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Bridging the Desktop/Mobile Divide: Understanding the technologies and tactics needed for success in a multi-channel world

September 30, 2014 Leave a comment

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http://www.fiksu.com/assets/ebooks/bridging-desktop-mobile-divide-ebook.pdf

 

Introduction

Many brands today are facing a mobile gap: consumers are spending
more and more time on mobile devices, but brands haven’t kept up.
Despite accounting for 20% of US consumer time spent on media, mobile
receives only 4% of all advertising dollars.1

To strengthen relationships with their customers, and ensure continuity across all touchpoints, brands
should be doing more to reach out and engage their current desktop
users on mobile. Some brands, such as Nike, Ikea, and Audi, have embraced
mobile apps to engage users with their products, and have had great
success.

Mobile websites are another way to make your brand available
to consumers where and when they choose to engage, even though
they do not see the same level of usage as mobile apps.
This paper outlines a cross-device retargeting strategy for linking desktop
and mobile users. Using this strategy will help you capture, engage, and
leverage your current user base as they spend increasing amounts of time
on mobile and move across devices and platforms

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The Multiplier Effect of Integrating Search & Social Advertising:

September 30, 2014 Leave a comment

http://www.marinsoftware.com/downloads/wp210_search-and-social_us_w_041414.pdf?mkt_tok=3RkMMJWWfF9wsRois6TAc%2B%2FhmjTEU5z16OgpWKC2lMI%2F0ER3fOvrPUfGjI4FRcVkMq%2BTFAwTG5toziV8R7jHL81j3N0QXhXg

 

Cross-Channel Marketing

INTRODUCTION

Over the past several years, search and social advertising have become essential
ingredients of any successful marketing program. Both channels, though fundamentally
different, have proven to be highly effective and efficient for customer demand
generation and fulfillment. Search, with its ability to “pull” users into a brand’s
message and social, with its ability to “push” a message to a highly targeted audience
are capturing a greater portion of global advertising dollars every year.
According to Magna Global, more than 50% of total digital media spend was allocated
to search and social channels in 2013.1 In 2014, that number is expected to rise
substantially; more than 43% of marketers plan to increase spend on search and 46%
on social, respectively.

Leading the way in these two channels are Google and Facebook
which, according to eMarketer, are considered the two most important advertising
platforms for driving return on investment.

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“6 Tried and Tested Conversion Strategies for eCommerce Managers”

September 29, 2014 Leave a comment
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Human-Related Climate Change Led to Extreme Heat, Scientists Say

September 29, 2014 Leave a comment

A fan tried to cool off at the Australian Open Grand Slam tennis tournament in Melbourne in January. New research from several scientific groups placed blame for the heat waves that hit Australia in 2013 and 2014 on the human release of greenhouse gases. CreditNarendra Shrestha/European Pressphoto Agency

Five groups of researchers, using distinct methods, analyzed the heat that baked Australia for much of last year and continued into 2014, shutting down the Australian Open tennis tournament at one point in January. All five came to the conclusion that last year’s heat waves could not have been as severe without the long-term climatic warming caused by human activity.

“When we look at the heat across the whole of Australia and the whole 12 months of 2013, we can say that this was virtually impossible without climate change,” said David Karoly, a climate scientist at the University of Melbourne who led one research team.

 Three other research groups analyzed the drought afflicting California, but could not come to a unanimous conclusion about whether the odds had been increased by human emissions. One paper found that they had been; two others found no clear evidence of that.
Researchers generally agreed, however, that regardless of the cause, the effects of the California drought have been made worse by global warming. That is because whatever rain does fall in California tends to evaporate faster in the hotter climate, leading to drier conditions.

Two dozen papers analyzing weather extremes from 2013 were published on Monday in the Bulletin of the American Meteorological Society. This look back at the prior year has become an annual event, as scientists increasingly try to answer the question many ordinary people are asking after every extreme weather event: Did climate change have anything to do with it?

For numerous events in 2013, they were able to rule that out. Even though the overall global warming trend has been definitively linked to human emissions in scores of papers, the new reports show that the frequent rush to attribute specific weather events to human activity is not always well grounded.

For instance, one research group found that the type of extreme rainfall that struck parts of Colorado last September had become less likely, not more likely, in the warming climate. Another group found no increase in the likelihood of heavy rains and floods that struck parts of Central Europe in June that could be attributed to global warming, even though such claims were made at the time.

Myles R. Allen, a researcher at Oxford University in Britain whose group conducted the latter study, noted in an interview that the science of attributing specific events to human emissions was still contentious and difficult, so any answers given today must be regarded as provisional.

 His group has found a measure of human influence on several weather events over the years. But with the science still emerging, he cautioned against the impulse to cite global warming as a cause of almost any kind of severe weather.

The new batch of reports analyzed extreme heat in 2013 not only in Australia, but also in Europe, China, Japan and Korea, with the researchers concluding in every case that global warming had made the occurrence of the heat extremes more likely.

 In the Australian case, computers were used to analyze what the climate would likely be in the absence of human emissions. They were simply unable to produce a year as extreme as 2013, and other analytical methods yielded similar answers.

But computer analyses that factored in greenhouse gases and the warming they are causing showed an increasing likelihood of extraordinary heat waves in Australia.

“Five reports all showing the same thing is a very powerful signal,” said Thomas C. Peterson, principal scientist at the National Climatic Data Center in Asheville, N.C., a unit of the National Oceanic and Atmospheric Administration.

In addition to the Colorado and central European rains, the 2013 events for which scientists were able to rule out a human contribution included a blizzard in South Dakota, heavy snowfall in the Pyrenees in Europe, and a cyclone that swept across northwestern Europe in late October.

The new reports come as scientists, responding to popular demand, are trying to speed up their analysis of extreme weather events and the role of greenhouse gases.

It used to take them years to come to a clear view of any particular event; now, papers are being published within several months. By sometime next year, researchers hope to reduce that to a matter of days, with three groups of researchers around the world training their sights on extreme events as soon as they occur, then putting out reports while the public is still discussing the aftermath.

“We want to get to this place where we can answer the question when the media are asking it,” said Heidi Cullen, a scientist with Climate Central, a news and research organization in Princeton, N.J., who is helping to lead the effort. “We want to give the first, best answer we can possibly give.”

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Three 16-year-old girls win Google’s global science competition with breakthrough project

September 27, 2014 Leave a comment

 

Ciara Judge, Emer Hickey and Sophie Healy-Thow working on their experiment

They started on the project after learning about the 2011 famine in the Horn of Africa. The girls came up with an experiment that resulted in seriously impressive results that are considered a breakthrough in crop yield technoology:

When a gardening project went awry, they discovered a naturally occurring bacteria in soil called Diazotroph. The girls determined that the bacteria could be used to speed up the germination process of certain crops, like barley and oats, by 50 percent, potentially helping fulfill the rising demand for food worldwide.

Using naturally occurring Rhizobium strains of the Diazotroph bacteria family, they carried out an extensive study of their impact on the germination rate and subsequent growth of the cereal crops wheat, oats and barley.Detailed statistical analysis of their results indicated that these bacterial strains accelerated crop germination by up to 50 per cent and increased barley yields by 74 per cent.

Such a cereal crop performance improvement could significantly assist combatting the growing global food poverty challenge and benefit the environment by reducing fertilizer use.

Not only could the project change crop yields, they earned some pretty notable rewards:

As the Grand Prize winners, Ciara, Émer and Sophie receive a 10-day trip to the Galapagos Islands provided by National Geographic, a $50,000 scholarship from Google, a personalized LEGO prize provided by LEGO Education and the chance to participate in astronaut training at the Virgin Galactic Spaceport in the Mojave desert.

 

 

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What’s the Most Energy-Efficient City?

September 27, 2014 Leave a comment

CA Energy Efficiency Model

September 19 2014

The American Council for an Energy-Efficient Economy this week unveiled its first City Energy Efficiency Scorecard, which ranked 34 of the most populous U.S. cities on their policies and other energy-efficiency advancements.

SAN FRANCISCO — If saving energy was a contest among U.S. cities, Boston would reign supreme with San Francisco not far behind.Golden Gate Bridge and Fort Point

Boston had the highest ranking with 76.75 out of 100 points and scored particularly high in building policies that have adopted stringent building energy codes and requirements. The East Coast city also scored high in transportation policies, including investment in efficient modes of transit and energy-efficient freight transport.

 

Portland, Ore., was second, followed by New York City and San Francisco which tied for third with 69.75 points each. Seattle was fifth, followed by Austin, Texas. In PG&E’s territory, Sacramento finished No. 18 and San Jose was tied with Riverside for No. 21 on the list.

San Francisco scored high when it came to energy-efficient transportation but also tied with Boston for being the leading cities on utilities and public-benefit programs. According to the report, the cities have “productive relationships with their utilities on program implementation and access to energy data.”

In fact, PG&E’s use of SmartMeter data provides thousands of customers with Home Energy Reports. The reports are mailed to customers and show energy usage compared with similar-sized homes in their neighborhoods. Each report also includes personalized tips to help customers save energy.

And PG&E’s groundbreaking collaboration with the White House and other California utilities has led to the Green Button, which makes it easier for customers to share their energy data with the app developer community.

PG&E also works closely with businesses to help companies save energy and money.

The highest scores for Sacramento and San Jose, not surprisingly, also were for utility policies and programs.

The purpose behind the scorecard is to provide a kind of roadmap for any local government looking to improve its energy efficiency. And cities like Boston and San Francisco are leading the way.

Saving energy can be hugely beneficial for cities, the report said, by helping residents and businesses save money, creating local jobs, reducing the costs of infrastructure investments and protecting human health by reducing pollutants and greenhouse gases.

“Energy efficiency may be the cheapest, most abundant and most underutilized resource for local economic and community development,” the report said.

– See more at: http://www.caenergyefficiencymodel.com/whats-the-most-energy-efficient-city/?utm_source=Taboola&utm_medium=Content%20Marketing&utm_content=dailykos&utm_campaign=2014%20test#sthash.n8wu5TKv.dpuf

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To the Surprise of No One, Kochs Spend Big to Buy Access to Republican Governors

September 26, 2014 Leave a comment

A banner week in Kochville

 

The New York Times reported yesterday that the Citizens for Responsibility and Ethics in Washington (CREW), a government and ethics watchdog group, uncovered a treasure trove of documents exposing the major corporate donors to the Republican Governors Association. Names on the list include Walmart, Exxon Mobil, and – yep, you guessed it – Koch Companies Public Sector, a.k.a. Koch Industries’ lobbying arm.

While that isn’t surprising, it does shed some light on just what the Kochs and their big-money pals are trying to buy: golf outings, policy breakfasts, secret donor meetings, an “intimate gathering” with Republican governors and Republican VIPs (whatever that means), and the Republican governors’ ears. In short: Access. Influence. Sway.

