DanielRoth.net

Oracle's Lost Revolution

Oracle's Lost Revolution [pdf]

In 1995, Larry Ellison announced a computer that would run applications that lived in the cloud. Just one thing: The cloud didn't exist.

WIRED magazine
January 2010 (18.01) issue

By Daniel Roth

Just after midnight on August 24, 1995, a student named Jonathan Prentice walked into a bookshop in Auckland, New Zealand, pulled out 200 New Zealand dollars, and became the first owner of Windows 95. Turning to a reporter, Prentice declared: “I will be able to play solitaire and send faxes at the same time.” And with that rallying cry, the Windows 95 craze exploded. Lines formed around the world as consumers jostled to buy copies; journalists in Poland prepared to take a Microsoft-sponsored submarine ride under the Baltic Sea; The Times of London handed out free papers wrapped in a Windows ad; and the Empire State Building lit up in Windows’ signature colors. Within a month, Microsoft’s new operating system had sales of more than $250 million and Bill Gates went from being a nerd to … well, he was still a nerd, but an invincible rock-star nerd. The future was very clear: PCs — running Microsoft software — would be the single most important device in our lives.

In Silicon Valley, Larry Ellison followed the glowing press coverage and fumed. He had lived in Gates’ shadow since March 1986, when Oracle, Ellison’s database- software company, had gone public just a day before Microsoft. Gates got attention for everything he did, but barely anyone knew Oracle. Windows 95 was the last straw. “There was peace in the Middle East and war in Bosnia the same week,” he later groused. “And all that the major networks seemed to cover was people in parking lots waiting up all night to get their first copy of Windows 95.” His grudge wasn’t just about ego; Microsoft had already begun nosing around the database- software industry, and its mounting war chest meant that it could easily fund a push into Oracle’s territory.

Immediately after the Windows 95 launch, Ellison called one of his lieutenants, Farzad Dibachi, to his mansion in Atherton, California. For years, Dibachi — who was responsible for brainstorming new business strategies — had urged Ellison to think more broadly about his company’s potential. Now, the two discussed a vision for Oracle that would neutralize Microsoft’s main advantage: the dominance of its operating system. They imagined a simple machine that would eschew software installed on a hard drive in favor of accessing applications online. Data — videos, documents, pictures — would be stored in Oracle databases instead of on the computer itself. In place of a robust operating system, this machine would work with programs and files through browsers like Netscape Navigator. Ellison liked the idea, and he and Dibachi started working on a speech so the CEO could share it with the world. The device would be called the network computer.

[Audio] NPR On The Media interview about Demand Media: "News Ex Machina"

Oct. 30, 2009 Online content provider Demand Media has found a formula, literally, for generating its many, often instructional, articles and videos. Think of it as a cut-rate Associated Press, except instead of human beings thinking up story ideas an algorithm does. Wired magazine’s Daniel Roth explains. Transcript. Listen Now.

Demand Media: The Answer Factory [pdf]

A fiendishly clever startup knows what we are Googling— then churns out thousands of cheap videos and articles to meet our every whim and wish.

WIRED magazine
November 2009 (17.11) issue

By Daniel Roth

If Christian Muñoz-Donoso is going to make this job pay, he’s got to move quickly. He has a list of 10 videos to shoot on this warm June morning, for which he’ll earn just $200. To get anything close to his usual rate, he’ll have to do it all in two hours. As he sets up his three video cameras on the rocky shore of a man-made lake in Huntington, Massachusetts, he thinks about the way things used to be. He once spent two weeks in a bird blind in his native Chile to capture striking footage of a rarely seen Andean condor. But those jobs are almost as endangered as that bird. Now he trades finesse for speed.

Today’s topic is kayaking. Muñoz-Donoso has enlisted a local instructor to meet him and to bring along four of his boats. Every five minutes, Muñoz-Donoso’s assistant shouts a new subject — “Kayak basics!” “Paddling tips!” — and the expert, sitting in one of his rigs in the bourbon-colored water, riffs off the top of his head. Muñoz-Donoso gets most of his shots in one take. But conditions are working against him. Shifting winds and changing light require him to adjust his setup. The instructor keeps switching kayaks and gear. Finally, the entire shoot has to be put on hold as three bearded fishermen loudly and slowly drag their boats into the lake, directly into the frame. Muñoz-Donoso hoped to finish his shoot by 11, but it’s already 12:45 when he crams his equipment into the back of his SUV and speeds back to his office, 20 mile away.

He climbs a flight of stairs to his studio above a strip mall, unloads his gear, and keeps up his breakneck pace. As he opens his files in Final Cut Pro, he winces. “Normally I’d eliminate the wind or the kid screaming in the background,” he says. “But in this case we don’t do any of that.” He points out that the focus is off: The rippling water is sharp while the kayaking instructor is slightly blurred. But the company he’s working for won’t care, he says, so why should he — especially for $20 a clip? Within a few hours, he has uploaded his work to Demand Media, his employer for the day. It isn’t Scorsese, but it’s fast, cheap, and good enough.

[Audio] NPR On The Media interview about Netflix: "Cutting the Cable"

Sept. 25, 2009 Last year, Netflix spent about a quarter of its $1.4 billion sending its little red envelopes back and forth through the mail. That’s why it would rather stream movies directly to your TV. As Wired reporter Daniel Roth tells it, if Netflix can cut the same content deals with Hollywood as Comcast and Time Warner - this could be the beginning of the end for cable. Interview by Bob Garfield. Transcript. Listen Now.

Netflix Inside

Netflix Inside

It's everywhere—on your computer, in your Xbox 360, backed into your TV. Now CEO Reed Hastings wants to let you watch every show and movie ever made—instantly.

WIRED magazine
October 2009 (17.10) issue

By Daniel Roth

It had taken the better part of a decade, but Reed Hastings was finally ready to unveil the device he thought would upend the entertainment industry. The gadget looked as unassuming as the original iPod—a sleek black box, about the size of a paperback novel, with a few jacks in back—and Hastings, CEO of Netflix, believed its impact would be just as massive. Called the Netflix Player, it would allow most of his company's regular DVD-by-mail subscribers to stream unlimited movies and TV shows from Netflix's library directly to their television—at no extra charge.

The potential was enormous: Although Netflix initially could offer only about 10,000 titles, Hastings planned to one day deliver the entire recorded output of Hollywood, instantly and in high definition, to any screen, anywhere. Like many tech romantics, he had harbored visions of using the Internet to rout around cable companies and network programmers for years. Even back when he formed Netflix in 1997, Hastings predicted a day when he would deliver video over the Net rather than through the mail. (There was a reason he called the company Netflix and not, say, DVDs by Mail.) Now, in mid-December 2007, the launch of the player was just weeks away. Promotional ads were being shot, and internal beta testers were thrilled.

But Hastings wasn't celebrating. Instead, he felt queasy. For weeks, he had tried to ignore the nagging doubts he had about the Netflix Player. Consumers' living rooms were already full of gadgets—from DVD players to set-top boxes. Was a dedicated Netflix device really the best way to bring about his video-on-demand revolution? So on a Friday morning, he asked the six members of his senior management team to meet him in the amphitheater in Netflix's Los Gatos offices, near San Jose. He leaned up against the stage and asked the unthinkable: Should he kill the player?

Revenge of the Nerds

Revenge of the Nerds

If we want to reform education, we have to make it cool to be a geek.

WIRED magazine
September 2009 (17.09) issue

By Daniel Roth

Earlier this year in midtown Manhattan, a local venture capital firm staged a daylong conference on school reform. Authors, professors, financiers, and entrepreneurs took over the French Institute's skylighted penthouse and earnestly discussed how embracing "digital culture"—from deploying videogame-style rewards to encouraging kids to develop online reputations—could completely transform education. Outsiders were invited to participate via Twitter, and their ideas were projected on the wall. It was a high-minded, tech-centric affair—until Alex Grodd brought it back to earth.

Although Grodd now runs a site that lets educators share lesson plans, he started out teaching at inner-city middle schools in Atlanta and Boston. The businesspeople in the room represented a world in which innovation requires disruption. But Grodd knew their ideas would test poorly with real disrupters: kids in a classroom. "The driving force in the life of a child, starting much earlier than it used to be, is to be cool, to fit in," Grodd told the group. "And pretty universally, it's cool to rebel." In other words, prepare for you and your netbook to be jeered out of the room. "The best schools," Grodd told me later, "are able to make learning cool, so the cool kids are the ones who get As. That's an art."

