TIME Retail

Toms Shoes Wants To Sell You Coffee Now, Too

TOMS & The Future Of The One For One Movement - 2014 SXSW Music, Film + Interactive Festival
Toms founder Blake Mycoskie speaks at the 2014 SXSW Music, Film + Interactive Festival at Austin on March 11, 2014 in Austin, Texas. Jon Shapley—2014 Jon Shapley

The shoe retailer is expanding its business model to sell coffee, and using its profits to fund clean water access in developing countries

Toms just spilled the beans: It’s diversifying into coffee.

The conscientious shoemaker announced Tuesday it has developed a coffee line that will use its sales to help provide clean water for cooking, drinking and sanitation to two billion people around the globe who don’t have clean water access, the New York Times reports. Toms founder Blake Mycoskie established his shoe dynasty by giving away one pair of shoes for each pair he sells. His pastel-colored flats are ubiquitous on socially conscious college campuses and cities throughout the country. The company has given poor children 10 million paris of shoes since Mycoskie founded the company in 2006.

Every bag of coffee sold by Toms Roasting Company, which comes in blue-and-white bags like Toms shoe box, will finance a week’s worth of clean water for one person.

“Once people get over the initial shock when they hear we’re going into the coffee business, I think they’ll see that Toms and the one-to-one model is a platform for doing a variety of things, not just a shoe or eyeglasses company,” Mycoskie said.


TIME wall street

Wall Street Bonuses Soared 15% Last Year

Bonuses on Wall Street in 2013 reached their highest levels since the financial crisis, rising 15% to an average of nearly $165,000, even after firms saw lower profits and paid out pricey legal settlements

Wall Street bonuses catapulted upward in 2013, rising 15% to an average of nearly $165,000 even though firms like JPMorgan Chase and Morgan Stanley paid billions of dollars in legal and regulatory settlements.

New York securities firms will pass out $26.7 billion in cash bonuses and deferred compensation for 2013 performance, bringing the average bonus to $164,530. The increased estimate by New York State Comptroller Thomas DiNapoli does not include stock options or deferred compensation for which taxes haven’t been withheld.

Wall Street bonuses increased in 2013 despite lower profits than the year before and expensive legal settlements.

“Wall Street navigated through some rough patches last year and had a profitable year in 2013. Securities industry employees took home significantly higher bonuses on average,” Mr. DiNapoli said. “Although profits were lower than the prior year, the industry still had a good year in 2013 despite costly legal settlements and higher interest rates.”

Meanwhile, the average American worker’s compensation fell to 42.6 percent of the economy in 2012, the New York Times reports, its lowest level since World War II.

The bonus cash pool reached its highest levels since the 2008 financial crisis. As of December 2013, the securities industry employed 165,200, 12.6 percent fewer workers than before the financial crisis.

TIME Regulation

General Motors Stock Plummets Amid Probe

General Motors headquarters in the Renaissance Center on January 14, 2014 in Detroit.
General Motors headquarters in the Renaissance Center on January 14, 2014 in Detroit. Stan Honda—AFP/Getty Images

An investigation into GM's handling of complaints about faulty and dangerous ignition switches is clobbering the company's stock

General Motors shares took a big hit Tuesday as a federal probe was launched into the automaker’s handling of defects complaints tied to 12 deaths.

General Motors stock fell 5%, or $1.91 per share to close at $35.18 in trading Tuesday on reports of the news, and continued to fall Wednesday morning.

The kingpin automaker is under intense scrutiny for its response to complaints about faulty ignition switches, which led last month to a recall of 1.6 million cars. The U.S. Attorney for the Southern District of New York is leading the probe, reports the Wall Street Journal, but lawmakers in the Senate and House of Representatives are also investigating. Rep. Henry A. Waxman (D-CA) said Monday the House Energy and Commerce Committee will examine whether GM knowingly allowed faulty and dangerous cars to remain in use without recalling them.

The National Highway Traffic Safety Administration recorded a July 2005 death when safety bags did not deploy in a Chevrolet Cobalt, and pointed out the problem to GM in March 2007. The automaker did not recall the vehicles until this year.

