Entrepreneur Alert: Not to Go Public?

Jimmy John’s, the sandwich chain with about 2,300 restaurants across the U.S., has shelved plans for an initial public offering.

Chief Executive Officer Jimmy John Liautaud, a majority owner of the company, said he spent the past two years talking to bankers and exploring an IPO before deciding that he wanted to stay focused on running the business he founded in 1983.

Liautaud, who didn’t attend college, opened the first Jimmy John’s in Charleston, Illinois, after graduating from high school. The 51-year-old expects the chain to finish the year with more than $2 billion in sales. It has 51 company-owned stores, with the rest operated by franchisees. Private-equity firm Weston Presidio bought 28 percent of Jimmy John’s in 2007 and still owns the stake, Liautaud said.

Jimmy John’s had been pursuing an IPO and had scheduled road-show meetings. Morgan Stanley was serving as the lead book runner for the deal, which would have valued Jimmy John’s at about $2 billion, the website said.

The road show never happened, and Liautaud scrapped the IPO plan in October because he wanted to focus on managing the sandwich chain in what’s become a tough climate for restaurants. The decision wasn’t based on conditions in the IPO market, the company said.

The chain, which had early success opening near college campuses and staying open late, is currently making an expansion push in California. An additional 1,300 restaurants are slated to open in the U.S. over the next five years, Liautaud said.

“I need to be here balancing all the dishes that are spinning,” he said.

Jimmy Johns Independent

Entrepreneur Alert: Climate Change in Politics of Myanmar

Start up opportunities as climate changes in Myanmar’s political landscape.

Myanmar-startups.com present the Rice Bowl Startup Awards held during the ASEAN Entrepreneurship Summit in Kuala Lumpur, November this year. It is the first ASEAN award that recognizes breakout startups that harness technology innovatively. What sets the awards apart from other accolades is that they are developmental in nature and focus on enhancing the nominees and giving them regional exposure.

Can We Kickstart Stagnation by Investing in Clean Energy?

Can we kickstart economic stagnation with investments in clean energy?

Dean Baker writes:   As the world prepares for another round of climate negotiations in Paris starting Nov. 30, it is worth repeating a few simple points.

It is becoming increasingly obvious that the world is already paying a substantial price for global warming. Sure, extreme weather events will never come with a stamp that says “caused by global warming.” But we know that global warming will change weather patterns in ways that are not entirely predictable. That means that we will see unusual weather events where global warming was likely a factor, but we can never know for certain.

One of the leading candidates in this respect is the extreme drought that afflicted Syria in the last decade, destroying much of its agriculture and leading to a mass migration to its cities. This migration was likely a factor in the unrest that led the country’s civil war starting in 2011. Syria’s conflict in turn has led to hundreds of thousands of deaths, the displacement of millions, and of course the rise of the Islamic State in Iraq and the Levant (ISIL).

It is likely that we will see, or are already seeing, other weather disruptions with comparable human consequences. Unfortunately, there has been much attention to low-lying and relatively sparsely populated islands as the main victims of global warming. In fact, there will almost certainly be hundreds of times more victims in relatively densely populated areas facing droughts or countries such as Bangladesh, which could be hit by devastating floods.

The time has long since passed for arguing about whether global warming is happening or whether the consequences will be serious. The question is what we are prepared to do about it. Here also, we have seen reality largely turned on its head.

Most countries are still suffering from the fallout of the Great Recession. They are struggling to contain budget deficits even as their economies remain well below full employment. This creates a situation where the leaders planning to meet in Paris are looking to address climate change on the cheap.

This logic is 100 percent backwards. The economic problem that the United States, most of Europe, Japan and even China now face is secular stagnation. This is a prolonged period of inadequate demand. The constraint on further output in all of these places is not the limit of the economy’s ability to produce goods and services, but rather of the demand for goods and services.

We should be paying for India and other developing countries to build out a modern electric grid that is based on clean energy.

This is a problem for which measures to confront climate change present an obvious solution. We know that reducing greenhouse gases (GHG) to acceptable levels is a massive undertaking. It will take an enormous amount of capital and labor to make our homes and businesses more energy efficient, and to convert them to clean sources of energy as quickly as possible. The same applies to our transportation network: We have to promote mass transit and make all of our transportation vehicles cleaner.

This can be done, though it costs money. But the story that is missed is that secular stagnation means we have the money. The resources are the unemployed and underemployed workers who could be employed in this massive undertaking. In terms of money, contrary to the whining of the deficit hawks, there are no practical limits to how much the United States, Europe and Japan can borrow right now. We hit limits on our ability to borrow when the economy is near full employment, not when there are still large numbers of unemployed workers.