These donors would be model residents in Kochville, the Koch brothers’ self-serving utopia where horrible things like the minimum wage, social security, and environmental protections don’t exist. And, for the low, low price of $100,000 – or two easy payments of $50,000 – the Kochs and their prospective Kochvillians get “the ability to bring their particular expertise to the political process,” which is code for tax cuts for the wealthy and cuts to education, among many, many other anti-worker and anti-middle class policies.

The truth is, this is a bargain compared to what the Kochs are spending on their extreme Senate candidates this year alone. The Koch brothers’ Americans for Prosperity plans to spend $125 million, and when you count the Kochs’ dark money donor network, that number rises to half a billion dollars.

It’s no question that too much money in politics leads to self-serving policies and self-serving politicians – just ask former Virginia Governor (and former chairman of the Republican Governors Association) Bob McDonnell, who was recently convicted of felony corruption for his misdeeds in office. And now nearly half of all current Republican governors are facing charges of corruption or other scandals. So as these governors sell their loyalties to their backers, they should remember that the Kochs and their pals won’t be there to bail them out when things go south because they’re just as self-serving as their agenda.

Welcome to Kochville! In case you missed it, American Bridge launched a significant online advertising campaign this week to hold extreme Republican candidates accountable for propagating the billionaire Koch brothers’ self-serving agenda. The online campaign, “Kochville,” will run both nationally and in targeted swing states, with animated videos depicting candidates proving their worth to the deep-pocketed brothers and pledging allegiance to the Kochs’ destructive, anti-working families political agenda.

First up in the series is North Carolina’s own Speaker Thom Tillis, whose “magic gavel” has proven quite the valuable tool to the Kochs as they attempt to turn the Tarheel State into a model state in the same vein as Kochville. Out of their enthusiasm for electing Speaker Tillis to the Senate, Americans for Prosperity North Carolina, the Kochs’ political arm in the state, went so far as to send incorrect voter registration information to hundreds of North Carolinians, including — get this — someone’s cat. But considering their affection for the Koch brothers, the nation’s ultimate fat cats, it’s hardly surprising that AFP is apparently confused about the illegality of feline voting.

Halfway across the country, the billionaires have also gone to great length to turn their home state of Kansas into a Koch utopia, and with the support of Governor Sam Brownback, they’ve notched several victories for their self-serving agenda. Brownback has become such a yes-man for the Kochs that he even sided with the billionaires in their attempt to repeal the state’s wind energy mandate, the Renewable Portfolio Standard, a measure which is overwhelmingly popular in the state and that Brownback himself once supported. The leverage the Kochs seemingly have over Brownback is hardly surprising, especially in the light of revelations from Citizens for Responsibility and Ethics in Washington (CREW) about Koch Industries’ support for the Republican Governors Association. We also have the scoop on CREW’s review of the most recent tax returns from the Kochs’ secret bank, aka Freedom Partners, and what they mean for the ever growing “Kochtopus.”

It was a busy week in Kochville, but we’ve got it all in this week’s Real Koch Facts roundup:

Brad Woodhouse
American Bridge 21st Century


Welcome to Kochville
Welcome to the wonderful world of Kochville! In the Koch brothers’ self-serving utopia, horrible things like the minimum wage, social security and environmental protections have been disbanded, and the Kochs’ hand-picked candidates are welcome. American Bridge’s new online advertising campaign is set to hold these extreme Republican candidates accountable for sharing the self-serving agenda the Kochs have been pushing for decades — an agenda that further rewards the wealthiest at the expense of working families. Watch the ads and learn more right here.

News & Observer: NC residents mailed incorrect voter registration information
According to a report from the Raleigh, NC News and Observer, Americans for Prosperity North Carolina sent incorrect voter registration information to “hundreds of North Carolinians – and one cat.” The confusion has resulted in hundreds of phone call complaints to the the State’s Board of Elections. …Read More

Gov. BrownNose (R-KS) Swaps Wind Energy For Koch Love
Sam Brownback has done the unthinkable: he’s made himself — an incumbent Republican governor in Kansas — the underdog in this year’s gubernatorial election. And he’s done it by giving his home state a terrible, horrible, Koch-fueled makeover, handing out massive tax cuts for the wealthy that have decimated the state’s economy, gutted education funding, and alienated his constituents across the board. … Read More

Freedom Partners creates more tentacles for the Kochtopus
Known as the Koch brothers’ “secret bank,” Freedom Partners is notoriously covert in its dealings and purposefully opaque about the flow of money in and out of the organization. Freedom Partners’ opacity is a hallmark of the many groups comprising the Koch network, known not-so-affectionately to some as the “Kochtopus.” Through what details are available, Freedom Partners seems to be quite central to the Kochtopus, if not the head. The Koch network and Freedom Partners continue to grow tentacles upon tentacles — way more than just eight — in a deliberate attempt to obscure their political spending activities. …. Read More

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Inside the Koch Brothers’ Toxic Empire

September 26, 2014 Leave a comment

(Blogmaster NOTE: This is important to Virtual Fashion Technology readers because the Koch Brothers own all the former Dupont textile fibers like Lycra and Dacron etc.)

 

imgres 

http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924

Illustration by Victor Juhasz
Together, Charles and David Koch control one of the world’s largest fortunes, which they are using to buy up our political system. But what they don’t want you to know is how they made all that money

By Tim Dickinson | September 24, 2014
The enormity of the Koch fortune is no mystery. Brothers Charles and David are each worth more than $40 billion. The electoral influence of the Koch brothers is similarly well-chronicled. The Kochs are our homegrown oligarchs; they’ve cornered the market on Republican politics and are nakedly attempting to buy Congress and the White House. Their political network helped finance the Tea Party and powers today’s GOP. Koch-affiliated organizations raised some $400 million during the 2012 election, and aim to spend another $290 million to elect Republicans in this year’s midterms. So far in this cycle, Koch-backed entities have bought 44,000 political ads to boost Republican efforts to take back the Senate.

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What is less clear is where all that money comes from. Koch Industries is headquartered in a squat, smoked-glass building that rises above the prairie on the outskirts of Wichita, Kansas. The building, like the brothers’ fiercely private firm, is literally and figuratively a black box. Koch touts only one top-line financial figure: $115 billion in annual revenue, as estimated by Forbes. By that metric, it is larger than IBM, Honda or Hewlett-Packard and is America’s second-largest private company after agribusiness colossus Cargill. The company’s stock response to inquiries from reporters: “We are privately held and don’t disclose this information.”

But Koch Industries is not entirely opaque. The company’s troubled legal history – including a trail of congressional investigations, Department of Justice consent decrees, civil lawsuits and felony convictions – augmented by internal company documents, leaked State Department cables, Freedom of Information disclosures and company whistle­-blowers, combine to cast an unwelcome spotlight on the toxic empire whose profits finance the modern GOP.

Under the nearly five-decade reign of CEO Charles Koch, the company has paid out record civil and criminal environmental penalties. And in 1999, a jury handed down to Koch’s pipeline company what was then the largest wrongful-death judgment of its type in U.S. history, resulting from the explosion of a defective pipeline that incinerated a pair of Texas teenagers.

The volume of Koch Industries’ toxic output is staggering. According to the University of Massachusetts Amherst’s Political Economy Research Institute, only three companies rank among the top 30 polluters of America’s air, water and climate: ExxonMobil, American Electric Power and Koch Industries. Thanks in part to its 2005 purchase of paper-mill giant Georgia-Pacific, Koch Industries dumps more pollutants into the nation’s waterways than General Electric and International Paper combined. The company ranks 13th in the nation for toxic air pollution. Koch’s climate pollution, meanwhile, outpaces oil giants including Valero, Chevron and Shell. Across its businesses, Koch generates 24 million metric tons of greenhouse gases a year.

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The Koch Brothers – Exposed!
For Koch, this license to pollute amounts to a perverse, hidden subsidy. The cost is borne by communities in cities like Port Arthur, Texas, where a Koch-owned facility produces as much as 2 billion pounds of petrochemicals every year. In March, Koch signed a consent decree with the Department of Justice requiring it to spend more than $40 million to bring this plant into compliance with the Clean Air Act.

The toxic history of Koch Industries is not limited to physical pollution. It also extends to the company’s business practices, which have been the target of numerous federal investigations, resulting in several indictments and convictions, as well as a whole host of fines and penalties.

And in one of the great ironies of the Obama years, the president’s financial-regulatory reform seems to benefit Koch Industries. The company is expanding its high-flying trading empire precisely as Wall Street banks – facing tough new restrictions, which Koch has largely escaped – are backing away from commodities speculation.
It is often said that the Koch brothers are in the oil business. That’s true as far as it goes – but Koch Industries is not a major oil producer. Instead, the company has woven itself into every nook of the vast industrial web that transforms raw fossil fuels into usable goods. Koch-owned businesses trade, transport, refine and process fossil fuels, moving them across the world and up the value chain until they become things we forgot began with hydrocarbons: fertilizers, Lycra, the innards of our smartphones.

The company controls at least four oil refineries, six ethanol plants, a natural-gas-fired power plant and 4,000 miles of pipeline. Until recently, Koch refined roughly five percent of the oil burned in America (that percentage is down after it shuttered its 85,000-barrel-per-day refinery in North Pole, Alaska, owing, in part, to the discovery that a toxic solvent had leaked from the facility, fouling the town’s groundwater). From the fossil fuels it refines, Koch also produces billions of pounds of petrochemicals, which, in turn, become the feedstock for other Koch businesses. In a journey across Koch Industries, what enters as a barrel of West Texas Intermediate can exit as a Stainmaster carpet.

Koch’s hunger for growth is insatiable: Since 1960, the company brags, the value of Koch Industries has grown 4,200-fold, outpacing the Standard & Poor’s index by nearly 30 times. On average, Koch projects to double its revenue every six years. Koch is now a key player in the fracking boom that’s vaulting the United States past Saudi Arabia as the world’s top oil producer, even as it’s endangering America’s groundwater. In 2012, a Koch subsidiary opened a pipeline capable of carrying 250,000 barrels a day of fracked crude from South Texas to Corpus Christi, where the company owns a refinery complex, and it has announced plans to further expand its Texas pipeline operations. In a recent acquisition, Koch bought Frac-Chem, a top provider of hydraulic fracturing chemicals to drillers. Thanks to the Bush administration’s anti-regulatory­ agenda – which Koch Industries helped craft – Frac-Chem’s chemical cocktails, injected deep under the nation’s aquifers, are almost entirely exempt from the Safe Drinking Water Act.

koch brothers
A 1996 explosion of a Koch-owned pipeline in Texas killed two teens. (Photo: National Transportation Safety Board)
Koch is also long on the richest – but also the dirtiest and most carbon-polluting – oil deposits in North America: the tar sands of Alberta. The company’s Pine Bend refinery, near St. Paul, Minnesota, processes nearly a quarter of the Canadian bitumen exported to the United States – which, in turn, has created for Koch Industries a lucrative sideline in petcoke exports. Denser, dirtier and cheaper than coal, petcoke is the dregs of tar-sands refining. U.S. coal plants are largely forbidden from burning petcoke, but it can be profitably shipped to countries with lax pollution laws like Mexico and China. One of the firm’s subsidiaries, Koch Carbon, is expanding its Chicago terminal operations to receive up to 11 million tons of petcoke for global export. In June, the EPA noted the facility had violated the Clean Air Act with petcoke particulates that endanger the health of South Side residents. “We dispute that the two elevated readings” behind the EPA notice of violation “are violations of anything,” Koch’s top lawyer, Mark Holden, told Rolling Stone, insisting that Koch Carbon is a good neighbor.

