of the time ... so I have some familiarity with this issue.

    The various reports, commentaries and debates about the working at home issue have been all over the map. Some people think that Marissa Mayer is off her rocker, and that she is violating a basic premise of the new economy. Some think that she's simply acknowledging a basic fact - that many people who work at home are slackers, and that leaders do better when they tighten the reins, not loosen them. And plenty of people have weighed in with suggestions about how she could be a better and more effective CEO. (A lot of folks think this is just a women's issue, but I'd obviously disagree with that.)

    I'm not a guy who often will urge that we cut people slack, but in this case I think giving Marissa Mayer a break makes sense - at least on the specifics of the issue. Clearly, Yahoo is a company with issues, and it seems logical to assume, based on her actions, that Mayer believes that a lack of cultural cohesion may be a key factor. I suspect that this is not a permanent change, and that Mayer needed to make a statement and move quickly to resolve issues that may be worse than many people believe.

    All of which is fine. Let's cut her a break and see if she can reinvigorate Yahoo.

    Where I have a problem with Mayer is in how this decision would appear to distance her concerns from those of her employees, and this may have as much to do with style as substance.

    Mayer gets paid millions of dollars. When she was hired, she was pregnant with her first child. She went back to work quickly after having the baby, and has been quoted as saying that the whole work-life balance thing doesn't seem so hard. But she also reportedly had a nursery built next to her office at Yahoo headquarters, she certainly has childcare help, and so maybe she's not the best barometer of how these things work.

    The problem, it seems to me, is not whether or not Yahoo employees can or should be able to work from home. The problem is yet again, we have a CEO who seems to be living on one planet, while employees live on another. I get that senior executives are going to live in bigger houses, drive nicer cars, eat better food, fly in company jets, and generally not have the same mundane concerns as people on the front lines. But it'd be nice if, while they live in different neighborhoods, if they seemed to be living and working on the same planet.

    I just think it is hard to lead from afar.

    We've talked about it here before. Real leaders need to understand that the people on the front lines are the folks most responsible for the success of an organization, and need to be perceived - especially in this time of maximum transparency - as being connected to their lives and concerns. And I'm not sure that Marissa Mayer has passed this test. Though, to be fair, it is early.

    I would refer you to a piece from the New York Times from earlier this week, talking about how - as companies don't hire new people, don't give decent raises to current employees, cut back on health care and other benefits, and consider even greater cutbacks because of economic and political uncertainties - corporations are enjoying a kind of "golden age" of profits, up at an annualized rate of more than 20 percent since 2008, with the stock market consistently flirting with record highs. The story notes that in part this is because of improved worker productivity - though it is not like the more productive workers are seeing this reflected in their paychecks, since disposable income since 2008 has gone up an average of just 1.8 percent a year.

    I'm a Capitalist. I believe in making money. But as the distance between these divergent paths continues to widen, I'm not sure it is sustainable. Or healthy.

    So that's where I think the newly announced Yahoo policy seems to reflect a greater problem. It isn't about working at home. It really is about working in tandem, working toward the same goals, and working in a way where people feel like they actually are on the same team.

    I'm not sure this is always the case, and I think that it is something that senior executives and boards of directors need to think about.

    That's what is on my mind this Thursday morning. As always, I want to hear what is on your mind.

    KC's View:

    Published on: March 7, 2013

    by Kevin Coupe

    The Associated Press reports that has ordered its sixth pilot for a TV series that would be aimed at children.

    According to the story, "The online retailer announced Wednesday that it will make a test pilot for 'Sara Solves It,' an animated math-focused mystery developed by WGBH and Out of the Blue Enterprises. The show is the sixth pilot geared for kids by Amazon Studios, the retailer's original movie and series production arm."

    Amazon reportedly will post all the pilots on its website later this year, and then decide which ones will go to series based on audience reaction and sales. The e-tailer also has TV series for kids and movies in development at its Amazon Studios division.

    This is fascinating. Traditional TV networks will make their decisions over the next two months about what series will air in the fall, and then they'll order a set number of episodes of those series, which they will run in the same time slot week after week. Most won't succeed, and the process will start all over again. And yet, this is happening as companies that used to just be in the distribution business (Netflix, Amazon) are getting into the content business, empowering the viewer in new and different ways, and embracing that empowerment as the engine that will drive their future growth and differentiation. And, as noted here earlier this week, production companies that used to just make programs for traditional networks now see the likes of Netflix and Amazon as being prime potential buyers for their shows, with the added benefits of greater creative freedom (which sometimes, but not always, means swear words and nudity).

