Media Decoder Blog: New York Observer Makes Ken Kurson New Editor

It will come as no surprise to those who follow the Manhattan media scene that The New York Observer has picked a new editor. After all, the newspaper has already had five editors in the seven years since Jared Kushner, a New York real estate developer, acquired the newspaper at the age of 25 in 2006.

Now it has a sixth. Ken Kurson, an author and editor who once worked with Rudolph W. Giuliani, the former mayor of New York, was named editor in chief of The Observer and editorial director of the Observer Media Group on Friday.

Mr. Kurson, 44, a longtime friend of Mr. Kushner’s, takes over from Aaron Gell, who has served as interim editor since Elizabeth Spiers resigned last August.

In a letter to The Observer staff, Mr. Kushner said: “Ken knows the ideas, stories and voices that make up New York better than anyone. He is a journalist and an author and through his years as a consultant observed the figures who create the framework of business, politics, media, tech, culture and real estate in our city.”

As Mr. Kushner has churned through editors and financial losses, he has struggled to find a landing place for The Observer, which faces increased competition from a revitalized New York Magazine and any number of Web sites staffed by young writers cracking wise and sometimes wisely about current events in New York.

“I took a company that was losing a lot of money and run as a hobby and turned it into a business,” Mr. Kushner said in a telephone interview Friday. “If you take a conventional approach in the media business, you are going to get slaughtered. It’s true that I’ve broken some eggs along the way, but in the process I’ve preserved an important editorial voice, not just in New York but in the rest of the country.”

Mr. Gell was surprised by the move, but was aware that editorial changes have become common at the weekly.

“I have loved every minute of editing the Observer, and I’m really proud of what we’ve done here, especially in terms of boosting readership to our web properties and our coverage of Hurricane Sandy,” Mr. Gell said. “I know Ken. He’ll do a great job, and I look forward to helping him out however I can.”

Mr. Kurson has been a contributing editor at Esquire magazine since 1997 and has written a column there. He was an intern at Harper’s Magazine, started and sold a personal finance magazine, and has written four books.

Still, one of those books was “Leadership,” which he co-wrote with Mr. Giuliani. Mr. Kurson worked at Giuliani Partners in 2002 after completing the book and then joined Mr. Giuliani’s failed campaign for president in 2008. Since then Mr. Kurson has worked at Jamestown Associates, a New Jersey political and communications firm, where he ran media operations for a number of Republican House and Senate candidates.

Given his close ties to Mr. Giuliani and the former mayor’s keen interest in advancing the candidacy of Joseph J. Lhota, the former head of the Metropolitan Transportation Authority, Mr. Kurson says he knows he will be closely watched.

“People will think what they want,” he said in an interview. “I will have to earn their trust. I have had a long and honorable journalistic career, calling it like I see it and being a straight shooter.”

A version of this article appeared in print on 01/05/2013, on page B3 of the NewYork edition with the headline: The New York Observer Names Author as Editor.

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Scare Amplifies Fears That Clinton’s Work Has Taken Heavy Toll

Pool photo by Brendan Smialowski

Hillary Rodham Clinton with Field Marshal Mohamed Hussein Tantawi in Cairo in July.

WASHINGTON — When Secretary of State Hillary Rodham Clinton fractured her right elbow after slipping in a State Department garage in June 2009, she returned to work in just a few days. Her arm in a sling, she juggled speeches and a trip to India and Thailand with physical therapy, rebuilding a joint held together with wire and pins.

It was vivid evidence of Mrs. Clinton’s indomitable stamina and work ethic — as a first lady, senator, presidential candidate and, for the past four years, the most widely traveled secretary of state in American history.

But after a fall at home in December that caused a concussion, and a subsequent diagnosis of a blood clot in her head, it has taken much longer for Mrs. Clinton to bounce back. She was released from a hospital in New York on Wednesday, accompanied by her daughter, Chelsea, and her husband, former President Bill Clinton. On Thursday, she told colleagues that she hoped to be in the office next week.

Her health scare, though, has reinforced the concerns of friends and colleagues that the years of punishing work and travel have taken a heavy toll. Even among her peers at the highest levels of government, Mrs. Clinton, 65, is renowned for her grueling schedule. Over the past four years, she was on the road for 401 days and spent the equivalent of 87 full days on a plane, according to the State Department’s Web site.

In one 48-hour marathon in 2009 that her aides still talk about, she traveled from talks with Palestinian leaders in Abu Dhabi to a midnight meeting with Prime Minister Benjamin Netanyahu in Jerusalem, then boarded a plane for Morocco, staying up all night to work on other issues, before going straight to a meeting of Arab leaders the next morning.

