A Family Dynasty Fails, Vulture Investors, and Pirate Trouble
BY Ryan McCarthy
After 55 years, a billion-dollar family business files for bankruptcy. Martin and Matthew Bucksbaum, two brothers from Iowa, rose from local grocers to become one of the richest families in the world. In the process, the Bucksbaums practically invented the suburban shopping center. Their company, General Growth Properties, operated 200 malls in 44 states, and became the second largest mall operator in the world. Still, onerous mortgage financing saddled the company with a whopping $27 billion in debt. The New York Times is calling it the biggest commercial real estate collapse in history.
Vulture investors vs. small business owners. As more investors snatch up loans from failed banks, more than a few entrepreneurs are being asked to pay up immediately. The New York Times relays a disturbing story of the Fayetteville Athletic Club, a company that had his $10 million loan was bought by a vulture investor. The investor bought the loan at an F.D.I.C. auction for -- prepare to be outraged - 34 cents on the dollar. Before the auction, co-owner Robert Shoulders offered to repay $6 million of the loan to settle with the F.D.I.C. Now, the owner Shoulders' loan is demanding repayment: "These guys put a gun to our head and said 100 percent is due in 10 days," said Mr. Shoulders.
The worst states for taxes. The Small Business and Entrepreneurship Counsel ranked all fifty states and D.C. on the basis of their small business taxes. Independent Street has the list. They accounted for 16 different types of taxes, including income, property, death/inheritance, unemployment, and consumption-based taxes for things like gas and diesel. You can consider yourself lucky if you're thinking of moving to South Dakota or Nevada, but you'll cringe if you're thinking of starting business in Minnesota, New York or New Jersey.
Bad week for real, metaphorical pirates. First, Navy Seals saved the American Captain of the Maersk Alabama--and in doing so disrupted the only growth industry in Somalia. (Reenactment here, thanks to the Daily Show). Now, a Swedish court has convicted the founders of the Pirate Bay, a website that, as TechCrunch points out, does nothing more than steer visitors to sites where you can find illicit copies of music and movies on the web. The Pirate Bay founders disputed that their website was a money-making enterprise, as Swedish prosecutors charged, and mounted a PR assault that consisted mostly of snarky rebuttals posted online. The company's founders were fined $3.58 million and face a year in jail. They promised to appeal.
Business competition borrows a page from American Idol. The New Orleans non-profit, The Idea Village, is in the final throes of its business plan competition, which is designed to lure the coveted 23-35 demographic to the Big Easy. Tomorrow, a live audience will text in their votes for one of five finalists. The winner will receive $100,000 in cash and $100,000 in business resources. As we wrote about here, Idea Village has kept its competition innovative from the get-go.
McKinsey: Cloud computing a bigger boost for small companies. Some good news for entrepreneurs struggling to compete with corporate behemoths. Bizbox has the lowdown on a new report from McKinsey, which argues that cloud computing is an even bigger boon for small business than expected. According to the report, cloud computing is turning out to be more expensive than it seemed—but only for big companies. As it turns out, the smaller your business, the more cost-effective cloud computing becomes. For more about whether cloud computing is right for you, see Inc.'s coverage.
Challenging marketing myths. At the Amex OPEN forum Randy Vaughn has five marketing truisms that are worth rethinking. Vaughn's Myth 1: "You have to spend money to make money." He writes: "The claim of having to spend massive amounts of marketing cash has been shattered by the host of affordable and sometimes, FREE marketing tools available. And with the rise of social media, you can engage in interactive marketing so that you trade in that cash outlay of expenses for time cultivating relationships in a variety of online forums."