Inc.com > All Topics

The Office: In Praise of Morning

Leigh Buchanan — 2009-07-24T17:56:59-05:00

For risibly unscientific reasons, I've concluded more CEOs are owls than larks. Over the years I've heard countless business leaders describe their 80-hour workweeks in last-car-out-of-the-parking lot terms. It's an existence of flickering fluorescents; take-out dinners, and the clatter of cleaning staff emptying trash. As these leaders sit nodding over their stacks of reports, the day's stresses, frustrations, and failures hang in the air around them like stale smoke.

If I owned a company I would work long hours too, but I'd burn my candle at the front end. That's because I love offices at dawn. I want to be there as pale light washes slowly over the utilitarian landscape of desks and computers. I enjoy the hush that plays prelude to the soundtrack of workaday activity.

Every place I have worked has had at least one great reading chair. It is soft and deep and broad; but it is often in the preferred spot for small-team meetings, so I'm lucky to steal ten minutes there. At 6 a.m. I can usurp that chair for a full hour and churn through the newspaper in comfort and quiet. Sometimes I take off my shoes or drape my legs over the arms without fear of being discovered in professional flagrante delicto. Night breeds similar solitude, of course. But by then my newspaper is reduced to relic, and all I want is to go home.

I like to make the first pot of coffee. I like to drink the first pot of coffee; then pretend I didn't and start another. Night coffee is queasy making: that burnt smell lingers no matter how thoroughly you rinse the pot. By morning—miraculously—it is gone.

The very early morning is the best time to go desk-browsing. During the day no one spares more than a glance for their colleagues' workspaces. Yet many cubicles are made over into miniature museums of collectibles, galleries of beloved images, scrapbooks of rich family lives. Such exhibits powerfully evoke their curators. As you peruse the idiosyncratic display on a desk, you find yourself looking forward to its occupant walking through the door.

If you walk by an office where a colleague or employee labors after hours, it seems natural to poke in your head and commiserate. But often commiseration devolves into passing the time; and after 6 P.M. another's time is not yours to pass. In the early morning, by contrast, no one is yet late for anything and so conversation is relaxed. During work hours I have argued and gossiped and traded stiff pleasantries with office mates. But my best true "chats" have been with fellow early risers, who usually start to trickle in before 8.

When I gaze out the window at night I see my face floating in dark pool. In the morning I see the world. And I am reminded that everything I do that day will contribute to it.

I'm sure that you know your company better than anyone, that you love it more. Still, try going in some day at dawn and wandering around in the silence. To watch the office wake up is to see it fresh.

Amazon Buys Zappos for More Than $900 Million

Max Chafkin — 2009-07-22T18:38:12-05:00

Zappos, the online shoe seller that has won renown for its stellar customer service and feel-good employment practices, announced that it was selling itself to e-commerce rival Amazon.com. If the deal gets the SEC’s blessing, Zappos would become a subsidiary of Amazon and Zappos shareholders would receive Amazon stock worth roughly $900 million.

CEO Tony Hsieh, a serial entrepreneur who provided the company with its initial investment and who has led the company for most of its 10-year history, emphasized in a letter to employees that although Zappos would be a part of the larger company, it would preserve its quirky culture that focuses on keeping workers happy. He said that rather than describing the transaction as an acquisition, he’d prefer a looser formulation: “Zappos and Amazon sitting in a tree."

Hsieh has long shown an uncanny ability to navigate the new media landscape, and this announcement was no exception. The deal was kept secret from rank-and-file employees and from the press for months. Hsieh released the news to the world through his Twitter feed, beginning with “Big day!” He then directed employees and outsiders to view a YouTube video staring Amazon founder Jeff Bezos. “Zappos has a totally unique culture,” Bezos said in the video. “I have seen a lot of companies and I’ve never seen a company with a culture like Zappos’s.”

In his letter, Hsieh said that he would do his best to keep Zappos independent of Amazon. The company will maintain its Las Vegas headquarters and its management will remain in place. “[W]e are planning on continuing to run Zappos as a separate company with our own culture and core values,” he wrote. “And we're not going to be giving the Zappos discount to Amazon employees either, unless they bake us cookies and deliver them in person.”