The recall of 1.6 million autos covers the 2003-’07 Saturn Ion, the 2006-’07 Chevrolet HHR, the 2006-’07 Pontiac Solstice, the 2007 Saturn Sky, and the 2005-’07 Chevrolet Cobalt and Pontiac G5.



Biotechs Are Booming on Wall Street Again—But for How Long?

Traders work on the floor of the New York Stock Exchange

If a flood of new startups are rushing into the public market, does it create a bubble? That questions seems to be playing out in the biotech sector, which has gone from years of inattention among investors to a sudden area of interest in the stock market.

Last year, 37 biotech companies went public, raising $2.7 billion, according to Renaissance Capital. Both figures easily surpass the totals from the previous five years combined, and even exceed the numbers from the “genomic bubble” year of 2000, when 26 companies raised $1.9 billion.

And from the looks of things so far this year, 2013 may just be the warmup act. In the first two months of 2014, 20 biotech IPOs have gone public, says Kathleen Smith, a principal at Renaissance. “That’s the strongest start to the year for biotech that we have ever seen,” Smith says.

Some are receving a warm welcome, with four members of the class of 2014 trading at more than double their offering prices: Relevance Therapeutics is up 105%, Dicerna Pharmaceuticals up 134%, Auspex Pharmaceuticals up 139% and Ultragenyx up 159%.

And more keep coming. Aquinox Pharmaceuticals, an early-stage biotech company, and Recro Pharma went public this month, raising $46 million and $30 million, respectively. Both are trading above their offering prices. According to IPOScoop, another 31 health-care companies, most of them biotech, are in the IPO pipeline, including companies like Corium International, Ignyta and Akebia Therapeutics.

The biotech sector has long been subject to booms and busts, driven largely by the uncertainty facing startups over whether drugs that look promising in development will make it through late-stage trials, find approval by the FDA and be accepted by the market.

The last boom came in 2000, as the collapse of the dot-com bubble drove investors into what they hoped would be a new flurry of drugs developed through gene-based research. But those hopes proved premature as it proved much harder to mine the human genome for breakthroughs that could create new therapies.

The past few years have borne signs that the genomic-based research may be finally delivering on marketable drugs. Technology and computing power has allowed for research impossible a decade ago, potentially shortening the development process by a matter of years.

Many of the new developments won’t be blockbuster drugs but targeted therapies for specific diseases. Companies developing targeted cancer therapies have been a particular area of interest, especially if they’ve reached late-stage drug trials, says Jim Healy, a general partner at Sofinnova Ventures, one of the few venture firms to have consistently and successfully backed biotech startups in recent years.

Another change: The FDA has been approving more drugs, sometimes fast-tracking so-called orphan drugs, or pharmaceuticals that offer limited potential for profitability. In 2012, the FDA approved 39 new drugs, the highest number since 1997. Approvals slipped to 27 in 2013, although that figure remains near the five-year average.

In general, biotech stocks have been on a tear for a while. The NYSE Biotech Index, for example, has risen 68% in the last year alone, above the Nasdaq’s 36% rise. The rally is driven by a few factors: An aging population in many developed economies will create a demand for more kinds of therapies beyond blockbuster drugs. Meanwhile, patents on their top-selling drugs, prompting big Pharma to make some aggressive acquisitions.

That bullishness has spilled over into the IPO market. But if it’s not yet a bubble, there are still plenty of signs of irrational investing. GW Pharmaceuticals went public last May at $8.90 a share and currently trades nearly nine times higher, at $77.38 a share, despite recent losses. Acceleron Pharma and Aratana Therapeutics are both trading at more than three times their offering prices.

Such rallies have stoked concerns of a biotech IPO bubble in recent months, concerns that gained steam in January when Dicerna said its insiders weren’t subject to traditional lock-up restrictions. But not all biotech IPOs have fared well. Prosensa’s stock is 49% below its offering price, having tumbled after a muscular-dystrophy drug faced a setback in phase-3 trials.

Another point argued by the counter-bubble camp is that many of the recent biotech IPOs don’t represent a gold rush, but the delayed arrival of a backlog of offerings pent-up for nearly a decade. What’s more, the average size of recent biotech offerings is relatively small, only $73 million per IPO. The total $2.7 billion raised by all 27 companies in 2013 is less than the year’s largest IPO: energy company Plains GP.