    It is the total revolution of a business model. And it is a great example of what can happen to any industry if one does not shift and grow with the times ... if one does not keep one's Eyes Open.
    KC's View:

    Published on: March 7, 2013 reports that "Google is stealthily preparing to launch an Amazon Prime competitor called 'Google Shopping Express.' According to one source the service will be $10 or $15 cheaper than Amazon Prime, so $69 or $64 a year and offer same-day delivery from brick-and-mortar stores like Target, Walmart, Walgreens and Safeway (though no specifics were mentioned by our sources).

    "When and if it launches, the product will be a competitor to Amazon Prime, eBay Now, Postmates' 'Get It Now' and even smaller startups like Instacart."

    The story goes on:

    "Google has been scrambling for a way to capitalize on its advantages in the space — the fact that it’s arguably one of the first places people visit when they want to find a product — for a while.

    "If the Google Shopping Express service debuts publicly, and we have no reason to think that it won’t, this would mean that the company could capitalize on its recent acquisitions of both BufferBox and Channel Intelligence to dominate the online-to-offline retail market. Google could possibly use its BufferBox delivery lockers to facilitate the ease of shipment — like what Amazon has been testing in Seattle, New York and the UK. It could use Channel Intelligence’s data-management platform to coordinate sales and delivery."

    Reuters reports that "the test is focused on the San Francisco Bay Area and has been going for at least a month."
    KC's View:
    One of the interesting things that Google could bring to such an arrangement is that while it is highly unlikely that Safeway would put Amazon lockers in its stores, it might well install Google lockers because it would be a partner in this Shopping Express business. And that could be a real advantage in terms of proximity and access.

    Published on: March 7, 2013

    The Associated Press reports that Democrats in the US Senate and House of Representatives have introduced bill that would raise the national minimum wage to $10.10 an hour, from the current $7.25 an hour, by 2015, as well as providing for automatic annual increases tied to the cost of living.

    President Obama has called for an increase to $9 per hour, but the lawmakers say that is insufficient.

    According to the AP story, "The lawmakers say a hike in the minimum wage would help lift millions of workers out of poverty and boost the economy. But top Republicans have rejected the idea, saying it would hurt employers."
    KC's View:
    Once again, I would refer you to this passage from a New York Times story that ran earlier this week...

    As a percentage of national income, corporate profits stood at 14.2 percent in the third quarter of 2012, the largest share at any time since 1950, while the portion of income that went to employees was 61.7 percent, near its lowest point since 1966 ... Corporate earnings have risen at an annualized rate of 20.1 percent since the end of 2008, he said, but disposable income inched ahead by 1.4 percent annually over the same period, after adjusting for inflation.

    I'm not saying that $10.10 is the right number, and I'm not smart enough to know what the timing should be. But I do think that there is such a gap between how corporations are doing and how average front line employees are doing, that it is hard to take too seriously comments that an increased minimum age will do irrevocable and irreparable harm to employers.

    The Los Angeles Times, by the way, reports that Costco is one of the companies that supports a hike in the minimum wage ... but then again, "Costco pays a starting wage of $11.50 an hour, gives most employees healthcare and other benefits, and has not switched to the model adopted by many big-box retailers of using temporary firms in warehouses to keep costs low." So raising the minimum would actually force its competitors to increase labor costs so that they are closer to Costco's.

    But, here's the thing. Costco has resisted all calls from analysts to reduce wages as a way of cutting costs, believing that it has an obligation to pay its people a living wage ... and this approach certainly has not hurt its long-term growth or share price.

    Published on: March 7, 2013

    Bloomberg reports that Ahold-owned Peapod is working to reduce FreshDirect's e-grocery advantage in New York City, "offering free delivery and cheaper prices on everyday goods like coffee and milk."

    FreshDirect reportedly has an 80 percent market share in NYC's e-grocery market; Peapod only started serving the city in 2011.

    Here's how Bloomberg frames the battle:

    "For years Peapod avoided Manhattan, due in part to the snarling traffic and strict parking regulations. FreshDirect’s drivers accumulate tens of thousands of dollars a year in parking tickets.

    "Despite the challenges, Manhattan is an alluring market for online grocers, thanks to its densely-packed, Web-savvy and time-starved population. FreshDirect’s sales hit $100 million after just two years, fueled by an recommendations engine and a custom-built ordering system that promised delivery inside a two-hour window ... Today, the company serves 100,000 active customers from a distribution center in Long Island City, just across the East River from Manhattan, and it’s moving to a bigger facility in the South Bronx soon. Having taken New York City and surrounding suburbs, FreshDirect invaded Philadelphia in October.

