Thanks to Trish Stevens and Monica Foster for their time, and for the interesting and informative responses to the questions. They are greatly appreciated.
What was the background to forming this partnership between Ascot Media Group and Reliant Public Relations?
Trish Stevens: After hearing from authors how they had poured their heart and soul into a book only to find out that getting it published left little for publicity, we put our heads together to come up with a plan that would be affordable for authors and still cover our own costs. We teamed up in such a way that Ascot promotes the Plan, and Reliant handles the processing.
How does this partnership serve authors better as their publicists?
Trish Stevens: Because we have the ability to reach tens of thousands of media personnel, we eliminate the middle man (the one-on-one publicist) and the author handles contact with the media directly. We get the media attention they need – they become their own publicist – all for a nominal fee!
One of the new initiatives you are employing is Author 333. How does this concept work to benefit authors, publishers, the media, and your company?
Trish Stevens: First of all, we have made the cost so affordable ($333) we give authors equal opportunity to hit the top! Publishers can promote several book titles at one time and still pay a great deal less than hiring a one-on-one publicist, ultimately increasing their Return on Investment (ROI). The media actually prefers to read ‘Teasers’ so our way simplifies the process – it is short and to the point versus reading an entire press release. The new Plan benefits us because it attracts authors in volume. Word-of-mouth and results are key!
Trish Stevens, Ascot Media Group (photo left)
How does this initiative revolutionize how authors approach publicists on a cost basis?
Trish Stevens: It revolutionizes the whole process – the author becomes his/her own publicist by dealing directly with the media. It actually eliminates the cost of an individual publicist completely.
How can one firm working alone charge a high fee, while two firms working together charge so little in fees. How does this counter-intuitive concept work?
Trish Stevens: We believe that traditional PR firms do not understand the ROI for authors. Celebrities need publicists but it is not economically feasible for new authors or those who have not yet hit the big time. Once they hit the NY Times best-selling list, they can afford a publicist. We give them an opportunity they normally would not get without a publicist – we get them out there, we get them the attention, and we get them recognized!!
Monica Foster , Reliant Public Relations (photo left)
How important is it for authors to consider working with a publicist in today's crowded book marketplace?
Trish Stevens: Many authors do not have the funds to hire an individual publicist but that doesn’t mean they should give up. In reality, the most important thing to consider is that they need to get their book out there – and that means any way they can! However, if they have the funds or have a busy lifestyle, e.g., a celebrity, physician or lawyer, it would be beneficial for them to hire a publicist to handle every detail. There are so many new authors who are typically ‘writers with day jobs’ – people with a dream who have often worked on their book for years and finally get it published – only to realize they can’t afford thousands of dollars to pay a PR firm for publicity. This is where the Author 333 Plan comes in.
How can this low cost venture help even more authors find success?
Trish Stevens: It’s all about exposure – we write a 6-line Teaser with their approval and distribute it to tens of thousands of media personnel – what better way to give them the opportunity to get in front of the ‘majors’ and a shot at the top!
What is next for Trish Stevens and Monica Foster, and for this new partnership venture?
Trish Stevens: Since our goal is to get clients the recognition they deserve and a chance to achieve maximum success, we see the Author 333 Plan as just another step in this process. It is a win-win for all concerned – the author, Reliant and Ascot! We welcome you to visit our site and view client testimonials at: http://www.ascotmedia.com/testimonials.html. As for future ventures, well, we’ll just have to wait and see…
President and CEO of global leader in scaling mission-critical systems Grid Dynamics, Victoria Livschitz, was kind enough to take the time to answer a few questions about her company, and about the challenges faced by women entrepreneurs in the technology industry.
Thanks to Victoria Livschitz for her time, and for her comprehensive and informative responses. They are greatly appreciated.
When you founded your company, you noticed that some of the problems that had confronted large companies were becoming a problem for Web 2.0 companies as well. What were those challenges that online companies faced?
Victoria Livschitz: I read recently a study from IBM that stated by end of 2010 the total amount of digital information in the world doubled every 11 hours. I did not know this statistic before but it did not surprise me in the least. Five years ago when I founded the company, the trend towards the explosion of data and the enormous aggregation of processing via the Internet was crystal clear for me. What we thought about the scalability problem 10 years ago is child’s play in today’s terms.
The challenges and the opportunities I saw five years ago were: how one can design and deliver a system, which is scalable and elastic, without paying a huge engineering price? Why is it a challenge—because everybody needs it, because it has to be pervasively available, and because a simple application written overnight by a college dropout with the next great idea about web service should be very rapidly developed and deployed and work successfully to support their business model. Delivery of transparent scalability and elasticity is what the world needs badly and has no fixed recipes for. That was the reason I founded Grid Dynamics, to be a part of this quest.
How did handling peak user and processor loads become such a widespread problem?
Victoria Livschitz: I believe the computing is intrinsically elastic, meaning the amount of hardware needed to process a piece of software changes from a function call to a function call, from one input parameter to another, and also depends on the state of the environment where and when the processing occurred. The first 50-60 years of computing did not produce a technological and economical answer of how to let bursting software to consume required hardware resources in a sensible way. Of course in the world of intense Internet traffic patterns we have extreme cases of bursting.
There is always an event which causes an enormous response in the amount of Internet searches, in the amount of twittering, or number of buyers interesting in procuring the next iPod in the next few minutes. The technology services became global and they became a social phenomenon when a little local news can generate a huge spike in demand. Spikes that affect millions or sometimes billions of people mean that in computing we need to manage peaks of unprecedented magnitude.
Victoria Livschitz (photo left)
The Study of Entrepreneurship has found that between 2004-2007 women founded only 1 % off high tech companies in the US. What challenges have you faced as a woman entrepreneur in a high tech field?
Victoria Livschitz: I have to say that entrepreneurship is hard – period. I would say that 90 percent of the challenges facing entrepreneurs are common to both men and women. There are still a few which put us apart. Entrepreneurship is a very time and life consuming activity. It is more like an obsession, especially when you are in a very high-tech business. Theoretically, if a start-up founder is a college-aged kid who has not much social responsibility such as a family, I do not see a lot of difference in patterns for men or women. However, many successful companies are not started by such young people in the greater scheme of things.
Most start-ups are launched by seasoned professionals; people who have reached a higher lever of maturity; or, the pinnacle of their corporate careers. They learned a lot about technology creation and can apply their wisdom and connections to building their own companies. They are mainly middle aged and that means that there are a lot of social and family responsibilities on their shoulders. This does make a difference between men and women. For a woman in her 30’s or 40’s to part with a job and dedicate herself entirely to the new business means that her domestic responsibility will unquestionable suffer. If she has a husband and children, it will have a profound effect on the family.
But it is also a kind of double jeopardy. Not only as a wife and mother are you not able to do what you did before for your family, but another part of the family (the husband and children) has to do more than they did before. It is not easy. Not easy on a woman, not easy on her family. There is another part of the problem. Entrepreneurship is such an intense and high stress activity that in order to sustain the consistent and permanent stress, to perform at your peak every day, every hour, you have to have some place where you can come to decompress, a place where your family and friends give you unconditional love and support.
You can say that a man with family and kids is going into such a business facing similar problems, but again the barrier is higher and implications are tougher for a women entrepreneur.
Many start-up entrepreneurial ventures struggle with achieving profitability, yet your company was profitable from day one. How did you become profitable so quickly?
