Wednesday, June 29, 2011
With a concentration of start-ups just behind that of Silicon Valley and an impressive pool of engineers, Israel is becoming the new standard for high-tech, with a unique business model.
Internet-related activities contributed 9 billion euros (12.6 billion dollars) to the Israeli economy in 2009, representing 6.5 percent of GDP, according to a report from management consultancy McKinsey.
The sector is worth more than the construction industry (5.4 percent of GDP) and almost as much as health (6.8 percent).
The web economy has also created a total of 120,000 jobs, accounting for 4 percent of the country's workforce, McKinsey says.
From Microsoft to Intel through Google, IBM and Philips, almost all the giants of the Internet and technology have set up important research and development centres in Israel, spawning products and systems used worldwide.
"Israel is the country with the most engineers in its population, and it ranks second behind the United States in the number of companies listed on Nasdaq," said David Kadouch, product manager at Google Israel, which opened its R&D operation in 2007 and currently has 200 employees.
"It's really a second Silicon Valley. Besides the multinationals, all the major American investment funds are present," he said.
"The scientific community is very active, there is plenty of manpower and especially an entrepreneurial culture. There is a huge ecosystem around high tech, and what is fundamental is that here we think global."
Some 500 start-ups are created every year in the country of 7.7 million people, which grew by 4.7 percent last year according to the Organisation for Economic Cooperation and Development against an average of 2.8 for its member countries.
The OECD forecast for Israel in 2011 is 5.4 percent.
Israel's higher education institutions, particularly the Technion, the prestigious technological university in the northern city of Haifa, must take a large share of the credit for this creativity.
"All the groups have set up subsidiaries here because of the proximity of the talents of the Technion university where there are (people with) excellent CVs," said Yoel Maarek, president of Yahoo Research Israel, which employs about 50 people.
"I myself have studied at the school of bridge engineering in France but when IBM hired me it was thanks to my degree from the Technion," he said.
The huge Technion campus comprising 19 schools for 12,000 students trained 70 percent of the country's current engineers and 80 percent of the executives of Israeli companies listed on Nasdaq.
"Many students... are already snapped up by large foreign companies," said Ilan Marek, professor of chemistry at the Technion.
"In the early 2000s, we broke down the barriers between the four classical branches of science, allowing the students to move between fields and have a more global vision," he said.
"The key to the development of a country is to train leaders in science."
Saul Singer, co-author with Dan Senor of the book "Start-up Nation: The Story of Israel's Economic Miracle," believes the often maverick nature of many Israelis also plays a role.
"The lack of respect for authority is typical in Israel, it's a cultural thing, in line with start-up creating. There is no authority, it is very informal. There are two big factors, drive and determination, and taking risks. We have a very exciting business model," he said.
"In Israel there is a constant struggle with all kinds of adversity," he added. "These adversities are a source of creation and energy. Israel is a country with a purpose, a mission."
Monday, June 27, 2011
Mansukhbhai does not hug trees, protests or debates. He is a simple potter, with a big green innovation to his name: Mitticool, a refrigerator that runs without electricity. He retails Mitticool all over India for Rs. 2,500 apiece.
It took him four years to get the combination right, mixing and churning different types of clay in different proportions.
He hit the jackpot with an unusual addition of sawdust and sand, which makes the soil porous and the interiors cold.
His inspiration came from a tragedy that shook the entire nation: The Gujarat Earthquake of 2001.
''Journalists came and photographed our broken matkas. They referred to them as the poor man's fridge. I thought why can't we make a real fridge with the same cooling principle?" said Prajapati Mansukhbhai Raghavjibhai, Creator, Mitticool.
From manufacturing to packaging, to R&D Mitticool is a one-man initiative.
''It keeps the water cool. Vegetables kept inside it can last up to a week," said Prajapati Mansukhbhai Raghavjibhai, Creator, Mitticool.
Mansukhbhai sells 50 to 70 Mitticools a month. His biggest markets are Chennai and Hyderabad.
Under this brand name he is also producing water filters, pressure cookers, and non-stick tawas all made of clay.
Retail giants like Big Bazaar are wooing him, but Mansukhbhai is worried that it may push up his prices and the whole idea of Mitticool for the poor may fail.
Now with his new innovations he wants to ensure safe and clean drinking water for all.