Over the past dozen years, the company has quietly acquired leases for 1.1 million acres of Alberta oil fields, an area larger than Rhode Island. By some estimates, Koch’s direct holdings nearly double ExxonMobil’s and nearly triple Shell’s. In May, Koch Oil Sands Operating LLC of Calgary, Alberta, sought permits to embark on a multi-billion­dollar tar-sands-extraction operation. This one site is projected to produce 22 million barrels a year – more than a full day’s supply of U.S. oil.

Charles Koch, the 78-year-old CEO and chairman of the board of Koch Industries, is inarguably a business savant. He presents himself as a man of moral clarity and high integrity. “The role of business is to produce products and services in a way that makes people’s lives better,” he said recently. “It cannot do so if it is injuring people and harming the environment in the process.”

The Koch family’s lucrative blend of pollution, speculation, law-bending and self-righteousness stretches back to the early 20th century, when Charles’ father first entered the oil business. Fred C. Koch was born in 1900 in Quanah, Texas – a sunbaked patch of prairie across the Red River from Oklahoma. Fred was the second son of Hotze “Harry” Koch, a Dutch immigrant who – as recalled in Koch literature – ran “a modest newspaper business” amid the dusty poverty of Quanah. In the family legend, Fred Koch emerged from the nothing of the Texas range to found an empire. But like many stories the company likes to tell about itself, this piece of Koch­lore takes liberties with the truth. Fred was not a simple country boy, and his father was not just a small-town publisher. Harry Koch was also a local railroad baron who used his newspaper to promote the Quanah, Acme & Pacific railways. A director and founding shareholder of the company, Harry sought to build a rail line across Texas to El Paso. He hoped to turn Quanah into “the most important railroad center in northwest Texas and a metropolitan city of first rank.” He may not have fulfilled those ambitions, but Harry did build up what one friend called “a handsome pile of dinero.”

Harry was not just the financial springboard for the Koch dynasty, he was also its wellspring of far-right politics. Harry editorialized against fiat money, demanded hangings for “habitual criminals” and blasted Social Security as inviting sloth. At the depths of the Depression, he demanded that elected officials in Washington should stop trying to fix the economy: “Business,” he wrote, “has always found a way to overcome various recessions.”

In the company’s telling, young Fred was an innovator whose inventions helped revolutionize the oil industry. But there is much more to this story. In its early days, refining oil was a dirty and wasteful practice. But around 1920, Universal Oil Products introduced a clean and hugely profitable way to “crack” heavy crude, breaking it down under heat and heavy pressure to boost gasoline yields. In 1925, Fred, who earned a degree in chemical engineering from MIT, partnered with a former Universal engineer named Lewis Winkler and designed a near carbon copy of the Universal cracking apparatus – making only tiny, unpatentable tweaks. Relying on family connections, Fred soon landed his first client – an Oklahoma refinery owned by his maternal uncle L.B. Simmons. In a flash, Winkler-Koch Engineering Co. had contracts to install its knockoff cracking equipment all over the heartland, undercutting Universal by charging a one-time fee rather than ongoing royalties.

It was a boom business. That is, until Universal sued in 1929, accusing Winkler­Koch of stealing its intellectual property. With his domestic business tied up in court, Fred started looking for partners abroad and was soon doing business in the Soviet Union, where leader Joseph Stalin had just launched his first Five Year Plan. Stalin sought to fund his country’s industrialization by selling oil into the lucrative European export market. But the Soviet Union’s reserves were notoriously hard to refine. The USSR needed cracking technology, and the Oil Directorate of the Supreme Council of the National Economy took a shining to Winkler-Koch – primarily because Koch’s oil-industry competitors were reluctant to do business with totalitarian Communists.

koch brothers
Outside its London offices, protesters gather. (Photo: P.Wolmuth/REPORT DIGITAL-REA/Re)
Between 1929 and 1931, Winkler-Koch built 15 cracking units for the Soviets. Although Stalin’s evil was no secret, it wasn’t until Fred visited the Soviet Union, that these dealings seemed to affect his conscience. “I went to the USSR in 1930 and found it a land of hunger, misery and terror,” he would later write. Even so, he agreed to give the Soviets the engineering know-how they would need to keep building more.

Back home, Fred was busy building a life of baronial splendor. He met his wife, Mary, the Wellesley-educated daughter of a Kansas City surgeon, on a polo field and soon bought 160 acres across from the Wichita Country Club, where they built a Tudor­style mansion. As chronicled in Sons of Wichita, Daniel Schulman’s investigation of the Koch dynasty, the compound was quickly bursting with princes: Frederick arrived in 1933, followed by Charles in 1935 and twins David and Bill in 1940. Fred Koch lorded over his domain. “My mother was afraid of my father,” said Bill, as were the four boys, especially first-born Frederick, an artistic kid with a talent for the theater. “Father wanted to make all his boys into men, and Freddie couldn’t relate to that regime,” Charles recalled. Frederick got shipped East to boarding school and was all but disappeared from Wichita.

With Frederick gone, Charles forged a deep alliance with David, the more athletic and assertive of the young twins. “I was closer with David because he was better at everything,” Charles has said.
Fred Koch’s legal battle with Universal would drag on for nearly a quarter-century. In 1934, a lower court ruled that Winkler-Koch had infringed on Universal’s technology. But that judgment would be vacated, after it came out in 1943 that Universal had bought off one of the judges­ handling the appeal. A year later, the Supreme Court decided that Fred’s cracker, by virtue of small technical differences, did not violate the Universal patent. Fred countersued on antitrust grounds, arguing that Universal had wielded patents anti-competitively. He’d win a $1.5 million settlement in 1952.

Around that time, Fred had built a domestic oil empire under a new company eventually called Rock Island Oil & Refining, transporting crude from wellheads to refineries by truck or by pipe. In those later years, Fred also became a major benefactor and board member of the John Birch Society, the rabidly anti-communist organization founded in 1958 by candy magnate and virulent racist Robert Welch. Bircher publications warned that the Red endgame was the creation of the “Negro Soviet­ Republic” in the Deep South. In his own writing, Fred described integration as a Red plot to “enslave both the white and black man.”

Like his father, Charles Koch attended MIT. After he graduated in 1959 with two master’s degrees in engineering, his father issued an ultimatum: Come back to Wichita or I’ll sell the business. “Papa laid it on the line,” recalled David. So Charles returned home, immersing himself in his father’s world – not simply joining the John Birch Society, but also opening a Bircher bookstore. The Birchers had high hopes for young Charles. As Koch family friend Robert Love wrote in a letter to Welch: “Charles Koch can, if he desires, finance a large operation, however, he must continually be brought along.”

But Charles was already falling under the sway of a charismatic radio personality named Robert LeFevre, founder of the Freedom School, a whites-only­ libertarian boot camp in the foothills above Colorado Springs, Colorado. LeFevre preached a form of anarchic capitalism in which the individual should be freed from almost all government power. Charles soon had to make a choice. While the Birchers supported the Vietnam War, his new guru was a pacifist who equated militarism with out-of-control state power. LeFevre’s stark influence on Koch’s thinking is crystallized in a manifesto Charles wrote for the Libertarian Review in the 1970s, recently unearthed by Schulman, titled “The Business Community: Resisting Regulation.” Charles lays out principles that gird today’s Tea Party movement. Referring to regulation as “totalitarian,” the 41-year-old Charles claimed business leaders had been “hoodwinked” by the notion that regulation is “in the public interest.” He advocated the “barest possible obedience” to regulation and implored, “Do not cooperate voluntarily, instead, resist whenever and to whatever extent you legally can in the name of justice.”

After his father died in 1967, Charles, now in command of the family business, renamed it Koch Industries. It had grown into one of the 10 largest privately owned firms in the country, buying and selling some 80 million barrels of oil a year and operating 3,000 miles of pipeline. A black-diamond skier and white-water kayaker, Charles ran the business with an adrenaline junkie’s aggressiveness. The company would build pipelines to promising oil fields without a contract from the producers and park tanker trucks beside wildcatters’ wells, waiting for the first drops of crude to flow. “Our willingness to move quickly, absorb more risk,” Charles would write, “enabled us to become the leading crude-oil­gathering company.”

Charles also reconnected with one of his father’s earliest insights: There’s big money in dirty oil. In the late 1950s, Fred Koch had bought a minority stake in a Minnesota refinery that processed heavy Canadian crude. “We could run the lousiest crude in the world,” said his business partner J. Howard Marshall II – the future Mr. Anna Nicole Smith. Sensing an opportunity for huge profits, Charles struck a deal to convert Marshall’s ownership stake in the refinery into stock in Koch Industries. Suddenly the majority owner, the company soon bought the rest of the refinery outright.

Almost from the beginning, Koch Industries’ risk-taking crossed over into recklessness. The OPEC oil embargo hit the company hard. Koch had made a deal giving the company the right to buy a large share of Qatar’s export crude. At the time, Koch owned five supertankers and had chartered many others. When the embargo hit, Koch had upward of half a billion dollars in exposure to tankers and couldn’t deliver OPEC oil to the U.S. market, creating what Charles has called “large losses.” Soon, Koch Industries was caught overcharging American customers. The Ford administration in the summer of 1974 compelled Koch to pay out more than $20 million in rebates and future price reductions.

Koch Industries’ manipulations were about to get more audacious. In the late 1970s, the federal government parceled out exploration tracts, using a lottery in which anyone could score a 10-year lease at just $1 an acre – a game of chance that gave wildcat prospectors the same shot as the biggest players. Koch didn’t like these odds, so it enlisted scores of frontmen to bid on its behalf. In the event they won the lottery, they would turn over their leases to the company. In 1980, Koch Industries pleaded guilty to five felonies in federal court, including conspiracy to commit fraud.

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The Koch family, mid-1950s. (Photo: Wichita State University Libraries)
With Republicans and Democrats united in regulating the oil business, Charles had begun throwing his wealth behind the upstart Libertarian Party, seeking to transform it into a viable third party. Over the years, he would spend millions propping up a league of affiliated think tanks and front groups – a network of Libertarians that became known as the “Kochtopus.”

Charles even convinced David to stand as the Libertarian Party’s vice-presidential candidate in 1980 – a clever maneuver that allowed David to lavish unlimited money on his own ticket. The Koch-funded 1980 platform was nakedly in the brothers’ self-interest – slashing federal regulatory agencies, offering a 50 percent tax break to top earners, ending the “cruel and unfair” estate tax and abolishing a $16 billion “windfall profits” tax on the oil industry. The words of Libertarian presidential candidate Ed Clark’s convention speech in Los Angeles ring across the decades: “We’re sick of taxes,” he declared. “We’re ready to have a very big tea party.” In a very real sense, the modern Republican Party was on the ballot that year – and it was running against Ronald Reagan.

