A blog about business and economics.

Oct. 31 2014 12:34 PM

How to Get Your $3 Burrito From Chipotle on Halloween

Happy Halloween! Here at Slate's Moneybox, we are always in favor of getting into the holiday spirit with a Halloween costume. But if you aren't much for festivities, here's another reason to dress up: It's your ticket to a $3 burrito at Chipotle.

Once again, Chipotle is bringing back its "boorito" event to celebrate Halloween. The rules are simple. Show up to any Chipotle in a costume from 5 p.m. on and you can purchase a burrito, burrito bowl, salad, or order of tacos for only $3. Chipotle will donate up to $1 million in proceeds from the day to benefit the Chipotle Cultivate Foundation, a nonprofit focused on food health and sustainability.

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The Chipotle boorito has come a long way since its humble beginnings. Back in 2008, the boorito was free but you had to dress as a burrito to get it. Many a college student would invest in reams of tin foil to wrap themselves for the complimentary item, then pass off their silver casing for another friend to don and do the same. (An excellent demonstration of this endeavor is available on YouTube.)

The boorito was $2 in 2012 and $3 last year, and it's surprising that Chipotle is keeping the price steady: Prices on its normal menu have increased on average 4 percent for chicken and 8 percent for beef this year amid rising food costs. In Manhattan, some burritos now go for nearly $9. (So note to New Yorkers: That $3 deal is especially good!)

The only thing that remains unclear is whether Chipotle is throwing in the guacamole with its boorito promotion. We've reached out to their team and will update if we hear back on this crucial point. In the meantime, costume up, go forth, and get your booritos.

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Oct. 30 2014 3:49 PM

How to Scale Your Artisanal Business in Four Easy Steps

This article originally appeared in Inc.

It's hard to shake a handcrafted, locally sourced stick these days without hitting a new artisanal business. Demand for makers' goods is booming; just look at online crafts marketplace Etsy, which helped artisans sell more than $1.4 billion worth of goods last year. That's more than triple its 2010 sales.

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The maker movement has been fueled by a new crop of entrepreneurs set on building their own futures, one carefully crafted product at a time. But expanding these detail-oriented businesses can be particularly tricky, whether you're selling homemade pickles or hipster-friendly denim jackets. Too many small companies promise more than they can deliver and flame out early because they can't meet demand or maintain their quality standards. But some makers have cracked the code on how to scale up while safeguarding their artisanal practices. This is what they've learned.

Pick the right partners

When Caroline Z Hurley got her first big order for her eponymous textiles at a trade show in 2011, she quickly found she wasn't equipped to fulfill it. But a trip to India made her realize that the obvious outsourcing option would have created more problems than it solved: She doesn't repeat patterns or sell enough to meet the large-scale minimums at the factory she visited, making long-distance production pricey and impractical. So Hurley hired a consultant, who eventually led her to a small factory in New Bedford, Massachusetts. The factory is staffed by expert weavers and embroiderers from Guatemala, whom Hurley trained in her textile printing methods. Now she visits New Bedford every three to four months to check on production, and to share the new designs that she creates back in Brooklyn.

Know your capacity

AHeirloom became one of the top sellers on Etsy in 2010, after it started selling wooden cutting boards shaped like the 50 states; each board is engraved with small details, like stars to mark individual towns. This customization helped AHeirloom break through—but after its boards made it into the New York Times and onto The Rachael Ray Show, co-owners and spouses Amy Stringer-Mowat and Bill Mowat realized they were stretched too thin.* "Our first Christmas we had to stop taking orders on December 5," says Mowat, who has since streamlined his customization system and created a database of existing designs to save production time. "With the computer script, it takes 10 seconds to lay out 200 orders," he says, "whereas before I drew everything in the drawing software." He's still cautious about selling more than he can make: "Know what you can do, and then stop after that."

Tell a social media story

Andrew Livingston and his partners raised $16,000 on Kickstarter to help their menswear startup, Knickerbocker Manufacturing, take over the lease of a sewing factory in Queens. That historic factory and its decades-old sewing machines have become a big part of Knickerbocker's social media story; the startup has an in-house photographer and brought in a cinematographer to produce short films, which are promoted on Vimeo, Twitter, and Instagram. Livingston says that social media focus has helped sales and especially Knickerbocker's branding: "We market our process first, then the goods."

