If You Can’t Beat ‘Em, Buy ‘Em Out

A gleeful businessman with a suitcase full of money.

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It’s not an uncommon occurrence: two companies duking it out in the marketplace, their battle only ending when one buys out the other. Whether it’s GoDaddy buying up European rivals to expand its reach or Billtrust taking its competition, Invoice Connection, out of the game to do away with constant low ball pricing scares, there are plenty of reasons why a company might choose to buy out a rival.

Of course, ideally, the situation is more of an amicable, strategic merger. San Francisco investment banker Thom Weisel is no stranger to this sort of development: his Montgomery Securities was sold to NationsBank in 1997, and in April of 2010, Stifel Financial purchased Thomas Weisel Group.

Montgomery Securities, a privately held investment bank that focused on lucrative IPOs of high tech companies, ultimately became a subsidiary of NationsBank called NationsBanc Montgomery Securities Inc. Weisel continued to serve as the unit’s chairman. This came after Weisel announced several months earlier that Montgomery was looking for strategic partners. So rather than a foundation of anger and distrust, this deal was made based on a desire for compromise.

“The combination of our two companies is a great fit and will allow us to reach our goal of providing one-stop shopping to our clients,” Weisel said at the time.

As for Stifel’s acquisition of Thomas Weisel Partners, the all-stock transaction, involving more than $300 million, definitely sweetened the deal. And while Stifel did basically buy Thomas Weisel Partners out, Stifel made the purchased investment bank a fairly autonomous subsidiary with Weisel himself a co-chairman of the board.

Unfortunately, not all buyouts are this smooth. Flint Lane’s Billtrust, an electronic and paper billing service aimed at plumbing, electrical, and lumber supply wholesalers, suffered from years of bitter rivalry with Invoice Connection, a rival company who consistently went after Billtrust’s clients by offering much lower prices.

Still, Lane wasn’t going to let the simmering animosity affect his business decisions. He met with Invoice Connection co-founder Earl Beutler, and on June 6, 2011, the two companies signed a letter of intent for Billtrust to buy out Invoice Connection. The deal closed in September of that year.

The world of mergers and acquisitions is, at least in theory, a realm of utmost professionalism. Companies make decisions about expanding, partnering, and buying based on the market and what’s best for each individual business. But there’s always the cutthroat underbelly, where sometimes the best solution to the problem of competition is to…well, buy it out. No matter what unpleasantness may (or may not) occur during the actual handoff, the positive outcomes are usually worth it: the subsequently formed businesses are stronger and can offer their clients more services and opportunities.

So in the end, having a rival might not be such a bad thing after all.

Print Media Isn’t Dying

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For a while there, everybody was concerned that print media was going extinct because people were reading newspapers and books online. That’s turning out to be a false alarm though, as several studies have shown that physical books are experiencing a resurge in popularity.

Newspapers, which have been seen as struggling in the digital age, are also doing fine (at least in the United Kingdom, anyway). According to a recent study, print newspapers are more popular than their digital counterparts, with readers spending 89% of their time with print editions and only 4% and 7% with web and mobile versions.

Other studies have shown that in Germany, print newspapers are 38% more likely to be used as a weekly news source than the web, while in the U.K. that number is only 13%. The authors of the British study think that German readers could spend even more time with their print papers. So while not everybody is reading print newspapers, or maybe newspapers at all, those that are seem to prefer print.

What this tells us is that digital technology hasn’t been as “disruptive” as we’d thought (disruptive in this case meaning that it would kill print media). The people lamenting the death of print media have mostly been people who were slow to embrace digital media in the first place. But there’s no reason that print and digital media can’t coexist, since they serve different purposes for different people.

Could print media eventually die out? Sure, but that’s still a ways down the road. In the meantime, it’s here to stay.

What does that mean for publishers, whether that be books, newspapers, magazines, or comics? It means that they need to pay attention to the way readers actually engage. Better than wasting their time trying to find ways to hinder digital media, they should find ways to work with it, or to find audiences that prefer print products they already make. Adaptability, and paying attention to what’s actually happening, is key here.

