Google Gets Into the Airline Ticket Business

Just in case it wasn't clear Google is going into the business of selling airline tickets. It's starting small with Cape Air, an independent New England-based regional airline.

The websites for Cape Air and Nantucket Airlines now have new booking software under the hood powered by Google-owned ITA Software, one of the 'Ten Most Innovative Companies in Transportation,' according to Fast Company.

ITA Software was acquired by Google in 2010. So far, the partnership has produced new flight search results for desktop and mobile Google searches. Today, you can use a normal Google search for every step of planning a flight (in the U.S.) other than buying the ticket.

But it's clear from the Cape Air arrangement that Google wants that business, too. It made sure to point out that ITA's Cape Air system is 'built to scale to support airlines of all sizes.'

Here's the problem: Google needs credit cards. If it's going to be a future payment platform, it needs to have its users' credit cards stored (like Apple does). That's why it now asks new Gmail users for a credit card when they sign up. They don't have to give their card, but Google wants it.

By becoming a convenient point of sale for something, Google can get its users to add credit cards to their accounts. Booking flights is a great business for Google to get into, because there's lots of friction in the process. A Google search seems like a natural place to start looking for flights.

It's just a search ad business for now, between desktop and mobile flight search and Google Maps inside airports. But when Google scales the flight booking system it built for Cape Air, it will be able to give users the option to make their travel plans using Google all the way.

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Google Gets Into the Airline Ticket Business

Just in case it wasn't clear Google is going into the business of selling airline tickets. It's starting small with Cape Air, an independent New England-based regional airline.

The websites for Cape Air and Nantucket Airlines now have new booking software under the hood powered by Google-owned ITA Software, one of the 'Ten Most Innovative Companies in Transportation,' according to Fast Company.

ITA Software was acquired by Google in 2010. So far, the partnership has produced new flight search results for desktop and mobile Google searches. Today, you can use a normal Google search for every step of planning a flight (in the U.S.) other than buying the ticket.

But it's clear from the Cape Air arrangement that Google wants that business, too. It made sure to point out that ITA's Cape Air system is 'built to scale to support airlines of all sizes.'

Here's the problem: Google needs credit cards. If it's going to be a future payment platform, it needs to have its users' credit cards stored (like Apple does). That's why it now asks new Gmail users for a credit card when they sign up. They don't have to give their card, but Google wants it.

By becoming a convenient point of sale for something, Google can get its users to add credit cards to their accounts. Booking flights is a great business for Google to get into, because there's lots of friction in the process. A Google search seems like a natural place to start looking for flights.

It's just a search ad business for now, between desktop and mobile flight search and Google Maps inside airports. But when Google scales the flight booking system it built for Cape Air, it will be able to give users the option to make their travel plans using Google all the way.

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Uptick in Business Spending Raises US Bank Hopes

Two-and-a-half years after the official end of the recession, businesses are starting to invest cash again, prompting bankers to hope they might start borrowing, too.

Consider Jim Burg. It has been a year since steelmakers started having trouble finding trucks to haul loads for the reviving auto industry. So Burg, whose company is based in Warren, Michigan, is finally about to borrow money from a bank to build his fleet of flatbed rigs to 85 from 70.

But Burg is taking the step carefully. He accumulated far more cash reserves than he has ever had in his previous 28 years in business. He also lined up bank credit lines in excess of what he needs to operate.

"We put in a very conservative business plan," said Burg. "Look what happened in the second quarter of last year when the tsunami hit Japan. That affected us directly."

Burg's story is a common one that bankers say gives them at least a little hope. They expect investments like those Burg is making will drive the economic recovery and bring additional borrowing and interest income —even as they recognize that in this day and age, businesses are mostly averse to debt.

"Companies are going to continue to increase productivity and generate cash," which they can use to build inventory, said Laura Whitley, commercial banking head at Bank of America Corp. [BAC  Loading...      ()   ] "I do not necessarily see them borrowing."

No borrowing surge

While banks large and small are certainly making more business loans, they say most of the money has been borrowed to replace worn-out equipment or to refinance existing debt. Businesses generally have not been borrowing to grow, making people like Burg a notable exception.

Bankers and analysts say they do not see a big surge of additional borrowing in the near term, following the strong growth of the last three months of 2011, when business loans outstanding at U.S. banks increased at an annual rate of 13.1 percent, according to Federal Reserve data.

A portion of that growth came from U.S. banks taking market share from retreating European banks and from the corporate bond markets, not from additional borrowing. Also, some of the surge came from companies hurrying to take advantage of an expiring tax investment incentive, said Christopher Mutascio, a stock analyst at Stifel Nicolaus & Co.

