The Tango of Business, Politics and Journalism

It came to no surprise among media pundits that Time Magazine’s Managing Editor Richard Stengel will be taking a job as a spokesperson for the U.S. State Department.  His new title, under secretary of state for public diplomacy and public affairs, will have Stengel leading communications outreach for the department across many issues, ranging from cultural programs to terrorism.

Time Magazine is no stranger to the Obama Administration.  Former Washington, D.C. Bureau Chief Jay Carney joined the president’s staff as White House press secretary in January 2011 after serving as Vice President Joe Biden’s communications director.

English: Jay Carney giving a press briefing.

English: Jay Carney giving a press briefing. (Photo credit: Wikipedia)

Journalists historically have transitioned from hack to flack, probably more so in recent times as traditional news outlets struggle to survive in today’s Internet-based media landscape. It’s happening in the corporate world as well, and has for decades, with financial reporters taking jobs at public relations firms, including ours, as well as within internal corporate communications departments to focus on media and investor relations.
On one hand, it’s hard to deny these moves don’t affect the credibility of journalism or at least each reporter’s former news outlet.  Reporters accepting positions at organizations they once covered can create an allure of collusion within an industry that prides itself as being vigorously independent, unbiased and objective.

The pendulum swings both ways, however.  Scores of business executives and political officials   have transitioned to various media gigs, including talk show hosts and media contributors.

Business, politics and journalism always have had incestuous relationships. Some good, others not so good.  With New York City’s primary elections over, and Anthony Weiner and Eliot Spitzer losing their bids for mayor and comptroller, respectively, all eyes will be on which politician may be the next media pundit.  Perhaps both.

— George Medici,

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The Rise of Mobile Payment

Mobile Payment Replaces Cash

iPhone Mobile Payment, 100 Euros, (Photo Credit: Flickr, Monty Metzger)

Hey, cash, it was nice knowing you, but I’m moving on.
According to a story this week in the New York Times, Square, the San Francisco start-up that is out to kill cash with its mobile payment gizmo, has formed an alliance with Starbucks.
To alert consumers and investors, Starbucks CEO Howard Schultz and Square co-founder Jack Dorsey have been doing the press rounds, being interviewed by major news outlets and appearing on national business television networks.
No doubt this is pretty big news.  In the coming months, Square is poised to take over the processing duties of credit and debit card transactions at all U.S. Starbucks stores.  The Times also reported that in the not too distant future, I will be able to pay simply by giving the barista my name.  What’s next, a retinal scan as I walk in the door that simultaneously orders my usual and charges my card?  I can definitely see that happening, but what if I want a Grande instead of a Tall?
There’s no doubt mobile payments are here to stay. They’re cool and convenient, unless you drop your phone into the bathtub — yes, that really happened.  But don’t make the funeral arrangements for cash just yet. As Fortune technology writer Miguel Helft points out, “changing the way Americans pay for stuff is going to be really hard work.”
It’s hard to imagine a world without cash.  Things do change however.  Just the other night, I was telling my children about nearly extinct products like typewriters, 8-tracks, VCRs and rotary phones, which were indispensable when I was their age. At the time, you’d never imagine these items ending up on the scrap heap. This leads me to believe that in the mobile payment revolution, once the kinks are worked out and buyer and seller are in sync, cash will just be another item on the “when we were kids” agenda.
The trick right now for mobile payment providers is communicating that proposition to consumers and merchants, no small feat. Looks like Schultz and Dorsey have more media to do.


Ron Neal,

Sunday Mornings May Never Be the Same

My favorite part of Sunday morning is relaxing over a cup of coffee while leisurely reading both the New York Times and Los Angeles Times–every section–without that harried feeling of having to skip and skim stories like I do the rest of the week, or use the speed reading techniques I learned from my 11th grade English teacher, Mr. Coughlin.