Victoria Livschitz: Grid Dynamics is a service business. In my opinion, service companies should be profitable quickly, as they don’t have long non-revenue generating start-up periods such as product companies or expensive manufacturing facilities. I started the company with $15,000 of start-up capital, and then looked for creative ways to bootstrap operations without cash. For example, I contracted with one offshore development company that was willing to take stock options instead of cash for their engineering services for the first 6 months of development and another that was willing to give me a long period of time – up to six months – on paying their services fees, so that I could bill my client and get the money long after the engineers were paid their salaries.
I was also very lean with overhead, doing everything myself, including sales, marketing, account management, technical design, operational management, even accounting. Since I started without venture money, and until I raised the first capital years later, we had to be profitable always, or die.
You left the corporate world to start your own company. That bold step is one that you must not have made lightly. What caused you to become an entrepreneur, rather than remain in with Fortune 500 employers?
Victoria Livschitz: Well, for me entrepreneurship was not a question of “if”, but a question of “when”. I got my first taste of the entrepreneurship within a few months after immigrating to the U.S. when I set up a professional chess academy with my husband…basically a private chess school. It was our first business, which allowed us to support the family and put ourselves through college. When I became a high tech professional I began thinking about a number of business ideas. Understanding the work-life balance challenges for women, I did not start my company sooner because those years were dedicated to my family. I have three children and it was not until my youngest turned six years old that I could seriously consider the possibility of leaving my job at a Fortune 500 company and start my own business.
Ultimately, a big part of my decision was a matter of the right timing. I saw a business opportunity as the industry was going through gigantic paradigm shifts, which lead to many fresh ideas and entrepreneurial opportunities.
What advice would you give for entrepreneurs seeking to start a company in the high tech world?
Victoria Livschitz: Well, the biggest advice is for entrepreneurs to stop procrastinating, making excuses and do it! If your dream is big, if you think that you have what it takes to change the world then go try it! You might be successful, and you might not. Actually, I doubt you’ll be unsuccessful in a true sense of this word no matter what happens with your venture. You may not become a millionaire, but you will experience life in a way you never anticipated. It will be a journey, a quest, which will take you places that you would never have gone to otherwise. So, go ahead…try it.
Do you have some additional insights and advice for women entrepreneurs in technology fields?
Victoria Livschitz: Figuring out the work-life balance is the key for success for any entrepreneur. It’s important to have this balance to stay grounded and to take enjoyment out of both your professional and personal life.
What is the first step a person should take toward living their dream of entrepreneurship?
Victoria Livschitz: The first one is to conceive the idea, then try to understand what it means for you and your industry. The entrepreneurs coming from the technology world are mainly former engineers and some have very naive and idealistic images of the world of venture capital, of the world of start-ups, of the world of business management. A lot of things are counter-intuitive to the engineers who turn into entrepreneurs. You have to take time to educate yourself, to speak with people who have done it before. Start getting involved in local organizations, which exist in most places to help you with information, resources, and connections. Find out as much as you can about what you are planning to do, and then learn the rest on the job.
What is next for Victoria Livschitz and Grid Dynamics?
Victoria Livschitz: This is a tough question. I honestly don’t know what the future holds! I know that we have a company to run, to grow, and to take to the next level. I know that we have new and interesting solutions to bring to the market.
Independent publisher and proprietor of Atomic Fez Publishing, Ian Alexander Martin was kind enough to take the time to answer a few questions about his company, the current state of the publishing industry, the challenges faced by both publishers and authors, and some information on the books his business is publishing both now and in the coming year.
Thanks to Ian Alexander Martin for his time, and for the tremendous and informative responses to the questions. They are greatly appreciated.
What was the background to starting Atomic Fez Publishing?
Ian Alexander Martin: Prior to creating the house, I was the acting head of an English-based small house, with whom I was involved for a little over three years. Prior to that, I was running a Vancouver-centric theatre news-site called The Boards which included reviews, features, editorials, and event listings about theatre in my area. As a stage and screen actor/director, I was dissatisfied with arts coverage in the area by the traditional print media, and recognized that the only practical thing was to take up the coverage slack myself.
In the latter- half of The Boards’ life, the content broadened to include Ontario, much of the USA's Pacific Northwest, and England. That UK content is what resulted in me getting to know Guy Adams, who lured me to his publishing house and into this career in the first place, and then proved he's a completely evil person by encouraging me to start the house which came to be called "Atomic Fez Publishing". It's entirely his fault.
What sets Atomic Fez apart from other publishers, for both authors and readers, in terms of options and benefits?
Ian Alexander Martin: Not all books are 'serious works of art.' When I started Atomic Fez, I wanted to bring some of the fun back into the publishing business and produce books whose primary purpose was to entertain rather than instruct. I wanted to publish books that simultaneously celebrated good (as in highly readable) writing, but were written by people who had a firm grasp of literary traditions; think Jasper Forde, for instance.
Take the logo and name: the absurdity of the fez as a piece of headgear in combination with the hope of the dawning of the 'atomic age’ – that kind of retro glam – made me laugh. Think Mad Men crossed with The Jetsons; if that appeals to your tastes, then have a seat and let me get you something to drink.
What genres of books does Atomic Fez publish currently?
Ian Alexander Martin: I’d say it could be a mystery, humorous, a bit scary, sarcastic, or simply weird. Something with a bit of odd content to make you say “what... but, if you... how does that work, exactly?” Warren Ellis’s “Transmetropolitan” series, Terry Pratchett’s “Discworld” series, Christopher Fowler’s work, and Cherie Priest’s “Clockwork Century” material. Whatever it is I read has to have an element of humour running through it. It’s the light which better defines the point at which you enter the darkness. When selecting material to publish, it’s much the same thing, but with less requirement for humour. I’m going to easily read the material in its totality four times by the time books hit the inside of a box. Logically, it’s going to have to hold my interest somehow through each of those readings.
As someone who lives with clinical depression, I do have to watch getting too firmly pushed into the “bleak and hopeless” end of the spectrum. As long as it’s extremely well-written, then that’s something setting it apart from some material already.
Does having an eclectic group of authors and titles help create a niche for the company?
Ian Alexander Martin: In a sense, it welcomes all interests, but at the same time may make it difficult for some retailers to know what section of the store to put Atomic Fez titles. That said, you’ll find books published by major houses in several areas of stores, so I see this as a strength.
Atomic Fez has shown interest in what you’ve described as ‘genre-busting fiction'. What is that and what is the market potential for this type of book?
Ian Alexander Martin: The five titles produced in 2010 span a variety of genres and combine elements of several in each book. For instance, The Terror and the Tortoiseshell, John Travis's first in the Benji Spriteman series, combines elements of fantasy, mystery, noir and science fiction as the animal kingdom moves from four legs to two and banishes the human population. Benji Spriteman is a sentient, six-foot tall, suit-wearing tortoiseshell cat. And one heck of a detective too.
However, “weird stuff” and “highly eclectic” is about right. There’s the detective story The Terror and the Tortoiseshell that I think is filled with humour, but other people focus on the horror and semi-dark events (which may say more about me than the book, frankly); meanwhile). Meanwhile there’s The Beautiful Red, which is a collection of some of the darkest and bleakest tales I’ve ever read. Wicked Delights is another collection, this one of tales which all include at least a vague reference to sex, but is supremely classy, witty, and intellectual throughout. Twisthorn Bellow is a novel that occasionally revels in its own puerility while delivering groan-worthy puns and sight-gags.
This assortment of styles and story-forms permits both a ‘something for everybody’ aspect to the catalogue, as well as banishing a bit of the reputation of any of the individual genres’ lack of respectability in some people’s minds. Atomic Fez is pre-designed with that “broad tent” approach to fiction.