Initial data since December points to slower loan growth, said Mutascio. That would be a disappointment to investors who had recently been bidding up bank stocks in anticipation of another strong step up in business lending, he added.

Meanwhile, companies continue to take in cash profits from their operations that they can invest instead of borrowing. U.S. businesses piled up a record $1.6 trillion in bank deposits and money market funds through the end of September, according to Federal Reserve data. Bankers say companies continue to add to their deposits.

"Corporate America built and continues to hold an extraordinary amount of cash," said Terry Turner, chief executive of Pinnacle Financial Partners Inc, a Nashville, Tennessee-based bank that specializes in commercial and industrial loans. "That serves as a damper on loan demand."

In Huntersville, North Carolina, engineering giant ABB Ltd [ABB  Loading...      ()   ] of Switzerland is using its own cash this year to build a $100 million factory to make cables to transmit high voltage electricity, said Ismo Haka, the company's chief financial officer for North America.

ABB is keen on keeping debt low and cash high.

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As Business Lunches Disappear So Do Men's Waistlines

British men’s waistlines have shrunk since the financial crisis cut the number and length of business lunches, a London tailor specialized in making suits for executives in the City said on Friday.

Adan Gault | OJO Images | Getty Images

According to tailors Norton & Townsend, British men have lost more than half an inch off their waist because of the credit crunch, as expense accounts slimmed down or totally disappeared.

“The majority of our clients are at executive level who would have seen a business lunch almost as part of their daily working life,” said Austen Pickles, head of Norton & Townsend, in a statement. “But that is no longer the case with expense accounts and lazy lunches out of keeping with the downturn in the economic climate.”

Norton & Townsend said the average waist size had dropped from 36 to 34 ½, while chest sizes shrunk from 44 to 42, with recession-proof London seeing the drop after other cities such as Leeds, Newcastle, and Manchester.

“With the emergence of so many different online networking platforms, businesses can often do without the business lunch with its demands on time and finances. It is most noticeable as average sizes drop,” Pickles said.

Another consequence of the cut in business lunches, according to the tailor, is that men are now choosing “finer, lightweight, higher performance fabrics” to go with their svelte figure.

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More Business Owners Plan to Spend in 2012: Survey

Small business owners are looking to spend in 2012.

That’s according to the just-released Wells Fargo/Gallup Small Business Index, which surveyed 600 small business owners in January 2012. It found that that 28 percent of U.S. small business owners plan to increase their company’s capital spending in the next 12 months.

That's in line with our own — smaller — survey conducted earlier this month with members of CNBC.com's Small Business Council. When asked if they were planning on spending in 2012, we heard a resounding yes.

Among the planned spending, most of it already in the works: a restaurant renovation; the purchase of a new building for a retail outlet, a delivery van; and, for several of the respondents, new manufacturing equipment that will each company between $100,000 to $250,000.

The Wells Fargo/Gallup survey brings more positive news: The 28 percent who say they will spend is the highest percentage the Index has recorded since January 2008.

One reason business owners may be considering spending: They believe it will be easier to get a loan in 2012. According to the Wells Fargo/Gallup index, 25 percent say credit was somewhat or very easy to get over the past 12 months, the highest percentage since April 2009. Looking ahead, 27 percent say it will be somewhat or very easy to get credit over the next 12 months; again, the highest since April 2009, and up from 22 percent in October 2011.

While a hefty 38 percent expect it will remain difficult to obtain credit, that number is down from 43 percent in October.

The report notes that despite the positive trends, economic realities still hover over most business owners' spreadsheets. Rising gas prices and fragile consumer confidence levels could drag down the economy, it notes.

And if consumers aren't spending, neither is the most optimistic business owner.

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Using Rap to Teach Pithy Lessons in Business

Silicon Valley, where engineers in khakis write software code, might not at first glance have much to do with the world of rap music, where artists in sagging pants write irreverent lyrics.

VisionsofAmerica | Joe Sohm | Getty ImagesBut Ben Horowitz, a prominent venture capital investor here, says rap holds a trove of lessons for tech entrepreneurs. Throw business classes and books out the window, Mr. Horowitz says, and listen to rap lyrics instead.

He applies his theory on his blog, where he has attracted a following of tech readers and other executives by offering business lessons, almost all of them preceded by a rap lyric that summarizes a moral, and with recordings from Grooveshark, the music site.

In the process, he has linked two cultures in Silicon Valley, which is not exactly known for its racial or cultural diversity.