    "Peapod’s plan to win over Manhattan residents hinges on lower prices. A 12-ounce bag of Dunkin’ Donuts original blend ground coffee sells for $6.99, 30 percent cheaper than from FreshDirect. A pint of Farmland fat-free milk is $3.29 on Peapod’s website, a buck cheaper than FreshDirect. Evian water, Skippy peanut butter, and Frosted Flakes: all also less expensive."
    KC's View:
    To me, FreshDirect and Peapod are totally different companies offering radically different services. It strikes me that there is plenty of room for both companies in NYC, and that the e-commerce business is healthier for having two viable, robust entries. (Wait for Amazon Local to come to NYC. And maybe a Walmart grocery delivery business. The city will make a fortune just on all the parking tickets it writes...)

    Published on: March 7, 2013

    National Public Radio (NPR) has a piece about a new study about how "Americans are all for government efforts to get them to eat more healthfully, as long as they don't feel like they're being bullied into it."

    The survey, by Harvard's School of Public Health, found that "less than one-third of people said students should be punished for having soda or other junk foods at school. A proposal to charge a $50 insurance surcharge for obese people was also a nonstarter. People were worried about how these sorts of programs would affect their liberty and privacy, with objections such as 'government should stay out of matters like what people eat'."

    That said, respondents "backed efforts to get kids exercising more, with 88 percent saying public school kids should be required to have 45 minutes of physical activity each day. Making fresh fruits and vegetables more affordable, and requiring restaurants to post calorie counts, also won a big majority of votes.

    "Three-quarters of people said food manufacturers and chain restaurants should be told to cut the salt content of their foods. And 76 percent of those surveyed said banning the use of food stamps to buy soda and other sugary beverages was good policy."

    And here's an Eye-Opener:

    "Younger people and women said they were more comfortable with the government telling them how to eat than were older white men. But perhaps the biggest surprise was the strong support for government intervention from African-American and Hispanic respondents.

    "African-Americans were two to four times more likely to support government action than whites, especially when it came to helping people control diabetes, and preventing childhood obesity. And Hispanics were more likely than whites to support programs to prevent diabetes and heart disease."
    KC's View:
    To me, the real focus should always be on providing information to adults so they can make intelligent, informed decisions. There's room for tougher rules in schools and public assistance, because I see no reason for tax dollars to be funding the obesity crisis.

    Published on: March 7, 2013

    The New York Times this morning reports that Walmart "appears to have scaled back its efforts to gain a foothold" in New York City.

    According to the story, "The company has pulled back after its push to open a store in the East New York section of Brooklyn fell through and after it terminated its contracts with five lobbyist-consultants it had hired to help it win approval for that project.

    "The plans have stalled during this year’s intensely fought mayoral primary in which several of the Democratic candidates are fierce critics of Wal-Mart and have backed union efforts to block the retailer’s entry to New York. Having saturated many suburban and rural areas, Wal-Mart has long had its eyes on New York City, the nation’s largest center for consumerism, as part of its effort to expand into highly populated urban areas."
    KC's View:
    Walmart may be regrouping, but it will make it to NYC. No question. The company's new focus on small formats will make it easier, and it will happen.

    And frankly, it should be allowed in NYC, if Target can operate there.

    Published on: March 7, 2013

    Yahoo News has a story about how Starbucks is disregarding the New York City law, scheduled to go into effect next week, that prohibits certain kinds of retailers from selling sugared drinks larger than 16 ounces.

    Starbucks says that there is still enough confusion about who and what are covered by the ban that it will not comply with the law, which has been promoted by Mayor Michael Bloomberg and his administration as a way of addressing the obesity crisis, and decried by opponents as being reflective of a nanny state.

    “We believe that the majority of our products fall outside of the ban given the ability of our customers to customize their beverage,” Starbucks said in a prepared statement. “As there is still ongoing litigation regarding the regulation, we’re not making any immediate changes at this time. We are evaluating which changes we may need to make to our recipes and product offerings and will be using this three-month evaluation period to make the appropriate changes for our customers and to fully comply with the new beverage restrictions.”