Rumours are rife that Deutsche Mark may be re-introduced in Germany and the Euro shelved as the country's currency, a media report said.
There is speculation that Deutsche Mark bank notes are being printed again in preparation for ditching the euro; it's said that Germany's Central bank, Bundesbank, has been ordered to print marks as part of contingency plans to leave Europe's single currency, the Daily Express reported.
Since its introduction in 1999, the euro has had a tough time trying to win over a sceptical German public, who saw the mark - one of the world's most stable currencies - as a symbol of post-World War II prosperity, second only to the US dollar as the reserve option for investors.
In fact, according to a survey, almost three-quarters of Germans now doubt that the euro has a future. They also believe rescue attempts are futile as billions more euros will be paid to bail out Greece which is almost bankrupt.
The poll by German newspaper, the Frankfurter Allgemeine, found 71 per cent had "doubt", "no trust" or thought there is "no future" for the euro. Only 19 per cent expressed "confidence" in it. Sixty eight per cent said they did not think the emergency bail-out of Greece would work.
A separate poll last week showed more than half of Germans thought that Greece should be thrown out of the euro.
WHEN I started writing this column almost three years ago, one of my goals was to figure out what the wealthiest Americans knew and pass along those lessons to middle- and upper-middle-class readers.
Recently, I put that idea to the test, spending the afternoon in a Manhattan town house with eight wealthy men who are all members of an investment club called Tiger 21. I was there to hear an unvarnished critique of how my wife and I save, spend and think about money.
Each of the 180 members of Tiger 21 has a net worth of at least $10 million, pays $30,000 in annual membership fees and commits to spending one day a month with other members. Nearly all of them made their money — they didn’t inherit it — and most are men.
I had asked to sit in on one of the group’s signature sessions, the portfolio defense, but a few weeks ago, the members invited me to be in the hot seat. I jumped at the chance. Beyond looking at how money is invested, the portfolio defense is intended to force members to discuss their wealth in the broadest terms.
I had heard horror stories. One member was told he needed to lose a lot of weight if he was going to get people to invest in his new fund. Another was chastised for telling his children that he had lost his money in the financial crash so that he would not have to talk to them about his immense wealth.
Michael Sonnenfeldt, the founder of Tiger 21, used the term “carefrontation” to describe what happens in a portfolio defense. The assessments are meant to be direct, unsettling and possibly painful to hear, Mr. Sonnenfeldt told me. But the goal is to get members to think differently about what they are doing with their investments and about everything in their lives that is affected by their wealth, from their family to charities.
“It’s not meant for the faint-hearted,” Mr. Sonnenfeldt said. “This is a process that some people could clearly find offensive or discomforting.”
What I experienced was rough, but it was also thought-provoking. The value to me — and to anyone given a similar opportunity — was that the members challenged everything about my assumptions on saving and spending. Here’s some of what I took away.
OUR MISTAKES In the week leading up to this, I worked with Joel Treisman, an executive coach and the chairman of one of Tiger’s 17 groups, to gather up all of our financial reports.
I was confident that the group would think my wife and I were in good financial shape. We save a good percentage of our income. We don’t have any debt beyond mortgages and a car payment. We probably spend a bit too much on food and pet care, but we don’t run up credit card bills to do it.
The members were warm and welcoming as we filled our plates with poached salmon, grilled asparagus and buffalo mozzarella from the buffet. But as soon as we were seated, it was all business. And I was immediately on the defensive. There were two big surprises but also blunt advice and some thoughtful questions about our portfolio.
First, the surprises. The group agreed that we did not have enough life or disability insurance. We both have insurance that would cover about three or four years of earnings if one of us died. This seemed sufficient to get past a few years of sorting things out. The group disagreed. Going from two incomes to one would mean a radical rethinking of our life.
We needed more sizable policies to give us the freedom to sort through things. Though we both carry disability insurance, the policies are old and do not reflect our current income. They would also cover only 50 to 60 percent of our old base salaries. The members thought we should buy individual policies to add to this.
The second surprise was about our savings. We have been saving about 15 percent of our post-tax income. Alan Mantell, a lawyer who made his money in real estate, development and investment, said the issue was not how much we saved but how we thought about spending.
“You need to ask, ‘What can I afford to spend versus what do I need to spend?’ ” he said. We could be saving more money for retirement — or in case something bad happens — if we cut back on things we did not really need, he said.