Administration Committed to Innovation

Alexandra Cheney — 2009-07-17T11:47:28-05:00

Amid tumbling banks and bankrupt companies, small businesses may have cause for celebration. The Senate reauthorized the Small Business Administration's Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs last Wednesday. In the House, Congressman David Wu (D-OR) shepherded the bill through, with a resounding 386-41 vote.

The bill will now head to the conference committee, where differences between the House and Senate bills will get ironed out, says Edsel Brown, assistant director for the Office of Technology at SBA. Congress has until the July 31st to conference the bill. If the revision passes, this legislation will reauthorize the programs for eight years, as well as add some much necessary fixes. One major adjustment includes allowing small businesses backed by venture capitalists to participate in the programs.

"The fact that we can move forward provides stability to the programs and gives small businesses an experienced program," says Brown, "not only for themselves but to move America forward in terms of innovation."

The SBIR program was established by Congress in 1982, while the STTR came later in 1992, to aid the government in research and innovation. Today, federal agencies with an extramural research and development budget of more than $100 million allocate 2.5 percent of their dollars to the SBIR program, while agencies with more than $1 billion must donate an additional 0.3 percent to the STTR program. With 11 different agencies, the SBA on average receives $2 billion annually for SBIR and $200 million for STTR programs.

"SBIR is fundamentally an innovation program. Given the current economic climate and growing global competition, we need a robust SBIR program that supports cutting-edge companies," said Congressman Wu in his floor statement. The SBIR awards have produced more than 85,000 patents and created millions of jobs, according to the SBA.

"We are here to make sure small businesses get their fair share," concludes Brown.

CIT Group Gets Last Minute Save

Alexandra Cheney — 2009-07-17T11:23:56-05:00

In a last-minute attempt to save the company from bankruptcy, CIT Group secured $3 billion in rescue financing from its bondholders late last night. CIT could not be immediately reached for comment, although an announcement detailing the intricacies of the arrangement is expected to be released later today.

The loan may strengthen the company’s financial position as well as assuage the pressure to pay the $1 billion in debt that's due from the company in August.

CIT is the nation's largest commercial lender, providing loans to roughly a million small and mid-size businesses. Last week, CIT received the bad news that the Federal Deposit Insurance Corporation (FDIC) would not provide the company some relief by granting access to its debt guarantee program.

"We have a comprehensive and aggressive strategy to restore stability to the financial system," the Treasury said in a statement. "Even during periods of financial stress, we believe that there is a very high threshold for exceptional government assistance to individual companies." Last Wednesday, CIT issued a brief statement announcing that there was "no appreciable likelihood of additional government support being provided over the near term."

For small businesses with loans from CIT this relief could prevent disaster despite the fact that some customers have already begun drawing on their credit lines, adding to an already mounting pressure onto the embattled company.

Dr. Kim Jones of the Stoney Brook Veterinary Hospital in Lebanon, N.H., took out a $1.3 million loan from CIT in June 2008. "I don't know what it will do to me," she says, "they have to do something, the money has been spent, the money is done."

Unlike the $2.33 billion taxpayer-financed bailout CIT received last December, CIT will likely pay interest rates 10 percentage points above the London Interbank Offered Rate, a benchmark interest rate index, for the bondholders loan.

Obama's 504 Loan Helping Businesses Expand

Alexandra Cheney — 2009-07-17T10:53:42-05:00

Dr. Lena Smith is not one to throw up her hands in defeat. She was facing mounting financial trouble a year ago, after she built a customized assisted living facility in Rio Rancho, New Mexico. She struggled to nail down a commercial lender willing to loan her money, and instead opted to apply for the Small Business Administration's 504 loan program. Although this program has been around for 51 years, now small business owners, as part of President Obama's stimulus package, can refinance any existing fixed asset loan as long as the amount is 50 percent less then the total expansion. In addition, most all loan fees have been eliminated.

"Quite honestly, I don't know if this facility could have gotten off the ground if all the elements hadn't coincided at the same time," Smith says. "It took close to $5 million to build this place." With over $30,000 in fees covered as part of the Recovery and Reinvestment Act, Smith was able to take that money and "green" her facility, adding eco-friendly insulation and air conditioning systems.