Ian Alexander Martin (photo left)
This is a difficult time for a new publisher to start up, with both a down economy and some very real turmoil in both the publishing and book retailing sectors. What challenges does a new publisher face in today's volatile marketplace?
Ian Alexander Martin: You're absolutely right about tumultuous nature of the industry: this is easily the most revolutionary period in books since Gutenberg created a reliable printing press using movable type. As Warren Buffet points out, however, “when everyone is doing something, it's time to do something else instead”..” The main challenge any publishing house faces is how to get attention for its titles when more than a million new books are being published in the US alone every year.
With fewer brick and mortar retailers out there in the marketplace, how is Atomic Fez leveraging the internet to help market books?
Ian Alexander Martin: The internet actually allows for simultaneous worldwide distribution and saves consumers both time and money on shipping costs. The cost of shipping printed books from Canada to the UK or vice versa often exceeds the cost of the books themselves, especially when purchasing from online vendors – free shipping offers such as Chapters/Indigo or Amazon only apply in a particular country. Atomic Fez is committed to making its books available in as many formats as technologically possible in accordance with consumer demand.
All Atomic Fez publications have been produced in multi-platform, digital rights management-free eBook formats at the same time as the printed books are released. All of the titles are available in both the Kindle and Kobo stores; as well as epub, pdf, html and mobi formats.
Atomic Fez has always released its titles in both printed and eBook format simultaneously. This year we're going to experiment with this formula a bit. Two of the five 2010 titles were published in jacket-less hardcover format; the other three as trade paperbacks. We're going to do our best this year to reduce production costs so we can also reduce the cost to the consumer. We're also going to consider more trade paperback publishing and, potentially, publishing eBooks prior to printed versions.
Late in 2010 we reduced the price of our eBooks to $6.99 for most titles and $4.99 for our shortest book, Andrew Hook’s Ponthe Oldenguine. I’d like to achieve similar price reductions for the paper books; while still managing to pay the printer, the authors and myself.
What advice would you have for a would-be author seeking to publish a book today?
Ian Alexander Martin: Write the book you want to, and do not submit it to anyone until you’ve worked through it so much that you’re at a loss as to what more can be done to it. Once you’ve done that, then send it around to people; all the time realizing that it’ll change several more times before it sees publication. Everyone’s work needs editing – many authors admit they’d not be able to operate without their editors’ help – so don’t get too precious about your words. That said, if your story is strong, major plot threads and characters shouldn’t have to be changed so much it’s not your book any more.
How can authors contact Atomic Fez to receive consideration for publishing their book?
Ian Alexander Martin: I’ve got more than enough on my desk right now to keep me busy well into the middle of the decade. That said, the door is always open for a proposal. Send me a quick synopsis, something about your writing credits, plus the market or category you see the work appealing to, and not much more. Attachments are best for those, as lengthy blocks of text pasted into an e-mail make for over-load.
Heading to www.AtomicFez.com/about/submissions/ will provide a quick run-down of those things, as well as a few tips on how to get my attention (wine seems to work, for instance). Take a look at the www.atomicfez.com web site; sign up for the blog feed (which features a weekly round-up of articles of interest to authors, both tips on writing and trends in publishing), and talk to (or follow) me on Twitter.
What is the one piece of advice you would give to any would -be author seeking a publisher?
Ian Alexander Martin: Don’t pay anyone for the opportunity to be published. Real publishers pay the writer, not the other way around. That said, don’t give up your ‘day job’, because the likelihood of making a living from your writing is about as slim as becoming a Hollywood star. While not impossible, it’s highly unlikely.
What is next for Atomic Fez?
Ian Alexander Martin: Atomic Fez is committed to the principle of publishing entertaining fiction. Plans are underway to publish four new titles in 2011: two in late spring, two in the fall. We'll be publishing works by new Canadian authors, as well as second books from two of our existing authors.
In spring of 2011, Atomic Fez will publish Gananoque, Ontario-based Carol Weekes' Terribilis, a mystery/thriller and her first novel. Also in the spring line-up is Calgary, Alberta-based Chris Roth's first novel Dirk Danger Loves Life, which tells the story of a young man’s discovery that life can be something other than a complete failure.
Then in the fall of 2011, we'll be releasing the second in John Travis’ “Benji Spriteman” series, a follow-up to The Terror and the Tortoiseshell, as well as John Llewellyn Probert’s first novel. The award-winning Probert wrote – and we published – Wicked Delights – in 2010.
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Ian Alexander Martin has been over the years a photographer, a photo-lab store-owner, stage actor, and performing arts journalist; thus demonstrating a fascination with embracing trends already well into their death throws. Currently he's the Proprietor of Atomic Fez Publishing, which is dedicated to providing well-written stories to people at fair prices in a variety of formats; including electronic, hardback, and soft-cover editions. He's lived in Metro Vancouver all his life, and in Burnaby with his wife and two cats for rather less than that.
Gary Stibel, Founder and CEO of the New England Consulting Group, and his team were kind enough to take the time from their busy schedules to answer a few questions about the New England Consulting Group, about their Global Business Practice, and about the international management consulting industry.
Thanks to Gary Stibel, and to the team at the New England Consulting Group, for their time and for their interesting and informative responses to the questions. They are greatly appreciated.
New England Consulting Group: NECG has always had global clients, but the formal organization only came recently as we have seen a surge in demand from our clients – many of which needed to recover from rushed globalization efforts which failed to deliver the stellar ROI and results they anticipated.
Have globalization and international expansion moved beyond the growth strategy level, and transformed into something entirely different?
New England Consulting Group: Globalization and international expansion are two different things at NECG. International expansion is not and should not be for everyone. It makes sense for certain businesses and not for others, depending on the costs, synergies, and potential upside. But globalization, on the other hand, is a strategic factor for everyone because of the changing nature of business, reach of communication, and location of resources. We offer clarification around these differences.
According to NECG Founder and CEO Gary Stibel, “We understand that doing business internationally is not the magic answer to guaranteed growth and, if done poorly, can be more complicated than constructive to our clients’ core businesses.”
The New England Consulting Group has created a three prong approach to optimizing the Global Business Practice. What are those three prongs and how do they benefit business clients?
New England Consulting Group: Very generally, NECG classifies clients into three buckets, each with its own set of objectives and unique approach.
1. Overseas clients that want to optimize their business in the U.S. market place (Penetration)
2. U.S.-based clients that are looking to grow beyond their current geographic footprint (Expansion)
3. Global clients that are pursuing best global category and brand practices (Optimization)
Many companies approach international business as a panacea. Does that mindset result in international business being conducted poorly, or even turning into a disaster for some companies?
Gary Stibel, Founder and CEO, New England Consulting Group (photo left)
New England Consulting Group: Yes, many companies do approach international expansion as a solution to their growth objectives. And many learn, the hard and expensive way, that it is not.
It tends to lead companies to spend money where they did not need to, and miss opportunities that may have had higher returns and strategic benefits. For example, Carrefour pulled out of select international markets in Southeast Asia because they were not performing as Carrefour had originally intended. They are focusing on their more profitable regions and redirecting their funds and efforts to Europe.
Many global operations leaders often see the impending fall before it turns into disaster, but after much money and time has been lost. NECG is hoping to reach them before that happens.
One of the areas were the New England Consulting Group has consulted is with clients in India, and with North American clients working in India. Is there a difference in the approach to these very different clients and their needs?
New England Consulting Group: Absolutely. International companies (clients in India) and Multinational Companies (North American clients working in an Indian branch) are distinctively different. The direction, leadership, priorities and strategy come from different places and perspectives. We find that there is a fine balance between how local and how global our approach has to be, depending on the type of client and the type of issue.