All the members agreed that we should sell our vacation condominium. “You need to become more liquid,” said Thomas Gallagher, the former vice chairman of CIBC World Markets. “If something bad happens, it’s easy to get rid of a dog walker; it’s hard to get rid of a house in Naples.”
Florida real estate is in a sad state, so I asked what they would do with an offer that was less than our mortgage?
“Take it,” Mr. Gallagher said. “Write the check and be done with it.”
As for our portfolio of stocks and bonds, the questions were more basic. Leslie C. Quick III, whose money came from Quick & Reilly, the discount brokerage firm, looked at our investments — 50 percent in equities, 34 percent in fixed income, 12 percent in commodities and real estate and 4 percent in cash — and wanted to know how our investment manager had done in the bear market. He also thought we should ask our adviser how he balances the risks in our jobs against those in our portfolio.
OUR SOLUTIONS Because I had parachuted into Tiger 21 for one meeting, I was taken aback by the group’s brutal honesty. I walked out after three hours in a daze. Over the next couple of days, though, I concluded that the members had made some great points.
Some solutions were simple. We can increase our term life insurance for comparatively little money — $1 million of term life costs about $700 a year. Individual disability policies cost more. Barry Lundquist, president of the Council for Disability Awareness, said the yearly premium would usually be 1 to 3 percent of a person’s salary, but the payout would still be limited to a percentage of that person’s income.
As for our portfolio, I put the questions to our adviser, K. C. King of Emerson Investment Management. I liked that he did not sidestep the bear market question: Emerson’s portfolios did better than the benchmarks in 2008, but they lost value like everything other than cash, gold and Treasuries.
Where I took comfort, though, was in how he thought about our portfolio. “We’re very mindful that what we’re managing for you and most of our clients is their core portfolio,” Mr. King said. “If someone said from the Tiger group that this is fairly conservative and you’re not taking big swings, we’d say you’re right. This is the portfolio that we’re trying to keep for your daughter’s education and into your retirement.”
The issue that Mr. Mantell raised about spending is the thorniest one. My wife and I are under no illusions that having a condo in Florida makes financial sense. Trimming spending in other places is easier: Walking the dogs ourselves, for instance, would save $100 a week or $5,200 a year.
In the end, though, there are such radical differences between the wealth of the Tiger members and most Americans that some of their advice could not apply.
Mr. Sonnenfeldt estimated that 90 percent of Tiger members had paid off the mortgages on all of their homes.
They also tend to view money as something to preserve rather than accumulate. Mr. Sonnenfeldt said members spent about 3 percent of their wealth annually, which allowed the principal to continue to grow. But at the $10 million entry level, this would mean $300,000 a year.
Perhaps most important, none of the members became rich by eating out less. They became rich by working in industries that paid extremely well or by building businesses that they later sold.
Still, what was best about the session was that no one pulled any punches. Their honesty forced us to think hard about the assumptions we were making. Yes, it was difficult. But really, who wouldn’t want advice from those who have made it?
Wednesday, June 22, 2011
$100,000 can buy many things: a brand new sports car, a boat, or a ridiculously luxurious vacation, just to name a few. But if you already have a new Audi in your driveway, a yacht at the marina, and just got back from a trip around the world, perhaps you'd rather drop your cold hard cash on a limited edition iridium razor. The pricey item is crafted by Zafirro, a company which seems to have just one product in its lineup, and just 99 of the "Zafirro Iridium" razors will be made.
The handle of the razor is made entirely of iridium, an extremely scarce and expensive metal that is so dense it could survive a drop into molten lava. Most iridium that appears on Earth is the result of crashed meteorites. The blades of the beast are made from artificially grown sapphire, making them hypoallergenic, not to mention many orders of magnitude sharper than your average Bic. The company boasts a 10-year blade life, and backs it up with free sharpening for a decade if the razor ever dulls.
The Zafirro Iridium, while promising "generations" of enjoyable use, is clearly made for the millionaire who already has everything. The company says the upgrade from a traditional razor to the $100,000 model is like changing from a CB radio to an iPhone, but unless your morning shave takes place at the mouth of a volcano, we're not sure it's worth it.