Charles’ management style and infatuation with far-right politics were endangering his grip on the company. Bill believed his brothers’ political spending was bad for business. “Pretty soon, we would get the reputation that the company and the Kochs were crazy,” he said.
In late 1980, with Frederick’s backing, Bill launched an unsuccessful battle for control of Koch Industries, aiming to take the company public. Three years later, Charles and David bought out their brothers for $1.1 billion. But the speed with which Koch Industries paid off the buyout debt left Bill convinced, but never quite able to prove, he’d been defrauded. He would spend the next 18 years suing his brothers, calling them “the biggest crooks in the oil industry.”

Bill also shared these concerns with the federal government. Thanks in part to his efforts, in 1989 a Senate committee investigating Koch business with Native Americans would describe Koch Oil tactics as “grand larceny.” In the late 1980s, Koch was the largest purchaser of oil from American tribes. Senate investigators suspected the company was making off with more crude from tribal oil fields than it measured and paid for. They set up a sting, sending an FBI agent to coordinate stakeouts of eight remote leases. Six of them were Koch operations, and the agents reported “oil theft” at all of them.

One of Koch’s gaugers would refer to this as “volume enhancement.” But in sworn testimony before a Texas jury, Phillip Dubose, a former Koch pipeline manager, offered a more succinct definition: “stealing.” The Senate committee concluded that over the course of three years Koch “pilfered” $31 million in Native oil; in 1988, the value of that stolen oil accounted for nearly a quarter of the company’s crude-oil profits. “I don’t know how the company could have figures like that,” the FBI agent testified, “and not have top management know that theft was going on.” In his own testimony, Charles offered that taking oil readings “is a very uncertain art” and that his employees “aren’t rocket scientists.” Koch’s top lawyer would later paint the company as a victim of Senate “McCarthyism.”

By this time, the Kochs had soured on the Libertarian Party, concluding that control of a small party would never give them the muscle they sought in the nation’s capital. Now they would spend millions in efforts to influence – and ultimately take over – the GOP. The work began close to home; the Kochs had become dedicated patrons of Sen. Bob Dole of Kansas, who ran interference for Koch Industries in Washington. On the Senate floor in March 1990, Dole gloatingly cautioned against a “rush to judgment” against Koch, citing “very real concerns about some of the evidence on which the special committee was basing its findings.” A grand jury investigated the claims but disbanded in 1992, without issuing indictments.

Arizona Sen. Dennis DeConcini was “surprised and disappointed” at the decision to drop the case. “Our investigation was some of the finest work the Senate has ever done,” he said. “There was an overwhelming case against Koch.” But Koch did not avoid all punishment. Under the False Claims Act, which allows private citizens to file lawsuits on behalf of the government, Bill sued the company, accusing it of defrauding the feds of royalty income on its “volume­enhanced” purchases of Native oil. A jury concluded Koch had submitted more than 24,000 false claims, exposing Koch to some $214 million in penalties. Koch later settled, paying $25 million.

Self­interest continued to define Koch Industries’ adventures in public policy. In the early 1990s, in a high-profile initiative of the first-term Clinton White House, the administration was pushing for a levy on the heat content of fuels. Known as the BTU tax, it was the earliest attempt by the federal government to recoup damages from climate polluters. But Koch Industries could not stand losing its most valuable subsidy: the public policy that allowed it to treat the atmosphere as an open sewer. Richard Fink, head of Koch Company’s Public Sector and the longtime mastermind of the Koch brothers’ political empire, confessed to The Wichita Eagle in 1994 that Koch could not compete if it actually had to pay for the damage it did to the environment: “Our belief is that the tax, over time, may have destroyed our business.”

To fight this threat, the Kochs funded a “grassroots” uprising – one that foreshadowed the emergence, decades later, of the Tea Party. The effort was run through Citizens for a Sound Economy, to which the brothers had spent a decade giving nearly $8 million to create what David Koch called “a sales force” to communicate the brothers’ political agenda through town hall meetings and anti-tax rallies designed to look like spontaneous demonstrations. In 1994, David Koch bragged that CSE’s campaign “played a key role in defeating the administration’s plans for a huge and cumbersome BTU tax.”

Despite the company’s increasingly sophisticated political and public-relations operations, Charles’ philosophy of regulatory resistance was about to bite Koch Industries – in the form of record civil and criminal financial penalties imposed by the Environmental Protection Agency.

Koch entered the 1990s on a pipeline-buying spree. By 1994, its network measured 37,000 miles. According to sworn testimony from former Koch employees, the company operated its pipelines with almost complete disregard for maintenance. As Koch employees understood it, this was in keeping with their CEO’s trademarked business philosophy, Market­Based Management.

For Charles, MBM – first communicated to employees in 1991 – was an attempt to distill the business practices that had grown Koch into one of the largest oil businesses in the world. To incentivize workers, Koch gives employees bonuses that correlate to the value they create for the company. “Salary is viewed only as an advance on compensation for value,” Koch wrote, “and compensation has an unlimited upside.”

To prevent the stagnation that can often bog down big enterprises, Koch was also determined to incentivize risk-taking. Under MBM, Koch Industries books opportunity costs – “profits foregone from a missed opportunity” – as though they were actual losses on the balance sheet. Koch employees who play it safe, in other words, can’t strike it rich.

On paper, MBM sounds innovative and exciting. But in Koch’s hyperaggressive corporate culture, it contributed to a series of environmental disasters. Applying MBM to pipeline maintenance, Koch employees calculated that the opportunity cost of shutting down equipment to ensure its safety was greater than the profit potential of pushing aging pipe to its limits.

The fact that preventive pipeline maintenance is required by law didn’t always seem to register. Dubose, a 26-year Koch veteran who oversaw pipeline areas in Louisiana, would testify about the company’s lax attitude toward maintenance. “It was a question of money. It would take away from our profit margin.” The testimony of another pipeline manager would echo that of Dubose: “Basically, the philosophy was ‘If it ain’t broke, don’t work on it.'”

When small spills occurred, Dubose testified, the company would cover them up. He recalled incidents in which the company would use the churn of a tugboat’s engine to break up waterborne spills and “just kind of wash that thing on down, down the river.” On land, Dubose said, “They might pump it [the leaked oil] off into a drum, then take a shovel and just turn the earth over.” When larger spills were reported to authorities, the volume of the discharges was habitually low-balled, according to Dubose.

Managers pressured employees to falsify pipeline-maintenance records filed with federal authorities; in a sworn affidavit, pipeline worker Bobby Conner recalled arguments with his manager over Conner’s refusal to file false reports: “He would always respond with anger,” Conner said, “and tell me that I did not know how to be a Koch employee.” Conner was fired and later settled a wrongful-termination suit with Koch Gateway Pipeline. Dubose testified that Charles was not in the dark about the company’s operations. “He was in complete control,” Dubose said. “He was the one that was line-driving this Market-Based Management at meetings.”

Before the worst spill from this time, Koch employees had raised concerns about the integrity of a 1940s-era pipeline in South Texas. But the company not only kept the line in service, it increased the pressure to move more volume. When a valve snapped shut in 1994, the brittle pipeline exploded. More than 90,000 gallons of crude spewed into Gum Hollow Creek, fouling surrounding marshlands and both Nueces and Corpus Christi bays with a 12-mile oil slick.

By 1995, the EPA had seen enough. It sued Koch for gross violations of the Clean Water Act. From 1988 through 1996, the company’s pipelines spilled 11.6 million gallons of crude and petroleum products. Internal Koch records showed that its pipelines were in such poor condition that it would require $98 million in repairs to bring them up to industry standard.

Ultimately, state and federal agencies forced Koch to pay a $30 million civil penalty – then the largest in the history of U.S. environmental law – for 312 spills across six states. Carol Browner, the former EPA administrator, said of Koch, “They simply did not believe the law applied to them.” This was not just partisan rancor. Texas Attorney General John Cornyn, the future Republican senator, had joined the EPA in bringing suit against Koch. “This settlement and penalty warn polluters that they cannot treat oil spills simply as the cost of doing business,” Cornyn said. (The Kochs seem to have no hard feelings toward their one-time tormentor; a lobbyist for Koch was the number-two bundler for Cornyn’s primary campaign this year.)

Koch wasn’t just cutting corners on its pipelines. It was also violating federal environmental law in other corners of the empire. Through much of the 1990s at its Pine Bend refinery in Minnesota, Koch spilled up to 600,000 gallons of jet fuel into wetlands near the Mississippi River. Indeed, the company was treating the Mississippi as a sewer, illegally dumping ammonia-laced wastewater into the river – even increasing its discharges on weekends when it knew it wasn’t being monitored. Koch Petroleum Group eventually pleaded guilty to “negligent discharge of a harmful quantity of oil” and “negligent violation of the Clean Water Act,” was ordered to pay a $6 million fine and $2 million in remediation costs, and received three years’ probation. This facility had already been declared a Superfund site in 1984.

In 2000, Koch was hit with a 97-count indictment over claims it violated the Clean Air Act by venting massive quantities of benzene at a refinery in Corpus Christi – and then attempted to cover it up. According to the indictment, Koch filed documents with Texas regulators indicating releases of just 0.61 metric tons of benzene for 1995 – one-tenth of what was allowed under the law. But the government alleged that Koch had been informed its true emissions that year measured 91 metric tons, or 15 times the legal limit.

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Charles Koch (Photo: Larry W. Smith / Polaris)
By the time the case came to trial, however, George W. Bush was in office and the indictment had been significantly pared down – Koch faced charges on only seven counts. The Justice Department settled in what many perceived to be a sweetheart deal, and Koch pleaded guilty to a single felony count for covering up the fact that it had disconnected a key pollution-control device and did not measure the resulting benzene emissions – receiving five years’ probation. Despite skirting stiffer criminal prosecution, Koch was handed $20 million in fines and reparations – another historic judgment.

On the day before Danielle Smalley was to leave for college, she and her friend Jason Stone were hanging out in her family’s mobile home. Seventeen years old, with long chestnut hair, Danielle began to feel nauseated. “Dad,” she said, “we smell gas.” It was 3:45 in the afternoon on August 24th, 1996, near Lively, Texas, some 50 miles southeast of Dallas. The Smalleys were too poor to own a telephone. So the teens jumped into her dad’s 1964 Chevy pickup to alert the authorities. As they drove away, the truck stalled where the driveway crossed a dry creek bed. Danielle cranked the ignition, and a fireball engulfed the truck. “You see two children burned to death in front of you – you never forget that,” Danielle’s father, Danny, would later tell reporters.

Unknown to the Smalleys, a decrepit Koch pipeline carrying liquid butane – literally, lighter fluid – ran through their subdivision. It had ruptured, filling the creek bed with vapor, and the spark from the pickup’s ignition had set off a bomb. Federal investigators documented both “severe corrosion” and “mechanical damage” in the pipeline. A National Transportation Safety Board report would cite the “failure of Koch Pipeline Company LP to adequately protect its pipeline from corrosion.”