It’s not necessary to take my word on this issue; the financial markets are saying the same thing. Long-term interest rates in the United States remain at extraordinarily low levels. The major European countries face long-term interest rates of less than 1.0 percent. And that debt-ridden basket case Japan has to pay a tiny 0.3 percent interest rate on its long-term debt. These markets are telling us that we can borrow hundreds of billions more each year to address global warming or other major needs.

There is one other point that is worth noting in this context. We should want to reduce GHG emissions at the lowest possible cost. Since it doesn’t matter for the environment whether the GHG comes from the U.S. or India, it would make sense to reduce emissions in the places where we get the greatest reductions per dollar.

That would mean having the U.S. and other wealthy countries pay developing countries to reduce their GHG emissions. We should be paying for India and other developing countries to build out a modern electric grid that is based on clean energy. That would be enormously beneficial to these countries, since they desperately need more energy, but it would also be beneficial to the wealthy countries, since we could avoid an enormous amount of coal usage. And paying India to develop clean energy should even help create jobs in the U.S., although the route is a bit circuitous.

Anyhow, this would be an obvious case where we could do something that would be very good for people in the developing world and for the U.S. economy today, and hugely important for all of our children and grandchildren in the years to come. Unfortunately, when we have a Congress controlled by people who doubt evolution or question whether global warming is happening because they are not scientists, we may not make much progress along.

Entrepreneur Alert: High Tech Toilets?

Luxury toilets a big item for big spenders.

Guarded by heavy metal gates, it feels like a secret base in the heart of Tokyo. Inside a typical office building in the Akihabara district is a high-tech factory that is created for use by anyone with innovative ideas.

To the uninitiated, a makerspace is a physical housing area (it could be a library or a community centre, for instance) that provides technology, manufacturing equipment and/or educational opportunities to the public.

Here the Toto electric toilet seat with water spray feature was created.

Japan has long pioneered high-tech toilets. This one allows users to check blood pressure, urine protein, weight and body fat on the control panel.

Is this an opportunity for creative entrepreneurs around the world?

High Tech Toilets

118 Years to Cure Gender Pay Gap?

Will it take 118 years to close the women’s pay gap?

A recent report from the World Economic Forum suggests this time frame.

It says progress on closing the gap has stalled in recent years at a time when more women are entering the workplace.

In fact, nearly a quarter of a billion more women are in the global workforce today than a decade ago.

In several countries, more women are now going to university than men but – crucially – this is not necessarily translating into more women occupying skilled roles or leadership positions.

The WEF report looks at whether men and women have the same rights and opportunities in each country in four areas: health, education, economic participation and political empowerment.

Gender Pay Gap

Financial Regulation for Crowdfunding?

Robert Shiller writes:  If one were seeking a perfect example of why it’s so hard to make financial markets work well, one would not have to look further than the difficulties and controversies surrounding crowdfunding in the United States. After deliberating for more than three years, the US Securities and Exchange Commission (SEC) last month issued a final rule that will allow true crowdfunding; and yet the new regulatory framework still falls far short of what’s needed to boost crowdfunding worldwide.

True crowdfunding, or equity crowdfunding, refers to the activities of online platforms that sell shares of startup companies directly to large numbers of small investors, bypassing traditional venture capital or investment banking.

Regulators outside the US have often been more accommodating, and some crowdfunding platforms are already operating. For example, Symbid in the Netherlands and Crowdcube in the United Kingdom were both founded in 2011. But crowdfunding is still not a major factor in world markets. And that will not change without adequate – and innovative – financial regulation.

There is a conceptual barrier to understanding the problems that officials might face in regulating crowdfunding, owing to the failure of prevailing economic models to account for the manipulative and devious aspects of human behavior. Economists typically describe people’s rational, honest side, but ignore their duplicity. As a result, they underestimate the downside risks of crowdsourcing.

The risks consist not so much in outright fraud – big lies that would be jailable offenses – as in more subtle forms of deception. It may well be open deception, with promoters steering gullible amateurs around a business plan’s fatal flaw, or disclosing it only grudgingly or in the fine print.

It is not that people are completely dishonest. On the contrary, they typically pride themselves on integrity. It’s just that their integrity suffers little lapses here and there – and not always so little in aggregate.

The SEC’s new rules for crowdfunding are complex, because they address a complicated problem. The concept underlying crowdfunding is the dispersal of information across millions of people. Most people, even the cleverest, cannot grasp the next breakthrough business opportunity. Those who can are dispersed.

The problem is that the promise of genuine “unique information” comes with the reality of vulnerability to deception. That’s why channeling dispersed knowledge into new businesses requires a regulatory framework that favors the genuinely enlightened and honest. Unfortunately, the SEC’s new crowdsourcing rules don’t go as far as they should.