Thursday, June 16, 2011
US technology pioneer IBM turns 100 years old on Thursday and while "Big Blue" is no longer the dominant player in the computer industry it remains a force to be reckoned with.
With a market capitalization of $197 billion, IBM is the world's 14th most valuable technology company, well behind California gadget-maker Apple's $304 billion but close to software giant Microsoft's $201 billion.
Thomas Misa, a history of science and technology professor at the University of Minnesota, credits IBM's longevity to its "mastery of getting information processing power into users' hands in a form that they need and want."
"They did this in the 1930s with punch-card tabulation machines and they are doing the same, essentially, with the post-1993 shift to information services," Misa said.
While its ancestry stretches back to the 19th century, IBM dates its birth to the June 16, 1911 merger of three firms: the Tabulating Machine Co., the International Time Recording Co. and the Computing Scale Co. of America.
Thomas Watson Sr., the man credited with building IBM into a powerhouse, joined the new company, Computing-Tabulating-Recording Co. (CTR) in 1914 and renamed it International Business Machines Corp. in 1924.
Over the years, rivals have mocked IBM's corporate culture of conformity but that has not stopped the Armonk, New York, company from being at the forefront of technological innovation.
IBM claims to hold more US patents than any other company and five of its employees have won Nobel prizes for physics.
Dag Spicer, senior curator of the Computer History Museum in Mountain View, California, said IBM's success can be traced in part to its readiness to take "big gambles."
"During the Depression, Tom Watson kept making machines even though there was no market," Spicer said.
"In 1935, FDR (president Franklin Delano Roosevelt) passed the Social Security Act. The law passed and IBM was the only company that had the equipment ready to go," he said.
Thomas Watson Jr., who took over the presidency of IBM in 1952 from his father, embarked on a huge gamble of his own in 1964, Spicer said.
"Tom Watson Jr decided to bet essentially the whole company -- $5 billion, probably the equivalent of $100 billion today -- on a new computer system, the System/360," he said. "It made all of IBM's products obsolete.
"The System/360 was the most successful mainframe computer of all time, sealing the blue letters IBM in the public imagination," he said.
IBM was unable, however, to emulate its success with mainframe computers with personal computers and the company struggled in the late 1980s and early 1990s.
"Microsoft and Intel were the big winners in the personal computer market, which IBM defined but did not long dominate," Misa said.
IBM sold its PC division to China's Lenovo in 2005 for $1.25 billion.
IBM's comeback came with a strategic shift to software and services and the company posted revenue of $99.9 billion in 2010.
IBM also grabbed headlines earlier this year when an IBM computer called Watson handily defeated two human champions on the popular US television game show "Jeopardy!" in a triumph of artificial intelligence.
Watson's triumph came 14 years after an IBM computer named Deep Blue defeated world chess champion Garry Kasparov in a closely-watched, six-game match.
Tuesday, June 14, 2011
For years, scientists have been predicting the Sun would by around 2012 move into solar maximum, a period of intense flares and sunspot activity, but lately a curious calm has suggested quite the opposite.
According to three studies released in the United States on Tuesday, experts believe the familiar sunspot cycle may be shutting down and heading toward a pattern of inactivity unseen since the 17th century.
The signs include a missing jet stream, fading spots, and slower activity near the poles, said experts from the National Solar Observatory and Air Force Research Laboratory.
"This is highly unusual and unexpected," said Frank Hill, associate director of the NSO's Solar Synoptic Network, as the findings of the three studies were presented at the annual meeting of the American Astronomical Society's Solar Physics Division in Las Cruces, New Mexico.
"But the fact that three completely different views of the Sun point in the same direction is a powerful indicator that the sunspot cycle may be going into hibernation."
Solar activity tends to rise and fall every 11 years or so. The solar maximum and solar minimum each mark about half the interval of the magnetic pole reversal on the Sun, which happens every 22 years.
Hill said the current cycle, number 24, "may be the last normal one for some time and the next one, cycle 25, may not happen for some time.
"This is important because the solar cycle causes space weather which affects modern technology and may contribute to climate change," he told reporters.
Experts are now probing whether this period of inactivity could be a second Maunder Minimum, which was a 70-year period when hardly any sunspots were observed between 1645-1715, a period known as the "Little Ice Age."
"If we are right, this could be the last solar maximum we'll see for a few decades. That would affect everything from space exploration to Earth's climate," said Hill.