Installed in the early Eighties, the pipeline had been out of commission for three years. When Koch decided to start it up again in 1995, a water-pressure test had blown the pipe open. An inspection of just a few dozen miles of pipe near the Smal­ley home found 538 corrosion defects. The industry’s term of art for a pipeline in this condition is Swiss cheese, according to the testimony of an expert witness – “essentially the pipeline is gone.”

Koch repaired only 80 of the defects – enough to allow the pipeline to withstand another pressure check – and began running explosive fluid down the line at high pressure in January 1996. A month later, employees discovered that a key anti­corrosion system had malfunctioned, but it was never fixed. Charles Koch had made it clear to managers that they were expected to slash costs and boost profits. In a sternly worded memo that April, Charles had ordered his top managers to cut expenditures by 10 percent “through the elimination of waste (I’m sure there is much more waste than that)” in order to increase pre-tax earnings by $550 million a year.

The Smalley trial underscored something Bill Koch had said about the way his brothers ran the company: “Koch Industries has a philosophy that profits are above everything else.” A former Koch manager, Kenoth Whitstine, testified to incidents in which Koch Industries placed profits over public safety. As one supervisor had told him, regulatory fines “usually didn’t amount to much” and, besides, the company had “a stable full of lawyers in Wichita that handled those situations.” When Whitstine told another manager he was concerned that unsafe pipelines could cause a deadly accident, this manager said that it was more profitable for the company to risk litigation than to repair faulty equipment. The company could “pay off a lawsuit from an incident and still be money ahead,” he said, describing the principles of MBM to a T.

At trial, Danny Smalley asked for a judgment large enough to make the billionaires feel pain: “Let Koch take their child out there and put their children on the pipeline, open it up and let one of them die,” he told the jury. “And then tell me what that’s worth.” The jury was emphatic, awarding Smalley $296 million – then the largest wrongful-death judgment in American legal history. He later settled with Koch for an undisclosed sum and now runs a pipeline-safety foundation in his daughter’s name. He declined to comment for this story. “It upsets him too much,” says an associate.

The official Koch line is that scandals that caused the company millions in fines, judgments and penalties prompted a change in Charles’ attitude of regulatory resistance. In his 2007 book, The Science of Success, he begrudgingly acknowledges his company’s recklessness. “While business was becoming increasingly regulated,” he reflects, “we kept thinking and acting as if we lived in a pure market economy. The reality was far different.”

Charles has since committed Koch Industries to obeying federal regulations. “Even when faced with laws we think are counterproductive,” he writes, “we must first comply.” Underscoring just how out of bounds Koch had ventured in its corporate culture, Charles admits that “it required a monumental undertaking to integrate compliance into every aspect of the company.” In 2000, Koch Petroleum Group entered into an agreement with the EPA and the Justice Department to spend $80 million at three refineries to bring them into compliance with the Clean Air Act. After hitting Koch with a $4.5 million penalty, the EPA granted the company a “clean slate” for certain past violations.

Then George W. Bush entered the White House in 2001, his campaign fattened with Koch money. Charles Koch may decry cronyism as “nothing more than welfare for the rich and powerful,” but he put his company to work, hand in glove, with the Bush White House. Correspondence, contacts and visits among Koch Industries representatives and the Bush White House generated nearly 20,000 pages of records, according to a Rolling Stone FOIA request of the George W. Bush Presidential Library. In 2007, the administration installed a fiercely anti-regulatory academic, Susan Dudley, who hailed from the Koch-funded Mercatus Center at George Mason University, as its top regulatory official.
Today, Koch points to awards it has won for safety and environmental excellence. “Koch companies have a strong record of compliance,” Holden, Koch’s top lawyer, tells Rolling Stone. “In the distant past, when we failed to meet these standards, we took steps to ensure that we were building a culture of 10,000 percent compliance, with 100 percent of our employees complying 100 percent.” To reduce its liability, Koch has also unwound its pipeline business, from 37,000 miles in the late 1990s to about 4,000 miles. Of the much smaller operation, he adds, “Koch’s pipeline practice and operations today are the best in the industry.”

But even as compliance began to improve among its industrial operations, the company aggressively expanded its trading activities into the Wild West frontier of risky financial instruments. In 2000, the Commodity Futures Modernization Act had exempted many of these products from regulation, and Koch Industries was among the key players shaping that law. Koch joined up with Enron, BP, Mobil and J. Aron – a division of Goldman Sachs then run by Lloyd Blankfein – in a collaboration called the Energy Group. This corporate alliance fought to prohibit the federal government from policing oil and gas derivatives. “The importance of derivatives for the Energy Group companies . . . cannot be overestimated,” the group’s lawyer wrote to the Commodity Futures Trading Commission in 1998. “The success of this business can be completely undermined by . . . a costly regulatory regime that has no place in the energy industry.”

Koch had long specialized in “over-the-counter” or OTC trades – private, unregulated contracts not disclosed on any centralized exchange. In its own letter to the CFTC, Koch identified itself as “a major participant in the OTC derivatives market,” adding that the company not only offered “risk-management tools for its customers” but also traded “for its own account.” Making the case for what would be known as the Enron Loophole, Koch argued that any big firm’s desire to “maintain a good reputation” would prevent “widespread abuses in the OTC derivatives market,” a darkly hilarious claim, given what would become not only of Enron, but also Bear Stearns, Lehman Brothers and AIG.

The Enron Loophole became law in December 2000 – pushed along by Texas Sen. Phil Gramm, giving the Energy Group exactly what it wanted. “It completely exempted energy futures from regulation,” says Michael Greenberger, a former director of trading and markets at the CFTC. “It wasn’t a matter of regulators not enforcing manipulation or excessive speculation limits – this market wasn’t covered at all. By law.”

Before its spectacular collapse, Enron would use this loophole in 2001 to help engineer an energy crisis in California, artificially constraining the supply of natural gas and power generation, causing price spikes and rolling blackouts. This blatant and criminal market manipulation has become part of the legend of Enron. But Koch was caught up in the debacle. The CFTC would charge that a partnership between Koch and the utility Entergy had, at the height of the California crisis, reported fake natural-gas trades to reporting firms and also “knowingly reported false prices and/or volumes” on real trades.

One of 10 companies punished for such schemes, Entergy-Koch avoided prosecution by paying a $3 million fine as part of a 2004 settlement with the CFTC, in which it did not admit guilt to the commission’s charges but is barred from maintaining its innocence.

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David Koch (Photo: Alexis C. Glenn /Landov)
Trading, which had long been peripheral to the company’s core businesses, soon took center stage. In 2002, the company launched a subsidiary, Koch Supply & Trading. KS&T got off to a rocky start. “A series of bad trades,” writes a Koch insider, “boiled over in early 2004 when a large ‘sure bet’ crude-oil trade went south, resulting in a quick, multimillion loss.” But Koch traders quickly adjusted to the reality that energy markets were no longer ruled just by supply and demand – but by rich speculators trying to game the market. Revamping its strategy, Koch Industries soon began bragging of record profits. From 2003 to 2012, KS&T trading volumes exploded – up 450 percent. By 2009, KS&T ranked among the world’s top-five oil traders, and by 2011, the company billed itself as “one of the leading quantitative traders” – though Holden now says it’s no longer in this business.

Since Koch Industries aggressively expanded into high finance, the net worth of each brother has also exploded – from roughly $4 billion in 2002 to more than $40 billion today. In that period, the company embarked on a corporate buying spree that has taken it well beyond petroleum. In 2005, Koch purchased Georgia Pacific for $21 billion, giving the company a familiar, expansive grip on the industrial web that transforms Southern pine into consumer goods – from plywood sold at Home Depot to brand-name products like Dixie Cups and Angel Soft toilet paper. In 2013, Koch leapt into high technology with the $7 billion acquisition of Molex, a manufacturer of more than 100,000 electronics components and a top supplier to smartphone makers, including Apple.

Koch Supply & Trading makes money both from physical trades that move oil and commodities across oceans as well as in “paper” trades involving nothing more than high-stakes bets and cash. In paper trading, Koch’s products extend far beyond simple oil futures. Koch pioneered, for sale to hedge funds, “volatility swaps,” in which the actual price of crude is irrelevant and what matters is only the “magnitude of daily fluctuations in prices.” Steve Mawer, until recently the president of KS&T, described parts of his trading operation as “black-box stuff.”

Like a casino that bets at its own craps table, Koch engages in “proprietary trading” – speculating for the company’s own bottom line. “We’re like a hedge fund and a dealer at the same time,” bragged Ilia Bouchouev, head of Koch’s derivatives trading in 2004. “We can both make markets and speculate.” The company’s many tentacles in the physical oil business give Koch rich insight into market conditions and disruptions that can inform its speculative bets. When oil prices spiked to record heights in 2008, Koch was a major player in the speculative markets, according to documents leaked by Vermont Sen. Bernie Sanders, with trading volumes rivaling Wall Street giants like Citibank. Koch rode a trader-driven frenzy – detached from actual supply and demand – that drove prices above $147 a barrel in July 2008, battering a global economy about to enter a free fall.

Only Koch knows how much money Koch reaped during this price spike. But, as a proxy, consider the $20 million Koch and its subsidiaries spent lobbying Congress in 2008 – before then, its biggest annual lobbying expense had been $5 million – seeking to derail a raft of consumer-protection bills, including the Federal Price Gouging Prevention Act, the Stop Excessive Energy Speculation Act of 2008, the Prevent Unfair Manipulation of Prices Act of 2008 and the Close the Enron Loophole Act.

In comments to the Federal Trade Commission, Koch lobbyists defended the company’s right to rack up fantastic profits at the expense of American consumers. “A mere attempt to maximize profits cannot constitute market manipulation,” they wrote, adding baldly, “Excessive profits in the face of shortages are desirable.”

When the global economy crashed in 2008, so did oil prices. By December, crude was trading more than $100 lower per barrel than it had just months earlier – around $30. At the same time, oil traders anticipated that prices would eventually rebound. Futures contracts for delivery of oil in December 2009 were trading at nearly $55 per barrel. When future delivery is more valuable than present inventory, the market is said to be “in contango.” Koch exploited the contango market to the hilt. The company leased nine supertankers and filled them with cut-rate crude and parked them quietly offshore in the Gulf of Mexico, banking virtually risk-free profits by selling contracts for future delivery.

All in, Koch took about 20 million barrels of oil off the market, putting itself in a position to bet on price disruptions the company itself was creating. Thanks to these kinds of trading efforts, Koch could boast in a 2009 review that “the performance of Koch Supply & Trading actually grew stronger last year as the global economy worsened.” The cost for those risk-free profits was paid by consumers at the pump. Estimates pegged the cost of the contango trade by Koch and others at up to 40 cents a gallon.