Study Shows That People With ADHD Add Value to Business

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There are numerous traits associated with entrepreneurial success, including risk taking, passion, persistence, and time commitment. But these traits are also associated with something else: ADHD. Most of us are used to hearing ADHD discussed as a problem, making it hard for students or workers to focus. But that’s only because we’re used to discussing ADHD in the context of structured environments that expect the same thing from everyone.

New evidence gathered from an international study found that, “some of the symptoms of ADHD resemble behaviors commonly associated with entrepreneurship—in a positive sense.” Some of the symptoms even had “a decisive impact on the subjects’ decision to go into business and on their entrepreneurial approach.”

These symptoms include impulsiveness, which allowed the study participants to make decisions without getting bogged down by details and concerns. Additionally, their boredom with their jobs often led them to start their own businesses. Hyper-focus allowed them to hone in on a task and really go after it, which contributed as well to their high activity level. But all of these pros could just as easily become cons, such as when impulsiveness makes it difficult to focus on routine tasks like bookkeeping.

It’s worth nothing that not all ADHD participants were successful, and sometimes their businesses failed, but so do a lot of business, regardless of who starts them. What this study does is gives us a new light in which to look at both entrepreneurship and ADHD, which should help us develop better understandings of both.

The markers by which we measure the success of a business might not be telling us everything about what makes a successful business, or who should start one. And by finding these connections to their symptoms, we can take a more positive look at ADHD as something other than a problem. It’s not something that needs to be treated or cured, but something that people need to learn how to make work to their advantage.

Breakthroughs in Understanding Social Hierarchies Lead to Advanced AI

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Social hierarchies are important, especially in the workplace where understanding the chain of command is crucial. Workers need to know who they can turn to for help, who they have to watch out for, and who they need to take orders from. This is a learning process that can take a while, but a study by researchers from London College and DeepMind have found that it is a process that makes significant use of the prefrontal cortex of the brain.

Researchers had participants undergo an fMRI while they imagined themselves as employees at a fictional company. Researchers then had the participants watch video interactions between “coworkers” to determine who “won” those interactions. Whoever won the interaction was determined to have more power in the hierarchy. Participants also watched similar videos but this time, they were asked to imagine their friend as an employee there. The findings show that we’re better at understanding the hierarchies to which we belong than those of others, which makes sense.

So what good is this research? Knowing what part of the brain is used in learning something that we pick up more or less “by instinct” may not sound immediately useful, but that’s because it’s part of a long-term project to help develop better artificial intelligence. That’s what DeepMind works on, actually.

DeepMind is trying to develop AI that can be applied to “some of the world’s most intractable problems.” If you’ve ever seen a movie about a robot, you know how hard it is for them to understand humans. By having a better idea of how our brains process human interactions, we can develop AI systems that better understand human interactions. Along the way, perhaps future research in this area will help us to better understand how we interact and maybe get a head start on fixing those problems before the robots are ready to help.

Private Equity Tycoon Reveals How He Turned His Company into a $90 Billion Business

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Everybody loves a good story about the American Dream, and this one’s pretty big. In a recent interview with Institutional Investor, American financier Henry Kravis gave the inside scoop on how he built one of the biggest private equity firms in the world.

It all started in 1976, when Henry Kravis and his cousin, George Roberts, decided to start their own investment company. Both men were 32 years old at the time. With limited financial resources, they each invested $10,000 into the company. Their partner, Jerome Kohlberg, was about 20 years older and was able to put $100,000 into the company.

Their strategy was to build a company with a unique workplace culture. Both Kravis and Roberts had worked for global investment bank Bear Stearns in the past, which Kravis described as being an “eat what you kill” environment. Kravis and his partners decided very early on that they didn’t want that type of culture, so they set out to design a company that was centered on active involvement and collaboration.

“We set a firm up that everyone would participate in everything we did, and that way we got everybody to work together. And today, 40 years later, that’s the same kind of culture that we have,” Kravis stated.

Being the optimists that they are, Kravis and his partners set an extremely high goal for themselves: raise $25 million. But they soon figured out that they couldn’t raise $25 million on terms that were acceptable to them. So they decided to regroup and set the bar a little lower: raise $500,000 to cover overhead costs.