Solar flares and eruptions can send highly charged particles hurtling toward Earth and interfere with satellite communications, GPS systems and even airline controls.
Geomagnetic forces have been known to occasionally garble the world's modern gadgetry, and warnings were issued as recently as last week when a moderate solar flare sent a coronal mass ejection in the Earth's direction.
The temperature change associated with any reduction in sunspot activity would likely be minimal and may not be enough to offset the impact of greenhouse gases on global warming, according to scientists who have published recent papers on the topic.
"Recent solar 11-year cycles are associated empirically with changes in global surface temperature of 0.1 Celsius," said Judith Lean, a solar physicist with the US Naval Research Laboratory.
If the cycle were to stop or slow down, the small fluctuation in temperature would do the same, eliminating the slightly cooler effect of a solar minimum compared to the warmer solar maximum. The phenomenon was witnessed during the descending phase of the last solar cycle.
This "cancelled part of the greenhouse gas warming of the period 2000-2008, causing the net global surface temperature to remain approximately flat -- and leading to the big debate of why the Earth hadn't (been) warming in the past decade," Lean, who was not involved in the three studies presented, said in an email to AFP.
A study in the March 2010 issue of Geophysical Research Letters explored what effect an extended solar minimum might have, and found no more than a 0.3 Celsius dip by 2100 compared to normal solar fluctuations.
"A new Maunder-type solar activity minimum cannot offset the global warming caused by human greenhouse gas emissions," wrote authors Georg Feulner and Stefan Rahmstorf, noting that forecasts by the Intergovernmental Panel on Climate Change have found a range of 3.7 Celsius to 4.5 Celsius rise by this century's end compared to the latter half of the 20th century.
"Moreover, any offset of global warming due to a grand minimum of solar activity would be merely a temporary effect, since the distinct solar minima during the last millennium typically lasted for only several decades or a century at most."
Monday, June 13, 2011
Social network Facebook is likely to go public in the first quarter of next year with a valuation of over $100 billion, the CNBC business news network reported on Monday.
Facebook chief executive Mark Zuckerberg has repeatedly said he is in no hurry to take the social network public but CNBC said the company may be forced to do so by Securities and Exchange Commission (SEC) regulations.
CNBC said Facebook's decision to conduct an initial public offering could be triggered by an SEC requirement that companies with more than 500 private investors must disclose financial information.
The network, citing "people familiar with the matter," said Facebook will likely report it has crossed that threshold at the end of this year.
The so-called "500 rule" requires private companies to release quarterly financial reports like public companies.
Facebook is also facing pressure from employees who are not allowed to sell their shares on private exchanges such as SharesPost, where Facebook has been given a valuation of as high as $85 billion, CNBC said.
It said Facebook's valuation was expected to be above $100 billion when an IPO takes place next year.
Saturday, June 11, 2011
An anonymous bidder agreed Friday to pay more than $2.6 million for a lunch with billionaire investor Warren Buffett, offering a final amount after the auction closed that topped last year's bid that set a record for the most expensive charity item ever sold on eBay.
When online bidding ended Friday night, the high bid fell short of the record, standing at $2,345,678. However, organizers say the bidder wanted to spend more to top last year's $2.6 million and settled on a final amount of $2,626,411.
The amount isn't considered a bidding record for eBay's charity auctions because the record total was only surpassed after bidding had closed, eBay spokeswoman Lonnie Shekhtman said.
All proceeds go to the Glide Foundation, which provides social services to the poor and homeless in San Francisco.
Buffett will spend several hours discussing whatever it is the winner would like to talk about, traditionally at New York's Smith and Wollensky steak house. The only topics the billionaire chairman and CEO of Berkshire Hathaway will not broach are potential future investments.
"I've met a lot of nice people through this," Buffett said.
Last year's record-setting auction was won by an anonymous American who placed the $2.6 million bid. The most expensive item ever sold on eBay was a jet that drew $4.9 million, eBay spokeswoman Amanda Miller said.
In 2009, Canadian investment firm Salida Capital paid $1.68 million to dine with Buffett. In 2008, a Chinese investment fund manager paid $2.11 million.
The annual lunch auction is a huge revenue generator at Glide, which operates on a $17 million annual budget. The charity estimates that Buffett has raised nearly $9 million over the past 12 years through auctioned lunches.