As of July 10, the SBA has supported $6.5 billion in small business lending with the approval of $4.8 billion in loans since February of this year. They received $730 million in the American Recovery and Reinvestment Act to galvanize the small business lending market. "It lowers the cost of capital," according to Eric Zarnikow, associate administrator for the Office of Capital Access. "It encourages small businesses; it's like we're putting our loans on sale."

John and Kimberly Henderson of Royal Window Films in Anaheim, California, received a $410,000 loan to purchase a new office building and expand their company, which sells and installs energy saving window films. "A lot of the fees went down," Kimberly noted. "The market has gone down, so it is a good time to invest." Without the 504 loan, the Henderson's would have had to put $205,000 as a down payment instead of $82,000, a price well outside their budget.

"I'm fortunate," adds Smith, "Those businesses that receive a 504 loan have great potential for success."

Auto Sales Bolster Overall Retail

Keaton Gray — 2009-07-17T10:25:55-05:00

Although department store and restaurant sales continue to wilt, automotive and gasoline station purchases are enough to account for a slight uptick in overall monthly retail sales, census numbers show.

In June, auto parts and vehicle sales climbed 2.3 and 2.6 percent, respectively, from the month before. Gas station sales rose 5 percent in June after increasing by the same amount in May. Total retail sales climbed just .6 percent, dragged down in part by general merchandise such as department and warehouse stores, which fell .4 percent from the month before.

Amid mostly negative news for the auto industry, this is a relative bright spot says Jack Plunkett, CEO of Plunkett Research, an industry research firm; relative being the key word. "It's going to continue to be a very difficult environment, he says."

Gasoline sales can rise and fall fairly significantly with a few pennies' increase or decrease in the price of a gallon, but auto sales can be more telling of the economic climate.

Plunkett says the time of year might be what has spurred sales more than anything else. With a new model year due out soon, dealers are more prone to making deals, he says.

For dealerships that have been forced to close their doors, they're also being pressured to make room for the next tenant. "The dealerships that are closing have been under a deadline to eliminate inventory," Plunkett says.

So while the initial reading of climbing sales might look good, Plunkett advises to stay wary of the broader ailing marketplace. "We're going to have bad back-to-school business," he says, "and a lousy Christmas."

Lights Out For Incandescents?

Meredith Maines — 2009-07-17T10:13:40-05:00

By 2012, incandescent lightbulbs - or "lamps" to those in the industry - were expected to be phased out because of updated energy laws. The brainchild of Thomas Edison, although serving the country well since the 19th century, isn't as energy efficient as its 1980s successor, the compact fluorescent lightbulb.

Facing industry extinction, incandescent manufacturers have charged ahead with research and testing to bring older lamps up to speed. But even post-innovation, efficiency has only increased by 30 percent, which means they still have far to go to catch up with CFLs' 75 percent efficiency lead.

Try as they might, Ellis Yan, CEO of Technical Consumer Products, doesn't think his competitors will ever catch up. Although his Cleveland, Ohio-based company strictly manufactures CFLs, his lighting industry involvement prior to founding TCP gave him experience with incandescent lamps.

"I think for everybody in the lighting industry there is an opportunity to innovate," Yan said. "You're able to achieve energy efficient lighting at different levels and in different ways. It's absolutely possible that incandescent bulbs can be made more efficient, but will it be enough?"

He considers the question rhetorical, but knows Americans would never rescind their comfort level with that familiar yellow light.

"Incandescent bulbs are the icon associated with the history of this country," he said. "People's consistent behavior is to pick up incandescent bulbs."

But the prejudice Yan said people feel toward CFLs is largely based on misconception. Even though upon their creation, CFLs gave off a slightly garish color, he said great strides have been taken in color correction thanks to the recognition of tri-phosphors.

"When CFLs debuted on the market, their manufacturers only knew how to mix basic red and blue phosphors," he said. "Now, give me ten days, and I can match any color you desire because we use these tri-phosphors."