The SEC with rulemaking for crowdfunding platforms specified that no startup can use them to raise more than $1 million a year. This is practically worthless in terms of limiting the scope for deception. In fact, including this provision was a serious mistake, and needs to be corrected with new legislation. A million dollars is not enough, and the cap will tend to limit crowdfunding to small ideas.

Some of the SEC rules do work against deception. Notably, crowdfunding platforms must provide communication channels “through which investors can communicate with one another and with representatives of the issuer about offerings made available.”

That is a good rule, fundamental to the entire idea of crowdfunding. But the SEC could do more than just avow its belief in “uncensored and transparent crowd discussions.” It should require that the intermediary sponsoring a platform install a surveillance system to guard against interference and shills offering phony comments.

The SEC and other regulators could go even further. They could nudge intermediaries to create a platform that summarizes commenters’ record and reputation. Indeed, why not pay commenters who accumulate “likes” or whose comments on issuers turn out to be valuable in light of evidence of those enterprises’ subsequent success?

For the financial system as a whole, success ultimately depends on trust and confidence, both of which, like suspicion and fear, are highly contagious. That’s why, if crowdfunding is to reach its global potential, crowdphishing must be prevented from the outset. Regulators need to get the rules right (and it would help if they hurried up about it).

crowdfunding-featured5

Entrepreneur Alert: Doing Business in Mexico

The Mexican economy is growing, slowly but surely.

A Dallas Federal Reserve Reports indicates: Mexico’s economy continued growing in the third quarter. The government’s monthly gross domestic product (GDP) measure increased in July and August. In addition, recent data on exports, employment, retail sales and industrial production are all up. Inflation appears firmly under control despite the peso’s depreciation against the dollar. The consensus 2015 GDP growth forecast held steady in September at 2.3 percent.

Mexico’s Global Economic Activity Index, the monthly proxy for GDP, grew 0.4 percent in August after increasing 0.1 percent in July. The three-month moving average shows steady growth since the end of 2013 (Chart 1). Service-related activities (including trade and transportation) increased 0.5 percent in August, while goods-producing industries (including manufacturing, construction and utilities) grew 0.2 percent. Agricultural output expanded 6.6 percent. Official estimates of third-quarter GDP will be released Nov. 21. Mexico GDP grew 1.9 percent (annualized) in the first half of the year.

Exports grew 1 percent in September after dropping 6.4 percent in August. The three-month moving average of exports stabilized after declining for several months (Chart 2). Oil exports improved in late spring due to a slight recovery in oil prices; however, the trend was quickly reversed. Total exports were down 3 percent and oil exports were off 45 percent in the first nine months of 2015 compared with the same period a year ago. Manufacturing exports were up 2.3 percent year over year in September.

Mexico industrial production (IP) growth is recovering after pausing earlier in the year. Total IP – which includes manufacturing, construction, oil and gas extraction, and utilities – inched up 0.2 percent in August. Three-month moving averages show a turnaround in total IP (Chart 3). In addition, manufacturing IP continues on an upward trend. Meanwhile, U.S. IP fell 0.2 percent in September.

Retail sales rose 0.5 percent in July after growing 1.2 percent in June. The three-month moving average shows strong growth over the first seven months of the year (Chart 4). Year over year, retail sales are up 5 percent. However, consumer confidence worsened in August and September.

Formal-sector employment – jobs with government benefits and pensions – rose at an annualized rate of 3.7 percent in September (Chart 5). Year to date, employment is up an annualized 4.2 percent, which is about the same as the 2014 annual job growth rate.

The peso held steady against the dollar in October, when the exchange rate averaged 16.6 pesos per dollar versus 16.9 in September (Chart 6). The peso has lost 19 percent of its value against the dollar over the past 12 months. The Mexican currency has been unstable, in part due to the expectation of an increase in U.S. interest rates and the impact of falling oil prices on Mexico’s government finances. Oil revenues account for about a third of the federal government budget.

Inflation in September fell to 2.5 percent year over year (Chart 7), logging its fifth straight month at a rate below the central bank’s long-term inflation target of 3 percent. Consumer prices excluding food and energy rose 2.4 percent. Banco de México has kept the policy rate at 3 percent since June 2014 based on the belief that inflation expectations are well-anchored. However, policymakers have noted their intent to raise interest rates as soon as the Federal Reserve tightens U.S. monetary policy. Their objective is to prevent further deterioration of the peso, which could push up inflation.

