Tag Archives: acquisition

Starbucks to improve its baked goods – purchases artisan bakery, La Boulange

Starbucks got the coffee right. Now, it is trying to do the same with the food.

The world’s largest coffee chain announced on Monday plans to acquire for $100 million a small artisan bakery chain, Bay Bread and its 19-unit La Boulange bakery brand.

The move comes just months after Starbucks (SBUX) purchased the tiny Evolution Fresh juice brand and at a time Starbucks is pushing hard to expand beyond coffee and vastly improve its baked goods and other food offerings. Food is one of the chains fastest-growing businesses, now accounting for $1.5 billion in revenues even as its sales have grown by double digits over the past two years.

“After more than 40 years, we will be able to say that we are bakers, too,” says Howard Schultz, CEO at Starbucks.

via USA Today

 

The bakery chain, La Boulange, reminds me a lot of Le Pain Quotidien.

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The return of the newspaper barons – very rich (and political) owners

Folks with several hundred million dollars and outspoken opinions have been buying up newspapers. The Omaha Herald, San Diego Union Tribune, Portland Press Herald, and Philadelphia Inquirer.

At the end of last year, Warren E. Buffett bought The Omaha World-Herald through his company, Berkshire Hathaway. This would be the same Mr. Buffett who told his annual shareholder meeting in 2009 that newspapers faced “unending losses” and that he would not buy most of them “at any price.” Yet there he was, ponying up $200 million for a relatively small regional newspaper in Berkshire Hathaway’s hometown.

And he is not alone. Douglas F. Manchester, a very rich developer, bought The San Diego Union Tribune at about the same time, for a reported $110 million. At the end of last month, S. Donald Sussman, a hedge fund manager and philanthropist who is married to a congresswoman, Chellie Pingree, bought a stake in the company that owns The Portland Press Herald in Maine.

And then word came at the beginning of last week that a group of very rich, very influential Philadelphia businessmen — including George E. Norcross III, a Democratic power broker in Southern New Jersey, and Lewis Katz, the parking magnate — bought the Philadelphia Media Network, which owns The Inquirer, The Daily News and Philly.com.

via NY Times

What does this mean?

If you pull back a few thousand feet, you can see newspapers coming full circle. Before World War II, newspapers were mostly owned by political and business interests who used them to push an agenda.

People like William Randolph Hearst and Robert McCormick wielded their newspapers as cudgels to get their way. It was only when newspapers began making all kinds of money in the postwar era that they were professionalized and infused with editorial standards.

“We are going back to a form of ownership that dominated in an earlier era,” said Alan D. Mutter, a newspaper and technology consultant. “As newspapers become less impressive businesses, people are going to buy them as trophies or bully pulpits or some other form of personal expression.”

“People just have to be aware that other agendas exist”

The new $180 million game – Play Pictionary with your friends, called Draw Something

The game is super fun and addictive. The first time I opened the iPhone app I played for an hour and a half. I drew all sorts of ridiculous things with my finger, which made them horribly bad, but also over-the-top funny.

The game has become so popular in the last 6 weeks that Zynga bought the entire company, OMGPOP, for $180 million based on this one game.

It plays kinda like Pictionary except over the internet. Which means that your drawing is recorded and then sent to the other player. You receive the video and watch the other player draw something while you try to guess what it is.

An old concept but with the dawn of social networks we know have hundreds more people to play with. No more Saturday night game night. You can play while waiting at the airport, like I did.

Go ahead and try it, and challenge me to a game if you want!

iPhone/iPad app

Android Store

Friend me on Facebook and challenge me to draw something!

Getting your attention is big business

Some interesting thoughts from Om Malik, founder of GigaOm, after their latest acquisition. He hints that while everyone can blog only certain websites can grab users attention and continue to do so.

Media is the new Wild West

We are quite strategic about our acquisitions — we acquire media entities only if we love the people and believe that we are at the starting phase of a trend. In 2008, we acquired jkOnTheRun as our tip of the hat to the growing demand for mobile devices and the changes it would bring into society. Later that year, we brought in The Apple Blog because we knew the best was yet to come for Apple. Both of those acquisitions have helped GigaOM cover the issues that matter most to our ultimate customers — you, the reader — in a smart, sensible fashion.

“The question that mass amateurization poses to traditional media is ‘What happens when the costs of reproduction and distribution go away? What happens when there is nothing unique about publishing anymore because users can do it for themselves?’ We are now starting to see that question being answered.”— Clay Shirky

Shirky’s observation means that we are in a time of chaos where the very idea of media is being questioned. And as a Chinese proverb says, from chaos emerges opportunity. I believe the best is yet to come for media.

I have always believed that we’ve got to stop thinking of media as what it was and focus on more of what it could be. In the world of plenty, the only currency is attention and attention is what defines “media.”

via Why we are buying paidContent

 

It may also help to have a name that squishes together multiple words into one :)

I really loved Gowalla – the site finally shuts down

Three months after the acquisition of Gowalla by Facebook, the company has officially closed it doors. The screenshot below can be found on the location startup turned travel guide‘s homepage.