The question facing the biotech IPO market now is whether that backlog has already been cleared, or whether many recent candidates are simply going for a money grab before the window slams shut. When it does, based on previous boom/bust cycles, the market will be stingy about biotech IPOs for some time.

For now, there is reason to believe biotech startups are finding capital to finance a new generation that has been long promised and much delayed, drugs that are often too specialized for big Pharma to put its marketing muscle behind. Picking stocks in the sector can be tricky for non-experts, however, not just because of the high valuations of companies like GW and Acceleron, but because of the risk of setbacks like the one Prosensa faced.

In that case, Sofinnova’s Healy says, “the safest way to invest is in large-cap biotech that are profitable and have revenue growth rates that are at least twice that of the pharmaceutical sector.” Rennaissance’s Smith also points to companies that handle clinical trials for biotech startups. And for the saftety-in-numbers theory, there are biotech ETF’s and managed mutual funds.

And finally, there’s always pure speculation – riskiest of all and, once it reaches a large-scale, a sure sign of a bubble.


Candy Crush Maker Thinks It’s Worth $7.6 Billion

King Digital Entertainment seeks to raise up to $532.8 million in its initial public offering as it values its operations at nearly $7.6 billion

The maker of the hugely popular puzzle game Candy Crush is hoping to raise up to $532.8 million in its initial public offering as it values its operations at nearly $7.6 billion, reflecting the rapid ascendence of the online mobile gaming industry.

The developer of the irresistibly addictive game, King Digital Entertainment, wants to sell 22.2 million shares between $21 and $24 in its IPO, placing it ahead of its rival and last game giant to go public, Zynga. Candy Crush’s maker King initially filed for the IPO last month.

The company saw an average of 144 million daily active users playing its games more than 1.4 billion times a day—an increase from 128 million daily active users playing more than 1.2 billion times in December.

King’s target valuation for its IPO would set it behind more established gaming players like Electronic Arts ($9.2 billion valuation) and Activision Blizzard ($14.3 billion).


TIME Puerto Rico

The Next Financial Catastrophe You Haven’t Heard About Yet: Puerto Rico

On Tuesday, the island sold $3.5 billion in new debt. But the crisis still poses a danger to everyday U.S. investors


Until recently, Puerto Rico was an investors’ tax heaven, renowned for its sandy beaches and killer rum. But the island is in dire financial condition and thousands of U.S. mom-and-pop investors may lose a big part of their savings if the small territory goes bankrupt.

It all started with an over-borrowing spree that lasted for decades. It ended with an island of fewer than four million residents accumulating $70 billion dollars in debt. That is a debt per capita of around $10,600 – or 10 times the median for U.S. states, according to the ratings agency Standard and Poor’s.

Puerto Rico’s over-borrowing was facilitated by an eager group of U.S. investors. U.S. mutual funds were more than willing to buy Puerto Rico bonds, because the island has a special financial advantage: its bonds are triple tax-exempt, which means that bondholders do not pay federal, state and local taxes for their coupon income (i.e. interest) from the bonds.

This created a large buyers base for Puerto Rico’s bonds, which encouraged the commonwealth to keep issuing debt. As a result, today around 70 percent of U.S. mutual funds own Puerto Rico securities, according to Morningstar, an investment research firm that specializes in data on mutual funds and similar investment offerings.

But Puerto Rico did not handle prudently enough this easy cash flow that was coming in. “For years, Puerto Rico practiced deficit financing, which essentially means taking out long-term debt to cover short-term financial needs; this was created by too much spending relative to revenues,” says municipal bond market expert Chris Mier, chief strategist at Loop Capital, an investment bank and advisory firm.

“This is unsustainable from an economic policy point of view in the long run, but since the ratings remained above investment grade, the buyers of the debt did not worry excessively,” says Mier.

The spark that lit the fuse came in 1996, when President Clinton repealed legislation that gave tax incentives for U.S. companies to locate facilities in Puerto Rico. The island’s economy began to sputter, and after the great recession, the decline in the island’s governmental finances continued.