Some bureaucracy can help

It may be anathema to makers of small-scale crafts, but an official standard operating procedure for all production processes is crucial. Joel Moskowitz, owner of manufacturer and online shop Tools for Working Wood, learned this the hard way. "When you have one person doing an operation and they leave, they take all their knowledge with them," he says. Now the company keeps loose-leaf notebooks and electronic documents with step-by-step instructions for making everything. On the advice of employee Ben Seltzer, Moskowitz is also building an archive of every tool produced, for reference when designing later versions: "We're creating a museum of everything we make."

*Correction, Oct. 30, 2014: This post originally misspelled the first name of Rachael Ray.

Oct. 30 2014 11:03 AM

Chevy Executive Blows His World Series Presentation. Chevy Social Media Turns It Into a Hashtag.

Poor Rikk Wilde. The Chevrolet regional zone manager was tasked with presenting World Series MVP Madison Bumgarner with a brand new Chevy truck, and came off as a nervous wreck, stopping to catch his breath and stumbling over his lines (he kept glancing down at a notecard). Then, to plug the truck's virtues, he uttered the instantly immortal words: "It combines class-winning and -leading, um, you know, technology and stuff."

Because it is the social media team's job to make lemonade whenever life hands a giant corporation lemons, it later attempted to turn Wilde's big whiff into a hashtag.

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For the record, the Chevy Colorado's #TechnologyAndStuff specs include high-speed Wi-Fi and advanced safety features; the inevitable SNL skit parodying this incident will star the ghost of Chris Farley.

Oct. 30 2014 10:08 AM

What Happens During the First Years of Your Startup

This article originally appeared in Inc.

When I start a new company and successfully get it funded, I sometimes get eye rolls from first-time entrepreneurs. What they are communicating is “of course you did—you have done it before.” While that’s true, I have done it before, and it is a little easier the second and third time, there are aspects that actually get harder every time.

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Following are things to expect and anticipate in the first few years as a CEO for a startup.

Year 1—Work a Lot, but Worry Even More

A good run with a startup can often take seven to 10 years. In the first year of a startup, expect to do about two years’ worth of work. Why? Well, in the first year there’s typically a lot of product-creation and compensation anxiety.

Product-creation anxiety is managed by just doing. Writing code all day, into the evening, on the weekend, etc. If you are exhausted at the end of the day, that’s good, you should feel like you’ve moved the ball down the field.

Compensation anxiety is trickier. If you are young and this is your first company, this is often minimized by the fact that you have a fairly “unencumbered lifestyle.” If you are older and have a more “complicated lifestyle” then this can be tough.

Regardless of how many times you start a company, you generally pay yourself between 0 and 25 percent of what you could be making nearly anywhere else. Having the resolve to work twice as hard for 25 percent of the pay is difficult. As the CEO, you are lead cheerleader; you really aren’t treated special. There is nothing exciting about your role.

Year 2—Work a Lot, Get Paid a Little

In the second year of the company, expect to do about one and a half year’s worth of work. You really aren’t getting paid any more than you were in Year 1, but the anxiety of product realization is minimizing as you see it take shape.

A new anxiety, however, takes its place: market acceptance anxiety. You are trying to hold your ground on the idea, convince your employees what they are building is filling a need in the market even though there is no validation yet. You are transitioning from doer to decider. The company is no longer the democracy it was at first. You feel more exposed. Will people buy the product?

Year 3—Start to Find the Balance

In the third year of the company, expect to do about a year’s worth of work.

By now, let’s hope, you have found the product-market fit. People are buying the product, and it has problems but they are generally manageable. With some success, you can raise more money and pay yourself 75 percent of your street value.

Product-market acceptance anxiety is diminished. You have a few specialists who can unload you a bit. Employees are getting excited and everyone can explain the product in an elevator.

By Year 3, I find that thinking is almost as valuable as hands-on working. I try to start taking vacations again as a way to help the creative thinking process. By being in different physical locations, you can just think and solve problems or challenges more easily. Usually at this stage, you need to strategize your way to success.

A new anxiety enters the picture at this stage, however—making-the-numbers.

The Out Years—Life Is Good, Until …

In what I call the out years—Years 4 and beyond—is where the company establishes its more mature trajectory.

You have good people who understand their roles in the company with great clarity. You know what generally works and what doesn't. In the out years, there tends to be a bit of decompression and your life can be more normal. You are finally paying yourself a standard market salary and, if the company is performing, nice bonuses that help on the home front.