Instead of spending time on developing newer incandescent lamps, Yan said small business research dollars might be better spent on LEDs.

"Everybody thinks LEDs are the future of lighting," he said. "We agree, but it won't happen today. There needs to be more innovation to bring down the price and increase efficiency."

Perception Isn't Everything to Shoppers

Keaton Gray — 2009-07-15T17:30:49-05:00

Slap the right price tag on a Timex, wax a little rubbing alcohol over the first several letters, etch out a few new characters, and voilà -- you've got a Rolex.

"Perception is everything," goes one marketing mantra; and according to accumulated economic data, the theory holds true in pricing economics. If consumers are told one apple costs $5 while another costs $2, they will often conclude that the $5 apple must be better than the other apple.

Before gouging prices to increase demand, however, economist Ori Heffetz is quick to warn that the higher prices also can decrease demand – maybe even more so in a recession.

"You have to know how this positive effect of prices on perceptions compares with the possibly large negative effects of higher prices on demand for a specific product," he says.

A recent study that Heffetz, a professor of economics at Cornell University, authored along with Moses Shayo, a professor of economics at the Hebrew University of Jerusalem, found that consumers' perceptions do indeed sway in accordance with prices, but their buying behavior doesn't necessarily follow.

In the study, volunteers in a lab proved that higher prices associated with different candies translated into an elevated perception of value. In a second experiment in which prices of entrees on a prix-fixe menu were altered, the researchers found that people pretty much stuck with what they liked. Because the price for the dinner remained constant, the diners (who were unaware of the ongoing, 14-week-long experiment) might have been expected to opt for whichever dish had the highest value on the a-la-carte menu, whether it be artichoke, pork, sausage, shrimp or a mullet fillet.

The results of the experiment found that increasing the prices of any of the options did not result in an increased demand, and the mullet remained most popular throughout the experiment. "It's one thing to show in a lab setup that I can manipulate you into thinking, feeling, and even doing something by manipulating prices. But it's quite another thing to think that such price effects will be large enough to matter when compared with other economic consequences of manipulating prices," Heffetz says.

It is possible that consumers aren't quite the rubes they were once believed to be, or maybe that placebo effect is finally beginning to wear off – or perhaps palates are just stubborn. Either way, Heffetz says, boosting prices can sink demand as much as it can raise it. "More expensive products might be perceived as more attractive -- which could increase demand -- but they are also more expensive, which turned out, in our study, to decrease demand by much more."

Middle America Coming Out of the Recession?

Keaton Gray — 2009-07-15T17:10:43-05:00

Although every metropolitan area has suffered job losses and a decline in gross metropolitan product, city centers in Texas and Oklahoma, among others, look as if they will lead the way out of the recession.

Judged by changes in employment, GMP, and housing prices, none of the 20 strongest overall performers extends west of Albuquerque, New Mexico. California alone is home to seven of the 20 weakest performers.

There's a "last-in, first-out" effect here, says Alan Berube, a senior fellow and research director of the Brookings Metropolitan Policy Program and MetroMonitor report that assesses the nation's 100 largest metro areas. "This recession is battering the interior west, Florida, and the manufacturing parts of the Midwest." By comparison, areas that incurred softer recessionary blows are standing out as bright spots among the competition. The balance of the top 20 metro areas dot the Northeast, with the exceptions of Washington D.C. and Virginia Beach, Va. to the south.

All six large metropolitan areas in Texas – one of the few states where home prices are actually up -- are among the 20 top performers. Berube attributes the lone-star state's success to a combination of its insulation from the housing market crash and the industries that have taken root in major metropolitan areas there, such as energy.

Austin is increasingly becoming recognized as a high-tech hub says Robin Dommisse, CEO of Austin-based Austin GeoModeling, a company that provides 3-D geological interpretations to oil and gas companies. The technology industry, combined with an attractive environment and the University of Texas at Austin, Dommisse says, makes finding qualified employees easy. "There's a good talent pool available of highly-trained technical people," he says. "We never have a problem convincing people to move to Austin."

The full map can be viewed here.