The Times-Picayne (Photo Source:

I even savor the smell of the newsprint, which combined with the coffee aroma, exudes a state of calm. But I am worried that the Sunday papers may not be around too much longer. And while the thought of sipping coffee with an iPad doesn’t exactly thrill me, I am reluctantly bracing for the future. Of course, it’s all about technology, which is changing our lives–granted, mostly for the better–and changing the media landscape at breakneck speed.
Within the last couple of weeks alone, The Times-Picayune in New Orleans told the world it will be cutting back its print editions to three days a week.  That same day, three other newspapers followed suit.  Like a tsunami, a few days later, a Canadian newspaper chain, Postmedia, announced that its three newspapers will be eliminating their Sunday editions.
These were not the first such actions, of course, but the pace of such change seems to be picking up speed.  The shift to online news certainly makes sense from an economic point of view. It’s just that it makes me sad and I would think that there are others like me that feel the same way.
But it’s not just about relaxing with the paper on Sunday mornings. It’s quality of content, as well as
quantity, with lost columns and generally fewer investigative pieces and features.  And add to that, perhaps saddest of all, is lost jobs.  When the change takes place at The Times-Picayune, expectations are that about a third of the journalists will be cut.
I’d like to think that in the biggest U.S. cities we’ll always have our Sunday papers.  But I guess
there’s a good chance that we will not. So as my psychotherapist wife repeatedly tells me, enjoy the moment. Sunday mornings may never be the same.


Roger Pondel,

Sleeping with the Enemy

Be honest.  How often do you check work email right before you go to sleep and then again soon after you wake up?

Android Email

Email apps are increasingly easy to check and use (Photo Source:

Does the paragraph above describe someone you know? Could that someone be you?  According to a recent story, it’s more common than you might think.  In fact, 72 percent of managers and professionals surveyed who work more than 50 hours per week check their smartphones every morning within an hour of waking up, while 62 percent check their devices before going to bed.
Such activity is not healthy for employees or employers, says Harvard Business School Professor Leslie Perlow. A few years ago, she conducted an experiment at Boston Consulting Group to help rid a small group of employees of the “always on” mentality. Each person took one night off from work by not responding to emails or answering calls from clients after leaving the office, instead letting other team members take care of any issues that came up.  After five weeks, the employees were happier and the quality of the team’s work went up, while the number of hours they put in at the office went down.
Steve Tobak, on the other hand, believes that a common sense approach to work-life balance is more realistic, and that one size does not fit all.  In other words, we must all make the decisions that work best for us.
I admit that I am a slave to my smartphone, but also believe it helps me do my job better.  I’d rather know at 5:30 a.m. that there is a problem awaiting my attention, so that when I arrive in the office I’m armed with information and have a leg up that will hopefully help make my day less stressful.  Just the same, knowing clients are happy before I got to bed helps me sleep better.
For me, and for the time being, that means sleeping with the enemy … my iPhone.


— Laurie Berman,

Resisting Temptation to “Like This”

No hoods

No Hoodies (source)

As I mulled this post while prying my seven-year-old out of bed this morning, I also wrestled with all of the brouhaha surrounding the pending Facebook IPO.  Something just did not sit right.  Then it hit me.  I have seen this show before.
Facebook’s global adulation is understandable, and well earned.  One in eight people on the
planet use it.  That’s an unfathomable audience that is now interconnected. But as the reports during the IPO process reach their crescendo, two large questions loom:  1) Does Facebook’s advertising really work; and 2) Should the company be valued at $100 billion?
Don’t get me wrong, I want to see the company succeed, badly.  I am dying for some good news.  But the more our collective anticipation builds, the more I worry.  Is there a clear rationale for this target valuation or is it hubris?  Are we more enamored of simply breaking an IPO record, or are investors using sane judgment?  And should California really be thinking it can potentially narrow its budget deficit with increased taxes from the many new resident millionaires that will materialize from this transaction?  I get the feeling we are putting too much value on this event, and we might be in for some disappointment.
As my son and I had our breakfast, an opinion piece in today’s Wall Street Journal titled “Jenkins:
The Zuckerberg Challenge
” sustained my anxiety.  The author too postulated that apart from enviable 2011 ad sale revenues totaling $3.2 billion, a chasm exists between this and Facebook’s estimated target valuation.  He also provides heaps of praise for the seemingly endless possibilities that lay before the company, which I can’t deny.
But as a newly public company, Facebook’s iconic leader Mark Zuckerberg will need to be more transparent with the company’s operations and growth strategies than ever before.  Demonstrating that its ad engine provides real value to its customers and a putting a keen focus on generating profits will be paramount. He now has to answer to many more people that own his baby, and should the stock price fall below the IPO level, the barbarians surely will arrive at the gate.  Which makes me wonder why the company is aiming for such an immediate high valuation in the first place.  “Under promise and over deliver” has been a mantra that has served many CEOs well.
As I make my final inspection of my son’s school clothes it also occurs to me that Mr. Zuckerberg might want to leave his signature hoodie at home and don a suit now and then. Growing up is hard, but if you want a $100 billion valuation, you need to play the part.