Life is good again, until someone comes along and makes an offer to buy the company. Eventually, you move on and it all starts again. You need to take a deep breath and find the courage to go back in that house.

Startups are front-loaded with respect to work versus life. It almost goes without saying that it's quite different from working for someone else—almost. Creating startup after startup in a serial manner presents a feast or famine situation with relation to compensation. Entrepreneurs need to be ready for it. On the flip side, it can be one of the most rewarding careers you can have.

Oct. 30 2014 9:09 AM

Apple CEO Tim Cook Comes Out: “I’m Proud to Be Gay”

In a lovely essay for Bloomberg Businessweek today, Apple CEO Tim Cook confirmed that he is gay. "While I have never denied my sexuality, I haven’t publicly acknowledged it either, until now," he writes. "So let me be clear: I’m proud to be gay, and I consider being gay among the greatest gifts God has given me."

Cook's sexuality has long been a mostly open secret. Out magazine ranked him at the top of their "Power 50" list back in 2011. Gawker has called him "the most powerful gay man in America." There was this awkward incident on CNBC last summer. And in December 2013, he edged toward discussing the subject himself in a speech on gay rights and racism, saying, “I have seen and have experienced many types of discrimination and all of them were rooted in the fear of people that were different than the majority.”

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But in his Businessweek essay, Cook says he finally came out in the hopes that he might serve as an inspiration for others. "I don’t consider myself an activist," he writes, "but I realize how much I’ve benefited from the sacrifice of others. So if hearing that the CEO of Apple is gay can help someone struggling to come to terms with who he or she is, or bring comfort to anyone who feels alone, or inspire people to insist on their equality, then it’s worth the trade-off with my own privacy."

One has to wonder if this might also signal Cook's transition into a more vocal advocate for LGBT rights. In his piece, he notes that in many parts of the country, gay and lesbian Americans can still be fired from their jobs or evicted from their homes based on their sexuality. "Countless people, particularly kids, face fear and abuse every day because of their sexual orientation," he writes. Recently, he criticized his home state of Alabama for its own lack of progress on marriage equality.  

All that said, the most shocking section of the essay is this paragraph:

Part of social progress is understanding that a person is not defined only by one’s sexuality, race, or gender. I’m an engineer, an uncle, a nature lover, a fitness nut, a son of the South, a sports fanatic, and many other things.

As Bloomberg View's Adam Minter put it:

Oct. 29 2014 5:57 PM

SodaStream Is Shutting Down Its West Bank Factory

SodaStream announced today that the company will close its controversial factory located on a West Bank settlement—the focus of an international boycott campaign. The company will move the plant's operations to a new location in southern Israel by late 2015. This is pleasant news for guilt-ridden liberals who also happen to be SodaStream fans, and (far more importantly) it's a small victory for Palestinians who would prefer not to live in an occupied territory.

SodaStream's defenders have pointed out that its factory employed some 500 Palestinians out of roughly 1,300 workers. But by locating in the West Bank—which critics say made it eligible for tax breaks as well as cheap land—the company helped anchor the settlements. As the Jewish Daily Forward explained it:

SodaStream’s factory is not located in a radical settlement; it is located a 10-minute drive from Jerusalem in an industrial park next to one of the largest settlement blocs—Ma’aleh Adumim—which will likely be incorporated into Israel in any future deal. But it does exploit the commercial benefits of its location, essentially profiting from occupation, and contributes to the slow closing of the E1 corridor that is necessary for the contiguity of a future Palestinian state.   
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Over time, the brand has been engulfed by controversy over the plant. Actress Scarlett Johansson had to step down as an ambassador for the humanitarian group Oxfam International, which is against trade with West Bank settlements, after she became a pitchwoman for SodaStream. According to the Wall Street Journal, "Online calls to boycott the company’s products have more than doubled since 2013 and represented 29% of SodaStream’s brand conversations on the Internet between July and October." In a remarkable act of corporate plainspeak, CEO Daniel Birnbaum eventually called the factory "a pain in the ass" and said with hindsight he "never" would have opened it. 

Perhaps today's announcement will offer a little pain relief. And what of the plant's current workers? According to the WSJ, Birnbaum says SodaStream "will try to secure Israeli work permits for Palestinians" at the new site, which is about 60 miles from the West Bank factory. That's a long commute. But this seems like it might be a win-win for all involved.  