How much has demand for international consulting services grown in the past few years?
New England Consulting Group: It is impossible to answer that question with any precise numbers. Certainly, there is a growing demand in the BRIC markets, from local and foreign sources.
What are some of the new challenges that businesses face in the new global economy that require consultancy assistance?
One of the New England Consulting Group initiatives is the NECG 7-11 program. How does that work and how does it benefit domestic clients and businesses based around the world?
New England Consulting Group: NECG’s 7-11 program guarantees that any inquiry that comes in before 7:00PM will be responded to by 11:00AM EST the next day. We understand the complications time zones can pose, but we always get back to clients within a 12 to 16 hour time frame, no matter how far they are or how complicated their issue is.
What is next for the New England Consulting Group and the Global Business Practice?
New England Consulting Group: We recently developed several highly innovative tools for analyzing and predicting consumer behavior, and we are using them with great success. Stay tuned!
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The New England Consulting Group, a boutique management consulting firm based in Westport, CT, uses behavioral economics and a range of innovative marketing tools to examine and forecast consumer and business trends. We consult to a diverse range of industries (NECG’s partners’ experience adds up to more than 100 years in marketing the best-known brands), including consumer packaged goods, healthcare, retail, financial services, technology and e-commerce, among others. For more information about NECG, please visit www.necg.net.
Gary Stibel, Founder and CEO, New England Consulting Group (photo left)
Gary Stibel is the Founder & CEO of the New England Consulting Group, the premier marketing management consulting firm in the world. Gary is a prominent member of New England’s consumer packaged goods, health care, financial services, high tech, restaurant, hospitality, retail and private equity practices. Gary’s career spans over thirty years of line management and management consulting for businesses that are marketing and sales driven for clients who are market and thought leaders.
Prior to founding the New England Consulting Group, he led the management consulting practice of Glendinning Associates (the largest marketing and sales management consulting firm in the world at the time), following multiple positions of increasing responsibility in marketing and sales management at Procter & Gamble.
Gary’s experience is focused on the development and implementation of corporate, division and brand strategies and plans. He has been equally successful consulting for small, entrepreneurial and large, sophisticated companies ranging from successful start-ups to transformational turnarounds and accelerated growth for the world’s largest corporations, in categories that are intensely competitive and extraordinarily complicated.
In recent years, Gary has consulted for over half of the world’s most admired companies, many legendary CEOs and almost all of the most valued brands on the planet. His knowledge base and analytic skills have helped countless companies and executives generate unprecedented growth and avoid costly errors.
Beyond consulting, Gary serves as a coach and mentor to many CEOs, CMOs and Boards. He is also the first choice for expert opinion on marketing and sales topics of the global business press. He is an avid game player, a voracious reader and an active volunteer. He sits on numerous boards – including local charitable, national professional, global corporate and start-up advisory boards.
He holds a BS in Mathematics and Economics from the University of Southern California, where he was a University Scholar, and an MBA in Marketing and Finance from Wharton, where he was a Chrysler Fellow. He graduated in the top 1% of his class from both schools.
Stephen Epstein describes the reasons for companies using videoconferencing and shared some of the advantages and disadvantages of the system. He also gazed into the crystal ball and shared some of his thoughts on the future of videoconferencing and of communications in general.
Thanks to Stephen Epstein for his time, and for his informative and comprehensive answers.
Thanks as well to Norman Birnbach of Birbach Communications, Inc., and his team, for their assistance in facilitating this interview.
Stephen Epstein: Each year, as part of our marketing efforts, we look at market conditions to help us focus our efforts. For the last two years, in the spirit of the social media age we live in, in which it is important to share perspective and insight, we've issued some of our insight regarding the more mainstream part of the visual communications market.
Briefly, how does videoconferencing fit in as a unified communications tool?
Stephen Epstein: Technology has given us a number of different ways to communicate – email, instant messaging (IM), and audio or phone and video. Many of those communication methods have been available as standalone services. Leading Unified Communications (UC) systems like Microsoft OCS and Lync and IBM Lotus Sametime integrate different communications services into one solution so that you can IM with someone you're talking to via videoconferencing without having to open a new window. The next step, we believe, is to integrate communications into key points of the business process, known as communications-embedded business processes or CEBP.
Is videoconferencing growing in prominence to the point of being everywhere?
Stephen Epstein: Absolutely. Videoconferencing has captured people's imaginations since AT&T unveiled the videophone at the 1964 World's Fair, and again a few years later on "Star Trek." But the technology wasn't there. It is now, and thanks to free consumer video chat services like Skype and FaceTime, videoconferencing is available everywhere.
Is interoperability becoming an issue for creating bridge standards to use different systems together?
Stephen Epstein: We see interoperability – the ability for technology to work across different systems, platforms, etc. – as being a big issue. The reason is partly due to the technology: closed systems have fewer issues and work better, and partly due to a business decision that bets that companies can sell more when customers are locked into one platform and can't buy a low-cost generic alternative. So current UC systems have been built as proprietary systems to limit connections to other systems. The problem is that people need to connect to people at other companies, who may be using a different platform.
To put this in context, imagine you're a Verizon customer and that the only way you can connect to an AT&T customer is to buy a separate phone and service plan and now you need to call a Comcast customer. The industry had addressed this before, and will again need to tackle the interoperability issue. The alternative – focusing customers to develop ways to bridge standards, media processing and signaling at their own cost – is unacceptable.
Is there a trend toward companies having to bridge standards at their own cost, or is that potential for added cost disappearing as a barrier to using visual solutions?
Stephen Epstein: Companies need to communicate. They need their employees to collaborate, even if they're in different locations, and that is more often the case these days. They need to develop relationships with customers and manage vender relationships. Right now, companies have to either figure out an acceptable compromise or determine a way to bridge the standards themselves. Ultimately, the UC developers will need to find a solution to the interoperability issue. However, because the Avistar C3™ solutions are interoperable, we're not finding that a barrier for customer adoption. Companies want videoconferencing solutions that can work across different systems.
Stephen Epstein (photo left)
Many business people think of videoconferencing from their own offices. Do you see an increase of mobile videoconferencing from anywhere?
Stephen Epstein: Absolutely, videoconferencing has moved from the conference room to the desktop, and from the desktop to the laptop and from the laptop to smartphones and tablets, thanks to the multitude of tablet devices hitting the market and the further roll-out of 4G networks. What we expect to see is the influence of consumer videoconferencing on businesses, as employees who use mobile videoconferencing in their personal lives push for the same capability at work. Videoconferencing has emerged as a must-have solution for business people at offices or on the go, as it provides smart, ubiquitous visual communications – anywhere, anytime, anyplace.
Is there a movement to thinner and less bulky hardware for videoconferencing?
Stephen Epstein: Absolutely. At the consumer level the just-announced iPad2 will be thinner and lighter and contain a front-facing camera for videoconference calls. At the business level, we’re seeing continued adoption of Virtual Desktop Infrastructure (VDI), which entails delivering a thin client – which may be not much more than a screen and a keyboard with access to all the data and applications hosted on a remote server. This movement will continue to gain momentum as businesses work to control costs while delivering software tools that employees need to do their jobs effectively.
How are the trends in videoconferencing affecting corporate networks?
Stephen Epstein: The big issue is bandwidth management. As demand and usage surge, companies will face pressure to provide increased videoconferencing services. The challenge will be to how to accommodate the demand for videoconferencing while ensuring that critical business applications, that also require bandwidth, are not adversely affected in a battle of the bandwidth. Companies will need to select communications solutions that provide robust bandwidth management, call admission control, user policy support, threshold and utilization modeling, in addition to extensive report and forecasting capabilities.