“So many people who know her have urged me to tell her not to work so hard,” said Melanne S. Verveer, who was Mrs. Clinton’s chief of staff when she was first lady and is now the State Department’s ambassador at large for women’s issues. “Well, that’s not easy to do when you’re Hillary Clinton. She doesn’t spare herself.”

It is not just a matter of duty, Ms. Verveer and others said. Mrs. Clinton genuinely relishes the work, pursuing a brand of personal diplomacy that, she argues, requires her to travel to more places than her predecessors.

While there is no medical evidence that Mrs. Clinton’s clot was caused by her herculean work habits, her cascade of recent health problems, beginning with a stomach virus, has prompted those who know her best to say that she desperately needs a long rest. Her first order of business after leaving the State Department in the coming weeks, they say, should be to take care of herself.

Some even wonder whether this setback will — or should — temper the feverish speculation that she will make another run for the White House in 2016.

“I am amazed at the number of women who come up to me and tell me she must run for president,” said Ellen Chesler, a New York author and a friend of Mrs. Clinton’s. “But perhaps this episode will alter things a bit.”

Given Mrs. Clinton’s enduring status as a role model, Ms. Chesler said women would be watching which path she decides to take, as they plan their own transitions out of the working world.

“Do remember that women of our generation are really the first to have worked through the life cycle in large numbers,” she added. “Many seem to be approaching retirement with dread.”

For now, aides say, Mrs. Clinton’s focus is on wrapping up her work at the State Department. She would like to take part in a town hall-style meeting, thank her staff and sit for some interviews. But first she has to get clearance from her doctors, who are watching her to make sure that the blood thinners they have prescribed for her clot are working.

Speaking to a meeting of a foreign policy advisory board from her home in Chappaqua, N.Y., on Thursday, Mrs. Clinton said she was crossing her fingers and encouraging her doctors to let her return next week. “I’m trying to be a compliant patient,” she said, according to a person who was in the room. “But that does require a certain level of patience, which I’ve had to cultivate over the last three and a half weeks.”

While convalescing, Mrs. Clinton has spoken with President Obama and has held a 30-minute call with Senator John Kerry, Democrat of Massachusetts, whom Mr. Obama nominated as her successor.

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Scare Amplifies Fears That Clinton’s Work Has Taken Heavy Toll

Pool photo by Brendan Smialowski

Hillary Rodham Clinton with Field Marshal Mohamed Hussein Tantawi in Cairo in July.

WASHINGTON — When Secretary of State Hillary Rodham Clinton fractured her right elbow after slipping in a State Department garage in June 2009, she returned to work in just a few days. Her arm in a sling, she juggled speeches and a trip to India and Thailand with physical therapy, rebuilding a joint held together with wire and pins.

It was vivid evidence of Mrs. Clinton’s indomitable stamina and work ethic — as a first lady, senator, presidential candidate and, for the past four years, the most widely traveled secretary of state in American history.

But after a fall at home in December that caused a concussion, and a subsequent diagnosis of a blood clot in her head, it has taken much longer for Mrs. Clinton to bounce back. She was released from a hospital in New York on Wednesday, accompanied by her daughter, Chelsea, and her husband, former President Bill Clinton. On Thursday, she told colleagues that she hoped to be in the office next week.

Her health scare, though, has reinforced the concerns of friends and colleagues that the years of punishing work and travel have taken a heavy toll. Even among her peers at the highest levels of government, Mrs. Clinton, 65, is renowned for her grueling schedule. Over the past four years, she was on the road for 401 days and spent the equivalent of 87 full days on a plane, according to the State Department’s Web site.

In one 48-hour marathon in 2009 that her aides still talk about, she traveled from talks with Palestinian leaders in Abu Dhabi to a midnight meeting with Prime Minister Benjamin Netanyahu in Jerusalem, then boarded a plane for Morocco, staying up all night to work on other issues, before going straight to a meeting of Arab leaders the next morning.

“So many people who know her have urged me to tell her not to work so hard,” said Melanne S. Verveer, who was Mrs. Clinton’s chief of staff when she was first lady and is now the State Department’s ambassador at large for women’s issues. “Well, that’s not easy to do when you’re Hillary Clinton. She doesn’t spare herself.”

It is not just a matter of duty, Ms. Verveer and others said. Mrs. Clinton genuinely relishes the work, pursuing a brand of personal diplomacy that, she argues, requires her to travel to more places than her predecessors.