7 Ways to Secure Your Email

Kim Boatman — 2009-07-15T16:32:22-05:00

E-mail just might be the most critical business application your company uses. Increasingly, businesses rely on e-mail even when it comes to sending sensitive information such as proprietary materials, private employee or customer account numbers, and confidential negotiations.

You depend on e-mail as a necessary form of communication. But is your e-mail really secure? “The important thing is for people to realize when they send an e-mail over the Internet, it’s the same thing as sending a postcard,’’ warns Bradley Anstis, director of technology strategy for Marshal8e6, an e-mail and Web security firm.

However, it is possible to shore up the security of your business e-mail communications. Here’s how to protect your business' e-mail privacy:

Encrypt e-mail and server connections. If you simply send e-mail without ensuring it’s encrypted, it can be intercepted and read by hackers. It’s important to employ e-mail encryption software and to also make sure the connection between servers is encrypted as well, using Transport Layer Security (TLS), says Antsis. If you’re encrypting business communications, then it’s up to you to make sure your clients are provided with the software needed to de-crypt it. “Some of the secure e-mail services will have a website where the person who’s receiving it can go to the website to unlock the e-mail,’’ says Matt Sarrel, an information security expert and executive director of the Sarrel Group, an information technology consulting firm. If expense is an issue, freeware such as TrueCrypt is an option.
Verify. There are two things you need to be able to count on when it comes to business e-mail, says Sarrel. It’s critical to know that the person who sent the e-mail is indeed the person to whom the e-mail is attributed, and it’s vital to know the data in the e-mail hasn’t been altered along the way. Look for software, such as the tools available from PGP, that let you digitally sign an encrypted document.
Be wary of Web-based e-mail. The experts advise caution when using Web-based e-mail accounts. “Web-based e-mail accounts are regularly targeted for attacks,’’ Anstis says. He should know. His personal Yahoo account was hacked and all of his contacts received spam, supposedly sent by Anstis. It was an embarrassing debacle for an e-mail security professional. If you are using a Web-based browser, you need to ensure the connection is encrypted with Secure Sockets Layer (SSL) protection. Check for https in the Web address. Providers such as Hushmail and NeoMailbox promise secure e-mail.
Educate employees. The best security technology in the world can’t mitigate one of the primary sources of risk for your business: human curiosity. It’s not just a matter of securing outgoing e-mail; your company’s data can be at risk with incoming mail as well. Not only is there a rise in malicious spam, there’s an evolution in delivery methods, says Anstis. Ever creative, the bad guys now use botnets, hijacking unsuspecting victims’ computers to unleash barrages of what is known as blended attack spam. “Forty-two percent of all spam is what we call a blended attack -- an e-mail with a URL in it,’’ Anstis says. The malware that will compromise your network is not in the e-mail, so the e-mail slips past security gateways. The malware is delivered when the curious recipient clicks on the URL in the e-mail to visit a website. “Educate your employees about not following unsolicited invitations to click,’’ advises Anstis. “We’re pretty good, but some of these attacks are going to get through.” It’s smart to show users examples of what a blended attack looks like. That’s why Anstis’ company, Marshal8e6, offers a sampling of different attack methods on its website.
Update software. Too often, says Sarrel, “a lot of businesses just set up e-mail and leave it. Stay on top of e-mail server software.” Understanding vulnerabilities and religiously installing updates and patches is critical. Make sure you’re receiving updates from the vendor when it comes to anti-spam protection software, says Anstis.
Scan e-mail for content. Anstis advises using a software product that will filter for content such as inappropriate language and images, both incoming to provide a professional work environment and outgoing to protect your company’s reputation. Content can also be scanned for information you don’t want sent externally, such as social security numbers and credit card account data.
Vet your vendor. Chances are you’ll turn to a third party for e-mail security. Anstis, whose company competes in this market, offers this blunt assessment: “Don’t trust vendor promises. Try all products. Get references from people you know and trust.”

For most small businesses, simply taking the time to question and to evaluate e-mail security is a big leap in the right direction, says Sarrel. “A lot of these systems get rolled out without thinking about security, and people just keep using them. A lot of people don’t seem to understand that email is almost by nature not secure.”