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The Roundup July 21

Polaroid picture

I never really understood paying some two bucks per shot on film that faded in two months. But there are millions who love the concept.

Polaroid’s loss is one entrepreneur’s gain. Taking notes?

When the Polaroid film factory in the Dutch town of Enschede shut down in June 2008, it seemed to signal the end for one of the most ingenious and iconic innovations of the 20th century. Almost 60 years after American inventor Edwin H. Land sold the first Model 95 of his new instant-picture camera in Boston in November 1948, the troubled Polaroid Corp. halted its cassette-film production for good. Demand was still relatively high — the plant churned out 30 million cassettes in 2007 and 24 million in the first half of 2008 — but the plant had run out of its allocated amount of the chemical components needed to make its famous instant film . . .

In October 2008, Kaps, 39, and Bosman, 55, took $2.6 million in private capital and started what they endearingly called the Impossible Project, with a view to reinventing the traditional Polaroid film. They founded a company named Impossible, leased a small building on the site of the closed Enschede plant, secured some key production machinery and hired nine former Polaroid employees to come up with new formulas for both a monochrome and a color version of the instant film. The new films would have unique characteristics but still maintain some of the best bits of Polaroid, like the square shape, the white frame and that familiar warm chemical smell. Since then, the impossible has become the highly likely. “Two weeks ago, we cleared the last of about five major road blocks,” Kaps tells TIME. “We have now proven that it is possible.”

(“After Polaroid, Keeping Instant Photography Alive,” Time, July 21) If you’re interested in starting a business — or you’re struggling with your current business — you can see all the necessary ingredients of success in this little story. The founder has a lifelong passion, a grossly underserved but large market aligned with his passion (analog instant cameras and older cameras), a very strong Internet and social media presence (the CEO, Florian Kaps, also owns, the world’s largest online Polaroid community, and, and sheer stick-to-it-iveness (simply going about to reinvent the instant camera film from scratch) — enough ingredients to persuasively forecast selling 1 million film cassettes at about $25 a pop in the first year. And that plausible forecast won him the capital to make this happen. Taking notes, anyone?

We plan to have a plan when we we’ve planned out a plan. In the meantime, we do as planned.

The United States ranks behind every industrial nation except France in the percentage of overall economic activity devoted to manufacturing — 13.9 percent, the World Bank reports, down 4 percentage points in a decade. The 19-month-old recession has contributed noticeably to this decline. Industrial production has fallen 17.3 percent, the sharpest drop during a recession since the 1930s.

So far, however, Mr. Obama’s administration has not come up with a formal plan to address the rapid decline. Instead, it has pursued ad hoc initiatives — bailing out General Motors and Chrysler, for example, and pushing green energy by supporting the manufacture of items like wind turbines and solar panels.

(“Obama’s Strategy to Reverse Manufacturing’s Fall ,” New York Times, July 21) Thom Hartmann is positively fanatical about this decline in American manufacturing, as he should be, and hats off to him for being one of the only people in the media who keep this issue on the front burner. Is it possible for America to continue its economic growth and prosperity while denuding its manufacturing base by offshoring it to places like Korea, Indonesia, China, and Vietnam? Our book, Shoestring Venture: The Startup Bible enthusiastically recommends startups on a limited budget to offshore many functions, including manufacturing. Since the big guys use them, why not you? But does that make you, an entrepreneur with a vision, part of the problem? If you, as a consumer on a straitened budget, buy something at Wal*Mart, which can be easily called “The People’s Republic of China Outlet Mall,” are you betraying America (or whatever country you live in)? The answer is no. A smart economic decision is a smart economic decision, particularly in tough times. The solution to the manufacturing decline in America isn’t going to be solved by buying American, whether you’re talking about the average consumer or Jeffrey Immelt. It’s going to be solved by rational, doable, and effective policies that make our manufacturing sector competitive with offshore alternatives. That includes some balance of health care reform (that effectively ends the “health care tax” on business), tax reform that favors manufacturing, and tariffs on imported goods that reflect in a nonreactive, rational, and measurable way both the social costs of offshore manufacture (such as its carbon footprint, pollution, etc.) and offsets for state subsidization of the industry. If, for instance, we impose a cap-and-trade regime on American of use of energy, the “carbon cost” of manufacturing in China, which is grossly inefficient from its office windows to its “dirty” coal plants, should be included in the regime, as well. If China is supporting its industry through various types of state subsidies — including the massive trade deficit which piles up useless dollars in its central bank — then some form of tariff or tax should partially offset that subsidy to make American companies more competitive on their home turf. Sans those policies, no-one who purchases goods manufactured offshore — whether you’re talking about your next door neighbor or Ford Motor Company — is to be blamed. There’s a tired and mendacious conservative mantra about liberals “blaming America.” Well, it’s time for people of all political stripes to stop “blaming Americans” and start blaming the people we’ve hired to fix these problems. And Obama, on this issue at least, seems determinedly asleep at the wheel despite his well-honed rhetoric on the matter.