Buffett's late first wife, Susan, introduced him to Glide's founder, the Rev. Cecil Williams.
Buffett has been slowly giving away the bulk of his fortune since 2006. The plans to eventually divide most of his shares of Berkshire stock between five charitable foundations, with the largest chunk going to the Bill & Melinda Gates Foundation.
Buffett company owns roughly 80 subsidiaries including insurance, furniture, clothing, jewelry and candy companies, restaurants and natural gas and corporate jet firms, and has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co.
Friday, June 10, 2011
Canada gave a new push to Indo-Canada trade relations when it announced a new visa regime that would allow Indians 10-year multiple entry visas to the country.
The announcement was made by the Canadian Minister of International Trade and Minister for the Asia-Pacific Gateway Edward Fast at the roundtable discussion with high-level representatives of the Indian government and business community at the two-day mini PBD Canada 2011 convention, a day for Overseas Indians.
The minister said that the new visa regime would accelerate bilateral trade and investment and cultural bonds.
The convention is being organised here for the first time by the Government of India and the Indo-Canada Chamber of Commerce and the High Commission of India as part of the celebrations to mark the Year of India in Canada.
Minister of State for External Affairs Preneet Kaur, who is leading the Indian delegation to the convention of the Indian-origin people settled in North America and the Caribbean, said that both countries were committed to strengthen and deepen their bilateral trade.
She said India and Canada aim at a bilateral trade target of US $15 billion in the next five years. Both countries were in talks for a Comprehensive Economic Partnership Agreement (CEPA) that would yield significant economic benefit and lower tariff on a large number of products for both the countries.
Kaur said that the India-Canada relations had undergone a "sea change" recently. On November 12, 2010, Prime Minister Manmohan Singh and his Canadian counterpart Stephen Harper announced the launch of talks on the CEPA.
"A Comprehensive Economic Partnership Agreement is an free trade agreement (FTA) from Indian perspective. It is aimed at promoting market opening policies and stands to become one of the most important building blocks in constructing a broader and deeper bilateral relationship," she said.
S M Gavai, the High Commissioner of India, said that the new 10 years multiple entry visa would help to meet the longstanding demand of Indians businesses and others who would like to come Canada frequently and would help in 'Building Bridges' between the two countries.
The PBD-Canada 2011 is a conference that brings more than 1500 high-level business and government delegates together, in Canada. It comes just a few weeks before the Bollywood Oscars in Toronto, whose TV audience of 700 million will put Canada, however briefly, at the centre of Indian cultural consciousness.
Thursday, June 9, 2011
As one nation after another has battled uprisings across the Arab world, the one major country spared is also its richest -- Saudi Arabia, where a fresh infusion of money has so far bought order.
The kingdom is spending $130 billion to pump up salaries, build housing and finance religious organizations, among other outlays, effectively neutralizing most opposition. King Abdullah began wielding his checkbook right after leaders in Tunisia and Egypt fell, seeking to placate the public and reward a loyal religious establishment. The king's reserves, swollen by more than $214 billion in oil revenue last year, have insulated the royal family from widespread demands for change even while some discontent simmers.
Saudi Arabia has also relied on its unusually close alliance with the religious establishment that has long helped preserve the power of the royal family. The grand mufti, the highest religious official in the kingdom, rolled out a fatwa saying Islam forbade street protests, and clerics hammered at that message in their Friday sermons.
But the first line of defense in this case was the public aid package. King Abdullah paid an extra two months' salary to government employees and spent $70 billion alone for 500,000 units of low-income housing. As a reward to the religious establishment, he allocated about $200 million to their organizations, including the religious police. Clerics opposed to democratic changes crowed that they had won a great victory over liberal intellectuals.
"They don't care about the security of the country, all they care about is the mingling of genders -- they want girls to drive cars, they want to go the beaches to see girls in bathing suits!" roared Mohamed al-Areefy, a popular young cleric, in a recent Friday sermon.
Financial support to organizations that intellectuals dislike "was a way to cut out their tongues," he said.
Saudi Arabia, a close ally of the United States, has struggled to preserve what remains of a regional dynamic upended by the Arab Spring -- buttressing monarchies and blocking Iran from gaining influence.