What was the most surprising result arising from the study?
Stephen Epstein: The impact that consumer technology is playing on enterprise software is really surprising. It used to be that software was developed to serve businesses and then expanded into the consumer market. These days, the look-and-feel of consumer software serves as a template for business software. And, of course, while Avistar has been developing videoconference technology for 16 years, free consumer services have really moved the market forward in a short time.
What is the future of videoconferencing?
Stephen Epstein: Convergence will be seen with videoconferencing popping up as a function in non-traditional devices, such as smart whiteboards and a variety of new and innovative devices, so that people can communicate and collaborate regardless of device, location and/or network capacity. A lot of videoconference solutions are still based on a hardware model of traditional telephony. But the future will require all-software solutions because of their cost-efficiency and high quality. For example, Avistar’s all-software approach lowers procurement and deployment costs by as much as 200%.
What sort of visual solutions will businesses large and small be seeking this year?
Stephen Epstein: Businesses will feel pressure from their employees for the ability to conduct videoconferencing at work. But companies have different requirements from consumers. Smart businesses will evaluate business-class solutions that provide high quality video and audio – because that's what customers expect. They'll need bandwidth management tools and security that aren't available with the free services. And they need the ability to place ad-hoc multiparty calls and the ability to share documents on each employee’s computer screen.
What is next for Stephen Epstein and Avistar in 2011?
Stephen Epstein: There's a tremendous amount of interest in videoconferencing. I think as an industry, we've finally reached the tipping point, and that's very exciting. We're looking forward to working with our customers, technology partners like IBM, Tandberg (now part of Cisco), Polycom, Logitech and LifeSize, and resellers and distributors to continue to push videoconferencing forward. Once people get used to it, they really like videoconferencing, and see for themselves that it's a big improvement over audio phone calls. It's a great time to be in the industry.
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Stephen Epstein, Chief Marketing Officer, joined Avistar Communications Corporation in January 2008 and is responsible for the company’s marketing, product and account management functions. Prior to Avistar he was Vice President, Head of Product Management at Mantas, Inc., where he was responsible for global product strategy, managing product requirements, defining go to market plans and marketing strategy, while continually evaluating the financial services market in order to provide a clear and decisive direction for Mantas’ business.
Prior to joining Mantas, Stephen Epstein was Head of Product & Business Development at Bang Networks where he spearheaded product and business development efforts, focusing on delivering real-time information distribution products. Prior to that he held senior-level management and product development positions including Head of Global Foreign Exchange Sales Technology and Group CTO at Deutsche Bank.
Public relations and media expert Norman Birnbach, President of Birnbach Communications, Inc., was kind enough to take the time to discuss media trends in 201i. He describes what is happening with radio, television, newspapers, magazines, and online media. He also shares a few surprising trends that will be appearing in 2010 as well. Norman also blogs at the popular and highly regarded public relations blog PR Back Talk.
Thanks to Norman Birnbach for his time, and for his intriguing forecasts in the fascinating field of media.
What was the background to your creating this annual series of public relations predictions?
When we started Birnbach Communications a decade ago, we realized there was a missing element from a few clients' marketing plans. They did a great job in capturing key issues from within the company but needed the context of the world outside -- that is, the trends and issues that were being covered by the media. We began issuing an annual list of predictions to help our clients more effectively understand and engage on topics of interest for traditional and now social media.
How successful were the forecasts you made for 2010?
We hit most of our predictions, including our major prediction that last year would be the year of online subscriptions. Very soon afterwards, publishers like the New York Times, Hulu.com, Boston Globe, the Times of London and others began announcing that they would be establishing online subscription access to their content. We were right that print journalism would see a better year – true, 10 papers shut down in 2010, but that's a drop in the bucket compared to the 109 that shut down in 2009.
We were right that the iPad would be one of the biggest stories of the year – which in hindsight was not a risky prediction; but at the time, there was a lot of skepticism about why people would need and buy iPads – plus a lot of people mocked the name, iPad. We did predict a battle between Android vs. the iPhone but did not expect that Android would outsell the iPhone. We predicted the media would focus on corporate battles like Google vs. Apple vs. Microsoft and EMC vs. HP vs. Oracle. We were right about Google vs. Apple, but we did not anticipate Oracle vs. SAP or Cisco vs. H-P. Overall, I'd give us an A/A-.
Social media use and rules are evolving very rapidly. Will this trend continue or even accelerate in 2011?
What's startling is how quickly people have adjusted to social media, now the #1 activity on the Web. It took radio 38 years to reach 50 million users, TV just 13 years. Yet it took Facebook less than nine months to add 100 million users. The platforms and the rules will continue to change rapidly. So much of that change is driven by new functionality and some by evolving business models. Take Twitter, for instance. An entire ecosystem of companies have popped up to offer services that Twitter didn't deliver at first, but as Twitter has evolved, it's added some of those features, That's one form of rapid evolution. This rapid change can be overwhelming, but it also presents an opportunity for companies that are social media newbies to jump in, and catch up quickly. After all, many companies are still taking social media baby steps.
How will the corporate use of social media be judged for success in 2011?
Companies will be judged on several criteria, including the quality of their social media engagement, their frequency and use of multimedia elements. Assuming the quality is there, it will be important for companies to post on a regular basis – not just once a month. The fact is that people assume a company has gone out of business or is in a downward spiral if it hasn't issued a release or otherwise updated its website in a matter of months. But in 2011, people will now assume your organization has gone out of business or that you have left your job if you haven't posted or updated your blog or status in a month. To keep brands and images relevant, social media content needs to be a consistent drumbeat, rather than an occasional dribble of information.
Are the reports of the death of the traditional press release still premature?
I recently moderated a panel on social media and public relations, and some of the panelists, who were either reporters or bloggers, gleefully declared that the press release was dead. I respectfully think they're wrong. Now news embargoes may be dead, but the press release continues to serve a purpose. There are other ways to communicate the news – such as making an announcement via Twitter or Facebook. However, press releases can still provide value and be effective in 2011, if only by enabling organizations to post fresh evidence of corporate activity and providing search engine optimization (SEO) opportunities.
Norman Birnbach (photo left)
Will traditional media find its footing from which to operate effectively?
Yes. This year, traditional media will move to stable, if fragile, footing. The worst may be behind them, based on the reduced number of traditional newspapers and magazines that have either shut down or shifted to an online-only business model in 2010 as compared to the prior two years. But the old ways of doing business won't survive the "new normal." Even with a recovery, media properties will never again see revenue at the 2007 pre-recession levels -- unless they innovate and find more ways to generate revenue aside from traditional ad sales. That means finding a way to charge for online content on the revenue side. That also means fewer staff and resources, perpetual deadlines and multichannel content.
Will we see more live real time integrated and interactive multimedia events in 2011?
They won't replace what we used to call "TV shows" in 2011, but we will see more of these events. But that's because we may not be watching on a TV. The cable channel Bravo already actively elicits people to post comments about its shows while the programs are airing – and they're seeing a strong response, more enthusiastic connections and interactions, which is something advertisers like. You won't be limited to just voting for a contestant on a reality show; you can also comment on everything about the show. Hate Ryan Seacrest? Now you can let everyone know. The difference is that in 2010, you had to comment on Twitter or Facebook. In 2011, you'll be able to comment next to the action, and be able to interact with others on one screen as opposed to watching your TV and typing away on your computer.
Are there any changes in the fashionable words and jargon that you expect to happen in 2011?