It's an art that has, for the most part, been lost on educators. The notion itself seems incredibly daunting—until you look at one maligned subculture in which the smartest members are also the most popular: the geeks. If you want to reform schools, you've got to make them geekier.

Street Smarts

Street Smarts

The crash could loosen the financial world's grip on bright young minds.

WIRED magazine
July 2009 (17.07) issue

By Daniel Roth

Walking around Wall Street these days is like being trapped inside the videogame Resident Evil. There are the dead (Lehman Brothers and Bear Stearns), the undead (AIG, which survives only as long as the government needs it to), and the living scared (every suit who still has a job). Even with the occasional announcement of a good fiscal quarter from one of the banks, it's hard to see anything but neutron-bomb-like decimation. The glory days of Wall Street's dominance are done.

No one likes to see an industry die, but there is an upside: Often, smart cubicle refugees will seize the opportunity to pursue their entrepreneurial dreams, unleashing waves of innovation upon society. The death of Big Steel in the 1980s gave birth to nimbler, more competitive mini-mills. The decline of the Hollywood studio system in the '60s gave us independent films. And the current demise of print media is giving us new sources of information, as journalists band together to reinvent news coverage.

Wall Street's turn is next, and we should all be praying for one thing: that many of those liberated innovators seek playing fields outside of finance. (more)

My interview with Better Place CEO Shai Agassi

The interview took place at the Wired: Disruptive By Design business conference, June 15, 2009 at the Morgan Library in New York City.

Gestures of War

Gestures of War

The battle to control iPhone-like multitouch technology has the gadget world in a pinch

WIRED magazine
April 2009 (17.04) issue

By Daniel Roth

The Pre, Palm's ridiculously slick new mobile phone, stole the show at CES this year. Good looks helped, but mainly it was the Pre's iPhone-like touchscreen technology that wowed the industry crowd. Sure, the Pre has a built-in keyboard, but all anyone wanted to do was drag their fingers along the screen and make magic happen: pop windows open, scroll through sites, fling the contact list to the bottom of the display.

The gestures were intuitive, fun, and basically copies of Apple's. Two weeks later, Apple COO expressed his irritation (without directly naming Palm) to analysts on a conference call: "We will not stand for having our IP ripped off, and we'll use whatever weapons we have at our disposal. I don't know that I can be clearer than that."

Them there are fighting words. (more)

Road Map for Financial Recovery: Transparency Now!

The Road Map For Recovery

The financial world doesn't need new regulations. It needs radical transparency. Make companies report results in easy to understand, easy to crunch numbers—and let investors do the rest.

WIRED magazine
March 2009 (17.03) issue

By Daniel Roth

On the morning of March 29, 1933, dozens of reporters filed into the Oval Office for a press conference with the new president. Franklin Roosevelt had taken office earlier that month amid the greatest economic crisis the US had seen: 5,700 banks had failed, 25 percent of the country was unemployed, and more than half of all mortgages were in default.

Hope for a recovery was dim; the public had lost faith in the entire financial system. The number of American investors had exploded, from a few hundred thousand before 1916 to more than 16 million. Yet few of them understood the investments they held, many of which had proven to be junk. Supposedly sound companies were exposed as pyramid schemes. Of the $50 billion in securities sold in the previous decade, half had become worthless.

And yet, as reporters huddled around his desk, Roosevelt sounded confident. "I have something on the Securities Bill today," he announced. That day, members of his brain trust were on Capitol Hill, submitting a plan that would spark the creation of the Securities and Exchange Commission. One overriding concept lay at the center of the legislation: transparency. Louis Brandeis, before becoming a Supreme Court justice, had written an exposé of the financial system for Harper's Weekly, and one passage in particular had lodged in Roosevelt's brain: "Sunlight is said to be the best of disinfectants. Electric lights the most efficient policeman." The proposed bill would require, for the first time, companies to file detailed accounts of their financial health and activity, and bankers would have to report their fees and commissions. As Roosevelt explained it to the reporters around him, the bill "applies the new doctrine of caveat vendor in place of the old doctrine of caveat emptor. In other words, 'Let the seller beware as well as the buyer.' In other words, there is a definite, positive burden on the seller for the first time to tell the truth."

Now, here we are again, 76 years later, facing another crisis of trust that threatens the entire financial system. This time, the issue is no longer a lack of transparency.  (More)

[Audio] NPR On The Media interview about Comcast

February 20, 2009 Comcast is now the cable monopoly in 40 of the top 50 markets. It’s the third largest phone company in the US, and the largest provider of broadband internet to homes, with nearly 15 million customers, many of whom apparently hate Comcast. Wired Magazine senior writer Daniel Roth parses the troubled reputation of a media giant. Interview by Brooke Gladstone. Listen Now

Torture Me Elmo: Do Humanlike Machines Deserve Human Rights?

Torture Me Elmo

As machines become more like us, should they be given human rights?

WIRED magazine
February 2009 (17.02) issue

By Daniel Roth

During the 20 months that Fisher-Price spent developing the innards and software of its latest animatronic Elmo, engineers gave the project the code name Elmo Live. And sure enough, they made him more animate than ever: He moves his mouth in time with the stories he tells, shivers when he gets scared, and has a fit when he sneezes.

When they were finally able to test the doll on children, they were struck by how immediately the kids blocked out all other stimuli in the room and began interacting with Elmo. "It was as if Elmo were part of their family," says Gina Sirard, Fisher-Price VP of marketing. "To a child, he really is alive."

So the code name stuck, and over the past few months legions of $60 Elmo Live dolls have joined families everywhere. Some are certainly doomed to join previous Elmos in a new pastime: robotic-toy torture. YouTube is full of videos of idiots dousing Elmo with gas, setting him on fire, and laughing as his red fur turns to charcoal and he writhes in a painful dance. (more)

Comcast: Brian Roberts, The Dark Lord of Broadband

The Dark Lord of Broadband

Arrogant. Unresponsive. Overpriced. Comcast CEO Brian Roberts knows people hate his Internet service. Inside his campaign to fix the company's image.

WIRED magazine
February 2009 (17.02) issue

By Daniel Roth

Robb Topolski couldn't stay awake. All he could manage was three hours at a stretch before passing out. At first, his doctors were baffled, though they would eventually diagnose his condition as a severe form of anemia. But for the time being, no one knew anything except that it was dangerous for Topolski to venture too far from his bed.

Topolski was a quality assurance engineer at Intel before going on disability, and he loved playing with new gadgets and software. So in late February 2007, he dragged himself out of the queen-size bed in his Hillsboro, Oregon, home, sat down at one of the three PCs a few feet away, and opened his latest toy, the file-sharing program Shareaza. He was a big barbershop-harmony fan—he'd sung baritone in Intel's One Bit Parody quartet—and he wanted to test the software by searching for some new tracks and sharing the ones on his hard drive: tunes like the Civil War-era hit "The Vacant Chair," and a Tin Pan Alley ode to prostitution, "She Is More to Be Pitied Than Censured."

Topolski pointed Shareaza to his music folder. Then he fell asleep. And that's when something strange happened—or rather, that's when nothing happened. Each time he woke up and checked his PC, he discovered there had been no activity at all. Topolski knew that his music tastes weren't exactly mainstream; but still, among the millions of BitTorrent, Gnutella, and eDonkey users out there who could see his files, no one wanted even one of his tunes? He'd search some forums for help, then fall asleep again. (more)

Economy: Back to the Garage

 Back to the Garage

When the economy is in turmoil, the time is ripe for ambitious innovation.

WIRED magazine
December 2008 (16.12) issue

By Daniel Roth

In July 1993, Tom Siebel launched Siebel Systems, which made software for managing corporate sales staffs. The US economy was faltering, and the market for his product was new and untested. In other words, the timing couldn't have been better.

The tech veteran picked up some inexpensive, underworked software engineers, secured office space in run-down East Palo Alto—at 11 cents a square foot—and bought office equipment at auctions held by the companies failing all around him. His own desk was a folding table. By the time he had his first release ready in 1995, he had spent less than $1 million on overhead and had an offering that none of the other major software companies could challenge. Investors made Siebel's June 1996 IPO—debuting just as the stock market was picking up steam—one of the year's top performers. Tom Siebel soon became one of the richest people in the US. "It was a great way to start a company," he says. (more)

Henry Blodget: Reinventing Henry

Reinventing Henry

Henry Blodget—yeah, that guy from the last bubble—is back, selling himself as an Internet entrepreneur. The haters are still angry, but his straight-talking analysis of the Web world is earning him new fans.