Artificially constraining oil supplies is not the only source of dark, unregulated profit for Koch Industries. In the years after George W. Bush branded Iran a member of the “Axis of Evil,” the Koch brothers profited from trade with the state sponsor of terror and reckless would-be nuclear power. For decades, U.S. companies have been forbidden from doing business with the Ayatollahs, but Koch Industries exploited a loophole in 1996 sanctions that made it possible for foreign subsidiaries of U.S. companies to do some business in Iran.
In the ensuing years, according to Bloomberg Markets, the German and Italian arms of Koch-Glitsch, a Koch subsidiary that makes equipment for oil fields and refineries, won lucrative contracts to supply Iran’s Zagros plant, the largest methanol plant in the world. And thanks in part to Koch, methanol is now one of Iran’s leading non-oil exports. “Every single chance they had to do business with Iran, or anyone else, they did,” said Koch whistle-blower George Bentu. Having signed on to work for a company that lists “integrity” as its top value, Bentu added, “You feel totally betrayed. Everything Koch stood for was a lie.”

Koch reportedly kept trading with Tehran until 2007 – after the regime was exposed for supplying IEDs to Iraqi insurgents killing U.S. troops. According to lawyer Holden, Koch has since “decided that none of its subsidiaries would engage in trade involving Iran, even where such trade is permissible under U.S. law.”

These days, Koch’s most disquieting foreign dealings are in Canada, where the company has massive investments in dirty tar sands. The company’s 1.1 million acres of leases in northern Alberta contain reserves of economically recoverable oil numbering in the billions of barrels. With these massive leaseholdings, Koch is poised to continue profiting from Canadian crude whether or not the Keystone XL pipeline gains approval, says Andrew Leach, an energy and environmental economist at the business school of the University of Alberta.

Counterintuitively, approval of Keystone XL could actually harm one of Koch’s most profitable businesses – its Pine Bend refinery in Minnesota. Because tar-sands crude presently has no easy outlet to the global market, there’s a glut of Canadian oil in the midcontinent, and Koch’s refinery is a beneficiary of this oversupply; the resulting discount can exceed $20 a barrel compared to conventional crude. If it is ever built, the Keystone XL pipeline will provide a link to Gulf Coast refineries – and thus the global export market, which would erase much of that discount and eat into company profit margins.

Leach says Koch Industries’ tar-sands leaseholdings have them hedged against the potential approval of Keystone XL. The pipeline would increase the value of Canadian tar-sands deposits overnight. Koch could then profit handsomely by flipping its leases to more established producers. “Optimizing asset value through trading,” Koch literature says of these and other holdings, is a “key” company strategy.

The one truly bad outcome for Koch would be if Keystone XL were to be defeated, as many environmentalists believe it must be. “If the signal that sends is that no new pipelines will be built across the U.S. border for carrying oil-sands product,” Leach says, “that’s going to have an impact not just on Koch leases, but on everybody’s asset value in oil sands.” Ironically, what’s best for Koch’s tar-sands interests is what the Obama administration is currently delivering: “They’re actually ahead if Keystone XL gets delayed a while but hangs around as something that still might happen,” Leach says.

The Dodd-Frank bill was supposed to put an end to economy­endangering speculation in the $700 trillion global derivatives market. But Koch has managed to defend – and even expand – its turf, trading in largely unregulated derivatives, once dubbed “financial weapons of mass destruction” by billionaire Warren Buffett.

In theory, the Enron Loophole is no longer open – the government now has the power to police manipulation in the market for energy derivatives. But the Obama administration has not yet been able to come up with new rules that actually do so. In 2011, the CFTC mandated “position limits” on derivative trades of oil and other commodities. These would have blocked any single speculator from owning futures contracts representing more than a quarter of the physical market – reducing the danger of manipulation. As part of the International Swaps and Derivatives Association, which also reps many Wall Street giants including Goldman Sachs and JPMorgan Chase, Koch fought these new restrictions. ISDA sued to block the position limits – and won in court in September 2012. Two years later, CFTC is still spinning its wheels on a replacement. Industry traders like Koch are, Greenberger says, “essentially able to operate as though the Enron Loophole were still in effect.”

Koch is also reaping the benefits from Dodd-Frank’s impacts on Wall Street. The so-called Volcker Rule, implemented at the end of last year, bans investment banks from “proprietary trading” – investing on their own behalf in securities and derivatives. As a result, many Wall Street banks are unloading their commodities-trading units. But Volcker does not apply to nonbank traders like Koch. They’re now able to pick up clients who might previously have traded with JPMorgan. In its marketing materials for its trading operations, Koch boasts to potential clients that it can provide “physical and financial market liquidity at times when others pull back.” Koch also likely benefits from loopholes that exempt the company from posting collateral for derivatives trades and allow it to continue trading swaps without posting the transactions to a transparent electronic exchange. Though competitors like BP and Cargill have registered with the CFTC as swaps dealers – subjecting their trades to tightened regulation – Koch conspicuously has not. “Koch is compliant with all CFTC regulations, including those relating to swaps dealers,” says Holden, the Koch lawyer.

That a massive company with such a troubling record as Koch Industries remains unfettered by financial regulation should strike fear in the heart of anyone with a stake in the health of the American economy. Though Koch has cultivated a reputation as an economically conservative company, it has long flirted with danger. And that it has not suffered a catastrophic loss in the past 15 years would seem to be as much about luck as about skillful management.

The Kochs have brushed up against some of the major debacles of the crisis years. In 2007, as the economy began to teeter, Koch was gearing up to plunge into the market for credit default swaps, even creating an affiliate, Koch Financial Products, for that express purpose. KFP secured a AAA rating from Moody’s and reportedly sought to buy up toxic assets at the center of the financial crisis at up to 50-times leverage. Ultimately, Koch Industries survived the experiment without losing its shirt.

More recently, Koch was exposed to the fiasco at MF Global, the disgraced brokerage firm run by former New Jersey Gov. Jon Corzine that improperly dipped into customer accounts to finance reckless bets on European debt. Koch, one of MF Global’s top clients, reportedly told trading partners it was switching accounts about a month before the brokerage declared bankruptcy – then the eighth-largest in U.S. history. Koch says the decision to pull its funds from MF Global was made more than a year before. While MF’s small-fry clients had to pick at the carcass of Corzine’s company to recoup their assets, Koch was already swimming free and clear.

Because it’s private, no one outside of Koch Industries knows how much risk Koch is taking – or whether it could conceivably create systemic risk, a concern raised in 2013 by the head of the Futures Industry Association. But this much is for certain: Because of the loopholes in financial-regulatory reform, the next company to put the American economy at risk may not be a Wall Street bank but a trading giant like Koch. In 2012, Gary Gensler, then CFTC chair, railed against the very loopholes Koch appears to be exploiting, raising the specter of AIG. “[AIG] had this massive risk built up in its derivatives just because it called itself an insurance company rather than a bank,” Gensler said. When Congress adopted Dodd-Frank, Gensler added, it never intended to exempt financial heavy hitters just because “somebody calls themselves an insurance

In “the science of success,” Charles Koch highlights the problems created when property owners “don’t benefit from all the value they create and don’t bear the full cost from whatever value they destroy.” He is particularly concerned about the “tragedy of the commons,” in which shared resources are abused because there’s no individual accountability. “The biggest problems in society,” he writes, “have occurred in those areas thought to be best controlled in common: the atmosphere, bodies of water, air. . . .”

But in the real world, Koch Industries has used its political might to beat back the very market-based mechanisms – including a cap-and-trade market for carbon pollution – needed to create the ownership rights for pollution that Charles says would improve the functioning of capitalism.

In fact, it appears the very essence of the Koch business model is to exploit breakdowns in the free market. Koch has profited precisely by dumping billions of pounds of pollutants into our waters and skies – essentially for free. It racks up enormous profits from speculative trades lacking economic value that drive up costs for consumers and create risks for our economy.

The Koch brothers get richer as the costs of what Koch destroys are foisted on the rest of us – in the form of ill health, foul water and a climate crisis that threatens life as we know it on this planet. Now nearing 80 – owning a large chunk of the Alberta tar sands and using his billions to transform the modern Republican Party into a protection racket for Koch Industries’ profits – Charles Koch is not about to see the light. Nor does the CEO of one of America’s most toxic firms have any notion of slowing down. He has made it clear that he has no retirement plans: “I’m going to ride my bicycle till I fall off.”

From The Archives Issue 1219: October 9, 2014
Read more: http://www.rollingstone.com/politics/news/inside-the-koch-brothers-toxic-empire-20140924#ixzz3ES3OW200
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Airlines’ Dirtiest Secrets!

September 26, 2014 Leave a comment

 imgres

We know the questions that pop into your head when you fly: Is the cabin air full of germs? Is the water safe to drink? How are pets treated in the hold? There’s a LOT of misinformation out there, and we’re cutting through the clutter to deliver the good, the bad—and the downright gross.

(Courtesy MattHurst/Flickr)

I recently did a fun segment on morning television here in New York about the airlines’ dirtiest secrets. Lately there’s been a LOT of idle speculation in the blogosphere about the cleanliness of airplanes, the flightworthiness of the equipment, and the abilities of the crew. Here at Budget Travel, we regularly interview pilots, flight attendants, and other travel professionals—sometimes on condition of anonymity—and we do our best to debunk the junk and deliver the truth. That said, the truth sometimes hurts. Inspired by my hosts at PIX 11 Morning News, I’m not only delivering the airlines’ dirtiest secrets, but also rating them on a “scary scale” of 1 to 5. Got more questions of your own? Email us at info@budgettravel.com!

ARE PETS STORED IN AN UNHEATED, UNPRESSURIZED HOLD?

I hate to get all Mr. Scott about this, but this legend absolutely defies the laws of physics: At 30,000 feet, that would mean temperatures below zero and not enough oxygen. The truth is, pets are kept warm and safe in the hold. However, airline travel can be harrowing for pets—the runway is so noisy during loading and unloading that the workers wear headphones. No such luck for Fido and Fluffy. Oh, and flying with a little dog in your lap—or asking repeatedly about the safety of your pet in the hold—really irritates overworked, underpaid flight attendants. If you’re a pet lover (or even just a decent human being), that rates a 5 on the “scary scale.” But before you consider sedating your pet—the way you might take, say, an Ambien before takeoff—get your vet’s best advice for dealing with airplane travel!

AIRPLANE DRINKING WATER MUST BE SAFE, RIGHT? RIGHT??

Sorry, maybe not! Tests show that airplane water is sometimes full of bacteria that could sicken you, and this has been confirmed in tests by the Environmental Protection Agency and the Wall Street Journal. That goes for onboard coffee and tea as well. Water is better than it used to be thanks to airline-mandated tests, but the big tanks that hold water on a plane are a breeding ground for gunk you don’t want in your cup. The EPA even warns people with at-risk immune systems (including children and adults over 50) to avoid airplane water. Buy a bottle! “Scary scale”? 5!

DO AIRPLANES JETTISON THEIR TOILET WASTE INTO THE AIR?

Who started this weird myth, a fourth grade boy? No, airplanes do NOT jettison toilet contents in midair! Ever, ever, ever. Well… at least not intentionally. A California man once had a chunk of frozen airplane waste (which, by the way, was blue because of the chemical with which airplane waste is treated) bust through his sailboat. On a “scary scale” of 1 to 5, I’ve got to give the sailboat guy a 5!