Hybrid will be the overused word of the year, followed by mashup and curation. We're seeing that hybrid no longer is relegated to plants or cars. It can mean anything that deploys a two-part solution, like one that offers a cloud-based solution, which stores data offsite, along with a way to store data onsite. On the other hand, mashups can be used to describe anything that combines elements of two different things, like two songs (as on "Glee"), or two kinds of data – such as overlaying crime statistics on top of Google Maps. Meanwhile, as used in 2011, curation does not have anything to do with healing. Curation generally refers to the concept of a website that offers information selected and maintained by an actual human (who might be known as a curator if this were a museum), not by an algorithm. In newspaper circles, this person used to be called "editor" – so curation is a back-to-the-future concept.
What will be some of the big technology stories to watch for in 2011?
The biggest will be the battle between the iPad and the iPad Killers. The media will also look at the impact of tablet computing on the PC market. (Anyone remember netbooks?) The media will look at the success and valuations of Groupon and Twitter and Facebook, and whether and when they will go public. The status of Facebook, its policy towards privacy, and the demise of MySpace. (Last year, it was Twitter's business model – which has yet to be fully answered.) Of course, the media will also cover the state of the media, especially print media, online-only business models and online subscriptions. The media – traditional and online can't help but cover itself.
Which trends that emerged in 2010 will continue or increase in 2011?
Location-based services and behavioral targeting by advertisers and personalization will be important. Online privacy will continue to be important. The continued growth of e-books and e-readers will lead to talk about the inevitability of the demise of paper-based book. (The one exception will be children's books, especially pop-up books – to be known as 3-D books.) The media will continue to focus on the latest smartphones and digital cameras.
What is next for Norman Birnbach in 2011?
As an agency, we'll be offering more and richer social media services, including enhanced advocacy programs. And I'll continue to comment on the state of the media, social media and the communications industry on my blog, PR Back Talk (blog.birnbachcom.com).
Steven J. Pugh, FCA, Chief Executive Officer, UNIT4 CODA, Inc., a business unit of UNIT4, the world's leading provider of enterprise resource planning (ERP) and financial management software was kind enough to take the time out from his busy schedule to answer a few questions about his career, his industry, the economy, and the challenges facing business today.
Thanks to Steven J. Pugh for his time, and for his thoughtful and informative responses. Thanks as well to the team at Birnbach Communications for their generous assistance in facilitating this tremendous interview.
These days, it is the exception not the norm to stay at a company for a quarter of a century, let alone serve as its CEO for more than a decade. You’ve seen it all – the booms, the downturns, and everything in between. What is the secret to your staying power?
Steven J. Pugh: It really comes down to really enjoying what I do and there are three reasons for this:
• As CODA evolved over the years, so did my job. Since 2000 I have had same job but against different parent company backdrops.
• Our accounting product set has changed as we migrated to emerging platforms – from minicomputers to client/server to browser-based, etc.
• CODA’s people and culture are outstanding. CODA employees truly listen to customers to understand what they really need, and many of our employees came to CODA from the end-user environment where they had been in the accounting roles for which we provide solutions.
Why did you choose this path -- why UNIT4 CODA and why financial software?
Steven J. Pugh: I come from an accounting background. I was naturally drawn to CODA when I realized that the company was totally focused on solutions to remove all those manual processes that were time-intensive, monotonous and prone to human error.
We’re slowly emerging from The Great Recession – certainly the toughest economic time we have seen in our lifetime. By and large, businesses have clamped down and focused on cost-cutting and their day-to-day operations, but they’ve been at it for more than 18 months now…a long, tough road. In your meetings with customers these days, what do you see happening now that is innovative, smart, etc. that keeps these businesses moving forward?
In general, companies that made hard decisions early on in this downturn have seen margin improvements. They invested very little in the backend of their business over the past two years and focused on revenue-generating activities. But now businesses are ready to make investments in their infrastructure, armed with the knowledge that they can do more with less, and therefore can be selective in getting the best tools for the job.
What can they do now to emerge from this recession with a leg-up on the competition? What are the key lessons learned they should consider?
Steven J. Pugh: Businesses should determine if their backend solutions are really doing the job. If they have an accounting system that is difficult to administer, is causing them real difficulty on a cyclical basis (e.g., closing monthly books), or if they regularly port everything to spreadsheets, they should seriously think about modernizing. A modern efficient financial system is critical to every business.
The “cloud” is an area that businesses should look at carefully. The advantage of cloud computing is that businesses don’t have to invest in computer equipment and they can get applications up and running quickly, particularly if IT is overloaded. Since CODA has always been about “best-of-class,” we view cloud computing as a logical extension of that philosophy. Businesses can find cloud apps that suit their needs and pocketbook.
Steven J. Pugh, FCA (photo left)
What is the “new normal”? Are you seeing “What’s old is now new again?” In what ways?
Steven J. Pugh: Early in my career, CFOs would tell me they had “smuggled” in minicomputers because they had a problem that CODA could solve, and they couldn’t get the attention of IT because the department was overloaded. I see this again today – very often people can’t get things done because IT is overloaded with revenue generation and operational projects. For these companies, best-of-class can be their best route.
You talk about accounting for change and the way in which a company responds to change can spell success or failure. With the move over the last decade toward more transparency, with more and more regulatory and compliance issues emerging, c-level execs have had their hands full. What is the particular pain point for CFOs in 2011 that is critical for them to stay on top of – what keeps them up at night?
Steven J. Pugh: CFOs are always at the sharp end of ensuring the company is in compliance, from getting ready for the audit and making sure there are no accounting irregularities. CFOs keep coming back to “How do I know that we are in compliance? How do I know that approved processes are actually being implemented?” We have a software solution that automates repeatable business & financial processes that are subject to compliance rules and regulations, so someone can’t approve expenditures in an unauthorized way, for example. It gives CFOs peace of mind that every document that is entered into the system will comply with company and regulatory requirements and is documented for the auditors.
What industries in particular are you seeing the most need?
Steven J. Pugh: Certainly the financial services sector is under the microscope, particularly the hedge fund industry. Financial services is an area that needs to demonstrate it is compliant, its records are secure, etc. This is a sweet spot for CODA.
Another area where there is great need is in the transport and logistics area, not necessarily due to heightened compliance requirement. They have complex accounting needs that cross borders, multiple currencies, different reporting methods and so on.
A third area is retail in that retail businesses require daily reports on how they are doing. They need to be able to turn on a dime and as a result they demand best-of-class accounting functions.
What trends do you see on the horizon?
Steven J. Pugh: Companies are examining the cloud but many of them don’t see this platform being one they are prepared to commit their business systems to 100%. There is, however, an opportunity to utilize cloud apps and cloud facilities for part of their business, perhaps a new venture they are setting up or a recent acquisition that requires a different IT approach. Hybrid computing could be a good direction for them. There is a lot of marketing hype on cloud, but businesses are slowing gaining confidence that there are cloud applications that do make sense for their business. They can opt to have best-of-class on-premise as well as off.
Another major trend one that is now actively being embraced is the use of social media in the work setting as a tool for better collaboration and communication. In many ways it is table stakes for any viable business. Many applications have chat functions built into them so that teams can collaborate more effectively and this will be seen even in financial accounting products very soon. We have a younger, more tech savvy workforce that is driving adoption of social media in business.
A final trend to watch is “green factor reporting.” This is very much an emerging trend in Europe but it is a little farther out on the horizon in the U.S. People are going to want to know much more about a business’ footprint: how far it transports its products and raw materials, how much resource its plants consume and what its overall philosophy about energy consumption and conservation are. In Europe, many large companies and government agencies require answers to these sorts of questions before admitting a company to their list of approved vendors. It is also becoming a growing requirement in European company annual reports.