“And so we said, ‘okay. Let’s go out to have a group of individuals that will put up $50,000 each for a commitment for five years, and if they put that kind of money up, we’ll show them every deal we do. They can come in or not come into the deal, but if they come in, we want 20% of the profits.’”

And that’s how KKR was born. Kravis says that to this day, neither he, Roberts, or Kohlberg have needed to put another penny into the company. With just $120,000, the three of them built the second largest private equity firm in the world, managing a total of more than $90 billion in assets.

Using Export Complexity to Explain Income Inequality

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Researchers from MIT have developed a new method for predicting the economic success of countries around the world: the complexity of that country’s export economy. For the last decade or so, Professor César Hidalgo and his colleagues have been doing research and writing papers to back up this idea. They argue that “not just [the] diversity but the expertise and technological infrastructure required to produce [exports] is a better predictor of future economic growth than factors economists have historically focused on, such as capital and education.”

And what’s more, the most recent research shows that this complexity can also say a lot about income equality in those countries as well. Basically, countries with greater export complexity have lower income inequality because there are more workers in more industries that are generating exports and, subsequently, income. Looking at data collected between 1963 and 2008, researchers found that “countries whose economic complexity increased, such as South Korea, saw reductions in income inequality, while countries whose economic complexity decreased, such as Norway, saw income inequality increase.”

This research comes at a time of renewed interest, both politically and scientifically, in the issue of income inequality in many parts of the world. There are a number of factors that can be used to determine the current or future success of an economy, but not all of those factors are equally important. Relying solely on GDP, which is often the case, is much less useful than combining it with export complexity, education, and population. However, relying just on export complexity seems to work almost as well as using all of the aforementioned methods.

This development could be extremely useful to both governments and businesses in the future, as they seek to do right by their citizens and employees, respectively. Essentially, finding a new niche isn’t just good for a company, but it can help the country as well.

Burger King Buys Popeyes Chicken

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Restaurant Brands International, the company that owns Burger King, will be buying Popeyes Louisiana Kitchen for $1.8 billion. Popeyes is known for its Cajun cuisine and extremely popular fried chicken which can be found in its 2,600 restaurants worldwide.

Daniel Schwartz, CEO of Restaurant Brands International, is excited about the new venture.

“RBI is adding a brand that has a distinctive position within a compelling segment and strong U.S. and international prospects for growth,” he said in a statement. “As Popeyes becomes part of the RBI family we believe we can deliver growth and opportunities for all of our stakeholders including our valued employees and franchisees. We look forward to taking an already very strong brand and accelerating its pace of growth and opening new restaurants in the U.S. and around the world.”

Restaurant Brands International is already doing well in the fast food market due to Burger King’s rising sales, but this Popeyes purchase can make it a formidable opponent in the fried chicken arena, where KFC is still king. Wall Street seems to think it has a chance. As of Tuesday morning, the company’s value rose 19% (up from Friday’s closing numbers), bringing Popeyes’ stock up to $79 per share.

Popeyes was founded in the early 1970s in New Orleans, and has since become a staple for chicken lovers in more than 25 countries. Cheryl Bachelder, CEO of Popeyes, is just as excited as Schwartz when it comes to the RBI/Popeyes partnership.

“As Popeyes enters its 45th year,” she said, “it’s success reflects the amazing brand entrusted to us by founder Al Copeland, Sr. and the unique high trust partnership that we enjoy with our franchise owners. RBI has observed our success and seen the opportunity for exceptional future unit growth in the U.S. and around the world.

Restaurant Brands International also owns Tim Horton’s, the Canadian coffee and doughnut chain.

Sleep and Exercise Help Mitigate Mistreatment at Work

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The sad reality is that a lot of people work in environments that leave them feeling stressed out. Unfortunately, that stress can easily spill over into their home lives, making it difficult for the people who live with them. But there could be a relatively simple solution to this problem. It turns out that getting enough sleep and exercise “promotes healthy brain functions needed to properly regulate emotions and behavior.”