Oct. 29 2014 5:21 PM

The Fed Has Ended Its Historic Bond Buying Program

It's official: The Federal Reserve is taking away Wall Street's favorite punch bowl. On Wednesday, the Fed ended its historic bond-buying program known as quantitative easing, or QE3. In this massive effort to stimulate the economy, the Fed spent a little more than a year purchasing $85 billion a month in mortgage-backed securities and debt. As things picked up, the Fed began to consider when it could take its foot off the gas pedal—aka dial back its hefty bond purchases.

After beginning to taper its stimulus in January, the Fed is finally bringing the whole thing to an end. The Federal Open Market Committee said in its statement that interest rates will stay low for a "considerable time" even after asset purchases end. The committee emphasized that labor market conditions have improved and the economy is growing "at a moderate pace," with "solid job gains and a lower unemployment rate." Nonetheless, an important chapter in Fed history has wrapped up. For a look at some of its key moments, check out the timeline below.

Oct. 29 2014 3:59 PM

Study: It’s Student Debt, Not the Economy, That Forces Millennials to Move In With Their Parents

Ask a millennial why so many twentysomethings live with their parents, and he’ll probably let out an exasperated sigh and then patiently explain that we're a whole generation loaded down with student debt and navigating an economy that's been cruddy for years. It’s hard to make your rent when you’re jobless and paying off a bachelor’s degree.

But that narrative may only be half-right, according to a new study by a pair of Federal Reserve Board economists. Student loans, the study argues, may be a big reason so many young adults are moving in with Mom and Dad. But the bad economy? Not so much.

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Between 2005–2014, Lisa Dettling and Joanne Hsu write, the percentage of 18-to-31-year-olds living with their parents grew at an “unprecedented” speed, hitting a high of about 36 percent. Using credit agency data on more than 1.8 million young adults, they look at how changes in indebtedness and the economy writ large affected the rate at which the kids moved in with their parents. During this period, student loan burdens skyrocketed, while other types of debt shrunk back a bit. Meanwhile, we all know what happened to the unemployment rate.

Their conclusion? The rise of student debt and delinquencies could potentially explain about 30 percent of the increased frequency with which twentysomethings moved back in with their parents. The health of the economy, measured by factors such as local unemployment rates, had an effect during the heart of the recession in 2008 and 2009. But over the whole nine-year time frame, the downturn couldn’t sufficiently explain the changes that occurred.

fed_living_at_home

Intuitively, it seems absurd to posit that the recession itself didn't send millennials back into their parents' basements. As Pew has pointed out, much of the increase in children living back at home seems to have been "concentrated" among young adults who never went to college. Are we really to believe that the astronomical unemployment rate didn't play a role?

Dettling and Hsu's paper also doesn't draw a super-clean line between debt and the rest of the economy. It notes, for instance, that rising delinquencies seem to have increased the rate at which young adults moved back home. But delinquencies tend to rise when the overall economy goes sour. It seems hard to completely separate out causation.

That said, Dettling and Hsu's findings may dovetail with other recent studies. As Neil Shah reported earlier today at the Wall Street Journal, for instance, Census Bureau researchers have shown that "the Great Recession’s impact on kids living with parents isn’t actually that special as far as recessions go."

New studies with counterintuitive findings should always be treated with a dash of skepticism. But consider this one a bit of ammo for those who are particularly alarmed at the rise of student debt: College loans may bear greater responsibility than the Great Recession for the growing ranks of boomerang kids.

Oct. 28 2014 4:50 PM

Don’t Let Anyone Blame Single Mothers for Economic Inequality

When it comes to talking about economic inequality, conservatives generally aren't too comfy discussing how skyrocketing CEO pay and Wall Street lucre have concentrated income among America’s tip-top earners. They are, however, extremely at home talking about families—namely, single mothers, and how the dissolution of the two-parent household model has set back the middle and working classes.

In that vein, the American Enterprise Institute has released a new report, “For richer, for poorer: How family structures economic success in America.” (I spoke about it on a panel earlier today). The paper's goal is to put marriage in the center of the public discussion about inequality and opportunity. And its point, to simplify a bit, is that marriage is really, really great. It’s good for men, who tend to make more when they’re hitched. It’s good for women, who end up with higher household income. It’s great for children, who generally fare better in life when raised by married parents. In fact, the report argues that whether or not someone grows up with both parents predicts about as much about their future income as race.  