What’s next for Steve Pugh and for UNIT4 CODA?
Steven J. Pugh: In the short term, CODA is moving into new verticals such as retail, and expanding our existing business. We are staying attuned to our customer base and continuing to look at new techniques and tools like social media and evaluating other services we can build or work with partners both on-premise and in the cloud to help customers work faster, better, cheaper.
Any questions I haven’t asked that you’d like to address?
Steven J. Pugh: Why would a company choose CODA?
We’ve been in business since 1979, in the USA since 1988, and we know Financial Accounting. It is all we do. Big companies that offer financial software don’t have a lock on innovation, domain expertise or being the “safe” choice. Increasingly businesses are selectively choosing best-of-class versus the one-size-fits-all approach of big ERP. Best practice today is a solution that gives companies exactly what they need, not what they don’t need, and at a cost effective price.
Senior resource specialist within the Land Program with the Natural Resources Defense Council (NRDC), Debbie Hammel was kind enough to take the time to answer a few questions about the conservation initiative established by forest products company Georgia-Pacific and a number of environmental organizations including NRDC.
Thanks to Debbie Hammel for her time, and for her informative and comprehensive responses to the questions. They are greatly appreciated.
Georgia-Pacific along with several leading conservation groups has announced that it will no longer purchase trees from Endangered Forests and Special Areas, or from new pine plantations established at the expense of natural hardwood forests. What does this announcement mean?
Debbie Hammel - NRDC: This means increased protection for more natural hardwood forests throughout the Southeast. Georgia-Pacific will no longer purchase pine harvested from plantations that could replace more than 90 million designated acres of natural hardwood forests. By taking this action, the company is doing its part to decrease the conversion of natural hardwood forests into industrial pine plantations – a trend that has significantly harmed the ecological values of natural forests in the region. The company has also agreed not to purchase timber harvested from 11 endangered and special areas in the Mid-Atlantic Eco Region, increasing protection for some of the region's most prized natural places. This commitment will be expanded to all of the areas that Georgia Pacific purchases timber from over the next few years.
What groups were involved in this historic announcement? What was the background to arranging this conservation initiative between the many conservation groups and Georgia-Pacific?
Debbie Hammel - NRDC: Georgia-Pacific worked in consultation with the Natural Resources Defense Council (NRDC), Dogwood Alliance and Rainforest Action Network for more than six years to develop this policy. Georgia-Pacific approached the conservation groups for input and environmental expertise on how they could expand their forest policy to increase protection for natural forests.
How is Georgia-Pacific protecting such endangered species as the South's natural hardwood forests?
Debbie Hammel - NRDC: Increased consumer demand for sustainably sourced products, paired with new mapping technologies, have allowed Georgia-Pacific and other companies to make ecologically sound decisions such as this without sacrificing profitability. Now more than ever, doing right by the environment makes good business sense.
How will this announcement protect hardwood forests and slow the conversion of forests to pine plantations?
Debbie Hammel - NRDC: This announcement will provide an incentive to landowners to harvest timber sustainably. Likewise, it will not reward those landowners who choose to convert natural forests to pine plantations.
What are some of the environmental problems that are associated with pine plantations that will be reduced as a result of this historic initiative?
Debbie Hammel - NRDC: There are myriad environmental problems associated with conversion of natural forests to pine plantations, including increased erosion, destroying habit for rare and endangered species, eliminating biodiversity, and -- perhaps most significantly -- eliminating vital carbon sinks and contributing to climate change.
Will this initiative help to protect endangered wildlife, improve habitat, and protect endangered wetlands?
Debbie Hammel - NRDC: Pine plantations are not forests. Rather, they are industrial row crops, unable to sustain the rich natural life that thrives in natural forests. The South is one of the most biologically diverse places in the world, to a great extent because of forest species. By keeping more natural forests intact, we protect the environmental integrity of the region, as well as the individual species -- many of them endangered -- which thrive there.
Does the conservation effort reflect a sea change in the corporate culture within Georgia-Pacific? How important is this shift in corporate culture and understanding of the environment for developing conservation programs with other corporations?
Debbie Hammel - NRDC: By making this policy statement, Georgia-Pacific is committing to making company-wide changes to increase protections for forests. This shift in corporate thinking toward more environmentally significant practices is of great significance, and is indicative of the changing marketplace – incorporating sustainability into the business calculation is now seen by companies as a necessary part of being responsive to their customers’ needs, and therefore, their bottom line. We anticipate that we will see more and more companies making significant moves toward more environmentally sound practices, as market pressures increase.
What is the future of forestry environmental protection as a result of this historic conservation effort?
Debbie Hammel - NRDC: As one of the largest purchasers of timber in the Southern U.S. – which is the largest timber producing region in the world – Georgia Pacific’s commitment will send a strong signal to the marketplace and have a significant impact on the practices currently employed in the region.
What is next for the Natural Resources Defense Council?
Debbie Hammel - NRDC: NRDC is committed to protecting critical forests in many different regions around the world. We depend on a variety of different tools to accomplish our work- from litigation to marketplace transformation. As we pursue the dual goals of forest protection and sustainable management, we will continue to look for opportunities to work with companies who share this same vision – in the U.S. South and more broadly.
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Debbie Hammel - NRDC (photo left)
NRDC is the nation's most effective environmental action group, combining the grassroots power of 1.3 million members and online activists with the courtroom clout and expertise of more than 350 lawyers, scientists and other professionals.
Since 1970 NRDC has been a strong advocate for, and defender of, the earth’s natural resources and public health. Over these nearly three decades NRDC has been a powerful catalyst for change and improvement of environmental policy in this country and internationally. NRDC’s vision is one of a sustainable world where human relationships with nature can be maintained indefinitely without causing the degradation of the biosphere. NRDC pursues this vision by designing policy solutions for genuine, lasting change—such as efficient energy use patterns and reduction of toxic wastes at the source—and putting them into place through advocacy, precedent-setting litigation, and direct negotiations with industry and government. NRDC has offices in New York, Washington DC, San Francisco, Los Angeles, Chicago and Beijing.
Debbie Hammel has been with NRDC for nine years and is a senior resource specialist within the Land Program. Based in the San Francisco office, she works on issues related to bioenergy and sustainable forest management. She has more than 25 years of experience in designing third-party environmental certification systems, and is an internationally recognized expert on sustainable forest management, supply chain management and chain-of-custody certification.
Over the last five years, Debbie has focused her energy on private sector initiatives – harnessing the power of the marketplace – to protect the forests of the southern U.S. - one of the most biologically diverse temperate forests in the world and threatened by a variety of diverse pressures including the international pulp-and-paper industry, mountaintop removal coal mining, climate change, subdivision developments and the emerging bioenergy industry.
She holds a degree in Conservation of Resource Sciences from the University of California at Berkeley.
Bethany McLean, famous for breaking the Enron story, is a contributing editor of Vanity Fair magazine, and Joe Nocera is a columnist for The New York Times.
The two share several basic opinions about the financial collapse: that rating agencies were the No. 1 culprit; that Republicans and Democrats hold equal political blame; and that subprime lending was never really about home ownership – it was about predatory lending.
JEFFREY BROWN: Next: a "who done it?" look at the financial crisis. NewsHour economics correspondent Paul Solman has our conversation.
It's part of his reporting Making Sense of financial news.
PAUL SOLMAN: At the Museum of American Finance on Wall Street: the co-authors of "All the Devils Are Here: The Hidden History of the Financial Crisis."