In a study, participants who burned an extra 587 calories in a day reduced the “harmful effects of mistreatment” and avoided “carrying [it] into the home.” When people are mistreated at work, they tend to carry that with them, which impacts how they interact with spouses, children, and other cohabitants.

However, getting enough sleep in the first place, and taking about 10,900 steps in a day, mitigates the danger of “passing along” that mistreatment. It allows one to better regulate one’s emotions and realize that trouble at work is not the fault of a spouse or child.

As the first study of its kind, it does pose some interesting questions that more research will be needed to explore. But it’s something that people in toxic work environments might consider. We all know that exercise and sleep are good for us, but this research gives us an extra goal for that exercise.

While what qualifies as “enough sleep” generally varies from person to person, a goal of 10,900 steps in a day is a little more concrete in terms of exercise. The CDC and American Heart Association have both been recommending between 8,000 and 10,000 steps anyway, so if one is already taking that advice, adding a few thousand more shouldn’t be that hard.

Of course, changing one’s life to adapt to a toxic workplace might not be the best advice, but some people can’t leave such work environments. Obviously bosses and coworkers shouldn’t mistreat people, but that is unlikely to change. In the meantime though, finding ways to mitigate the effects of toxic workplaces can go a long way.

Researchers Discover New Flexible Material with Numerous Applications

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Photo courtesy of Brookhaven National Laboratory at Flickr Creative Commons.

The phrase “near-perfect broadband absorption from hyperbolic metamaterial nanoparticles” sounds like some Star Trek “technobabble.” But believe it or not, it’s actually the title of a real paper. In the paper, researchers from UC San Diego’s Jacob’s School of Engineering describe a new material that is thin, flexible, and transparent, with some pretty cool capabilities.

The material absorbs light and, more than that, can essentially be “programmed” when made to absorb different wavelengths of light. This could allow for “transparent window coatings that keep buildings and cars cool on sunny days,” or “devices that could more than triple solar cell efficiencies.”

Imagine a window that keeps a building cool, cutting down on AC costs, while still allowing through the kinds of radio waves that we use for TV, radio, and broadband. Alternatively, the window could be used to block these radio waves, or to prevent heat generated inside the building from escaping. There are a lot of potential uses for the material, which is still early in the development phase. But for now it’s only being made in very small quantities to test out the various capabilities of the material.

Researchers are still figuring out how to scale up production. Because they’re using complex nanotubes and silicon substrates and other advanced technologies, scaling up will take some effort. While these kinds of techniques are becoming increasingly common, they’ve been limited to nanomaterials, which are called that for a reason.

So far we haven’t used these technologies on anything near so big as a plate glass window, but there’s no reason to think that they wouldn’t work. Most likely, as the researchers figure out how to scale up and make things like windows and such, they’ll run into some production issues, but that’s what research and experimentation is for, to figure out how to make something like this work.

Online Ads Result in Offline Sales

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The question of whether or not online ads are a worthwhile investment is one that plagues many companies. Unless customers are clicking on ads and those ads are directly resulting in a sale, its hard to gauge whether or not they’re beneficial. That’s where statistics and experiments come in, which can help make more sense of online advertising. But there’s still a gap in the data, namely, how do you know if online ads are working if the vast majority of your sales are in-store?

To investigate that question, researchers from the University of Rochester, Netflix, and Pandora worked with Yahoo! and an unspecified clothing retailer to figure out how effective that retailer’s online ads were. It turns out that, according to the data, they’re pretty effective. On average, the ads increased revenue by 3.6%.

While that may not sound like a lot, it’s actually about three times what the company spent on those ads, which is a really good return on investment. What’s really interesting though, is that about 84% of in-store sales increases came directly from online ads. In other words, the ads were working and driving people to the physical stores, instead of driving them to the online store.

There are likely a few reasons behind that, which may not be applicable to all retailers. Shopping for clothes is, generally speaking, a more personal experience than shopping for home goods or books. Buying clothes generally requires trying them on, unless you have a very good understanding of how a specific company sizes and cuts their clothing.

So while people might buy books and movies online with no worry, a lot of them seem to be still buying clothes in stores. But the online advertisements are still working, because those same people are spending enough time online that this is where the ads are having the most effect.

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