At at time when the island is experiencing steady population loss and very low productivity, the unsustainability of unbalanced budgets and rapidly growing debt became increasingly evident.

Then the downgrades came: in the past several years, ratings agencies gradually downgraded Puerto Rico’s debt notch by notch. And the island’s government continued to promise investors that it would pass a balanced budget – something that has not occurred in over a decade.

To make things worse, a “brain drain” is occurring, as young qualified professionals are fleeing an unemployment rate of 15.4%, compared to the 6.6% federal unemployment rate, according to the U.S. Bureau of Labor Statistics. The fact that Puerto Ricans are U.S. citizens makes migration much easier and appealing, says Puerto Rican consultant Heidie Calero, president of Calero Consulting Group.

Currently, Puerto Rico’s population is 3.7 million on the island, versus 4.9 million Puerto Ricans living on the U.S. mainland. The U.S. Census Bureau projects that the island’s population will drop to 2.3 million in 2050.

“Around 51 percent of the island’s population is on welfare. How do you make them participate in the economy?” asks Calero. The size of the island’s “underground economy” was recently estimated at approximately $20 billion; and that is just an approximation since nobody really knows how much revenue goes unaccounted for, says Calero.

In February 2014, all three major ratings agencies downgraded Puerto Rico’s debt to below investment grade, widely referred to as ”junk” status in bond market circles. This indicates a greater risk of possible default or a debt restructuring. For U.S. investors, this means that the crisis in Puerto Rico will have a severe impact, not only on Wall Street but also on thousands of mom-and-pop investors.

The decline in market value of Puerto Rico bonds has reduced the value of investors’ holdings by at times as much as 35%, says Mier. But Mier cautions that there are many possible scenarios, including favorable ones where Puerto Rico succeeds in resolving its budget and debt problems and returns to investment grade ratings.

But to do that, the government needs to balance two seemingly conflicting goals: economic growth and fiscal austerity, says economist Carlos Soto-Santoni, president of Nexos Económicos, a Puerto Rico-based consulting firm, and deputy advisor for former Governor Rafael Hernández Colón’s administration.

In 2013 alone, the government passed $ 1.36 billion in new taxes. While this increases the government’s revenue, it makes doing business on the island more onerous – which in turn further impedes economic growth, says Soto-Santoni.

Solving the economic puzzle will determine whether Puerto Rico will be for the U.S. what Greece was for the European Union.

Ellie Ismailidou is a reporter for Debtwire Municipals

TIME Career Strategies

8 Ways to Say No Without Killing Your Reputation

G Fletcher—Getty Images/Flickr RF

This piece originally appeared on Adam Grant’s LinkedIn Influencers page.

If you want something done, ask a busy person. The old saying rings true, but it also spells doom for that busy person. When you develop a reputation for being responsive and generous, an ever-expanding mountain of requests will come your way. This may be why Warren Buffett says: “The difference between successful people and very successful people is that very successful people say ‘no’ to almost everything.”

For those of us who enjoy being helpful—or just plain polite—this is no easy task. Every “no” is a missed opportunity to make a difference and build a relationship. And if it comes across the wrong way to the wrong person, it’s also a surefire way to brand yourself as selfish and rude.

As long as I can remember, I’ve been terrible at saying no. If it benefited other people more than it cost me, I would try to help. With a growing family and increasing professional responsibilities, I knew I needed to say no more often, but I had a hard time actually doing it.

Last year, I got the push I needed when the New York Times magazine ran a cover story on my book, Give and Take. Since the book focuses on the surprising success of givers—people who consistently help others with no strings attached—it was only natural to analyze how I handle these dynamics myself. A much bigger audience became aware that “no” tended to be absent from my vocabulary, and I was flooded with thousands of emails from people seeking help.

I learned that there’s a big difference between pleasing people and helping them. Being a giver is not about saying yes to all of the people all of the time to all of the requests. It’s about saying yes to some of the people (generous givers and “matchers” who aim for quid pro quo, but not necessarily the selfish takers) some of the time (when it won’t compromise your own goals and ambitions) to some of the requests (when you have resources or skills that are uniquely relevant). Outside those specific conditions, successful givers follow Buffett’s edict and decline for one fundamental reason:

Saying no frees you up to say yes when it matters most.