While the United States has pressed other Arab nations to embrace democratic changes, it has remained largely silent on Saudi Arabia and the kingdom's efforts to squelch popular revolts in neighboring Bahrain and Oman.
Saudi Arabia's efforts have succeeded in the short run, at home and in its Persian Gulf backyard. But some critics call its strategy of effectively buying off public opinion unsustainable because it fails to address underlying problems.
"The problem is that some leaders do not understand what is going on and do not learn the lessons while these things are unfolding in front of their eyes; they do not learn the lessons of history," said Prince Talal bin Abdul Aziz, 79, a brother of the king.
The prince, whose 14 living children include the billionaire investor Prince Alwaleed bin Talal, said: "These people want to preserve their power, their money and their prestige, so they want to keep the status quo. They are afraid of the word change. This is a problem because they are shortsighted, but the difficulty is I don't know how to change their way of thinking."
The monarchy has not completely escaped calls for change. There have been at least three petitions, with a group of youths and even some members of the Sahwa, the staunchly conservative religious movement, calling for an elected consultative council.
The only major street protest scheduled for March 11 largely fizzled -- its organizers were anonymous, and its stated goal of toppling the government lacked broad appeal. In the largely Shiite eastern provinces, though, police officers arrested scores of protesters.
The ruling princes have also moved against dissent in other ways, like imposing a new press law with punishments including a roughly $140,000 fine for vaguely defined crimes like threatening national security.
Saudis of all stripes say that they are less concerned about democratic elections than about fixing chronic problems, including the lack of housing, unemployment that is officially 10 percent but likely 20 percent or more, corruption, bureaucratic incompetence and transparency on oil revenues.
The demand for change in the kingdom long ago evolved into a struggle between puritans and progressives over the country's future. So the debate prompted by the Arab uprisings is coursing through familiar battle lines here that pit Saudi against Saudi rather than Saudis against their government.
The ruling Saud clan has maintained absolute power by ensuring it remains the sole referee in that tussle, so change must emerge from the top.
But even senior princes doubt that the very top is interested. The four or five senior royals with real power have also been slowed by illness.
"Unfortunately, there is a minority in the royal family who doesn't want to change; they are a minority, but they are influential," said Prince Talal, long the family gadfly, nicknamed the "Red Prince" in the 1960s.
King Abdullah, 87, is personally widely popular as a kind of national grandfather. His government has put in place what Saudi activists describe as random acts of reform -- like improving elementary school education to include English and better science.
Elections for more than 200 municipal councils, postponed since 2009, have been rescheduled for Sept. 29. The councils have little power and half their members are appointed, so many Saudis consider them an empty democratic facade.
Women who organized a campaign starting more than year ago to win the right to vote were particularly incensed when the government rolled out an old excuse to ban their participation -- the difficulty of separating polling stations by gender, as custom dictates.
But other groups hope to capitalize on the opening the election could provide. A group called Jidda Youth to the Municipal Council, designed to win a youth seat, has spread to other cities. Some 7,000 young people in Jidda turned out spontaneously as volunteers when floods devastated the city in January, killing 13 people. Fouad al-Farhan, a founder of Jidda Youth and a well-known blogger, said grass-roots action like that is the taproot of change, although forming public organizations remains illegal.
"We want to say that we are a third voice; we are so bored of this game of liberals versus conservatives," he said.
The open question is what kind of impact they will have. Among a group of former political prisoners who gather regularly, there is a measure of bitterness that years of confronting the monarchy has not changed much.
"They are frustrated and disappointed," Mohammad F. Qahtani, a human rights activist, said of the men. "They feel that they made one sacrifice after another. They went to jail multiple times, and there has been no response from the public."
Monday, June 6, 2011
The man who could make more than $4 billion from the initial public offering of Groupon Inc. is an 41-year-old, unassuming Midwesterner who got his start selling carpets on the street.
Eric Lefkofsky, who seeded Groupon with its first $1 million in 2008, shot to business fame this week when the e-commerce company filed for one of the most hotly-anticipated IPOs of the year. Mr. Lefkofsky was listed as Groupon's largest shareholder, with 21% of the shares--three times as much as Andrew Mason, the CEO and public face of the company.
If Groupon, which offers daily deals on goods and services to consumers in partnership with local merchants, is valued at the expected $20 billion or more, Mr. Lefkofsky's $1 million investment will be worth about $4 billion.