WIRED magazine
December 2008 (16.12) issue

By Daniel Roth

Henry Blodget has never gotten used to the chorus of hate that follows his every move. He's merely learned to live with it. When he started his personal blog in 2005, the comments dripped with disgust. "You are a boldface liar," a reader wrote. "Give me one reason why I should believe what you are writing," said another. And that was just in response to Blodget's innocuous first entry.

During his years as a star Wall Street analyst, his pronouncements were welcomed and celebrated; now he couldn't say hello without getting savaged. Just last August, TechCrunch mentioned that Blodget would be one of more than two dozen tech celebrities judging a contest for startups. Blodget knew what was coming, even if his hosts didn't. "Blodget is scum.... He is no longer the arrogant prick we saw in the '90s, but he's still scum," someone wrote. "A lot of people lost money listening to this dirtbag." "Blodget is a Web 1.0, bubble-creating has-been." "He is unethical." "He's as crooked as they come."

I meet Blodget at the offices of his new business, a year-old site called Silicon Alley Insider, shortly after the TechCrunch beat-down. Alley Insider is one of many tech business blogs that feed news, earnings info, and rumors to investors and corporate insiders. But Alley Insider has one thing that others don't. Blodget. He's smart, he's skeptical, and he's got the kind of self-assured voice that sells well in the blogosphere. As the market sinks, his opinions are even more in demand, though he's still hated by a large portion of his prospective audience. (more)

[Audio] Living on Earth interview about Better Place

Living on Earth's Bruce Gellerman talks with Wired Magazine writer Daniel Roth about Better Place's unique approach to greening roadways.
Listen now

Shai Agassi and the Future of the Electric Car

The Future of the Electric Car pdf

Shai Agassi has an audacious plan to put electric cars on the road. All he needs is a nationwide grid of charging stations—and a whole new business model for the auto industry.

pdf

WIRED magazine
September 2008 (16.09) issue

By Daniel Roth

Shai Agassi looks up and down the massive rectangular table in the Ritz-Carlton ballroom and begins to worry. He knows he's out of his league here. For the last day and a half, he's been listening to an elite corps of Israeli and US politicians, businesspeople, and intellectuals debate the state of the world. Agassi is just one of 60 sequestered in a Washington, DC, hotel for a conference run by the Saban Center for Middle East Policy. Among the participants: Bill Clinton, former Israeli prime minister Shimon Peres, Supreme Court justice Stephen Breyer, and two past directors of the CIA.

It's December 2006. Scheduled to speak in a few minutes, Agassi gets nudged by the Israeli minister of education: "Be optimistic," she tells him. "We've got to close with an upbeat tone." Agassi thanks her. Optimism won't be a problem.

At 38, Agassi is the youngest invitee. Just after the dotcom boom, SAP, the world's largest maker of enterprise software, paid $400 million for a small-business software company he started with his father; now he's SAP's head of products and widely presumed to be the next CEO. But he's not here this morning to talk about business software. Instead, his topic will be the world's addiction to fossil fuels. It's a recent passion and the organizers invited him to counterbalance the man speaking now, Daniel Yergin, the famed energy consultant and oil industry analyst. Yergin gives them his latest thinking: Energy independence is unattainable. Oil consumption will continue to rise. Iran will get richer. It's not exactly what this audience wants to hear.

Now it's Agassi's turn. He starts off uncharacteristically nervous, stammering a bit. He's got something different, he says. A new approach. He believes it just might be possible to get the entire world off oil. For good. Point by point, gaining speed as he goes, he shares for the first time in public the ideas that will change his future—and possibly the world's. (more)

The Google Phone

The Google Phone pdf

Here comes Android, the open source operating system that will break the corporate stranglehold on the  wireless web, make it fun to surf from your cell, And (oh yeah) scoop up billions of dollars in mobile ads.

WIRED magazine
July 2008 (16.07) issue

By Daniel Roth

"Is this interesting to Google?" That's what Andy Rubin was asking Larry Page. It was a spring day in 2005, and the two were in a conference room just off the main lobby at Google's headquarters. A simple yes and Rubin would have walked away happy.

They had met three years before, when Rubin was about to launch a smartphone he'd invented called the Sidekick. At the time, Google was just an up-and-comer, trailing AOL and even Lycos in traffic. But Rubin, a well-known Silicon Valley player, chose Google as the Sidekick's default search engine. Page was flattered by the unexpected endorsement. So when Rubin called out of the blue and requested this meeting, well, Page couldn't say no.

The Google cofounder arrived late, as usual. Rubin walked to the whiteboard and began his pitch. There were nearly 700 million cell phones sold each year compared with fewer than 200 million PCs — and the gap was widening. Increasingly, he said, phones were the way people wanted to connect with each other and with everything else. Yet the mobile industry was stuck in the dark ages. Unlike the Web, where open standards had fostered a multitude of cool companies and applications, mobile was a tyrannical, closed system, repelling all innovators and disrupters who tried to gain entrance. (more)

Tech Trends: Open Source

Tech Trends
Open Source Software Made Developers Cool.
Now It Can Make Them Rich?

WIRED magazine
April 2008 (16.04) issue

By Daniel Roth

Last spring, marketer and blogger Hugh MacLeod posted a question on his site: If open source is such a phenomenon, where are all the open source billionaires? His audience wasn't amused. Open source software relies on a community of volunteer developers who tinker on, write for, or amend a program, then give it away free. MacLeod's site filled up with complaints that even to look for billionaires violated the spirit of the open source movement. "There have to be rewards," one commenter wrote, "but they don't have to be financial." Another simply recommended that MacLeod "shut the fuck up," adding: "You don't know what you're talking about." (more)

[Audio] NPR interview about online piracy

NPR interview about Media Defender and online piracy

February 08, 2008 Daniel Roth talks to On the Media's Bob Garfield about the entertainment industries ongoing (and losing) battles against piracy. Listen Now 

Hacking: The Pirates Can't Be Stopped

The Pirates
Can't Be Stopped

A lone teenager hacked into the outfit charged with protecting companies like Sony, Universal, and Activision from online piracy—the most daring exploit yet in the escalating war between fans and corporate giants. Guess which side is winning?

Condé Nast Portfolio
February 2008 issue

By Daniel Roth

From: Ty Heath [MediaDefender]
Sent: Wednesday, June 6, 2007 7:02 p.m.
To: it <it@mediadefender.com>
Subject: pm webserver
                     
The 65.120.42.146 pm webserver has been compromised […]
As a side note, please do not ever use the old passwords on anything.
                     
The first time Ethan broke into MediaDefender, he had no idea what he had found. It was his Christmas break, and the high schooler was hunkered down in the basement office of his family's suburban home. The place was, as usual, a mess. Papers and electrical cords covered the floor and crowded the desk near his father's Macs and his own five-year-old Hewlett-Packard desktop. While his family slept, Ethan would take over the office, and soon enough he'd start taking over the computer networks of companies around the world. Exploiting a weakness in MediaDefender's firewall, he started poking around on the company's servers. He found folder after folder labeled with the names of some of the largest media companies on the planet: News Corp., Time Warner, Universal.
                     
Since 2000, MediaDefender has served as the online guard dog of the entertainment world, protecting it against internet piracy. When Transformers was about to hit theaters in summer 2007, Paramount turned to the company to stop the film's spread online. Island Records counted on MediaDefender to protect Amy Winehouse's Back to Black album, as did NBC with 30 Rock. Activision asked MediaDefender to safeguard games like Guitar Hero; Sony its music and films; and World Wrestling Entertainment, its pay-per-view steel-cage championships and pudding-wrestling matches.

Gilt Trip: Hedge fundies start worrying about their wealth

Gilt Trip

Everyone else already hates them. Now even hedge-funders are starting to feel bad about their wealth.

Condé Nast Portfolio
December 2007 issue

By Daniel Roth

In late August, Jeff Tarrant was driving home from his midtown Manhattan office when he heard a radio report on a topic that he knew intimately: the subprime meltdown. The founder of Protégé Partners, a fund of hedge funds, Tarrant had had a good year betting that the mortgage mess would continue and was following the story closely. Still, he was taken aback when a young investor interviewed on the segment suggested that the crisis should be contained by regulating hedge funds. "I'm sitting back and thinking, 'Subprime had nothing to do with hedge funds,'  " Tarrant recalls. "It was rating agencies. The funny thing is, here's a kid on the street. He probably had $10,000 in his I.R.A., and he's blaming the hedge funds! How did that happen?"

Hmm, how did the average investor come to be suspicious of secretive, ultrawealthy money movers?

Barry Sternlicht: Revenge of the Hotel King

Revenge of the
Hotel King

Barry Sternlicht revolutionized the hotel world as he built Starwood into an $12.4 billion empire. Now he has to prove himself again. But will he ever satisfy his harshest critic?

Condé Nast Portfolio
October 2007 issue

By Daniel Roth

Barry Sternlicht’s chauffeur-driven black G.M.C. Yukon rolls up to a crumbling brick building on the wrong side of the Stamford, Connecticut, train tracks. It’s a warm fall morning, and a nearby field of dumpsters casts a rank smell over the block. The site was a heavily used auditorium and dental clinic for workers at the Yale & Towne lock factory. When the plant closed in the late 1950s, the building started its inexorable decline: The windows are blacked out or broken; the front-door frame is stripped and exposed; inside, wires hang from where lighting fixtures have been ripped down. But for the next few months, this littered wreck is going to be the unlikeliest launching point for the greatest second act in American real estate.

Sternlicht is the 46-year-old founder, former C.E.O., and ex-chairman of Starwood Hotels. Just two years ago, he was the most influential person in the hotel world, commanding one of the industry’s largest operations: 733 hotels, 231,000 rooms, 120,000 employees and more than $5 billion in revenue. Starting with a small, nearly bankrupt real estate investment trust he bought in the mid-1990s for $120 million, Sternlicht gobbled up name brands like Sheraton and Westin; dreamed up a new chain, the W, that appealed to the young, Kenneth Cole-wearing executive class; and transformed the St. Regis from a stand-alone hotel in New York into a worldwide luxury chain.

He was the thirtysomething fireball of the hotel business, revolutionizing the industry and stealing customers and glory from slow-moving giants like Marriott and Hilton. In the process, he created countless enemies outside the firm by openly mocking his competitors’ conservative ways and, internally, by ignoring veterans’ opinions and relentlessly hounding his senior executives.<

“In the hotel industry, he embarrassed a lot of people,” says Ted Darnall, chief operating officer of HEI Hotels & Resorts and former head of Starwood’s North American operations. “He had the vision and strategy that the so-called experts didn’t see or said wouldn’t work. And very little of Barry’s vision was wrong. That’s going to result in a lot of people wanting to see him fail.”

Cerberus/Chrysler: The Most Dangerous Deal in America

The Most Dangerous
Deal in America

Inside the secretive world of Cerberus Capital­­­—and why its plan to save Chrysler spooks Wall Street.

Condé Nast Portfolio
September 2007 issue

By Daniel Roth

This is what the people came for, but Stephen Feinberg looks as if he’d rather be anywhere else. He stands motionless on one end of the sprawling stage, practically hiding behind a lectern decorated with the massive golden coat of arms of Manhattan’s Waldorf-Astoria. The Wall Street investors who pack the room sit expectantly, ignoring—for the first time all morning—their BlackBerrys, which scroll silently in their pockets.

Feinberg, who is 47, sports thinning brown hair and a wispy mustache. Without any notes, he launches into a meandering speech. Between long pauses, he wends his way through market analyses that seem deliberately vague. At the heart of his speech, he sums up the philosophy that guides his company: Reveal as little as necessary; be anonymous; be invisible. “We try to hide religiously,” he says. “If anyone at Cerberus has his picture in the paper and a picture of his apartment, we will do more than fire that person. We will kill him. The jail sentence will be worth it.” There are a few nervous laughs.

Since graduating from Princeton 25 years ago, Feinberg has never given an interview and has never been photographed by the press. Not that there has been much demand until now. On Wall Street, the C.E.O. of Cerberus Capital Management, an investment firm with $26 billion in assets under management, has long been admired. (“You probably think you’re smart,” says one former employee. “Now take your brain and mine, take them to the 28th power, and you have Steve Feinberg.”) To the general public, though, Cerberus has been just another shadowy buyer of companies in an already overpopulated field. The firm’s purchases include a grab bag of brands that lurk on the edge of consumer consciousness: Fila sporting goods, Mervyn’s department stores, Alamo and National rental cars, Air Canada, the GMAC lending arm of General Motors.

All that changed on May 14 when another mustachioed C.E.O., Dieter Zetsche of DaimlerChrysler, announced he was selling Chrysler to Cerberus for $7.4 billion. (Daimler is retaining a 20 percent stake.) It marked the historic end of the German carmaker’s cross-cultural business experiment and the return of an American icon to U.S. soil. Feinberg didn’t even bother to appear at the press conference.

[Video] CNBC: Inside Cerberus' Lair

Inside Cerberus Lair CNBC Squawk Box interview about the secret world of Steve Feinberg and Cerberus.

Mohammed Al-Maktoum: The Sheik Who Would Be King of Horse Racing

The Sheik Who Would Be
King of Horse Racing

He's spent more than $1 billion on horses, and built them their own 747. He's won the biggest races worldwide. Now the ruler of Dubai is taking his game to the U.S.

Condé Nast Portfolio
May 2007 issue

By Daniel Roth

Betting is not allowed at the Nad al-Sheba racetrack in Dubai. Gambling is illegal in the United Arab Emirates, so the thousands of race fans there spend the intervals between post times kicking soccer balls or buying trinkets from vendors who lay out their wares on the Bermuda grass. It’s a cool night in January—it gets too hot here to race during the day—and floodlights illuminate the five-story, glass-and-steel space-station-style grandstands. In the distance are the skyscrapers Dubai is famous for; almost all have cranes on top, signaling that they’re only going to get higher.

Just after 9:30 p.m., the crowd suddenly starts moving, packing in tightly near the parade ring, where the winning horses and jockeys receive their prizes. Kufis brush against baseball caps as locals strain to get a view of Sheik Mohammed bin Rashid al-Maktoum, who has stopped by to take in the action.

Sheik Mohammed is the ruler of Dubai, the prime minister of the seven-state United Arab Emirates, and the most powerful man in the world of horse racing. At 57, he moves with an athlete’s quickness. At one point, while chatting with a jockey, he lifts the hem of his blue dishdasha, revealing a heavily muscled calf. On his head is a crisp white headdress. He turns to a slim British man standing next to him: “Who won?”

Simon Crisford manages Godolphin, Sheik Mohammed’s top racing operation. A onetime Racing Post writer, Crisford now spends half the year in Dubai and half in his native Britain.

“A German horse, sir,” says Crisford.

“That’s good!” says Sheik Mohammed, smiling broadly. “Very good.” The German owners not only beat Sheik Mohammed’s entry, which placed second, but walked away with $72,000—much, if not all, of it the ruler’s money. At most tracks, the house skims off a percentage of gamblers’ bets to cover costs and finance the winner’s purse. Here, the $31 million in prize money that Nad al-Sheba will pay out during its main 11-week season comes mostly from “the Boss,” as Sheik Mohammed’s employees refer to him out of earshot. So while the sheik is fiercely competitive, he’s fine with losing if it means the Germans will be back for more races, perhaps bringing friends and adding to Dubai’s ballooning tourist trade.

[Video] Mohammed Al-Maktoum: Sheik Mohammed's Vision

                                                                                                         

Sheik Mohammed's Vision

Senior Writer Daniel Roth talks about Sheik Mohammed's plans for Dubai.

[Audio] NPR interview on Sheik Mohammed's Derby plans

Sheik Mohammed's Expensive Horse Obsession

 Weekend Edition Saturday, May 5, 2007. Daniel Roth talks to Scott Simon of Weekend Edition about Sheik Mohammed and why he doesn't have a horse running this year. Listen Now [5 min 3 sec]

Anime: It's... Profitmón!

It's... Profitmón!
From Pokémon to Full Metal Panic, the anime industry is doing everything the rest of show biz isn't: embracing technology, coddling fans--and making a killing.
December 12, 2005

By DANIEL ROTH

It was 2 A.M. when John Ledford heard the banging at his door. Stumbling from bed on that night in the fall of 1999, he threw on a robe over his boxers and opened the door of his Houston apartment to a twentysomething guy with glasses and a face full of freckles. Ledford was about to tell him he had the wrong apartment when the stranger launched into a speech. At that moment, Ledford knew: This visit was no accident. This stranger was an otaku.

Translated literally, the word is Japanese for "your household." But for obscure reasons, otaku morphed in modern Japan to connote a scarily hard-core fan, a nerd obsessed with a hobby to the point of unhealthiness. In the U.S. the otaku's infatuation is focused on anime--the Japanese style of animation that typically features saucer-eyed women and giant mechanical men. American otaku wear the label with pride.

The specimen at Ledford's door was going on about an anime TV show called Neon Genesis Evangelion, a series about humans fighting an alien invasion. He had a problem with the ending. "I don't like the direction you went in and I want you to go back and fix it," he demanded. Ledford explained that he didn't make the show and closed the door. He was rattled by the nocturnal visit--later that morning, leaving for Japan, he called his assistant and told her to find him a new place to live. But he should have known: That's what happens when your customers are wild with desire.

Bittorrent: The Great Disrupter

Torrential Reign
Bram Cohen’s BitTorrent software made it a cinch to pirate films on the Internet. So why is Hollywood on his side?
from the Oct. 17, 2005 issue

By Daniel Roth

 For two years after the dot-com crash, Bram Cohen could almost always be found at his small dining-room table, first in San Francisco’s Nob Hill and later in Oakland. His long brown hair would flop in front of his eyes, and he’d curl it back over his ears as he stared at the screen of his Dell laptop, writing line after line after line of code. Occasionally Cohen would take breaks—there was a club to visit some nights, a conference on coding to help organize, a trip to Amsterdam—but then he’d return to his wooden chair, his keyboard on his lap, his laptop propped up on some books, his back perfectly straight (thanks to posture classes he was taking), and he’d program some more. First he lived off savings from the handful of jobs he’d worked during the bubble. When that ran out, he lived off credit cards, following a rigid system for applying for and transferring debt to 0% introductory-rate cards. Friends would ask what he was doing. Why wouldn’t he just get a job? Cohen shooed them away. He was determined to solve a puzzle that was consuming him.

Since the birth of the Net, programmers had been stumped by how to transfer massive files—movies, TV shows, games, software, whatever—without incurring astronomical bills or risking frequent failure. Cohen knew he could find a solution; all it would take was time, good code, and brute intellect. He had all three. The money would take care of itself. “I didn’t have any clear plans when I first started,” he says. “I wasn’t worried, partially because what I was doing was really cool, and partially because I’m broken and can’t feel anxiety.

Buffett and Gates: The $91 Billion Conversation

The $91 Billion Conversation

Warren Buffett and Bill Gates answer questions, first for 2,000 Nebraska students, then for FORTUNE's Daniel Roth. The billionaire buddies on the economy, philanthropy, and investment strategy--an exclusive report.

From the Oct. 17, 2005 issue

By Daniel Roth

It's the Friday before the University of Nebraska's Big 12 Conference opener in football-mad Lincoln, but the Cornhuskers game isn't the only hot ticket in town. On a beautiful late September afternoon, some 2,000 students are lined up outside the school's Lied Center auditorium, an hour before the doors open. Andrew Schoemacher, a lanky 19-year-old chemical-engineering sophomore, doesn't even have a ticket but hopes he can scrounge one to get inside. How could he miss seeing this show? After all, he says, "It's Bill Gates and Warren Buffett."

Gates and Buffett--friends who just happen to be the two richest men in the world, worth $51 billion and $40 billion, respectively--are coming together for a free-ranging question-and-answer session. They have done this kind of talk before--once. The two met up in Gates' hometown of Seattle in 1998 with students at the University of Washington. Back then both men were on the verge of turbulent times: Microsoft about to face off against the government in its epic antitrust trial, and Buffett weeks away from buying reinsurer General Re, now the thorn in his company Berkshire Hathaway's side, thanks to its involvement with the troubled AIG. FORTUNE, the only magazine invited to attend their first chat, found the interaction "something pretty darn close to wisdom" and put the talk on the cover (see "The Bill & Warren Show" on fortune.com). So when the billionaires decided to meet again, we went along for an inside peek at the event--and more important, some private time with the two men to pose our own questions.

Estée Lauder's Dynasty: Sweet Smell of Succession

Sweet Smell of Succession
Dynasties don't last forever. But Estée Lauder's grandkids aren't about to let this beauty empire crumble.
from the Sept. 19, 2005 issue

By Daniel Roth

Every few months the two women gather in the CEO's office to talk about their problems. Both of them--the glamorous, creative type with a fondness for A-list events and the shy, no-nonsense manager who spends her days marketing to soccer moms--get a chance to give the chief executive a piece of their mind. Sometimes they even bring in a moderator to keep the discussion flowing. There's probably a plot for a bad reality show in this scenario; certainly it's an unorthodox use of the CEO's time. But when you're family, you do what you have to do. And in the case of the Estée Lauder Cos., the giant of the prestige-cosmetics world, family is everything. So CEO William Lauder and his cousins Aerin Lauder Zinterhofer, who oversees the Estée Lauder brand's image, and Jane Lauder, a vice president at a new division called BeautyBank, gather and clear the decks: What's bothering them? What is working and what is not? The caution makes sense. Around the world the conventional wisdom is that they will fail. Not them, exactly, but their generation: the grandchildren of a legendary founder. The Italians say, "Dalle stalle, alle stelle, alle stalle"-- "From the barn stalls, to the stars, back to the barn stalls." In Yiddish it's "Schmattes to schmattes in three generations," or up from rags and back down. In Chinese, it is chilly and blunt: "Wealth does not pass three generations." But Estée Lauder's grandchildren are doing everything they can to make sure the proverbs won't apply to them.

The world of cosmetics and fashion is watching closely to see if they can pull it off. In April 2004, Estée Lauder, the longtime undisputed queen of the cosmetics world, died at age 96. Three months later William became CEO, taking over a job that his father, Leonard, once held. The family business--the Lauders control 82% of the company's voting shares--continues to dominate the high-end beauty industry, with hot brands such as Bobbi Brown in makeup and Aveda in hair care. Lauder captures almost a fifth of the $33 billion U.S. beauty market overall and roughly half of the $13 billion prestige business. But it faces daunting challenges and new challengers. Estée Lauder's empire was built during the age of the great department stores, when the destination for the latest fashions and styles was Neiman Marcus, not Target. That era ended long ago. Yet about 40% of the company's sales still come from mostly older customers at these one-time giants in the U.S. Meanwhile, Lauder is being pressured on the high end of the market by nimble, boutique beauty brands, and on the low end by giant manufacturers such as Procter & Gamble that are determined to erase the boundaries between prestige and mass market.

To make sure the company keeps its edge in the changing cosmetics landscape, the three Lauder cousins are taking on much more than family counseling. (The fourth cousin, William's brother, Gary, 43, is a venture capitalist in Silicon Valley.) They could easily live off the $2.2 billion the family has taken out in stock offerings since the company's 1995 IPO, or on the millions that each makes in dividends every year. Instead, they're hunkered over spreadsheets, ad layouts, and store plans. And they've all carved out roles in the company that appear to fit their personalities perfectly.

Estée's grandkids were long ago assigned their own one-dimensional identities by the media. When you grow up as royalty in New York high society, that's bound to happen. Still, they don't do much to dispel the images. As the eldest, William, 45, is the responsible one, setting the direction and overseeing details. Aerin, 35, is known as the pretty, outgoing one, but she's far more than that. She recently took over directing everything from advertising to counter displays for the flagship--and stagnating--Estée Lauder brand and personally recruited superstar designer Tom Ford (who is, of course, a friend of hers) to bring it some sparkle, sex, and buzz. The press-wary Jane, 32, is seen as serious and hard-working. She's also a canny problem solver. Mostly behind the scenes, she is leading the company's charge into mid-tier markets that are crucial for growth.

Despite their different personal styles, the third-generation Lauders share an intense dedication to the family legacy. William, Aerin, and Jane all exude earnestness as if it's the next big fragrance. A few years ago they got together and decided to make sure they were all on the same page about where they wanted to take the business. So they drew up a manifesto: "We are not a family business, we are a family in business." While hardly the Gettysburg Address of corporate mission statements, the document made it clear that the good of the company would come first--and that those looking for a family brawl should probably look elsewhere. "My grandparents did such an incredible job building this company, and gave us so many advantages, that you want to be able to keep it going," says Jane. "It's hard to separate your life and your work because they're all kind of the same thing. Maybe there should be more separation, but there isn't."

The Amazing Rise of the Do-It-Yourself Economy

BRAINSTORM
The Amazing Rise of the Do-It-Yourself Economy
Tuesday, May 17, 2005
By Daniel Roth

It's doubtful that Steve Jobs ever faced these kinds of interruptions. "Daddy, I want to take a picture," says Owen Misterovich, motioning to a digital camera on his father's desk. "Okay," says Pat Misterovich, handing it to his 5-year-old son, who proceeds to snap a few self-portraits. Then it's back to the work at hand: producing the next great MP3 music player. Only instead of the simple, elegant lines of the iPod, Misterovich's device will look just like a Pez dispenser. Oh, and instead of working from a corporate campus in Cupertino, Calif., with nearly 12,000 employees, Misterovich is a stay-at-home dad, creating his Pez MP3 player from the basement of his Springfield, Mo., home.

Misterovich is the former head of IT at the University of Detroit Mercy. He has few of the engineering skills necessary to build a device like this, no marketing experience, and absolutely no corporate infrastructure. And yet he's got two factories—one in China, one in the U.S.—vying to build the player. He has a small Austin company started by an ex-Apple engineer designing the innards. And on his blog, pezmp3.com, he uses prospective buyers—some 1,500 people have already expressed interest—as an R&D-center-meets-focus-group. What's better, he asks, AAA batteries or Li-Ion? In come dozens of replies ("Go for the AAA with a USB NiMh recharger if possible," suggests one reader). What's a good slogan? Some 50 ideas roll in (one of the best: "Candy for your ears"). By the end of this month the first prototype should be in Misterovich's hands. "I don't know that this product could have come to life years ago," he says. "I seriously doubt it. And if it did, it wouldn't have come through a guy in his basement."

Can Nike Still Do It Without Phil Knight?

Can Nike Still Do It Without Phil Knight?
Now that Knight has stepped down, it’s up to new CEO Bill Perez to channel one of the most inscrutable, contradictory, and inspirational leaders around.
from the April 4, 2005 issue

By Daniel Roth

I had been warned that the interview would be a crapshoot. On some days Phil Knight opens up; on others he barely says a word. I got lucky. On this gray January morning the founder of Nike was willing to talk. Perhaps Knight felt nostalgic: He had just finished his last official day as CEO of the company he had built from scratch some 40 years earlier, and this was his first—and so far only—extensive interview. Or perhaps he just wanted to talk. No one ever really knows with Knight; they just take what they can get. Tinker Hatfield, a 24-year Nike veteran, told me that when he goes to Knight with a question, sometimes Knight doesn’t even answer. (Tinker says he simply treats that as a yes.) Whatever the reason, Knight happily ruminated on the highs and lows of his career; he reminisced about the joys of building his company, about the hunt for a successor, about the athletes he had signed—good and bad—and about the people he had managed—well and not so well. He talked, haltingly, about the death of his son last May. Knight, famous for wearing his sunglasses just about everywhere—even inside the buildings on Nike’s 176-acre campus in Beaverton, Ore.—kept the Nike shades off, though they were always within his reach on the table in the small conference room.

There was only one question that got shot down, and it came as we were wrapping up. "May I see your office?" I asked. Knight didn’t speak; he simply shook his head. "You don’t want to show it?" Again, he shook his head. It wasn’t a surprise. Few employees, let alone an outsider, have ever been in Knight’s office. One executive who works closely with Knight told me he hadn’t been in there in almost a decade. The only thing that anyone seems to know about the sanctum is that Knight fashioned it in a Japanese style. So Japanese, in fact, that inside the office of the man who controls the most powerful shoe company in the world, no shoes are allowed. Not even Nikes.

Why There's No Escaping the Blog

10 TECH TRENDS
Why There's No Escaping the Blog
Freewheeling bloggers can boost your product—or destroy it. Either way, they've become a force business can't afford to ignore.
from the Jan. 10, 2005 issue

By David Kirkpatrick and Daniel Roth

Early in the evening of Dec. 1, Microsoft revealed that it planned to take over the world of blogs—the five-million-plus web journals that have exploded on the Internet in the past few years. The company's weapon would be a new service called MSN Spaces, online software that allows people to easily create and maintain blogs. It didn't take long for the blogging world to do what it does best: swarm around a new piece of information; push, prod, and poke at it; and leave it either stronger or a bloody mess. The next day, at the widely read Boing Boing blog, co-editor Xeni Jardin opted to do the latter.

She titled her critique of MSN Spaces "7 Dirty Blogs" and hilariously sent up the fickle censoring filters Microsoft appeared to have built in. MSN Spaces prohibited her from starting a blog called Pornography and the Law or another entitled Corporate Whore Chronicles; yet World of Poop passed, as did the educational Smoking Crack: A How-To Guide for Teens. Within the first hour of Jardin's post, five blogs had linked to it, including the site of widely read San Jose Mercury News columnist Dan Gillmor. By the end of the day there were dozens of blogs pointing readers to "7 Dirty Blogs," a proliferation of links that over the next few weeks topped 300. There were Italian blogs and Chinese blogs and blogs in Greek, German, and Portuguese. There were blogs with names like Tie-Dyed Brain Waves, Stubborn Like a Mule, and LibertyBlog. Each added its own tweak. "Ooooh, that's what I want: a blog that doesn't allow me to speak my mind," wrote a blogger called Kung Pow Pig. The conversation had clearly gotten out of Microsoft's hands.

Typically Microsoft would have taken the hits and kept powering forward. That is the Microsoft way. For years such behavior has done little but make people feel defenseless against the company. But this time Microsoft deployed one of its most important voices to talk back: not Bill Gates or Steve Ballmer, but Robert Scoble.

China Tries to Kick the Piracy Habit

TEN TECH TRENDS
China Tries to Kick the Piracy Habit
All of a sudden, China's entrepreneurs are asking for protection from intellectual-property thieves.
from the Jan. 10, 2005 issue

By Daniel Roth

Ben Ye is one of China's many rising young stars. At 24, he won the first round of a business-plan competition at Beijing's prestigious Tsinghua University with a proposal for a web-conferencing company. Rather than stay in the competition, Ye took his idea and started a business called V2 Technology. He has been able to raise $1.3 million and build a 70-person company, yet the plan didn't account for one potentially fatal threat: pirates. Two years ago, when V2's software hit the market, resellers called to say that cheap, illegal copies were already being hawked.

Ye's lawyers declared that the only way to get relief was to find the pirates, collect evidence, and bring it to the cops. "We said, 'Forget it,'" says Ye. "We aren't Sherlock Holmes."

Salesforce.com: The Big Benioff

Salesforce.com: The Big Benioff
He's perhaps the most charming, cocky, pr-blitzing, eastern-religion touting, pushy showman in tech. but is Marc Benioff possibly also right?
from the Dec. 13, 2004 issue

By Daniel Roth

"I'm glad you're here," Vivek Ranadivé, the CEO of Tibco Software, says to me as he bounds up the stairs of his Palo Alto headquarters. "You're going to watch me sell to Marc." Marc is Marc Benioff, the CEO of Salesforce.com, a five-year-old company, half the size of Tibco, that offers a web-based program companies use to track and analyze all of their sales and support functions. Ranadivé ushers us into a conference room, where he has a team ready with a presentation on why Salesforce.com needs to rewrite itself using Tibco's recently acquired application development software. Almost as soon as the demonstration starts, though, it's clear that Ranadivé wishes I weren't there. He's not selling; he's getting sold.

"This is much bigger than you think it is," says Benioff, cutting off the presentation. "This is a tremendous opportunity for Tibco. But you need to build a five- to ten-year plan to really take this seriously." Benioff leans forward. "If you do that, you'll take your company to another level. This is your greatest opportunity to go from doing $500 million worth of revenue to getting into the $1 billion to $2 billion club. Vivek, this is your opportunity. And we will help you."

Benioff leaps to a whiteboard, grabs a marker, and sketches the details of Salesforce.com: how the system works, how an "ecosystem" of companies selling add-ons to his software is growing around it. Tibco shouldn't try to hawk a product to him, Benioff says; it should transform itself into a Salesforce.com partner, selling to the 12,500 companies using Salesforce.com. He talks about Tibco's joining a worldwide Salesforce.com road show, about creating "webinars" together, about how Tibco can thrive by grabbing onto the Salesforce.com rocket. Then he slyly suggests that Tibco could pilot its new tool in-house—all it would need to do would be to expand its use of Salesforce.com.

"Okay, we'll do that," says Ranadivé quietly. His bravado gone, he sinks into his chair, holding his head up with his hand. Benioff beams. He has just laid the groundwork to add another 100 users to the 400 at Tibco who are currently subscribed—and he wasn't even trying.

In Search Of China's Bill Gates

In Search Of China's Bill Gates
Does one of these young entrepreneurs have what it takes to create China's first world-dominating company?
from the Oct. 4, 2004 issue
By Daniel Roth

In the early 1990s, Wang Zhidong jumped into the sea, as the saying goes. The Beijing University graduate left a secure job to set up his own firm in an abandoned school near a street so crowded with stands hawking PC innards it was dubbed "Electronics Avenue." With a handful of friends, he crafted a program that enabled Microsoft Windows and Windows-compatible programs to work in Chinese. By 1997 the software was running on about 90% of the country's PCs. Then, as dot-com fever came to China, he decided to turn the company into an Internet portal.

Wang suffered from the usual problems faced by tech entrepreneurs—lack of funds, contract issues, fear of Microsoft—but there were a few that Western CEOs have never had to deal with. One: whether to install toilets. In 1997 the American CFO of his company demanded that Wang put real toilets in the company's new office. Wang was flabbergasted; he had never worked in an office that had them and didn't understand why he couldn't just have the usual holes in the ground. "We Chinese are used to these toilets," he says. "We call it 'Chinese kung fu.' " The CFO begged, explaining that he had been making up an excuse every day at 3 p.m. to leave so that he could sneak back to his hotel and use the toilet there.

Powell Takes a Pounding

Powell Takes a Pounding
Attacks on the FCC chair have been unrelenting. But Michael Powell might just know what he's doing.
from the Jul. 26, 2004 issue
By Daniel Roth

If you think Colin Powell's had it bad this summer—forget Fahrenheit 9/11, we're still trying to wipe away the image of him "YMCA"ercising in Indonesia—just imagine what his son is going through. In a mere six days in late June, Michael Powell, the chairman of the Federal Communications Commission, saw his carefully crafted plan for relaxing media ownership restrictions slapped down by a federal appeals court (the decision noted that a central section of his case "requires us to abandon both logic and reality"); had a U.S. Senator accuse his commission of potentially violating federal law in a spectrum swap proposal; and, in what has to be a first for an FCC chief, served as the target of a Howard Stern diatribe. "Michael Powell [is] a guy you didn't vote for, a guy who got his job because his father works for the Bush administration," declared the shock jock to his millions of listeners. "He's a crackpot, and I have said he's a crackpot." Also, pointed out Stern, he's "a boob and a jerk."

Seeing the World on Ten Coffees a Day

Seeing the World on Ten Coffees a Day
There is no stopping Starbucks' worldwide expansion. One man thinks he can at least keep up. Meet Winter, Starbucks hunter.

Download starbucks-spanish.pdf

From the Jul. 12, 2004 issue
By Daniel Roth

By 9:10 a.m., John "Winter" Smith—just Winter to those who know him—had already been up for three hours, visited four Starbucks, eaten one Starbucks doughnut, and downed a Starbucks DoubleShot espresso and 12 ounces of regular Starbucks coffee. He's jittery, but he's still on his game: Standing at the counter of Starbucks No. 5 for the day, an unremarkable strip mall location in Scottsdale, Winter realizes something is amiss.

Larry Bird Finds Trump In His Backyard

Larry Bird Finds Trump In His Backyard
The Donald is competing to build a casino in the basketball legend's Indiana hometown.
Monday, May 17, 2004
By Daniel Roth

Lounging in his gold-bedecked 727 not long ago, Donald Trump explained one of his rules of investing: "I only do a deal if I think it has the greatest glamour."

Yet his latest deal couldn't be farther from the spotlights.

Trump: The Trophy Life

The Trophy Life
You think Donald Trump's hit reality show is a circus? Spend a few weeks watching him work.
Monday, April 5, 2004
By Daniel Roth

Donald Trump is not a great promoter. He has explained that to me a number of times already. "See, I don't view myself as a good promoter," he said during a five-hour flight from New York to Los Angeles on his private 727. "People say I'm a great promoter. People say I'm the greatest promoter that there is. Anywhere." So when we meet the next morning in the lobby of the Beverly Hills Hotel, it's a relief to see that he's working through his promotional problems: On his head is a red baseball cap bearing the coat of arms Trump created for himself (a hand clutching an arrow, resting on a knight's helmet, which is perched over three leaping lions) and, emblazoned in gold, trump international, the name of his Florida golf course. His yellow Tommy Hilfiger sweatshirt also sports the insignia, as does the white golf shirt underneath. Only his khakis are logo-free, along with his golf cleats.

What Donald Trump is great at, Donald Trump tells me, is building buildings, inside and out. And today he's focusing on the minute details of the inside, climbing into a limo for a trip to the factory of J.P. Weaver Co., which makes, he says, "the most incredible moldings you'll ever see." Trump is adding a 17,000-square-foot ballroom to his Palm Beach private club, Mar-a-Lago, a 128-room mansion built in 1927 from Dorian stone imported from Italy and containing 36,000 Spanish tiles dating back to the 15th century. And as soon as he walks into the company's showroom, designed to resemble a room at Versailles, he has seen enough.

"This is exactly what I'm looking for," he says to owner Lenna Tyler-Kast, his plastic cleats clicking along the hand-laid cherry floor. The room is a riot of celadon moldings—flowers in urns, flowers on their own, curlicues, leaves, tasseled ropes, ribbons. "Not the ceiling, by the way," Trump warns. "The ceiling no, the walls yes. I also think the mirrors should have this." He fingers a delicate strip of molding that splits a mirror into a grid. "The moldings are very important in the mirror." A few minutes later, as Tyler-Kast handles other business, Trump marvels at what he's seen. "Unbelievable," he says in a low whisper. "Can you imagine if I can pull that off in a huge room?" As soon as she comes back, though, the famously pursed lips return. "What's your price? I hope that you'll give me a discount. No. 1, because I'm Trump."

Skype: Catch Us If You Can

Catch Us If You Can
The folks who brought you Kazaa have a new hit called Skype—and a plan to set phone calls free. If the telcos want to fight back, they'll have to find them first.

Monday, January 26, 2004

By Daniel Roth

Near the center of the walled medieval district of Estonia's capital, Tallinn, sits the NoKu bar. It's almost impossible to find, on a cobblestone street behind a pair of old, unmarked wooden doors that unlock only with a magnetic keycard, and up a set of rickety stairs. In Estonian, "NoKu" is an acronym for "young culture"; the private club is full of twentysomethings in jeans, drinking local Saku Original beer to rock music. The bar's name has another meaning: Read as one word, it's slang for "penis." Both the hidden nature and the cheeky attitude of the place fit perfectly with the company I'm here to meet.

Almost a dozen computer programmers and engineers are gathered around a large wooden table in the back of the bar on this bitterly cold mid-December night. They work for a startup called Skype, which produces software that allows people to make free, incredibly clear voice calls from their PC to any other PC in the world. "We're building the next great communications platform," declares Andreas Sjoelund, a product manager who has shuttled to Estonia from his native Sweden. Next to him is white-bearded Kaido Karuer, the eldest of the group at 34. The rest include a few Estonians straight out of college and a dark-haired Russian who, when Estonia declared independence in 1991, chose not to ally himself with either Russia or Estonia and is now stateless. Just about all the Skypers are in their mid-20s and perfectly fluent in English. And every one of them is confident that what they're doing will make telephone companies irrelevant.