Entrepreneurs may do well to listen to Mr. Horowitz’s advice. He started the venture capital firm Andreessen Horowitz with Marc Andreessen, the co-founder of Netscape, and the firm made vast amounts of money on investments in companies like Groupon [GRPN  Loading...      ()   ] and Skype, and stands to make more on Facebook’s initial public offering.

Late last month, the firm announced that it had raised its third fund in three years, $1.5 billion in fresh capital, a large amount even in Silicon Valley. The two men previously started Opsware, a data center software company, and sold it to Hewlett-Packard [HPQ  Loading...      ()   ] in 2007.

Mr. Horowitz uses rap as an introduction as he philosophizes about business challenges like how to fire executives, why founders run their companies better than outside chief executives and how to stand up to difficult board members.

“All the management books are like, ‘This is how you set objectives, this is how you set up an org chart,’ but that’s all the easy part of management,” Mr. Horowitz said in an interview in his spacious office here on Sand Hill Road, the epicenter of tech investing. “The hard part is how you feel. Rap helps me connect emotionally.”

How to deal, for instance, with the stress of the 11th-hour, late-night auditing mishap that almost stymied the $1.6 billion sale of Opsware?

Listen to the Kanye West song “Stronger”: “Now that that don’t kill me/Can only make me stronger/I need you to hurry up now/’Cause I can’t wait much longer/I know I got to be right now/’Cause I can’t get much wronger.”

Much of rap is about business, whether the drug business, the music industry or work ethic, said Adam Bradley, an associate professor specializing in African-American literature at the University of Colorado at Boulder who wrote “Book of Rhymes: The Poetics of Hip Hop” and co-edited “The Anthology of Rap.”

“It comes out of the fact that rap is such a direct mode of expression, maybe more so than any other music lyric, because of the emphasis on language, of words above melody or harmony,” Mr. Bradley said.

People think of rap lyrics as being only about money, women, status and cocaine, he said, but more pervasive themes are leadership, collaboration and the vulnerability beneath the swagger — all relevant in business.

Mr. Horowitz said he made that discovery in the early 1980s, when he was introduced to rap as one of few white players on the Berkeley High School football team.

Current DateTime: 03:42:15 20 Feb 2012
LinksList Documentid: 22528753He began using lyrics to make his points when he became a chief executive.

Recently, for instance, one of the entrepreneurs that Andreessen Horowitz financed clashed with a disparaging board member. Mr. Horowitz advised the executive that he was being too deferential and needed to show his strength.

He said he sent the executive “Scream on Em,” a rap song by The Game, because its “superaggressive” lyrics — so aggressive that none can be printed in a family newspaper.

“I couldn’t have explained what I was talking about quite right, but he called and said, ‘I’ve been listening to that song every day, and everything is better,’ ” Mr. Horowitz said.

When he explained on his blog why his venture firm favored founding chief executives, as opposed to those hired to run companies, he had trouble explaining one of the more subtle reasons — people care more about something they started, while outsiders care more about money.

Then he remembered a lyric by Rakim from the song “Follow the Leader:” “You’re just a rent-a-rapper, your rhymes are minute-maid/I’ll be here when it fade to watch you flip like a renegade.”

Mr. Horowitz said, “Because it’s Rakim, and he’s like the greatest rapper of all time, he could fit into two sentences what it took me three pages to explain.”

He has a similar response to those who say Silicon Valley is in the midst of another bubble, including those who have criticized his firm’s large investments as having played a role in inflating the bubble. It’s LL Cool J’s song “Going Back to Cali:” “I’m going back to Cali ... hmm, I don’t think so.”

“It’s totally about the way he said it — ‘Hmm, I don’t think so’ — which is how I was feeling about the bubble talk,” Mr. Horowitz said.

Mr. Horowitz’s use of rap connects two cultures that are rarely linked. African-Americans hold only 6.7 percent of computer jobs, according to the Bureau of Labor Statistics, and their representation among Silicon Valley entrepreneurs is even smaller.

Last fall, Mr. Horowitz’s posts led to an appearance before the Congressional Black Caucus. He talked to the group about how the Internet brings different cultures together and about the role African-Americans have played in social media and mobile technologies.

Silicon Valley “can leave a lot of people on the outside looking in,” said Jason Lee, a follower of the blog who helped organize the panel and is the son of Representative Sheila Jackson Lee, a Texas Democrat and a caucus member.

“The fact that he begins with a relevant hip hop lyric immediately contextualizes the narrative into something familiar and accessible to people from a wide variety of experiences,” Mr. Lee said. “To the extent that more people read his blog, relate to his posts and can place themselves in the situations he describes, I think more people will feel like Silicon Valley has room for them as well.”

This story originally appeared in The New York Times

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