Bethany McLean, famous for breaking the Enron story, is a contributing editor at "Vanity Fair" magazine, Joe Nocera, a columnist for The New York Times.
PAUL SOLMAN: You frame this book as a look back at the whole financial crisis, so I thought I would frame this interview as a: Who is the biggest culprit?
JOE NOCERA: I certainly would put the rating agencies right at the top of my list of bad guys, or my list of devils.
A place like Moody's took a culture that had a reputation for some integrity, and completely corrupted it in a drive for market share and profits.
Bethany Mclean and Joe Nocera (both in photo left)
PAUL SOLMAN: So, biggest culprit, ratings agencies; you agree?
BETHANY MCLEAN: I do agree. If they hadn't taken subprime mortgages and rated enormous quantities of them AAA, meaning they gave those bonds the same credit rating as the U.S. government debt has, this -- this whole thing couldn't have happened, because debt that is rated AAA is precisely the debt that is snapped up by the largest quantity of buyers all around the world, buyers who are not capable of doing the detailed work to analyze these bonds by themselves.
And yet there is still this myth that these buyers are supposed to be sophisticated buyers, and they're supposed to understand what they're getting into. And the cornerstone of this myth, the thing that makes it all work, is the rating agencies, because the investment banks say, well, we sold AAA securities.
PAUL SOLMAN: But don't you cut ratings agencies any slack? I mean, the incentives are all there for the ratings agencies to do what they did, no?
JOE NOCERA: I don't cut them any slack at all. They are supposed to be protecting investors. That's what their job is. They're not supposed to be in cahoots with the Wall Street firms that are ginning up these securities.
And yet that's what they did. They used to rate normal, old- fashioned corporate bonds. And then -- then this new form of finance arose called structured finance. And that's all these, you know, mortgage-backed securities bundled into CDOs, so on and so forth, all this complicated stuff.
It became a growth area, a profit area that far outstripped the old fuddy-duddy business of rating government bonds. So, the rating agencies raced, jumped on it. And it just flew. And then the top executives really started to drive the place around the profitability of structured finance. And that's really what happened, more than any other single thing.
PAUL SOLMAN: But isn't that what happened at Fannie Mae and Freddie Mac?
BETHANY MCLEAN: A slightly more complicated story with Fannie and Freddie, because they were set up to serve this noble purpose, to enable home ownership. And we can have a debate about how noble a purpose that -- that actually was.
But there were these odd entities that were half-private and half-public, meaning they had this mission to serve the public good by boosting home ownership, but they also were privately-held companies that were traded on the stock exchange, with a responsibility to produce profits for the bottom line, and, even more importantly, executive bonuses that were tied to those bottom-line profits.
JOE NOCERA: The dirty little secret of Fannie and Freddie is that they jumped into subprime, not for political reasons, but because they were being left behind by the private market, and they were losing market share because, subprime was becoming so big, it was kind of starting to take over the securitization market. Fannie and Freddie needed to be in the securitization market, so they dove in with both feet.
Paul Solman (photo left)
PAUL SOLMAN: OK, Republicans or Democrats, who is more responsible?
(LAUGHTER)
BETHANY MCLEAN: Both.
JOE NOCERA: Both. Republicans want to blame Fannie and Freddie and the government, because they have a hard time accepting the notion that the market failed. Democrats want to blame it on the marketplace, on Wall Street and subprime companies, because they have a hard time accepting that the government didn't do its job. The fact is, neither party did their job.
BETHANY MCLEAN: And, after the crisis, it has become very popular for Republicans to say, well, the Democrats caused this with their focus on homeownership, on putting people in homes who couldn't afford those homes.
But one of the really interesting things, if you go back to the 1990s to the birth of subprime lending, it was never about homeownership.
PAUL SOLMAN: What do you mean it wasn't about homeownership?
BETHANY MCLEAN: It was never about homeownership, because subprime lending grew out of cash-out refinancings, meaning the ability of somebody to go to a bank, refinance their mortgage, and take cash out of their house in order to live on that cash.
And that enabled consumer spending through the 1990s and through the early part of -- of this decade. Most of the business of the major subprime lenders, from Countrywide, to Ameriquest, to New Century, was cash-out refinancing. It wasn't the first-time purchase of homes by homebuyers. And this was celebrated by Republicans, as well as Democrats.
JOE NOCERA: Homeownership was a giant fig leaf, particularly for the rise of subprime.
I was stunned, in the reporting of this book, how much subprime was about predatory lending. And it was way more than I thought. And then, when you find that a company like New Century, which really, you know, 85 percent of its business is refinancing, 15 percent of its business is homeownership, that's astounding.
PAUL SOLMAN: What does predatory lending mean in this situation?
JOE NOCERA: Taking advantage of unsophisticated people to put them into loans that -- knowing, absolutely knowing, that they can never pay them back, often lying about what the interest rate hike is going to be, prodding them to lie themselves about their income, about their true financial condition.
BETHANY MCLEAN: I -- I started this book with a bias toward personal responsibility, and, if consumers got in over their head on their mortgage, that was their fault.
And one of the big discoveries to me in the course of reporting the book is the extent to which these loans were sold; they weren't bought. And one of the most telling moments were these internal documents from Washington Mutual, one of the big subprime lenders, around 2003 talking about how to get consumers who really wanted safe 30-year fixed-rate mortgages to take out these dangerous option ARMs instead.
PAUL SOLMAN: ARMs meaning adjustable rate.
BETHANY MCLEAN: Adjustable rate mortgages -- how to sell those to people, and how to confront a consumer who said, but it doesn't feel right to me. I want to pay back my mortgage every month. This is what my parents did.
How do you get these people to take out a risky mortgage instead? You told them that home prices could only go up. And the reason Washington Mutual wanted to sell these option ARMs, instead of the 30-year fixed rate mortgages, is that Washington Mutual could turn around and sell these to Wall Street for a lot more money than it could sell the old 30-year fixed-rate loans.
JOE NOCERA: The astonishing thing about the run-up to the crisis is that this situation was happening all over the country. Lots of people on the ground could see it. And, yet, no one in government, whether it was the Fed, whether it was the regulators, whether it was Congress, was willing to do anything about it.
And -- and not only that. In some cases, like the bank regulators, they actively pushed back and stopped anybody trying to stop this kind of lending.
PAUL SOLMAN: Is Wall Street any worse than it ever was?
BETHANY MCLEAN: Yes, I think it's worse.
Wall Street, by the very sleaziness and impenetrability of its practices, set up its own run on the bank, because, when push came to shove, there was no transparency. And, even though in -- you can argue that this was a run on the bank, it was a run on the bank created by the way Wall Street did business. So, in the end, they only have themselves to blame.
PAUL SOLMAN: Some people have argued that this wasn't not quite a plot or a conspiracy, but a means by which Americans who had companies with stuff to sell could get money into the hands of people whose incomes were stagnant, so they could buy this stuff, that is, lend them the money.
BETHANY MCLEAN: I do not think that was ever an explicit plot. In other words, I don't think any group of people ever sat in a dark room and said, here's what we are going to do, and it's eventually going to bring the financial system down, but we are going to keep this party going while we can.
But I absolutely think that was an implicit plot. In other words, in order to keep the U.S. economy going, you had to keep consumer spending strong. In order to keep consumer spending strong, you had to have consumers whose income otherwise wasn't keeping up have a ready source of cash.
That was cash-out refinancing, by using their homes as piggy banks, and no one wanted to stop that party.
PAUL SOLMAN: You agree with that?
JOE NOCERA: Totally, 100 percent.
PAUL SOLMAN: Joe Nocera, Bethany McLean, thanks very much.