Gowalla launched in 2009 and raised approximately $10 million. Facebook’s acquisition price hasn’t been disclosed but is rumored to be primarily Facebook stock.

via TNW

 

Early investor Jason Calacanis talks about the end of Gowalla.

 

 

How could Apple spend its $51 billion cash?

The common advice would be to acquire some hot property like Twitter, Pandora, or Hulu. Doing so would satisfy Wall Street’s insatiable hunger for greedy growth, but wouldn’t be all that strategic.

Another idea would be for Apple to invest in itself. A post over on Business Insider highlights this using a thread on Quora.

It started with this question, “What would make sense for Apple to use its $51+ billion in cash for a strategic acquisition?”

The two most interesting answers present inspired analysis of the company.

One has a list of Apple acquisitions since 1997 and points out that all have been small, with most in the $10-20 million range. The biggest on record was over a decade ago with the “purchase of NeXT that brought Steve Jobs back to Apple”.

1997 Next (programming services). Value: $404 million
1997 Power Computing (cloned computers). $100 million
1999 Xemplar Education (software). $5 million
1999 Raycer Graphics (graphic chips). $15 million
2000 NetSelector (Internet software). Value: NA
2001 Astarte (DVD authoring software). Value: NA
2001 bluebuzz (Internet service provider). Value: NA
2001 Source Technologies (graphics software). Value: NA
2001 PowerSchool (online info systems services). $62 million
2002 Nothing Real (special effects software). $15 million
2002 Zayante (software). $13 million
2002 Silicon Grail Corp-Chalice (digital effects software). Value: NA
2002 Emagic (music production software). $30 million
2002 Propel Software (software). Value: NA
2005 Fingerworks (gesture recognition). Value: NA
2006 Silicon Color (software). Value: NA
2006 Proximity (software). Value: NA
2008 P.A. Semi (semiconductors). $268 million
2009 Placebase (maps). Value: NA
2009 Lala (music streaming). $17 million
2010 Quattro (mobile advertising). $275 million
2010 Intrinsity (semiconductors). $121 million
2010 Siri (software). Value: NA
2010 Poly9 (Web-based mapping). Value: NA

The second, even more insightful, points out that the majority of Apple’s cash is used for strategic capital investment. They find a new technology they want in on and buy the factory, patent, or supply chain and then secure exclusive contracts for them.

Even writing in first-purchase clauses, where they get exclusive production discounts by fronting some start-up costs for the new factories.

Read the full answer for more details on how this world-class supply chain operates:

Apple actually uses its cash hoard in a very interesting way to maintain a decisive advantage over its rivals:

When new component technologies (touchscreens, chips, LED displays) first come out, they are very expensive to produce, and building a factory that can produce them in mass quantities is even more expensive. Oftentimes, the upfront capital expenditure can be so huge and the margins are small enough (and shrink over time as the component is rapidly commoditized) that the companies who would build these factories cannot raise sufficient investment capital to cover the costs.

What Apple does is use its cash hoard to pay for the construction cost (or a significant fraction of it) of the factory in exchange for exclusive rights to the output production of the factory for a set period of time (maybe 6 – 36 months), and then for a discounted rate afterwards. This yields two advantages:

  1. Apple has access to new component technology months or years before its rivals. This allows it to release groundbreaking products that are actuallyimpossible to duplicate. Remember how for up to a year or so after the introduction of the iPhone, none of the would-be iPhone clones could even get a capacitive touchscreen to work as well as the iPhone’s? It wasn’t just the software – Apple simply has access to new components earlier, before anyone else in the world can gain access to it in mass quantities to make a consumer device. One extraordinary example of this is the aluminum machining technology used to make Apple’s laptops – this remains a trade secret that Apple continues to have exclusive access to and allows them to make laptops with (for now) unsurpassed strength and lightness.
  2. Eventually its competitors catch up in component production technology, but by then Apple has their arrangement in place whereby it can source those parts at a lower cost due to the discounted rate they have negotiated with the (now) most-experienced and skilled provider of those parts – who has probably also brought his production costs down too. This discount is also potentiallysubsidized by its competitors buying those same parts from that provider – the part is now commoditized so the factory is allowed to produce them for all buyers, but Apple gets special pricing.

Apple is not just crushing its rivals through superiority in design, Steve Jobs’s deep experience in hardware mass production (early Apple, NeXT) has been brought to bear in creating an unrivaled exclusive supply chain of advanced technology literally years ahead of anyone else on the planet. If it feels like new Apple products appear futuristic, it is because Apple really is sending back technology from the future.

Once those technologies (or more accurately, their mass production techniques) become sufficiently commoditized, Apple is then able to compete effectively on cost and undercut rivals. It’s a myth that Apple only makes premium products – it makes them all right, but that is because they are literally more advanced than anything else (i.e. the price premium is not just for design), and once the product line is no longer premium, they are produced more cheaply than competitor equivalents, yielding higher margins, more cash, which results in more ability to continue the cycle.

Here is one of those famous Apple production videos which highlights the aluminium machining technology.