Mexico Grows Slwly

Entrepreneur Alert: US Iconic products by state

Entrepreneur alert:   The iconic product of each state in the United States:

Alabama, cotton; Alaska, Salmon: Arizona, copper; Arkansas, broilers; California, wine; Colorado, Marijuana; Delaware, corporations; Florida, oranges; Georgia, peaches; Hawaii, pineapples; Idaho, potatoes; Illinois, farm equipment; Indiana, limestone; Iowa, corn; Kansas, wheat; Kentucky, bourbon whiskey; Louisiana, shrimp; Maine, lobsters; Maryland, crabs; Massachusetts, cranberries; Michigan, cars; Minnesota, butter; Mississippi, catfish; Missouri, beer; Montana; precious metals; Nebraska, beef; Nevada, casinos; New Hampshire, granite; New Jersey, salt water taffy; New Mexico, chile peppers; New York, apples; North Carolina, textiles; North Dakota, sunflowers; Ohio, rubber; Oklahoma, wind power; Oregon, sneakers; Pennsylvania, steel; Rhode Island, steamers; South Carolina, boiled peanuts; South Dakota, pork; Tennessee, whiskey; Texas, petroleum; Utah, candy; Vermont, maple syrup; Virginia, tobacco; Washington, airplanes; west Virginia,coal; Wisconsin, cheese; Wyoming, horses.

Where in the USA?

South Africa Needs to Play Catchup

Acha Leke and Michael Katz write:  A paradox of Sub-Saharan Africa’s rapid economic expansion is the fact that the region’s most sophisticated economy seems not to be part of it. Since 2008, South Africa has recorded average annual GDP growth of just 1.8%, less than half the rate of the previous five years. Sub-Saharan Africa is porjected to grow at a rate of close to 5% next year, but South Africa is projected at about 1% growth. More worrying still, the country’s 25% unemployment rate  is one of the highest in the world.

Countries across the continent are constructing the roads, ports, power stations, schools, and hospitals.  They need to sustain their growth and meet the needs of their fast-growing and urbanizing populations.  They need most of all is expertise.

But while South Africa has highly capable architecture, construction, and engineering sectors, its current share of foreign-built projects in Sub-Saharan Africa stands at only 7%, compared to 32% for China.

The opportunities are not limited to the construction industry. South Africa has the know-how to meet Africa’s burgeoning need for a wide range of services, from banking and insurance to retail and transport. The country currently provides only 2% of Sub-Saharan Africa’s service imports – a market worth some $40 billion annually.

South Africa is home to several well-established, innovative banks that are well placed to offer low-cost, digital services to millions of currently unbanked African households and businesses. Indeed, South African banks already command a 12% share of Sub-Saharan Africa’s banking market.

South Africa has a highly developed insurance sector, with a long history of creating products for every demographic and income level. It is ideally placed to provide insurance to the rest of Sub-Saharan Africa, where just 1% of households have insurance of any kind.

South Africa also has been punching below its weight in merchandise trade.

The key to reigniting South Africa’s economic growth is an ambitious regional strategy driven by government and business leaders working in partnership. A massive scale-up of vocational education is particularly important, as this will provide young South Africans with the technical skills needed to support the expansion of export industries. Putting in place infrastructure to support growth – notably power generation, which currently lags demand – will also be crucial.

South Africa’s economic transformation since its transition to democracy two decades ago has been remarkable. But its renaissance is in danger of running out of steam. Only by boldly seizing the initiative can South Africa put itself at the core of Africa’s economic renewal, and only by embracing its role as regional leader can it revitalize its own prospects.

African growth?

 

Entpreneur Alert: The Rich Get More Comfortable

Cessna is building roomier, more comfortable jets for bigwigs.  Long gone are the days when steel CEO’s flew coach.

Textron Inc.’s Cessna probably will introduce its largest-ever business jet next week to meet customers’ demand for roomier, more-comfortable cabins and longer range.

The new plane is expected to fly as far as 4,000 nautical miles (7,400 kilometers), giving it the ability to make international trips, and resurrects a concept that was abandoned during the 2009 recession.

Cessna also may unveil changes to the Longitude, which has been the biggest plane on the company’s books since its 2012 introduction but hasn’t yet been built. Vincent said the range would be cut 15 percent to 3,400 nautical miles and the engines switched to Honeywell International Inc. models from Safran SA. Textron, Honeywell and Safran spokesmen declined to comment.

A revised Longitude probably will remain a $26 million aircraft, while the new plane may be priced at $30 million to $35 million.

The new plane’s ceiling will be taller than the 6-foot (1.8-meter) cabin in Cessna’s Latitude Being able to stand upright is a crucial sales point for buyers shelling out millions for the convenience and luxury of private aircraft.

Large and midsize models have led a rebound in the business-jet market since the global financial crisis. Cessna already has revamped its smaller jet lineup to fight a sales decline caused by the economic slump and the entry of Brazil’s Embraer into corporate aviation a decade ago.

Cessna’s new jet would enable customers to “move up the food chain to a larger plane” and take advantage of financial troubles at Bombardier, which got a bailout from Quebec’s government because of delays to the C Series jetliner program, Foley said.

New models have been a hallmark of Scott Donnelly’s tenure since he came to Textron in 2009 from General Electric.

More comfortable jets