While there is no medical evidence that Mrs. Clinton’s clot was caused by her herculean work habits, her cascade of recent health problems, beginning with a stomach virus, has prompted those who know her best to say that she desperately needs a long rest. Her first order of business after leaving the State Department in the coming weeks, they say, should be to take care of herself.

Some even wonder whether this setback will — or should — temper the feverish speculation that she will make another run for the White House in 2016.

“I am amazed at the number of women who come up to me and tell me she must run for president,” said Ellen Chesler, a New York author and a friend of Mrs. Clinton’s. “But perhaps this episode will alter things a bit.”

Given Mrs. Clinton’s enduring status as a role model, Ms. Chesler said women would be watching which path she decides to take, as they plan their own transitions out of the working world.

“Do remember that women of our generation are really the first to have worked through the life cycle in large numbers,” she added. “Many seem to be approaching retirement with dread.”

For now, aides say, Mrs. Clinton’s focus is on wrapping up her work at the State Department. She would like to take part in a town hall-style meeting, thank her staff and sit for some interviews. But first she has to get clearance from her doctors, who are watching her to make sure that the blood thinners they have prescribed for her clot are working.

Speaking to a meeting of a foreign policy advisory board from her home in Chappaqua, N.Y., on Thursday, Mrs. Clinton said she was crossing her fingers and encouraging her doctors to let her return next week. “I’m trying to be a compliant patient,” she said, according to a person who was in the room. “But that does require a certain level of patience, which I’ve had to cultivate over the last three and a half weeks.”

While convalescing, Mrs. Clinton has spoken with President Obama and has held a 30-minute call with Senator John Kerry, Democrat of Massachusetts, whom Mr. Obama nominated as her successor.

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Common Sense: Google Finds a Line Between ‘Aggressive’ and ‘Evil’

“Don’t Be Evil,” the founders of Google, Larry Page and Sergey Brin, proclaimed in their 2004 “Owner’s Manual” for prospective investors in the company. Despite widespread cynicism, criticism and even mockery, the company has never backed down on this core premise, reiterating in its most recent list of the “things we know to be true” that “you can make money without doing evil.”

Mladen Antonov/Agence France-Presse — Getty Images

Jon Leibowitz, chairman of the F.T.C., at the announcement of its Google antitrust ruling.

Yet the company has been dogged for years by widespread allegations that it violates its own pledge by manipulating the search results that remain the core of the company and the primary source of its enormous profits.

Google insists that its results have always been “unbiased and objective” and that they are “the best we know how to produce.” But for competitive reasons, it never disclosed the secret algorithms that produce those results, so no one outside the company knew for sure. A growing chorus of complaints from companies like Expedia, Yelp and, especially, Microsoft that Google manipulates the results to favor its interests at the expense of competitors led both the United States government and the European Union to take up the issue. On Thursday, after nearly two years of investigation, the Federal Trade Commission rendered a verdict: Google isn’t evil.

It may have been “aggressive,” as the commission delicately put it. But “regarding the specific allegations that the company biased its search results to hurt competition, the evidence collected to date did not justify legal action by the commission,” said Beth Wilkinson, outside counsel to the F.T.C. “The F.T.C.’s mission is to protect competition, and not individual competitors.”

The decision is “a huge victory for Google,” Randal Picker, a professor of commercial law at the University of Chicago Law School and a specialist in antitrust and intellectual property, told me just after this week’s decision.

It’s also a vindication of the integrity of Google’s search results and the company’s credibility. “There’s never been any evidence that consumers were harmed by Google’s practices, and no evidence that Google ever engaged in any manipulation that violates antitrust law,” said Eric Goldman, a professor of law and director of the High Tech Law Institute at Santa Clara University School of Law.

The decision is also likely to set standards for competition on the Internet for years to come. It’s a blow to competitors like Microsoft, which has been stirring up opposition to Google for years, not to mention newer rivals like Facebook, Apple and Amazon. “The gloves will be off,” Professor Picker predicted. “The F.T.C. has indicated it’s going to be taking a very cautious approach toward regulating competition on the Internet.”

But will the decision ultimately prove to be good for consumers?

The F.T.C. did secure some concessions from Google regarding patent licensing and advertiser options. But to call those a slap on the wrist would be an overstatement.

What mattered most to both Google users and competitors was Google’s search practices, which had never been put under the regulatory microscope to such a degree and which the F.T.C. left untouched.