But the rest of the time, how do you say no without burning bridges and jeopardizing your reputation? Since it wasn’t possible to say yes to everyone, I got a crash course in saying no. I ended up test-driving eight responses. Each had advantages and disadvantages, and proved appropriate with different people in different circumstances:

1. The Deferral: “I’m swamped right now, but feel free to follow up”

My first response was to explain candidly that my availability was limited while traveling on book tour, but I hoped to have more flexibility a few months down the road. This initial filter provided clues about who cared the most about connecting with me. I liked prioritizing the people who were passionate and persistent. But I also unwittingly rewarded the stalkers and the takers—people so aggressive and single-minded that they would do whatever it took to get what they wanted. As Joel Stein laments, it’s all too common that we end up helping “the pushy ones” and miss the people who are too respectful of your time to bother you at all, let alone again.

2. The Referral: “I’m not qualified to do what you’re asking, but here’s something else”

Many requests were so far removed from my expertise that saying yes would have been a disservice. (A word to the wise: don’t ask an organizational psychologist for assistance with startup financing or a medical malpractice lawsuit.) When people reached out for career advice, although I empathized with them, I have no training as a career counselor. In the rare occasions when I offer career suggestions, it’s after observing a student in class and having multiple conversations during office hours.

Not wanting to leave anyone empty-handed, I replied that I’m generally reluctant to give prescriptive advice, especially to people I don’t know. In lieu of that, here are some resources that might be useful: books on career choices (The Startup of You, Finding Your Element, So Good They Can’t Ignore You) and assessments for clarifying your values (Decision Pulse), strengths (Reflected Best Self and StrengthsFinder), and career interests (Self-Directed Search). These referrals allowed me to avoid saying no outright and to engage equally with everyone in a way that protected my time.

3. The Introduction: “This isn’t in my wheelhouse, but I know someone who might be helpful”

When I wasn’t in a position to help, I sometimes knew people who could. Provided that I had a way to verify the requestor’s trustworthiness, I facilitated the connection. This was a huge time-saver and often proved far more helpful than the other approaches: some people landed jobs, and one of my introductions accidentally resulted in a marriage. As I wrote a few months ago, introductions are the gift we love to receive but forget to give.

Despite the appeal of introductions, there’s one major downside: they can be an imposition on the person who’s being enlisted to help. I didn’t mind asking givers who weren’t too busy and matchers who had benefited from my help in the past. But I worried about becoming what Ken Chester calls a Robin Hood giver, someone who “zealously gives to one group of people by taking from others.” I started checking with my colleagues first to see if they were comfortable with an introduction. That way, I didn’t punish the most generous givers by overloading them with requests—and it was less likely to damage our relationship or my reputation. This saved some embarrassment and some amusement (in at least three cases, I attempted to introduce people who already knew each other).

4. The Bridge: “You two are working toward common goals”

Inevitably, due diligence failed in some cases, and the introduction wasn’t productive. Instead of inconveniencing one person to help another, I started looking for ways to make mutually beneficial connections. When I heard from an aspiring screenwriter asking to get his screenplay read by a film industry insider, I remembered an earlier note from a depressed comedy writer searching for a way to help others. Rather than putting these two strangers in touch with people from my network, I connected them to each other. And when a series of entrepreneurs asked for feedback on apps designed to facilitate seeking and giving help, I put them in contact so they could support one another’s efforts.

5. The Triage: “Meet my colleague, who will set up a time to chat”

Unfortunately, these moments of serendipitous synergy don’t happen every day, and I was still taking a larger number of calls than I had time to handle. I hired Reb, an applied psychology expert, to collaborate on a variety of projects. When a request was related to his expertise, he fielded the initial conversation and reported back, and we evaluated whether there were unique ways we could help. His rare combination of competence and compassion has made this remarkably effective.