WHAT’S WITH THE MOOD LIGHTING?

Why do the plane lights dim before landing? Dim lighting prepares your eyes for seeing outside in the event of an emergency evacuation. (Similarly, you are asked to open your window shades before landing so the crew can see outside in the event of an accident.) On a “scary scale” of 1 to 5, I’m gonna give this a 1 because, once you understand the reason for it, it seems kind of comforting (am I the only one?).

CAN STRANGERS UNLOCK THE AIRPLANE LAVATORY FROM THE OUTSIDE?

Yep! Toddler, grandparent, or spouse locked in the bathroom? Relax—right behind the no smoking sign on the door there’s usually a little switch to unlock the door! On a “scary scale” of 1 to 5: If I have a toddler and I’m standing at the door, that gets a 0. If I’m flying alone and a total stranger decides to pay me a little surprise visit, 4. (And while we’re on the subject of airplane lavatories, do not walk in there in your socks or bare feet. You don’t even want to know what’s on that floor!)

THE CABIN AIR IS MAKING ME SICK, RIGHT?

Wrong! Airplane cabin air is filtered and often tests cleaner than hospital air. However, just about everything else onboard should be considered a mile-high petri dish. In fact, your tray table may have been used to change a baby. Yeah, that’s right. E coli bacteria are regularly found on airplane tray tables. What can you do about that? Travel with sanitizing wipes to clean off surfaces you or your loved ones may touch during the flight, and to clean your hands. On a “scary scale,” the cabin air gets a 0 and the tray table gets, uh, number 2? (Sorry!)

HOW CAN I BE SURE MY PILOT KNOWS WHAT HE OR SHE IS DOING?

How experienced is your pilot? And how worried should you be about that? You may be flying one of the big carriers in name, but here in the U.S. you may actually be in the hands of a subcontracted regional airline crew. Oh, and your pilot may make less in a year than a cab driver. Yep. Those regional airlines have grown so fast in recent decades that requirements for pilot training went down to accommodate the demand. If you were having, say, brain surgery, would you want the doc with more operations under his belt or the guy getting paid by the hour? That said, I’ve never had a bad experience due to pilot error, and we travelers often completely misjudge pilot actions—bumpy landings, for instance, are no indication of a pilot’s experience or competence, they just happen. But how would you rate the issue of pilots’ experience on a “scary scale”? 4 or 5

THOSE PILLOWS, BLANKETS, AND HEADPHONES ARE CLEANED OR CHANGED AFTER EVERY FLIGHT, RIGHT?

Cue Aerosmith and dream on. Flight crews are busy, budgets are tight, and you’ve probably witnessed the onboard scramble that occurs between flights. If your blanket is neatly folded and your headphones are in a plastic bag, congrats! That’s about the best you can hope for these days. On our “scary scale,” I give that a 3 or 4.

ARE PILOTS AND COPILOTS REALLY SERVED SEPARATE MEALS IN CASE OF POISONING?

This is a really good idea, of course, and I wish I could tell you that it’s strictly enforced. But the reality is that the crew eats whatever they want whenever they can get it. (Some bring their own food, others eat what’s served out of the galley.) On some flights, the pilot and copilot will indeed be served separate meals. On others, not so much. On a “scary scale,” considering that I’ve seen few, if any, accounts of poisoned pilots wreaking havoc in the skies, I give it a 2.

IS IT TRUE THAT OXYGEN MASKS HAVE ONLY A FEW MINUTES OF AIR IN THEM?

Yes. But it’s not as bad as it sounds. Airplanes are pressurized mostly because the air at 30,000 feet does not hold enough oxygen. In the very rare event of depressurization, the oxygen masks descend and, though it may be frightening, passengers use them for a few minutes while the pilot quickly gets the plane down to around 10,000 feet, where oxygen levels are comparable to a mountain summit. On our “scary scale,” this makes me feel a little safer and I give it a 1. Though if you’ve ever been on a plane that descended from 30,000 to 10,000 feet in a matter of minutes, there’s not a theme park ride in the world that will ever scare you again!

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SF Bay Delta Plans for Climate Change Effects

September 26, 2014 Leave a comment

http://www.escholarship.org/uc/item/8j20685w

Abstract:

Climate change will affect tidal wetlands with higher rates of sea-level rise and higher
concentrations of salt in brackish and freshwater tidal systems, in addition to causing increases
in atmospheric CO2 concentration, warmer temperatures, and shifts in precipitation. In the San
Francisco Bay–Delta, the areas most likely to be affected—brackish and freshwater tidal wetlands
—are also the sites with the majority of endemic plant species and the greater biodiversity and
productivity. Effects on the San Francisco Bay– Delta estuary are complex and difficult to predict,
but a few things are clear. Biodiversity of the tidal wetland system in the San Francisco Bay–
Delta region will decline, with subsequent effects on ecosystem functioning and services. Altered
plant production, physiological tolerances, and shifts in rates of mortality will modify wetland plant
communities in ways not yet predictable. Lower ecosystem productivity from salinity increases will
affect both primary and detrital-based food webs. Such changes will cascade via the food webs into

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Seven disruptive trends that will kill the ‘dinosaurs of retail’

September 26, 2014 Leave a comment

 

 Retail Customer Experience

Sept. 25, 2014 | by Chris Petersen

Retail has been described as the world’s “second oldest profession.” But that doesn’t mean that it is not changing. In fact, some of the most well-known retailers in their categories have suddenly gone extinct. The forces that caused these retailers to vanish are yet again evolving at an even faster pace. Darwin’s law of survival is even more relevant for today’s “retail dinosaurs” on the verge of extinction. For those unwilling or unable to adapt, there are at least 7 major disruptive trends which will cause the next wave of retailer casualties.

25 retail dinosaurs vanished in the last 25 years

Dinosaurs are the perfect analogy for some of the major retailers who have vanished in recent years. Many of these extinct retailers were giants that literally dominated their category or channel. Others were retail innovators in their own right, until they were outgunned by new disrupters. Longevity, size or specialization have NOT guaranteed retail survival.

Normally, I do not think of Entrepreneur as a primary retail source, but they recently had a great piece on “The Retail Giants That Disappeared.” Starting with Circuit City, the article runs down the list of 25 retailers that have disappeared in the last 25 years and what led to their demise, iconic institutions such as Comp USA, Blockbuster, Borders, and Tower Records.

In reviewing the list of dead retail dinosaurs, Darwin’s law of survival would seem to apply to retailers as well as natural species:

It’s not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.

Seven major disruptive retail trends

There has never been a time of more disruptive change in retail. As we have said previously, retail has changed more in the last three years than the previous 30. There are at least seven major disruptive trends that are forcing retailers to adapt, and adapt quickly, in order to survive.

1. Omnichannel is the new normal

The major force of change in retail is the consumer, who now shops anytime and everywhere. While stores remain a destination for experience, the consumer journey starts online. The successful retailer of the future needs to not only master online and offline, but how to connect with the consumer across many touch points, especially social media.

2. BOPIS required, not optional

BOPIS is an acronym that describes both consumer expectations and behavior. BOPIS = Buy Online, Pickup In-Store. Actually, consumer expectations now exceed BOPIS: More than 50 percent expect to shop online and see if stock is available in store. This not only requires new integrated technology, but re-engineering of processes and staffing to be able to both execute, and capitalize on the omnichannel shopper who is now in charge of both where they make a purchase, and where they take delivery.

3. Virtual aisle = endless shelf

The reverse of BOPIS is just as important. Omnichannel consumers now fully realize that stores can’t begin to stock every model, style and color. While consumers can see hundreds if not thousands of products in store, they know that there are millions online. Even Walmart is now realizing that stores are becoming distribution points for online. They have joined the big rush to build smaller stores, much smaller and less costly to operate. But, for small to be successful, they also need to be able to offer the consumer an “endless aisle” through a virtual shelf. The very best disrupters are literally creating a seamless experience between online, store and mobile apps so the consumer can “have it their way” anywhere, anytime.

4. Consumer experience rules

E-commerce giants like Amazon helped to kill off the previous retail dinosaurs based on price and selection. But, Amazon also created a new trend and high standard for consumer-centric experience and service. When consumers can shop anywhere for the lowest price, products become commodities. The biggest challenge for retail dinosaurs is a product-centric heritage of building big-box stores for displays. The number one reason consumers today say that they shop stores is for the experience and interaction with staff.

5. Connecting with the “WE”

Consumers have gone social, worldwide. While the major platforms may vary by country, omnichannel consumers are heavily invested in the “WE” of social networks. Social has become a primary source of research and validation on what to buy. Today’s consumers are 14 times more likely to believe the advice of a friend than an ad. Today’s major brands are spending more dollars on social media than traditional media. It is not about point of purchase for today’s sale – it is all about creating and sustaining relationships. It is also not just about Facebook. Disrupters like Pinterest are being use to forecast consumer purchase trends and actually sell stuff.

6. Personalizing for “ME”

By being able to access retail worldwide, consumers today realize that choices are almost unlimited. Innovative pioneers like Nike have shown that consumers value and will pay for building their own customized shoes. New disrupters are emerging with “mass personalization” opportunities to custom tailor your clothes, or curate your personal wardrobe assortment and send it to you. One of the fastest growing online retailers is Etsy. They enable artisans to sell very personalized goods, even made-to-order styles, to millions of consumers worldwide. Why buy “stock” off the shelf when you can have something unique and personally tailored for you?

7. Mobile majority

The latest stats show that there are now more cell phones in use than people on this planet. Smartphones now exceed 4.5 billion. Mobile is the majority, and will be the preferred screen for shopping. How many retail dinosaurs have optimized online for mobile search and purchase? The retail disrupters are not only optimizing for mobile engagement, they are broadcasting offers and connecting with consumers where ever they are. The store of the future will not only have beacons to connect, but to track traffic via mobile as well.

Saying you’re omnichannel is one thing, executing is quite another

The one major disruptive trend that is changing the face of retail is consumers and their behavior across many channels. To us as consumers, it is not just mobile, social or any one thing. It is all about a personal, seamless experience across our journey to explore, evaluate and purchase, with services beyond that. The retail dinosaurs must be able to adapt quickly. And, the answer is not a choice of picking one of the 7 above … the answer for survival lies in executing some form of ALL of the above.

(Photo by Connie Ma.)

 

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9 Types of Social Media #FAILS and the Lessons Learned

September 26, 2014 Leave a comment

Social media fails are an unfortunate byproduct of marketing—and life—on the web. But let’s be honest—they also provide for some
major entertainment. So, we have a laugh at another brand’s expense. We sit back, roll our eyes, and pity the poor person who made such a
thoughtless mistake. But if you think you or your brand are immune to social media fails, think again.

No brand, no matter how small or large, or how big its marketing budget, is safe from social mishaps. After all, behind the fancy brand
logos, apps and contests, there are real people running these social media accounts—and people are not perfect. You can either choose to
learn from the mistakes of others or be destined to repeat them.