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Social scientists can debate whether marriage actually turns men into more responsible, ambitious, and higher-earning individuals (as some have argued), or whether responsible, ambitious, and potentially higher-earning men are just more likely to get married. But common sense tells us that the truth lies somewhere in between. You can debate whether family income or family structure plays a more important role in shaping kids, but I think most people would agree that two parents are preferable to one. Raising children solo is an insanely difficult undertaking. Life isn’t an episode of Gilmore Girls.

But I’m also skeptical about efforts to turn the inequality debate toward single mothers and absent fathers—because, in the end, it’s simply not driving the changes in the economy we’re experiencing today. As Timothy Noah wrote in Slate years ago, the biggest changes in American family structure took place in the '70s and '80s, and they help explain why, for instance, the ratio between the 90th percentile of earners and 10th percentile is higher than it was 30 years ago. But the shift away from two-parent households doesn't really factor into the concentration of wealth among the 1 percent. And the rise of the 1 percent, and the 0.1 percent for that matter, is the real story when it comes to how income inequality is evolving today.

Conservatives will point to recent research showing that economic mobility is stronger in places with fewer single mothers. But that same work also shows that mobility has been weak for decades. The notion that Horatio Alger stories are just myths isn’t new. But the share of the economy that the rich are chewing up is relatively new.

Single mothers and fragile families are a fact of American life, and we certainly need to find better ways to support them. But that discussion isn’t a substitute for grappling with the rise of the 1 percent.

Oct. 28 2014 3:26 PM

FTC Sues AT&T for Misleading Customers Over Unlimited Data

The Federal Trade Commission seems to have had it with AT&T. Three weeks ago, the regulator ordered AT&T to pony up $105 million for bogus "cramming" charges on customer bills. Today, the FTC is slamming the wireless carrier with a lawsuit for allegedly misleading millions of its users about their unlimited data plans.

The FTC's complaint is this: AT&T did not deliver truly unlimited data to customers on unlimited data plans. At issue here is something the industry refers to as "throttling," which occurs when carriers decide to slow data speeds for consumers after they hit a certain usage threshold in a given billing period. (For example, imagine AT&T serves a customer's first 3 GB of monthly data at normal speeds but drastically reduces the pace for anything beyond that—that's throttling.)

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The way the FTC sees it, an unlimited data plan with throttling is not an unlimited data plan. In its complaint, the FTC notes that customers on AT&T devices have had their data speeds reduced by between 60 percent and 95 percent after using as little as 2 GB. "Many everyday applications, such as web browsing, GPS navigation, and streaming video, are significantly slower, and in some cases are severely impaired or rendered practically inoperable," the FTC writes.

In a statement on its website, AT&T dismissed the FTC's allegations as "baseless" and "baffling." AT&T argues that it has been "completely transparent with customers since the very beginning" of its throttling program, informing them of changes in billing statements and through a national press release. AT&T stopped offering unlimited data plans to new customers in 2010; it has allowed existing customers with unlimited data to stay on grandfathered versions of those plans but has made it increasingly difficult for them to maintain the arrangement.

As consumer frustration with throttling has grown, regulators have taken note. In late July, FCC Chairman Tom Wheeler wrote a letter to Verizon saying he was "deeply troubled" by the company's intention to start throttling its heaviest data users. On Oct. 2, Verizon abruptly backed away from its plan.

The FTC's case against AT&T will largely hinge on whether the carrier adequately disclosed its throttling program. So far, the FTC is being careful to note that "data throttling isn't always illegal" but that "when it's done in a way that's deceptive or unfair, it most certainly is." It argues that AT&T's customer agreements do not state that AT&T may "modify, diminish, or impair the service of unlimited mobile data plan customers" if they use more than a certain amount of data. The FTC also alleges that most AT&T customers with unlimited data plans have "never been sent a text message or email" about the company's throttling program.

What's unclear is why the FTC is bringing its case now, after several years of throttling on AT&T's part. The FTC has been on something of a roll with wireless regulation lately, including its early-October settlement with AT&T and a July complaint that accused T-Mobile of cramming. FTC officials didn't address on a conference call why the mobile industry has suddenly caught their interest. But all the same, other wireless carriers might want to watch out.

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