6. The Batch: “Others have posed the same question, so let’s chat together”

A dialogue with a former student opened my eyes to another response. Ryan is a military veteran who transitioned into business, and I was stunned to learn that he schedules upwards of 100 calls per month with fellow veterans pursuing that path. It seemed inefficient to take those calls individually when he was providing similar information to each person, so I suggested inviting them in small groups to weekly Google Hangouts. I ended up following my own advice, and found that it helped people create a community around common interests. It also served as a low-commitment first encounter for me to gauge how helpful I could be in subsequent interactions.

7. The Relational Account: “If I helped you, I’d be letting others down”

Even though I tried to help in other ways, each of these responses meant declining the original request, which was hard for me to do. Anne Lamott writes that “‘No is a complete sentence,” but it’s not a very nice sentence. Research shows that saying no can make us appear cold and selfish, and due to gender stereotypes, declining costs women more than men. As Sheryl Sandberg observes in Lean In, “when a woman declines to help a colleague, she often receives less favorable reviews and fewer rewards. But a man who declines to help? He pays no penalty.”

The good news is that there’s a friendly way to circumvent this risk. It’s called a relational account, and it involves referencing your commitment to other people when declining the focal person. Studies by Hannah Riley Bowles and Linda Babcock reveal that when we offer relational accounts for going against the norm, we’re viewed more favorably, as we preserve our image as giving and caring. Here are some of my relational accounts:

  • Mentoring requests: “Students are my top priority professionally, and since I teach more than 300 students per year, I don’t have the bandwidth to take on additional mentoring.”
  • Speaking requests: “With more than two dozen speaking invitations rolling in per week, my wife and I have set a limit for speaking engagements, and at this point, I’m maxed out.”
  • Introduction requests: “I’d become a taker if I kept asking this person for favors” or “I don’t know this person well enough to impose.”

8. The Learning Opportunity

One guy wouldn’t take no for an answer. I tried the deferral, the referral, the batch, and the relational account, but he kept coming back.

I might have responded differently if he had followed some of the recommendations in Mattan Griffel’s insightful post on getting busy people to answer your email, or my list of six ways to get me to email you back. Instead, I decided to level with him:

“I’m sorry to disappoint. One of my goals for this year is to improve my ability to say no—you are a tough audience. I suppose it’s good practice…”

At that point, he moved on. Meanwhile, I’m still practicing.

Adam is a Wharton professor and the author of Give and Take: Why Helping Others Drives Our Success, a New York Times bestseller. You can follow him on Twitter @AdamMGrantand sign up for his free newsletter at www.giveandtake.com.


Meet the Geniuses on a Quixotic Quest to Archive the Entire Internet

Contrary to popular belief, the internet is not forever. Our digital heritage needs to be saved.


Wake up, check your phone. Go to work, log on. Get home, surf the net. The World Wide Web has changed how we interact with the world over the past 25 years. It’s almost hard to believe that it began as a side project to the Large Hadron Collider. Tim Berners-Lee, father of the Internet, came up with the idea to help the physicists organize better, even when they could not physically be at the collider.

But after 25 years and untold numbers of websites, blogs, and browsers, the web is what needs to be organized. While some sites like the Space Jam homepage or DoleKemp96.org have remained embalmed in the ether of the Ethernet since the early days, most sites don’t last that long. Web historians are trying to save our online past, whether it be rebuilding early in-line web browser to run on a modern computer or meticulously archiving page after page.

TIME Tax Policy

U.S. Corporations Parking More Cash Abroad To Avoid Tax

Multinational companies have $1.95 trillion outside the United States, according to a Bloomberg analysis. Among the worst offenders are tech companies Microsoft, Apple and IBM.

U.S.-based companies are increasingly parking their earnings in offshore accounts, with some of the largest companies adding $206 billion to their accounts in low-tax countries to avoid forking over taxes to the IRS.

Multinational companies have $1.95 trillion outside the United States, according to a Bloomberg analysis of 307 corporations, up 11.8 percent from last year. Microsoft, Apple and IBM were among the biggest offenders, adding $37.5 billion to cash piles held outside the United States.

Taking advantage of loopholes in the tax code allows companies to make it look as though they earned profits offshore, preventing the federal government—which has run a deficit for over a decade—from taking a share of the money pot. Estimates on the amount of annual revenue the U.S. loses range from $30 billion to $90 billion.


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