— PondelWilkinson,

Remembering George Rathmann

AMGen 1983 Logo

AMGen’s Logo in 1983 (Photo Source:

Thankfully, it’s not often that PWInsight publishes obituaries. But this week, George Rathmann, 84, the founder of Amgen, one of our early biotech client companies, died, and I cannot let his passing go without acknowledgment.
He led the push for groundbreaking drugs. He was a cheerleader for everyone who surrounded him.  He changed lives. And he never let his well-deserved medical celebrity go to his head.
“I’m George, not Dr. Rathmann,” he told me upon our first meeting in the late 1980s.   I vividly recall showing him a six-minute video we produced for investors about Amgen’s first-approved drug, Epogen, which treated severe anemia for kidney patients.  He wept.  And when we showed the film weeks later at an investor conference, he wept again.
George had soul. He is survived by his wife of 61 years, five children and 13 grandchildren.  Ironically, he developed kidney disease in his late 70s and took Epogen to help him survive.


Roger Pondel,

What They’re Still Sayin’ about Payin’

Say on Pay

Photo credit: Flickr, Tind

With proxy season nearly upon us, a couple of thoughts may be in order about Say on Pay, one year after
we first blogged about these new guidelines going into effect.
On the positive side, last year nearly all companies had their executive pay plans approved by at least a majority of their shareholders, according to a recent research report from IR Insight in a survey of 181 companies.  Moreover, the vast majority of the companies received a “yes” vote from 70 percent or more of their shareholders on their executive pay plans.
With only two companies surveyed receiving a majority of “no” votes, Say on Pay is nevertheless not lessening in importance.
“Egregious pay packages are by and large a thing of the past,” according to Robin Ferracone, a consultant with Farient Advisors, an independent executive compensation firm.  Ferracone believes that investors were “forgiving” last year.  She said institutional investors are set to grade companies’ pay plans “a lot harder” in 2012, although if companies’ performances and the markets improve, investors may not question executive pay much at all.
Narrowly approved pay plans may not be out of the woods.  Modest changes to the investor base could put these companies in jeopardy of receiving enough “no” votes to reject the pay plan.  Executive compensation experts advise corporate secretaries and investor relations officers to contact top holders at these companies to learn about investor concerns, and either explain the purpose of the questionable provisions, or modify the plan.
Going forward, the expectation is investors will more closely scrutinize how executive pay is
determined.  They want to see companies disclose how they have appropriately aligned performance with pay.  Ferracone believes this means more use of objective criteria, benchmarking and third-party diagnostic tools.
Finally, the SEC has delayed until the second half of 2012 the final rules on a number of pay disclosures under the Dodd-Frank Act.  Ira Kay, managing director at Pay Governance, a firm that provides independent executive compensation advice to boards, says the “pay versus performance” disclosure rules are difficult to craft, and the SEC may get ideas from companies tackling the issue on their own.  We’ll soon see.



This Time, It’s Real

On this, the first business day of the second quarter of 2012, everyone seems to be writing and talking about the spring in this year’s early spring.  No, not the weather, but the economy and how, this time, the rebound finally seems real and sustainable.
In early 2010, we, and most others, thought things were turning around.  We even asked our landlord about the two vacant offices adjacent to our suite in Century City.  Glad we didn’t sign on.
Then again in early 2011, the economy once again appeared to be heading in the right direction. But, alas, hopes were dashed, and it stalled again.
Today, it not only feels different, but the facts seem to be saying so, too.
Jobs are being created and unemployment is falling.  According to our client, Greg Palmer, CEO of staffing industry advisory firm Greg Palmer and Associates and his Palmer Forecast™, the use of temp help among businesses throughout the nation is on the rise, one indicator that good things are in store.
Last week, nine companies went public, the most IPOs in one week in more than 15 months.  More than 200 companies have filed with the SEC and are waiting in the wings.
Even James Surowiecki, who writes the Financial Page column in my favorite magazine, The New Yorker, recently wrote, “…there are at least a couple of reasons to think that, this time, we aren’t looking at a false spring.”
The two reasons, according to Surowiecki, are autos and housing.
Pent-up demand for autos is morphing into active demand.  Our client, the nation’s largest wheel manufacturer Superior Industries, is operating at near capacity.  And client Autobytel just recorded its first full year of net income since 2004 fueled by many positive changes within the company but also buoyed by the industry’s recovery.  New car sales fell from a pre-recession annual peak of 17 million to just over 10 million in 2009. The seasonally adjusted annualized (SAAR) forecast of new car sales for March is estimated at 14.3 million, down from last month, but up from 13.0 a year ago and the highest since August 2007.
As to real estate, things look better there, too. PondelWilkinson client Market Leader, which provides more than 100,000 real estate professionals throughout the United States and Canada with online technology and marketing solutions, delivered 39% revenue growth last year in what can conservatively be labeled a challenging, aka, stinky, environment.  The latest National Association of Realtors forecast predicts that existing home sales and prices, along with new home sales and housing starts all will be up for 2012 and will rise even more in 2013, with continued low (but climbing a little next year) mortgage rates.
The 2012 first quarter was outstanding in the stock market as well, to the tune of 900 points on the Dow.  In fact, it was the best Q1 for the Dow in 14 years and the best for NASDAQ in 21 years.
So welcome to Q2. Let’s all do our best to keep the momentum going and not let the media pundits in yesterday’s newspapers, television shows and blogs dampen our enthusiasm with their commentary about the prospect of a slip and the anxiety that is creeping back into the markets, as New York Times’ Nathaniel Popper and others  believe.  After all, yesterday was April’s Fool day.