Yet for Mr. Lefkofsky, Groupon wasn't a one-off in the lottery of high-tech wealth. It was an extension of a lifetime of starting and selling companies-- sometimes with mixed results. The process has led him to a set of guiding business principles: Enter big, fast-growing markets, change course when things aren't working and use data as your guide.
"In our current environment, business and customers are changing so much faster than in the old days," he said in an interview. "You need access to information to figure out what to do next."
Mr. Lefkofsky, executive chairman of Groupon's board, is a rare mix of Midwestern modesty and Silicon Valley obsessiveness. He lives just outside Chicago with his wife and kids, staying close to his roots in suburban Michigan. He hates flying and travels for business only four to six times a year. He doesn't own a vacation home. His sartorial signature is a sweater vest, which he wears every day for precisely seven months a year to shield him from the harsh Chicago winters. Between April 1 and November 1, he switches to button-downs.
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Unlike Apple Inc.'s Steve Jobs with his famous black mock turtlenecks, Mr. Lefkofsky varies the colors of his vests.
He and his wife collect contemporary art, including works by Cindy Sherman and Richard Prince. He arrives at work every day at 6 a.m. and is home at around 6 p.m., rarely if ever, working on weekends or evenings. His office, in a former Montgomery Ward warehouse with exposed concrete walls, is one flight up from Groupon's.
Friends say Mr. Lefkofsky analyzes and de-constructs everything--sometimes to a comical degree.
"When you sit down with Eric, you know that within 10 minutes, he'll stand up, grab a magic marker and start writing on the white board," said Ted Leonsis, the former AOL executive, who is a Groupon board member and friend of Mr. Lefkofsky's. "It doesn't matter what the subject is. He could be talking about what we're going to have for dessert, he'd say 'Well, we could have cake, or we could have pie, and here are the issues,' and he'd write it on the board."
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Mr. Lefkofsky grew up in what he calls a "Brady Bunch" world, in a harmonious, middle-class family in Southfield, Mich. His father was an engineer, his mother was a school teacher. He was a unremarkable student in high-school and showed little interest in technology or business, he said.
"I was your typical confused high-school student, lost and insecure," he said.
In his freshman year at the University of Michigan, where he majored in history, he was dumped by his girlfriend. Searching for a distraction, he started selling carpet discarded by a company owned by a friend's father. The buyers were mostly students looking for cheap furnishing for their dorm rooms. He discovered his "fascination with money" and business, he said. He expanded to other universities, making $100,000 a year while still in college.
"I realized I had this propensity and knack for business," he said.
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After college, he and a friend, Brad Keywell, took advantage of the booming leveraged buyout business to borrow millions and buy Brandon Apparel Group, which made licensed children's clothing. The company eventually shut down under heavy debt and poor sales. Their second venture, an Internet firm called StarBelly, a promotional products company, was sold to a company that later went bankrupt.
Mr. Lefkofsky and Mr. Keywell went on to three companies after 2001: InnerWorkings, a print outsourcing company, Echo Global Logistics, which manages transportation systems for companies, and MediaBank, which helps buyers manage ad spending.
Mr. Lefkofsky can't talk about Groupon, given regulatory restrictions during the IPO process. His role in the company started when Mr. Mason, the founder, was a young tech whiz working at InnerWorkings. Mr. Lefkofsky became Mr. Mason's mentor and friend.
When Mr. Mason had an idea for a company that could organize group actions around social or political causes, Mr. Lefkofsky and Mr. Keywell invested $1 million to launch the company, which morphed into Groupon.
Mr. Lefkofsky made millions when Innerworkings and Echo went public, and he has already cashed out more than $300 million of Groupon stock as the company sold shares to outside investors. Because of his existing wealth, he said, the Groupon IPO windfall won't bring big changes to his life.
"Once you've reached a level where you're able to do the things you want to do, you stop focusing on the number," he said. "At some point, you just stop counting."
He says his focus is on Groupon and the more than 20 companies he and Mr. Keywell have funded through their $100 million fund, called Lightbank. While he's hopeful about their prospects, he said the chances of scoring another Groupon are slim.
"For that to happen, I would have to find another Andrew Mason," he said. "I've needed the magic of Andrew to create this kind of value."