In this white paper we will review 9 social media fails and provide shining examples of companies that crashed hard. We will discuss why
these social missteps are fails, how they happened and detail how they could have been avoided. You’ll also come away with useful tips to
help prevent social fails from happening to you.

http://downloads.digitalmarketingdepot.com/rs/thirddoormedia/images/HOO_1405_FailPrfSoc.pdf?mkt_tok=3RkMMJWWfF9wsRolvK7OZKXonjHpfsX77%2BksUa%2BwlMI%2F0ER3fOvrPUfGjI4GSMZqI%2BSLDwEYGJlv6SgFTbLCMbpx37gNXxU%3D

 

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Increasing Mobile Conversions

September 25, 2014 Leave a comment
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Exposing Hidden Bias at Google

September 25, 2014 Leave a comment

NY Times

Photo

Google’s campus in Mountain View, Calif. The company, whose work force is 70 percent male, is trying to make its employees aware of how unconscious biases can affect hiring and promotion decisions. CreditJeff Chiu/Associated Pres

Google, like many tech companies, is a man’s world.

Started by a pair of men, its executive team is overwhelmingly male, and its work force is dominated by men. Over all, seven out of 10people who work at Google are male.

Men make up 83 percent of Google’s engineering employees and 79 percent of its managers. In a report to the Equal Employment Opportunity Commission last year, Google said that of its 36 executives and top-ranking managers, just three are women.

Google’s leaders say they are unhappy about the firm’s poor gender diversity, and about the severe underrepresentation of blacks and Hispanics among its work force.

And so they are undertaking a long-term effort to improve these numbers, the centerpiece of which is a series of workshops aimed at making Google’s culture more accepting of diversity.

There’s just one problem: The company has no solid evidence that the workshops, or many of its other efforts to improve diversity, are actually working.

In some ways Google’s plan to fix its diversity issues resembles many of its most ambitious product ideas, from self-driving cars to wiring the country for superfast Internet.

Photo

 
CreditStuart Goldenberg

As in those efforts, it has set a high goal in this case: to fight deep-set cultural biases and an insidious frat-house attitude that pervades the tech business. Tech luminaries make sexist comments so often that it has ceased to be news when they do.

Google is attacking the problem with its considerable resources and creativity. But it does not have a timeline for when the company’s work force might become representative of the population, or whether it will ever get there.

“I think it’s terrific that they’re doing this,” said Freada Kapor Klein, an entrepreneur who has long studied workplace diversity, and who is the co-chairwoman of the Kapor Center for Social Impact. “But it’s going to be important that Google not just give a lecture about the science, but that there be active strategies on how to mitigate bias. A one-shot intervention against a lifetime of biased messages is unlikely to be successful.”

Google says its plan isn’t one-shot. It points out that it has been trying to improve its diversity for years by sponsoring programs to increase the number of women and minorities who go into tech, andmeticulously studying the way it hires people in an effort to reduce bias.

In May after pressure from civil rights leaders, the company published a report documenting the sex and race of its employees “to be candid about the issues,” Laszlo Bock, Google’s executive in charge of human resources, wrote at the time.

Google’s disclosure prompted a wave of similar reports across the industry, with Facebook, Apple, Yahoo and other tech giants issuing similarly dismal numbers about their work forces.

A Man’s World

The tech industry has a reputation for being a boys’ club, and recent diversity reports from several companies illustrate how men dominate their global work forces.

 

 

Company Total Employees Pct. Male Employees
Apple 98,000 70%
Facebook 7,200 69%
Google 48,600 70%
Twitter 3,300 70%
Yahoo 12,200 62%

Google’s diversity training workshops, which began last year and which more than half of Google’s nearly 49,000 employees have attended, are based on an emerging field of research in social psychology known as unconscious bias. These are the hidden, reflexive preferences that shape most people’s worldviews, and that can profoundly affect how welcoming and open a workplace is to different people and ideas.

Mr. Bock wondered how such unconscious biases were playing out at Google. “This is a pretty genteel environment, and you don’t usually see outright manifestations of bias,” he said. “Occasionally you’ll have some idiot do something stupid and hurtful, and I like to fire those people.”

But Mr. Bock suspected that the more pernicious bias was most likely pervasive and hidden, a deep-set part of the culture rather than the work of a few loudmouth sexists.

Improving diversity wasn’t just a feel-good goal for Google. Citing research that shows diverse teams can be more creative than homogeneous ones, Mr. Bock argued that a diverse work force could be good for Google’s business. Could Google investigate how biases were affecting people’s work — and, more important, could it change its own culture?

Photo

Laszlo Bock, Google’s executive in charge of human resources, has argued that a diverse work force could be good for Google’s business.CreditJim Wilson/The New York Times

The lecture begins with a dismal fact: Everyone is a little bit racist or sexist. If you think you’re immune, take the Implicit Association Test, which empirically measures people’s biases. Dr. Welle goes on to explain that some of the most damaging bias is unconscious; people do the worst stuff without meaning to, or even recognizing that they’re being influenced by their preferences.

The effect of bias is powerful, and it isn’t softened by Silicon Valley’s supposedly meritocratic culture. In the lecture, Dr. Welle shows a computer simulation of how a systematic 1 percent bias against women in performance evaluation scores can trickle up through the ranks, leading to a severe underrepresentation of women in management.

Finally, Dr. Welle points to research showing that we aren’t slaves to our hidden biases. The more we make ourselves aware of the role our unconscious plays in our decision-making, and the more we try to force others to confront their biases, the greater the chance we have of overcoming our hidden preferences.

Google offered several anecdotes that seem to indicate a less biased culture as a result of the training. Not long ago the company opened a new building, and someone spotted the fact that all the conference rooms were named after male scientists; in the past, that might have gone unmentioned, but this time the names were changed.

During one recent promotion meeting in which a group of male managers were deciding the fate of a female engineer, a senior manager who had been through the bias training cautioned his colleagues to remember that they were all men — and thus might not be able to fully appreciate the different roles women perform in engineering groups. “Just raising the awareness was enough for people to think about it,” Mr. Bock said. The woman was promoted.

Another time, in an all-company presentation, an interviewer asked a male and female manager who had recently begun sharing an office, “Which one of you does the dishes?” The strange, sexist undertone of the question was immediately seized upon by a senior executive in the crowd, who yelled, “Unconscious bias!”

Mr. Bock saw all of these actions as evidence that the training was working. “Suddenly you go from being completely oblivious to going, ‘Oh my god, it’s everywhere,’ ” he said.

But whether that will lead to a long-term change at Google and, in turn, the rest of the tech industry, remains an open question.

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Welcome to the new fashion concept store—it’s a way of life

September 23, 2014 Leave a comment

 

September 16, 2014 | By fierce retail

Jacqueline Renfrow

Fashion and apparel concept stores are popping up everywhere, and many of the designer names behind them are pretty big—Jimmy Choo, Coach, Urban Outfitters. We’re talking the kind of brands that get customer attention internationally just by the name alone. But these retailers are still pushing the envelope by reinventing the look and feel of their brick-and-mortar outlets to create a memorable experience for shoppers, so that their brand names will continue to matter.

Let’s start at the drawing board: finding a location. An old Tower Records building, a historical neighborhood or well-traveled street, anything will work as long as shoppers are passing by and the location has charm. Next, get the look right: Moorish arches adorning the entryway, ornate chandeliers hanging above spiral staircases, gold-lined walls—this is the stuff of fantasy, and it should be. Finally, make sure the displays provide a sense of character that speaks to the products, the store’s image and a unique customer experience—anything from guitars to vintage pottery. Thus, the concept store is born.

But these aren’t just concepts, they’re lifestyle experiences, and that’s why the model is getting so much attention from retailers planning their futures. This year alone has seen the launch of in-store entertainment and services that range from haircuts, shaves and cappuccinos, to cocktails, record turntables and photo booths.

Many of these concept stores are flagships for retailers overhauling their store image. Emerging primarily in trendy neighborhoods in cities such as New York, San Francisco, Los Angeles and Chicago, concept stores demonstrate retailers’ ongoing efforts to capture and hold the attention of everyone from short-on-cash millennials to well-established Baby Boomers. And beyond setting up a store, these brands are enmeshing themselves in the community by featuring installations crafted by local artists and designers

These are some of the latest concepts that have popped up in the first half of the year:

Just this week, Jimmy Choo announced a new flagship store in London, Choo’s largest store to date. Some of the amenities in this three-story, gold-mesh-paneled store include a fully stocked marble bar in the bridal salon and a made-to-measure area for personal service.

Around the same time in the U.S., Urban Outfitters launched a “his and hers”flagship in Los Angeles’ Westwood neighborhood. The “his” half includes a music shop, complete with Gibson and Fender guitars and vinyl records, and an art-focused bookstore. The “hers” side has two floors that include an old-school photo booth and vintage pottery, along with the traditional Urban Outfitters apparel.

The East Coast is getting some of the action too. Urban Outfitters’ Space Ninety 8 store in Brooklyn, New York, has five levels of shopping and entertainment and includes an event space for local designers, roof-top dining, a vintage shop, electronics and home goods.

Men’s lifestyle retailer Haberdash launched their concept earlier this month in Chicago. The brand’s “convergence” concept combines e-commerce models with brick-and-mortar. Located in Chicago’s South Loop, customers can purchase La Colombe cappuccinos, haircuts, shaves or facials. The store also includes an interactive photo studio.

Luxury brand Coach announced in the spring that its retail stores would be getting a makeover as the company looks to refresh retail locations and attract more shoppers. The first redesigned store will be located at the brand’s Rodeo Drive flagship in Beverly Hills, slated for launch in the fall. While the company is remaining tight-lipped on how exactly the store will look, the upgrades will result in a finished product vastly different than anything the brand has ever done before.

High-end department chain Lord & Taylor also announced two new concept shops, Birdcage and Brand Assembly, which will launch this fall at its flagship location on Fifth Avenue, New York. The Birdcage collection, slated to open in October, will feature an eclectic assortment of more than 1,000 styles from 30 vendors. The merchandise will primarily include accessories, but home and food products will be featured as well, in addition to jewelry, cosmetics, tech and apparel. Brand Assembly, which will open in September, will showcase about 20 up-and-coming contemporary designers.

What are these concept stores a result of? Do retailers not think product alone will keep shoppers coming back into their stores? Or is this the new norm in a world oversaturated with technology, digital media and multi-tasking? Must a retailer create a sensual experience in order to capture the attention of busy consumers?

Whatever the reasoning behind the “concept” model, the shopper of the future is going to be on the hunt for more than just a bargain. Shoppers will also want that “wow” factor that completes the experience, and there will soon come a time when I will expect my trip to buy a new blouse to include a wardrobe consultation, a latte, a facial and a chance to scan titles on a bookshelf while listening to a DJ spin vinyl records.

And that’s not too much to ask, because concept stores are already banking on these extravagances, and I have no problem bagging my couch-bound online shopping spree and hitting the streets to buy my goods, because that’s where the real shopping experience is. -Jacqueline

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