    The story notes that "opponents of the law, including the American Beverage Association, National Association of Theatre Owners, the National Restaurant Association and other trade groups, have filed a lawsuit asking for it to be thrown out, in part because it creates an uneven playing field for businesses. For example, while restaurants and delis regulated by the city Health Department are banned from selling large sugary drinks, a customer can still buy a 32-ounce Big Gulp at 7-Eleven because the store is regulated as a market by the state of New York, not by the city."

    Yahoo News also reports that "as opponents of the law continue to press forward with a lawsuit aiming to stop the ban from going into effect, some businesses have started to pre-emptively warn their customers of changes in their menu.

    "Earlier this week, Dunkin' Donuts began displaying signs in some locations telling customers they will now be responsible for adding cream and sugar to their own drinks. Other beverages, like iced coffees, would be sold only in small and medium size, the chain announced ... A spokeswoman for McDonald’s restaurants told Yahoo News its locations will comply with the law by selling only 16-ounce fountain sizes of sugary drinks beginning next week."

    NYC officials have said that while the regulations go into effect next week, for three months violators will get off with a warning, with fines scheduled to be levied beginning in June.
    KC's View:

    Published on: March 7, 2013

    The New York Times reports that craft beer manufacturers are embracing container sizes larger than the traditional bottles and cans - "22-ounce 'bombers,' 750-milliliter wine bottles, even three-liter jeroboams ... The trend toward large bottles is part of what is being called the 'wine-ification' of beer, the push by many brewers to make their product as respectable to pair with braised short ribs as is a nice Chateauneuf-du-Pape, and at a price to match. Bottles sell for as much as $30 in stores and much more on restaurant menus."

    But, the Times writes, "they are getting a chilly reception from many drinkers. Internet message boards dedicated to craft beer are replete with complaints that large bottles are too expensive and, thanks to their typically higher alcohol content, a challenge to finish in one sitting. Unlike wine, a beer is nearly impossible to recork.

    "The backlash is particularly troublesome for merchants and restaurateurs, who say it can be hard to persuade customers to commit to these big, boozy beers."
    KC's View:
    I have to admit that I'm one of those folks who would tend not to buy larger sized beers. To me, beer and wine are different experiences, and I think the whole "wine-ification" trend is silly. And maybe even a little pretentious.

    Published on: March 7, 2013

    • The Los Angeles Times reports this morning that "California officials face mounting criticism from union leaders over plans to let retail giant Wal-Mart Stores Inc. enroll shoppers in President Obama's healthcare expansion.

    "The state wants employees at Wal-Mart and other retailers to help consumers learn about their options and assist them in buying federally subsidized private insurance. These plans are part of state efforts to implement the federal healthcare law and reach out to 5 million Californians eligible for new coverage starting in January.

    "Labor unions as well as some consumer advocates protest the idea of government officials partnering with Wal-Mart and paying for its help. They contend that the nation's largest retailer has no place advising others on health coverage when so many of its workers don't qualify for company benefits and end up in taxpayer-funded programs such as Medi-Cal."

    Columbus Business First reports that bankrupt Hostess has filed a lawsuit against Kroger, claiming that the retailer owes it $2.8 million in overdue invoices.

    Kroger has not yet issued a statement in response to the suit.

    • WorldPay, the financial technology company, said yesterday that it has acquired YESpay International Ltd, described as "a leading payments services provider," in a deal that it says will allow the combined companies to "to fully exploit the evolving needs of omni-channel shoppers with a single payment service operating in-store, online and on mobile."

    • The New York Times reports that Time Warner has decided to spin off its Time Inc. magazine business - including Time, Sports Illustrated and Fortune - into a public company separate from its cable TV and film businesses.

    According to the story, the announcement came after the company ended negotiations with Meredith Corp. that would have resulted in a separate company owning many, but not all, of Time's titles. "The deal with Meredith fell apart in part because of Time Warner’s concern over the fate of four of Time Inc.’s famous but struggling magazines — Time, Sports Illustrated, Fortune and Money, according to three people with knowledge of the negotiations who could not publicly discuss private conversations. At one point Meredith expressed some interest in the news and sports magazines, but Meredith decided not to pursue them because such a deal would have diluted its controlling family’s shares in the new company, another person with knowledge of the negotiations said. If Time Warner retained those four titles, the economics of a full spinoff proved more appealing, this person said."

    Reuters reports that Safeway "is exploring putting its Canadian property assets into a real estate investment trust" (REIT), a move that would be seen as returning value to shareholders.
    KC's View:

    Published on: March 7, 2013

    ...will return.
    KC's View: