Tag Archives: iPhone

Grexit Day!

So, the burning question of the day is who will prevail in Athens?

As Greek voters prepare to the go to the polls on Sunday and central banks around the world prepare to enter crisis mode if far left-wing candidate Alexis Tsipras wins and reneges on the country’s bailout package, thus threatening euro zone solidarity, the Greek economy may slip into something resembling medieval Europe‘s Dark Ages.

All of the money managers in the U.S. and around the globe will have a busy afternoon and evening watching and waiting and finally executing their market calls. BlackBerries and iPhones will be at the ready during Father’s Day barbecues. Most predict a future for the Euro, though admittedly fraught with weakness and instability.

In recent days, international companies have been divesting their Greek branches. French supermarket giant Carrefour SA  sold its Greek branch to its local partner at a loss, Coca Cola’s Greek operations were downgraded by Moody’s Investors Service, and various import-export insurance companies have stopped covering transactions with Greek companies.

In addition, Greece risks blackouts as Russian gas giant Gazprom has said it will cut the country off if it does not pay its bills by June 22 

While international companies have withdrawn from Greece, the Greeks themselves have stopped buying everything from clothing to medicine.

The only things that have been selling well recently have been staple foods like pasta and canned goods, which have been flying off the shelves. Greeks are stocking up on non-perishable food in panic-buying mode as they prepare for shadowy worst-case-scenarios following the election. A quiet rush on banks has been occurring, with $1 billion in deposits leaving Greek banks each day for some time.

As for the euro itself, it may not really matter much, at least in the medium term, as most money managers are betting that the euro, the currency of 17 nations from the Baltic to the Mediterranean, will eventually weaken, whatever the outcome on Sunday.

“The hundred billion bought us two hours of relief, and then interest rates began to go up again and markets began to zoom in on Italy,” says one money manager, referring to last weekend’s 100 billion euro bailout for Spanish banks. “It has become a systemic issue. Until we see a lasting resolution of those doubts, we feel the euro will remain under pressure.”

If the left-wing parties win in Greece and back away from austerity, prompting a default or a disorderly exit from the euro, “we would expect the euro to drop like a stone,” says another money manager. “The consequences would be dramatic.” The currency could sink to parity with the dollar, he says.

The larger point is that whatever happens in Athens, doubts about Spain and Italy will only continue to grow. Those nations’ debt loads are large, and both are increasingly seen as unable to make the kind of changes that will persuade investors to keep buying their debt.

The ultimate answer is for European governments, led by Germany, to agree on concrete and credible steps toward greater fiscal and political integration, including the issuance of broader euro zone debt. That would eventually allow Spain and Italy to borrow what they need with Continent wide backing. In addition, leaders should come up with a euro zone wide bank guarantee to avert full-scale bank runs in shaky countries.

Ultimately, the market will force policy makers’ hands. But with 17 parties sitting at the table, the decisions are glacial. The markets move in a rapid-fire fashion. The stakes are increasing every day. 


Crowdfunding Needs To Go On The Warpath!

I cannot believe the opposition to the Crowdfunding component of the JOBS act. This is a classic case of government lifers protecting their turf.  

President Obama sent a strong message by signing the JOBS Act: This administration wants to actively participate in job creation, revive the American entrepreneurial spirit, and maximize the opportunities that modern technology can offer small business owners.

And the best part: It doesn’t cost taxpayers a dime. Just by cutting regulations, the JOBS Act energizes and modernizes an age-old formula. It’s simple: More funding for start-ups = more jobs. Kauffman Foundation’s research is clear:  All net new jobs in the last 30 years come from businesses fewer than five years old. Stimulating and enabling start-ups is the key to stimulating the job market.

The Crowdfunding opponents’ main objections? Fraud.

The SEC, along with several state securities regulators are “worried” that innocent, unsophisticated investors will be bilked by unscrupulous system gamers and scam artists. They actually equate this new frontier to the Wild West. Nothing could be further from the truth. And, by the way, this is the same SEC and state securities regulators that somehow missed Bernie Madoff, JPMorgan Chase, Lehman, AIG and Goldman-Sax, to name but a few. Are these the agencies that we want “protecting” us from predatory investors and scam artists? I think not.

Here’s a few reasons why their “concerns” are poorly grounded:

First, the SEC has another nine months in which to establish all sorts of regulations that will surely protect investors from fraudulent schemes. But, the best protection is baked right into the essence of Crowdfunding itself. That is, the crowds will ferret out any semblance of fraud and broadly report it before any investors have an opportunity to participate. The best example of this behavior can be seen by examining the recent Facebook IPO.

Within hours of the offering, millions of bloggers and reporters took to the airwaves reporting on the botched IPO, and this was “carefully” managed by people like JPMorgan, Morgan Stanley and the like. Imagine how quickly that information would have been disseminated were an actual crowd participating online.

Second, we have a lot of actual Crowdfunding history to dispel the notion of fraud. Indiegogo, for example, has been around for over a year and has distributed millions of dollars every month – losing less than 1% to fraud.

Third, that tiny fraud rate is not mere coincidence. Rather, it’s based on very specific efforts. From the very start of a campaign, today’s Crowdfunding sites capture relevant information from both campaign owners and campaign funders. Online tools constantly screen funding campaigns using a fraud algorithm built on hundreds of thousands of transactions (similar to PayPal, MasterCard, and eBay).

Finally, the realities of Crowdfunding limit fraud as well – as typically the first 30-40% of funds contributed are from friends and family, providing social proof before new investors come on board. Quite understandably, strangers are reticent to fund empty campaigns. And beyond fraud, there are additional information rights and investor protections written into the JOBS Act.

Setting the fraud concerns aside, the benefits associated with Crowdfunding are unique, and in addition to creating lots of jobs and potential wealth, the upside is huge:

1. Projects that begin through online Crowdfunding have built-in risk mitigation. That’s because the public nature of the solicitations forces transparency regarding demand for the product or service.

2. The Crowdfunding process facilitates marketing efforts even before a new company is operational. It provides an opportunity to test the message – after all, the whole process of securing funding involves social media networking, marketing, and brand-positioning.

3. The very nature of starting a business through an online platform provides exposure to potential customers that a bank loan doesn’t. It provides open access to anyone, anywhere, and is shared with like-minded friends through social media.

4. The data-collection inherent in online interactive activity provides new businesses with critical information. Brick and mortar businesses struggle to obtain data about existing customers – let alone prospects. The Crowdfunding world provides that data instantly and in volumes large enough to draw statistical conclusions.

5. Crowdfunding provides young businesses and ideas with money to launch those ideas.

6. Crowdfunding allows average Joes and Janes access to startups and opportunity to invest and become part of the next Facebook, Google or cool Indie film debuting at Sundance.

These guys (Pebble) raised $7 million in two weeks before they shut down the fundraising on KickStarter and are now making these cool smart-watches that work with iPhones and Androids. Now, of course, the very Venture Capitalists who turned them down and dying to throw money at them. In addition, they have created a development platform for smart-watch applications, which guess what, creates lots of new jobs. If this had happened after Crowdfunding for equity was lawful (next February) the investors would each own a piece of this company – now they just get a watch instead.

We are not the same society that we were in the 1930s when the Securities Act of 1933 was written into law. That act prohibited anyone worth less than $1,000,000 from investing in privately held companies. 

This is 2012. We have the Internet. We have news on a 24/7 cycle. We all use Facebook, Twitter and many of us Blog and Pin and send Instagrams. We are social networking junkies. We insist on authenticity and we love to share. The JOBS act acknowledges the changing world and is an attempt to reflect today’s realities in the world of investing and business creation.

The JOBS Act is a natural evolution of President Obama’s Startup America agenda. And perhaps nothing speaks to the value of Crowdfunding better than the successful businesses – and jobs they created – that owe their existence to the short history of Crowdfunding. Let’s all get behind this and make sure that the law, as passed is what we are going to get next February and not some crazy, restricted version that defeats the whole purpose.

Apple. How Cool.

Apple, the most valuable public company in the world, is making major casheesh off their cool and oh, so innovative tech gadgets — here is an Infographic that puts this in perspective.

Last week, the company reported a record net profit of more than $13.6 billion for its quarterly report lasting 14 weeks and ending Dec. 31, 2011. A rumored summer release of the iPhone 5 will help keep the money flowing in this year for the more than $400 billion company, and the soon to be released iTV is alleged to blow doors off the TV industry.

“We’re thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs,” Tim Cook, Apple’s CEO, said in a statement. “Apple’s momentum is incredibly strong, and we have some amazing new products in the pipeline.”

Cook alone raked in $378 million last year, naming him the highest-paid CEO. In the past three months, Apple brought in four times more profit than Walmart, the world’s largest retailer.

Apple could pay off the public debt of eight European Union countries. Apple could also write $6,622,516 checks to each of its employees before exhausting its fortune. More than $97.7 billion of Apple’s money is in cash reserves, and two-thirds of the money is stored offshore. I am one of those “fools” that think the company will break $1,000 a share this year. But, mostly I LOVE cool Infographics!

Kickstarter On Track To Distribute More Funding Than The National Endowment For The Arts!

Fundraising website Kickstarter is on track to beat the National Endowment for the Arts in funding, Talking Points Memo reports.

In an exclusive interview with TPM, one of the web startup’s co-founders, Yancey Strickler, said the company expects to distribute $150 million to its users’ projects by the end of the 2012 fiscal year, edging out the NEA’s $146 million budget.

Kickstarter has been around since 2008, distributing funds for projects in a variety of creative areasincluding art, comics, technology and theater. The way it works is community based — users pitch their projects, and anyone on the internet can donate money to fund them. The NEA is an independent federal government agency that has been around since 1965, awarding grants to the arts, from dance and design to music and theater.

While NEA funding calls are made by a council and the NEA chairman (Rocco Landesman), and typically don’t exceed $100,000, Kickstarter’s grassroots model is limitless. Some projects have raised mind-boggling amounts of money, such as this Elevation Dock for the iPhone, which was one of three projects to exceed $1 million, raising close to $1.5 million on Monday.

In general, Kickstarter projects follow a looser definition than the NEA’s, described as “creative” projects rather than solely artistic ones. The NEA’s recent grantees include Magic City Smooth Jazz, supporting their Jazz in the Park series, and the Puppetry Arts Theater, Inc. in Brooklyn, NY, to support a production of a new musical, “Antropomorphic” (see a list of recent grant recipients here), and are often meant to promote arts education as much as specific projects.

Strickler added that the company views the implication of the $150 million number “in both a good and a bad way.”

“Maybe there’s a reason for the state to strongly support the arts,” Strickler told TPM.

Whatever Strickler’s reservations, this can’t be anything but good news. There’s no reason the two worlds shouldn’t coexist — the more underground Kickstarter projects, and the more traditional NEA grants — when all it means is more funding for the arts. The only way it could be viewed in a negative light is if someone used this news to bolster an argument for cuts in federal arts funding. Bizarre, but entirely possible.

“Social” Is Changing Everything!

Wheelz: Automotive Veterans Launch P2P Campus Car Sharing Platform Backed By Former Facebook VP

Screen shot 2011-09-28 at 3.21.40 AM

Kicking it into fifth gear and zooming out of stealth and into the public sphere today is Wheelz, a new person-to-person car sharing platform for campuses — designed to connect students who have cars with student who need ‘em. Granted, when I first heard the basics on Wheelz, I immediately thought, “gadzooks, another car sharing platform!?” What about RelayRides, GetAround, Zimride, and Zipcar? These are all by and large great young businesses, adding value to the space; sure they’re not all targeting campuses, but I wasn’t so sure we needed another one.

Whether you feel the same way or not, Wheelz begs to differ. Launching initially at Stanford University, the startup is bringing campuses a technology and service platform that allows students and other campus dwellers to connect safely and easily — through Facebook integration, a good-looking iPhone app, and its proprietary in-car hardware system, called DriveBox.

Facebook integration and mobile apps are fairly standard for savvy online businesses today, but the latter feature isn’t. Once a user signs up for Wheelz, the startup will install the DriveBox in their car for free (installation takes about an hour), which will allow other Wheelz members to unlock the car using the startup’s iPhone app or Wheelz card. This is a great feature for those who don’t have time to meet the person to give them keys, or don’t want to (can’t) make a new key, etc.

After sign up, the company then provides a secure “Key Box” in which owners can leave the key so that renters can start the car. They Key Box also contains a gas card, so that when your car falls below a quarter of a tank, the person driving the car is responsible for filling the car up, using the gas card. The owner of the car is responsible for the price of gas, which will be deducted from the owner’s total earnings each month.

The person driving your car is obliged to pay for use of your wheels, and so each car has hourly and daily prices that are established by the car’s owner. Prices will vary depending on the type of car, age of the car, use, and so on, though Wheelz contends that it is offering the cheapest solution on the market. (Also, users looking to rent for longer can also set up weekly share prices).

As to insurance, as soon as a user borrows a Wheelz car, they are covered by the startup’s million-dollar insurance policy for the entire time they’re using their car. And, according to Wheelz’s website, a user’s “personal auto insurance is in no way affected” by the startup’s coverage.

Some other cool features? Wheelz is offering a pretty wide variety of cars, including sedans, hybrids, luxury cars, convertibles, vans, SUVs, and even a few trucks — plus, while you’re enjoying your Wheelz reservation, you’ll be able to take advantage of free, 24/7 customer support and roadside assistance.

Another piece that helps inspire confidence in the nascent startup is that it raised $2 million in seed funding, pre-launch, led by Chamath Palihaptiya, a former Facebook VP and early employee (who recently left to found the Social+Capital Partnership venture fund). Joining Palihapitiya are VC firms Felicis Ventures and Red Swan Ventures as well as an impressive list of angel investors, including Jim Freer, the former vice-chair of Ernst & Young, and Sebastien De Halleax, the founder of Playfish.

The Wheelz team also brings significant automotive experience to bear on their new venture, including founder and CEO Jeff Miller, who has spent the better part of the last three years focused on building sustainable transportation solutions, working for electric vehicle network provider Better Place.

In addition, Akhtar Jameel, Wheelz Co-founder and CTO (and the architect behind Wheelz’ technology platform) was formerly the CEO of Mercedes-Benz R&D and has held senior product and technology positions at Daimler, Better Place and Xerox PARC.

And, um, also of note? Jameel was awarded a Smithsonian Computer World Innovations gold medal for developing the world’s first Internet connected car back in 1997.

Of course, this name-dropping doesn’t mean that Wheelz categorically predestined for success, they still need to offer a more trustworthy service than their competitors and avoid those Airbnb-type PR kerfuffles. The startup is aiming to get at the trust factor via the platform’s integration with Facebook Connect, so that students know who they’re renting their car to, seeing as they can access the social data of prospective car-sharers to make sure they’re actual people, not criminals recently out of Pelican Bay.

And though there’s certainly some interesting technology at play, Wheelz still has to kill the customer experience — or they will be headed to the startup deadpool in the sky just like everyone else.

Social is changing every industry in a profound way, and we believe this is the team that’s going to revolutionize the concept of car ownership, turning cars from financial burdens into opportunities”, Palihapitiya said. “I invested in Wheelz on the strength of the executive team and its thoughtful approach to building this business and bringing it to market.”

The Beginning Of The New Social Age. MommyCycle, FundAGeek and KickStarter.


Not necessarily. Although it is true that capital tends to breed capital, what gets lost in translation is that capital comes in more forms than monetary.  Your reputation is a form of capital.  Your unique ideas are a form of capital.  THE FREE EXCHANGE OF INFORMATION (the Internet) is a form of capital.  How you use these alternative forms of capital may be the difference between speaking about your dreams and realizing your dreams.


This post is about two websites that give artists and entrepreneurs the opportunity to receive funding from scratch.  All you need is a solid idea and a lot of support.


But first, let me introduce you to Ms. Alexa Mason, someone who is currently using one of the sites to pursue her dreams.  Alexa is in the process of starting a business called The Mommy Cycle and we support Alexa 1,000% for such a dope idea.  Check out the video below for more details on how to support.



Introducing: FundAGeek.

FundaGeek is the first Crowd Funding service designed specifically for technical innovation – commercial projects based on technology, as well as basic research projects at universities and research institutions. FundaGeek is for securing funding for these projects without giving up equity interest and without incurring debt. Funding is provided via micro-pledges through  social media.



Kickstarter is the world’s largest funding platform for creative projects. Every week, tens of thousands of amazing people pledge millions of dollars to projects from the worlds of music, film, art, technology, design, food, publishing and other creative fields.


FundAGeek & Kick Starter

A new form of commerce and patronage. This is not about investment or lending. Project creators keep 100% ownership and control over their work. Instead, they offer products and experiences that are unique to each project.

All or nothing funding. A project must reach its funding goal before time runs out or no money changes hands. Why? It protects everyone involved. Creators aren’t expected to develop their project without necessary funds, and it allows anyone to test concepts without risk.

Each and every project is the independent creation of someone like you. Projects are big and small, serious and whimsical, traditional and experimental. They’re inspiring, entertaining and unbelievably diverse.

And, it’s only the beginning. Expect to see lots of commercial websites adopting these funding principles and working out new business models around Crowdfunding. Can hardly wait.

How Technology Sharpens Online Loan Scoring and Matching.

Modern technology allows a new entrant in the peer-to-peer lending space, SoMoLend LLC, to create a more targeted matching system for small-business borrowers and lenders.

SoMoLend certainly has more tools at its disposal than the earliest P2P players did. When P2P lending debuted in the U.S. in 2006, Facebook was still months away from opening its site to the general public and the original iPhone was a year away from being launched.

The Cincinnati company, whose name is an abbreviation of Social Mobile Lending, says it has developed a patent-pending credit scoring system that links lending rates to social media rankings, much the way eBay lets its community rank sellers. It also uses a mobile service to make the borrowing process more personal.

While the concept is not entirely new — five and a half years ago, a nascent Prosper Marketplace Inc. fashioned itself as the eBay of lending — SoMoLend is already claiming early success due largely to its ties to the banking community.

It has the backing of KeyCorp, of Cleveland, which says it is intrigued enough to lend up to $50 million to the businesses that SoMoLend is targeting. These businesses are primarily in the bank’s 17-state footprint, and have five or fewer employees.

The lending platform is consistent with Key’s focus on the small-business market, where it has committed to lending $5 billion through 2015, Maria Coyne, executive vice president and business banking segment head for Key, says.

“We are always looking for alternative ways to understand people’s capacity and ability to repay,” Coyne says.

SoMoLend was founded by Candace Klein, the company’s chief executive, whose previous company, Bad Girl Ventures, also received support from Key. Bad Girl helped women-owned ventures secure financing and business education.

Though still in beta, SoMoLend has signed up 100 businesses looking for loans. Key is currently the sole lender, and Klein says she is in talks others.

SoMoLend assumes none of the borrowing risk, but it performs some of the underwriting functions, including the credit scoring and setting the rates for the loans, which can run between 3% and 22%.

SoMoLend examines traditional lending criteria, such as debt to income ratio, credit score and the number of years in business. It also looks at community reputation earned as borrowers repay loans.

Businesses that may not have qualified for traditional bank financing can solicit small loans from a broad base of lenders on the network, spreading risk and giving insight into their social community, Klein says. So if a small business is looking for a $10,000 loan, it can ask for $1,000 from ten different lenders (which can be institutions or people).

As the business repays the loan, it builds up a good credit history in the community, which may qualify the borrower for cheaper rates on future loans. Banks can factor this alternative credit history into their own credit decisions

“We are encouraging borrowers to share with friends and family members who will be most likely to lend to them at lower rates,” Klein says.

SoMoLend collects a fee of 2% of the total loan from the borrower once a loan has been made. From lenders, it collects 1.8% of total loans made each year.

SoMoLend’s mobile application uses a phone’s GPS to connect borrowers and lenders in proximity to one another.

The mobile service appeals to Key, because it offers additional insight.

“Social media is interesting to us and we want our clients to have the option to have a face-to-face relationship,” says Coyne. “We also like to meet our borrowers and know our client.”

When Prosper launched in the pre-iPhone era, it allowed users to identify one another by affinity group, such as if lenders wanted to invest only in borrowers who went to the same college they did or who live in their community.

However, some of Prosper’s eBay-like traits faded as the company matured. Today, for example, it no longer lets users set loan rates.

“Prosper initially had that idea of peer to peer and gradually realized there were no peers on the money side, so it wound up becoming like a finance company with institutional lenders,” says Christine Pratt, a senior analyst for Aite Group.

SoMoLend may have different luck because of Key’s influence, she says.

SoMoLend’s model functions somewhat the way a prepaid credit card program works, says Les Dinkin managing director at Novantas LLC. Instead of putting up money to gain credit, small-business borrowers put up their reputation by soliciting loans from family and friends.

“Banks want to lend to small businesses, however they are looking for additional insight that might be available from working with non-traditional sources,” Dinkin says.

But SoMoLend’s borrowing base may be too small, some analysts say.

Other loan facilitators, like Weemba Inc., a Miami company that focuses on providing loans to consumers, appeal to a broader base of borrowers and are likely to be more successful, Pratt says.

“Weemba seems to have gathered a fair amount of lenders looking at a bigger and more diverse loan pool that is consumer-based,” Pratt says.

Peer-to-peer lending sites suffer from consumer and financial institution apathy, analysts say. Only 10% of consumers and 7% of financial institutions would be likely to participate in peer to peer lending, according to recent research by Forrester. Really? Really?

At the same time, the P2P model lets banks experiment with ways to gauge potential customers through social media without investing a lot of money, says Peter Wannemacher, an analyst for Forrester.

“It is a smart bet by Key, [even] if they are just lending their brand,” Wannemacher says.

Why There Won’t be a Jobs Recovery and Why Congress Needs to Get Real.


History is telling. Modernization has always caused some kinds of jobs to change or disappear. As the American economy transitioned from agriculture to manufacturing and then to other industries, farmers became steelworkers, and then salesmen and middle managers. These shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.

But in the last two decades, something more fundamental has changed. Midwage jobs started disappearing. Particularly among Americans without college degrees, today’s new jobs are disproportionately in service occupations — at restaurants or call centers, or as hospital attendants or temporary workers — that offer fewer opportunities for reaching the middle class. That job increase in December? Mostly minimum wage, service jobs.

Here is the iPhone story and it is an insight into how the world has changed and how out of touch our political leadership really is.


When Barack Obama joined Silicon Valley’s top luminaries for dinner in California last February, each guest was asked to come with a question for the president.

But as Steven P. Jobs of Apple spoke, President Obama interrupted with an inquiry of his own: what would it take to make iPhones in the United States?

Not long ago, Apple boasted that its products were made in America. Today, few are. Almost all of the 70 million iPhones, 30 million iPads and 59 million other products Apple sold last year were manufactured overseas.

Why can’t that work come home? Mr. Obama asked.

Mr. Jobs’s reply was unambiguous. “Those jobs aren’t coming back,” he said, according to another dinner guest.


The president’s question touched upon a central conviction at Apple. It isn’t just that workers are cheaper abroad. Rather, Apple’s executives believe the vast scale of overseas factories as well as the flexibility, diligence and industrial skills of foreign workers have so outpaced their American counterparts that “Made in the U.S.A.” is no longer a viable option for most Apple products.

Apple has become one of the best-known, most admired and most imitated companies on earth, in part through an unrelenting mastery of global operations. Last year, it earned over $400,000 in profit per employee, more than Goldman Sachs, Exxon Mobil or Google.

However, what has vexed Mr. Obama as well as economists and policy makers is that Apple — and many of its high-technology peers — are not nearly as avid in creating American jobs as other famous companies were in their heydays.

Apple employs 43,000 people in the United States and 20,000 overseas, a small fraction of the over 400,000 American workers at General Motors in the 1950s, or the hundreds of thousands at General Electric in the 1980s. Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States. Instead, they work for foreign companies in Asia, Europe and elsewhere, at factories that almost all electronics designers rely upon to build their wares.

“Apple’s an example of why it’s so hard to create middle-class jobs in the U.S. now,” said Jared Bernstein, who until last year was an economic adviser to the White House.

“If it’s the pinnacle of capitalism, we should be worried.”

Apple executives say that going overseas, at this point, is their only option. One former executive described how the company relied upon a Chinese factory to revamp iPhone manufacturing just weeks before the device was due on shelves. Apple had redesigned the iPhone’s screen at the last minute, forcing an assembly line overhaul. New screens began arriving at the plant near midnight.

A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day.


“The speed and flexibility is breathtaking,” the executive said. “There’s no American plant that can match that.”

Similar stories could be told about almost any electronics company — and outsourcing has also become common in hundreds of industries, including accounting, legal services, banking, auto manufacturing and pharmaceuticals.

But while Apple is far from alone, it offers a window into why the success of some prominent companies has not translated into large numbers of domestic jobs. What’s more, the company’s decisions pose broader questions about what corporate America owes Americans as the global and national economies are increasingly intertwined.

“Companies once felt an obligation to support American workers, even when it wasn’t the best financial choice,” said Betsey Stevenson, the chief economist at the Labor Department until last September. “That’s disappeared. Profits and efficiency have trumped generosity.”

Companies and other economists say that notion is naïve. Though Americans are among the most educated workers in the world, the nation has stopped training enough people in the mid-level skills that factories need, executives say.

To thrive, companies argue they need to move work where it can generate enough profits to keep paying for innovation. Doing otherwise risks losing even more American jobs over time, as evidenced by the legions of once-proud domestic manufacturers — including G.M. and others — that have shrunk as nimble competitors have emerged.

Apple was provided with extensive summaries of The New York Times’ reporting for this article, but the company, which has a reputation for secrecy, declined to comment.

This article is based on interviews with more than three dozen current and former Apple employees and contractors — many of whom requested anonymity to protect their jobs — as well as economists, manufacturing experts, international trade specialists, technology analysts, academic researchers, employees at Apple’s suppliers, competitors and corporate partners, and government officials.

Privately, Apple executives say the world is now such a changed place that it is a mistake to measure a company’s contribution simply by tallying its employees — though they note that Apple employs more workers in the United States than ever before.

They say Apple’s success has benefited the economy by empowering entrepreneurs and creating jobs at companies like cellular providers and businesses shipping Apple products. And, ultimately, they say curing unemployment is not their job.

“We sell iPhones in over a hundred countries,” a current Apple executive said. “We don’t have an obligation to solve America’s problems. Our only obligation is making the best product possible.”

‘I Want a Glass Screen’

In 2007, a little over a month before the iPhone was scheduled to appear in stores, Mr. Jobs beckoned a handful of lieutenants into an office. For weeks, he had been carrying a prototype of the device in his pocket.

Mr. Jobs angrily held up his iPhone, angling it so everyone could see the dozens of tiny scratches marring its plastic screen, according to someone who attended the meeting. He then pulled his keys from his jeans.

People will carry this phone in their pocket, he said. People also carry their keys in their pocket. “I won’t sell a product that gets scratched,” he said tensely. The only solution was using unscratchable glass instead. “I want a glass screen, and I want it perfect in six weeks.”

After one executive left that meeting, he booked a flight to ShenzhenChina. If Mr. Jobs wanted perfect, there was nowhere else to go.

For over two years, the company had been working on a project — code-named Purple 2 — that presented the same questions at every turn: how do you completely reimagine the cellphone? And how do you design it at the highest quality — with an unscratchable screen, for instance — while also ensuring that millions can be manufactured quickly and inexpensively enough to earn a significant profit?

The answers, almost every time, were found outside the United States. Though components differ between versions, all iPhones contain hundreds of parts, an estimated 90 percent of which are manufactured abroad. Advanced semiconductors have come from Germany and Taiwan, memory from Korea and Japan, display panels and circuitry from Korea and Taiwan, chipsets from Europe and rare metals from Africa and Asia. And all of it is put together in China.

In its early days, Apple usually didn’t look beyond its own backyard for manufacturing solutions. A few years after Apple began building the Macintosh in 1983, for instance, Mr. Jobs bragged that it was “a machine that is made in America.” In 1990, while Mr. Jobs was running NeXT, which was eventually bought by Apple, the executive told a reporter that “I’m as proud of the factory as I am of the computer.” As late as 2002, top Apple executives occasionally drove two hours northeast of their headquarters to visit the company’s iMac plant in Elk Grove, Calif.


But by 2004, Apple had largely turned to foreign manufacturing. Guiding that decision was Apple’s operations expert, Timothy D. Cook, who replaced Mr. Jobs as chief executive last August, six weeks before Mr. Jobs’s death. Most other American electronics companies had already gone abroad, and Apple, which at the time was struggling, felt it had to grasp every advantage.

In part, Asia was attractive because the semiskilled workers there were cheaper. But that wasn’t driving Apple. For technology companies, the cost of labor is minimal compared with the expense of buying parts and managing supply chains that bring together components and services from hundreds of companies.

For Mr. Cook, the focus on Asia “came down to two things,” said one former high-ranking Apple executive. Factories in Asia “can scale up and down faster” and “Asian supply chains have surpassed what’s in the U.S.” The result is that “we can’t compete at this point,” the executive said.

The impact of such advantages became obvious as soon as Mr. Jobs demanded glass screens in 2007.

For years, cellphone makers had avoided using glass because it required precision in cutting and grinding that was extremely difficult to achieve. Apple had already selected an American company, Corning Inc., to manufacture large panes of strengthened glass. But figuring out how to cut those panes into millions of iPhone screens required finding an empty cutting plant, hundreds of pieces of glass to use in experiments and an army of midlevel engineers. It would cost a fortune simply to prepare.

Then a bid for the work arrived from a Chinese factory.

When an Apple team visited, the Chinese plant’s owners were already constructing a new wing. “This is in case you give us the contract,” the manager said, according to a former Apple executive. The Chinese government had agreed to underwrite costs for numerous industries, and those subsidies had trickled down to the glass-cutting factory. It had a warehouse filled with glass samples available to Apple, free of charge. The owners made engineers available at almost no cost. They had built on-site dormitories so employees would be available 24 hours a day.

The Chinese plant got the job.

“The entire supply chain is in China now,” said another former high-ranking Apple executive. “You need a thousand rubber gaskets? That’s the factory next door. You need a million screws? That factory is a block away. You need that screw made a little bit different? It will take three hours.”

In Foxconn City

An eight-hour drive from that glass factory is a complex, known informally as Foxconn City, where the iPhone is assembled. To Apple executives, Foxconn City was further evidence that China could deliver workers — and diligence — that outpaced their American counterparts.

That’s because nothing like Foxconn City exists in the United States.

The facility has 230,000 employees, many working six days a week, often spending up to 12 hours a day at the plant. Over a quarter of Foxconn’s work force lives in company barracks and many workers earn less than $17 a day. When one Apple executive arrived during a shift change, his car was stuck in a river of employees streaming past. “The scale is unimaginable,” he said.

Foxconn employs nearly 300 guards to direct foot traffic so workers are not crushed in doorway bottlenecks. The facility’s central kitchen cooks an average of three tons of pork and 13 tons of rice a day. While factories are spotless, the air inside nearby teahouses is hazy with the smoke and stench of cigarettes.


Foxconn Technology has dozens of facilities in Asia and Eastern Europe, and in Mexico and Brazil, and it assembles an estimated 40 percent of the world’s consumer electronics for customers like Amazon, Dell, Hewlett-Packard, Motorola, Nintendo, Nokia, Samsung and Sony.

“They could hire 3,000 people overnight,” said Jennifer Rigoni, who was Apple’s worldwide supply demand manager until 2010, but declined to discuss specifics of her work. “What U.S. plant can find 3,000 people overnight and convince them to live in dorms?”

Indeed, none. End of story. Please don’t ever say “Let’s bring jobs back to America, and make America great again!” you incredibly uninformed and irresponsible, lying politicians. Except for my buddy, Obama.