— Roger Pondel,

Cash isn’t King

As companies dealt with the challenges of the most recent recession, many hoarded cash and strengthened their balance sheets.  According to CFO Magazine, cash reserves for U.S. nonfinancial companies now total nearly $2 trillion.  With the economy seemingly on slightly better ground, are they now ready to deploy this cash rather than save for the next rainy day?
Forty one percent of nearly 1,000 financial services, consumer and industrial products, technology, media and telecommunications banking and securities, and energy and resources industry professionals said their companies plan to dip into their cash reserves and resume spending in 2012.  The
Deloitte survey results showed that planned uses of cash include acquisitions, capital budget increases, share repurchases, one-time dividend payments or dividend increases.  Even Apple, who has amassed an incredible $98 billion in cash after years of spending reluctance, may be reconsidering its strategy.
Interestingly, one-third of those surveyed by Deloitte believe that investors want them to conserve their cash instead of spending it.  This didn’t appear true last April when one hedge fund manager told the Associated Press that “We’ve been in a bunker mentaility for too long,” and the Chairman and CEO of Legg Mason commented that, “The best use of cash is to deploy it.”  Or in a survey conducted by The Boston Consulting Group in May, where investment community respondents noted that the time had come for companies to start utilizing cash to create shareholder value by investing in profitable growth opportunities or returning it directly to shareholders.
Only time will tell if the purse strings have been loosened, but it seems as if that’s just what may be needed to help stimulate the economy.


Laurie Berman,

Greed: Good or Evil?

Cover of Wall Street (20th Anniversary Edition)

Economists persuasively argue that greed encourages effort, discovery, invention – it motivates us to take risks, come up with new products, enter new markets and make enterprises more efficient. Soon after the memorable line, “Greed is Good, Greed is Right, Greed Works,” was uttered in the movie “Wall Street,” much was and continues to be written about the economic and psychological impact of greed.
Evolution may have programmed us to be greedy, since greed keeps us motivated to achieve a genuine state of happiness, according to Jay Phelan, an economist, biologist, and co-author of Mean Genes.  Echoing that thought, some psychologists say greed is the only consistent human motivation.
Today, however, increasing numbers of mental-health professionals are saying that greed is not nearly as good for people as it is for economies.  Some have begun warning that greed is beginning to overwhelm conscience, reason, compassion and family bonds.  Psychologist David Farrugia sees greed as a mistaken, empty and shortsighted goal that contains many seeds of destruction.  In his article, Selfishness, Greed, and Counseling, Farrugia says, “a chronic orientation toward greed has been shown to result in inflexibility and diminished reality testing.”
This likely explains the brazenness of Bernie Madoff, Raj Rajaratan and, now, the seven defendants recently charged in the U.S. District Court in Manhattan by Federal authorities with securities fraud involving insider trading.
SEC Enforcement Director Robert Khuzami said, “These are not low-level employees succumbing to temptation by seizing a chance opportunity, [but] …. sophisticated players who built a corrupt network to systematically and methodically obtain and exploit illegal inside information again and again.”
Bottom line:  While greed may indeed drive us in ways that have positive effects on behavior, it also has proven to wreak havoc and shatter lives.