"We've designed this to be able to support an infinite amount of users," says Sjoelund. Karuer tones him down: "We can't do much more than six billion, actually." When asked to name the company's biggest competitor, three at the table quickly reply, "No one."

Normally, bragging Baltic programmers don't inspire much fear among the FORTUNE 500. But these guys do.

Magna Cum Loud

Magna Cum Loud
The art of DJing has come a long way. How far? A new school is drawing students from Wall Street and beyond.
Wednesday, October 2, 2002
By Daniel Roth

Singer Angie Stone has a nice hit in "Wish I Didn't Miss You." The song is danceable, features appropriately vacuous lyrics, and has an infectious groove. But, for Eric Schimmel, "Wish" has a major flaw: Its tempo doesn't match King of House's "Billie Jean Club Remix."

Terry Semel Thinks Yahoo Should Grow Up Already

Terry Semel Thinks Yahoo Should Grow Up Already
That means going broadband and taking on AOL and MSN. Lots of luck.
Sunday, September 15, 2002
By Daniel Roth

For almost three years Ted Meisel's calls to Yahoo went unanswered. As CEO of GoTo.com--now called Overture--Meisel knew that Yahoo could make money by using his pay-for-placement search offerings. Companies were lapping up the service, which lets, say, findaplumber.com pop to the top when a user searches for "leak" or "clogged toilet" or "plumber." But with dot-com advertisers lining up to get a spot on Yahoo, the company hardly needed to field unsolicited pitches. "It wasn't something that they were willing to make time for," says Meisel.

Then last fall an odd thing happened: Yahoo called in Meisel for a test run. Within three months Overture was placing its listings on Yahoo, and by April the two companies had inked a three-year deal. By early this summer the partnership was responsible for an estimated 10% of Yahoo's $226 million in second-quarter revenues--all with Yahoo's barely lifting a finger or spending a dime.

What Congress Doesn't Know Will Hurt You

What Congress Doesn't Know Will Hurt You
Basic accounting know-how would improve questions at hearings.
Tuesday, July 23, 2002
By Daniel Roth

When the House Committee on Financial Services hauled top WorldCom executives onto Capitol Hill in early July, its intent was to uncover how and why the telco booked nearly $4 billion of operating expenses as capital expenditures. But with ex-CEO Bernie Ebbers and ex-CFO Scott Sullivan taking the Fifth, little was revealed--except this: Many members of Congress need a refresher course in accounting (remedial American history wouldn't hurt either). In the interest of helping our Representatives, we asked a few professors to deconstruct some of the questions:

Can EMC Restore Its Glory?

Can EMC Restore Its Glory?
The hardware juggernaut's answer to its problems: software.
Monday, July 8, 2002
By Daniel Roth

In August 2001, two dozen coders, product managers, and marketers at storage kingpin EMC were sitting in a conference room on the company's sprawling campus outside Boston. The gathering was routine: The group was plotting a road map for the latest release of EMC's ControlCenter software. One programmer explained to Erez Ofer, who oversees the group, how a certain piece of the software would help power EMC's crown jewel: the Symmetrix box, a data-storage system that can cost several million dollars. Ofer stopped him. "I think you should build that for Hitachi instead," he said, invoking an EMC archrival. The room fell silent. Then came a reply: "Are you serious?"

He was, and so is EMC. In an attempt to regain its past glory, the beleaguered company is rolling out a bold new strategy. Since 1991, when it practically invented the modern storage market, EMC has defined itself first and foremost as a hardware company, albeit one that sold pretty darn good software. But the technology world has turned upside down, so EMC is attempting a flip of its own--emphasizing software instead of hardware. And if that means embracing Hitachi's or any other competitor's technology, so be it.

Pat Robertson's Quest for Eternal Life

Pat Robertson's Quest for Eternal Life
He's making bets to ensure that his evangelical empire outlasts him. His portfolio so far: a gold mine in Liberia, a mothballed oil refinery, and $78 million in losses.
Tuesday, May 28, 2002
By Daniel Roth

Jesus mania swept Liberia. For eight nights last December the nation's TV channels--both of them--simultaneously showed programs created by Pat Robertson's Christian Broadcasting Network. There was the Prodigal Son parable told from a Nigerian point of view; animated Bible episodes; stories about people who said they'd had out-of-body experiences and come face to face with the Almighty; and the true tale of a Mexican family who stayed together thanks to God. For two nights the stations simply broadcast testimonials from Liberians detailing Jesus' role in their lives. Those without televisions (the vast majority of the country) could catch the same fare at local "video clubs"--converted storefronts where people paid the equivalent of a few pennies to gather around a TV and VCR.

That was just the buildup. In February, at a national three-day prayer-and-fast rally partially funded by Robertson, Liberia's President--a U.S. prison escapee who, according to Human Rights Watch, has run "the whole gamut of human rights abuses"--declared he had seen the light. "We in Liberia recognize that there is a higher authority," said Charles Taylor, decked out in a short-sleeved white suit and standing on a red-carpeted stage at the center of the Samuel K. Doe stadium in Monrovia. "I am not your President. Jesus is!" He instructed the estimated 65,000 people in the crowd to prostrate themselves and join in a song that he would lead despite his position--face down on the carpet. As the rally ended, Taylor presented a ceremonial plate to an American preacher named John Gimenez who had helped organize the event. "Thank you," Taylor said. "Tell Pat Robertson, and please present this to him as a token of our appreciation."

About 190 miles away, in a densely forested region of Liberia called Bukon Jedeh, Robertson's employees were busy working on a much more valuable token of Taylor's appreciation. There a crew of 35 Liberians were digging deep holes into the red, claylike soil on a plot of land contracted out to Robertson. Their goal was to uncover the spot, beneath the gravel and laterite, that they believed held five million ounces of the stuff that the Book of Revelation says lines the streets of heaven: pure gold. Gold that if sold on the open market could reap about $1.5 billion.

Behind the media blitz of Monrovia and the trenches of Bukon Jedeh is the tale of Pat Robertson's search for immortality. In the past few years Robertson has slowly slipped out of view, especially in politics, where his ambitions once extended to the White House. But he has hardly gone into retirement. In fact, friends and family say he's working with more intensity than ever. His mission: not just to boost his $300-million-a-year empire--dominant Christian broadcaster CBN, an all-graduate-level university called Regent, and his Operation Blessing global charity--but also to make sure it lasts forever.

How to Cut Pay, Lay Off 8,000 People, and Still Have Workers Who Love You

How to Cut Pay, Lay Off 8,000 People, and Still Have Workers Who Love You
It's easy: Just follow the Agilent Way.
Tuesday, January 22, 2002
By Daniel Roth

At about 9 p.m. on Oct. 15, Cheryl Ways' office phone rang with a call from her husband: "What are you still doing there? Come home," he begged. Ways, a 30-year-old IT worker at tech giant Agilent Technologies, told him she'd leave soon. Then she went back to work. A half-hour later, she shut off her computer and walked down Agilent's darkened corridors. It was hours after most of her co-workers had left, hours later than she typically stayed, and the last time she'd do it in her career.

Three weeks earlier, Ways had been laid off. In that, she was just another statistic in a truly dreadful year for the paycheck nation. According to outplacement firm Challenger Gray & Christmas, corporate America announced nearly two million job cuts in 2001, the most since Challenger started its survey in 1993. Agilent, an $8.3 billion spinoff of Hewlett-Packard, had been hammered not only by the downturn in the economy but also by the downfall of the telecoms that were once big buyers of its chips, electronic components, and testing and measurement devices. So Ways' getting caught in a downsizing isn't surprising. What is surprising is the manner in which Ways left: not by spending her lame-duck days updating her resume on company time or prying the A's off office keyboards, but by working harder, longer, and with an intensity that rivaled the most productive periods of her five years at Agilent and HP.

The answer to why she did it--and how Agilent was able to wring such performance and devotion from tens of thousands of employees working beneath an ax--provides a lesson for all companies struggling to slim down in these post-boom years. In many ways, Agilent had a head start: It had worked hard on the way up to gain its employees' trust. But on the way down, Agilent has also made a series of smart moves involving good management, good planning, and most of all, empathy. In interviews with dozens of current, former, and soon-to-be former Agilent employees, almost no one had a bad word to say about the company. Which is how Agilent was able to slash, cut, and downsize its way to No. 31 on this year's list of the Best Companies to Work For.