Thanks for the sour persimmons, Arnold.

The budget includes $6 billion in new cuts to K-14 schools, as well as $3 billion in cuts to higher education, some of which colleges can offset with federal stimulus dollars. . . .

The budget agreement also has about $850 million in cuts to three major safety-net programs – In-Home Supportive Services, CalWORKs and Healthy Families low-cost medical insurance. . . .

Leaders agreed to cut $1.2 billion in the state’s corrections budget, but they would not discuss how they would realize those savings until after they meet with their caucuses.

The state will take about $4.7 billion from cities, counties and special districts.

The plan relies on $2 billion in borrowing the state promises to repay in 2013; local governments are expected to seek loans to compensate. It also takes $1 billion from gas tax money that now pays for local road projects, as well as $1.7 billion in redevelopment funds.

(“A deal — at last,” Sacramento Bee, July 21) I like the part where they cut state corrections by $1.2 billion but how they’re going to do that is . . . a secret. Considering that state corrections is under federal receivership which has full authority to bust into California’s bank accounts and take whatever money it needs — something it’s done on a couple occasions — the only way they’re going to realize all that savings is to let people out of prison. And if there’s anything Californians of all political stripes love to pay for is putting people in prison for a long, long time, especially minorities (liberal state, indeed). Meanwhile, the prison guards and prison medical personnel are working two and three shifts (on time and a half) to make up for income lost through furloughs. Smart budgeting, huh?

If you’re interested in filmmaking, then the Sony deal with Redbox is a major piece of news.

Sony Pictures Home Entertainment has signed a multiyear distribution agreement with Redbox Automated Retail that will put Sony’s DVDs, direct-to-video movies and catalog titles into Redbox’s 17,000 self-service kiosks where movies rent for $1 a night.

Other studios have eyed the growing network of Redbox kiosks warily, concerned that bargain DVD rentals will further erode DVD sales. Redbox even is battling Universal in court, claiming the studio is trying to limit third-party distributors’ dealings with Redbox.

(“Sony inks Redbox deal,” The Hollywood Reporter, July 21)Since I do so much consulting work with independent filmmakers, I have a bias towards news that opens yet one more door to filmmakers and film producers on a budget. The standard model of independent filmmaking involved a series of windows. You made your film and took it around on the festival circuit. Somewhere on that circuit, you hoped a distributor would pick it up and start ushering it through a sequence of distribution windows: theatrical distribution, secondary distribution (airplanes, etc), DVD/video release, pay-per-view, cable, network, syndication. Two things have happened in the last few years. First, the time spacing between windows has narrowed (in fact, some filmmakers like Steven Soderbergh have narrowed that spacing to 0). Second, the number of distribution outlets and formats has vastly increased. Internet streaming, Redbox, Netflix, iTunes, video-on-demand, all have found new ways to put entertainment content in front of an audience. In the past, the barriers to the audience were considerable — you had only two choices: find a theatrical distributor or find your way into a DVD rental outlet. Now you have a half a dozen ways to find an audience and get your work a decent showing. In this environment of cheap production and multiple distribution points, anyone still going the festival-distributor network is exhibiting a profound failure of imagination.

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