Google’s search results have evolved significantly from its early, simpler days. When I searched for “flight JFK to LAX” this week, I got three categories of results: paid ads at the top and on the right; a Google-produced chart comparing flight options with the disclaimer, which you need to click on, that “Google may be compensated by these providers”; and so-called organic results below that. The first two organic results were entries for Expedia, a rival to Google’s travel site. But given the layout and size of my screen, none of the organic results were visible unless I scrolled down.

However clearly labeled, the prominence of Google’s own travel results gives pause to some antitrust experts. “Location is important,” Professor Picker said. “No one thinks otherwise. Years ago, it was important for airlines’ reservations systems to be on the first screen. But I’m not sure this is an antitrust problem.”

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Greece Tax Scandal Shifts Focus From Collection Problem

The tax scandal that reignited in Greece over the holidays had all the makings of a grade-B drama. A former finance minister, George Papaconstantinou, was accused of scrubbing his relatives’ names from a CD containing the identities of thousands of possible Greek tax dodgers. Within hours, his chief political rival tossed him from their party.

Thanassis Stavrakis/Associated Press

George Papaconstantinou, a former finance minister, was accused of scrubbing relatives’ names from a CD with the identities of possible tax dodgers.

Mr. Papaconstantinou, in turn, hinted darkly that he was the victim of a plot masking malfeasance at higher levels.

While the firestorm may have made for political theater of a sort, it has diverted attention from a much bigger problem: Greece, its foreign lenders say, has fallen woefully short of its tax collection targets and is still not moving hard enough to tackle widespread tax evasion — long tolerated, particularly among the country’s richest citizens.

Greek officials agreed to the targets as part of an international lending pact last year, but there is no penalty for missing them. In recent weeks, however, two reports by Greece’s foreign lenders have found that Athens pulled in less than half of the additional tax income that it expected last year and performed fewer than half of the expected audits.

One report said that Athens had brought in a little less than $1.3 billion in additional taxes of the $2.6 billion it had hoped to collect in 2012. Only 88 major taxpayers, including corporations, were the subject of full-scope audits, well below a target of 300, the report said, while just 467 audits of high-wealth individuals were completed, compared with a goal of 1,300.

The fragile, three-party coalition government of Prime Minister Antonis Samaras continues to vow it will crack down on corruption and tax evasion, but a blunt assessment last month by a task force of Greece’s foreign lenders said, “These changes have not yet been reflected in results in terms of improved tax inspection and collection.” Analysts say the failure to pursue tax evaders aggressively is deepening social tensions. “It’s a weak government with very difficult work to do, and this is very, very bad for the morale of the people,” said Nikos Xydakis, a political columnist for Kathimerini, a daily newspaper. “This year will be hell for the middle-class people. And the rich people are untouchable. This is very bad.”

In a separate report, the European Union and the International Monetary Fund said they were concerned that the “authorities are falling idle and that the drive to fight tax evasion by the very wealthy and the free professions is at risk of weakening.”

The report added that total unpaid taxes amounted to nearly $70 billion, about 25 percent of Greece’s gross domestic product. But only about 15 percent to 20 percent of the amount is actually collectible, either because the statute of limitations has run out or the scofflaws do not have the money.

It pressed Greece to focus on the cases most likely to produce real revenues, especially in vocations where tax evasion has become pernicious. “Doctors and lawyers are a good place to start,” it said.

Critics, especially the leftist party Syriza, which leads in opinion polls, say the government has not done enough to stop corruption because its members are tied to the country’s business elite and do not want to jeopardize their political careers.

“The problem is not simply tax evasion among the rich,” said Zoe Konstantopoulou, a member of Parliament from Syriza who serves on a panel investigating the so-called Lagarde list, a compilation of more than 2,000 Greeks with accounts in a Swiss branch of HSBC that had been sent to Mr. Papaconstantinou in 2010 by Christine Lagarde, then the finance minister of France. “The problem is tax evasion among the rich with the complicity and the aiding and abetting of those who govern.”

While Greece received a badly needed $45 billion in aid last month to help it avoid defaulting on its debts, critics say that unless Athens can more forcefully tap the billions it is owed in taxes, it will never pay off its debts, even if its moribund economy eventually starts to recover.

A dysfunctional bureaucracy weakened by budget cuts, two destabilizing rounds of elections last spring and an economy decimated by austerity have hampered tax collections further. But a thicket of regulations and a culture of resistance also fuel a shadow economy that includes an estimated 25 percent of economic activity.

Liz Alderman reported from Paris, and Rachel Donadio from Rome. Niki Kitsantonis contributed reporting from Athens.

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Common Sense: Google Finds a Line Between ‘Aggressive’ and ‘Evil’

“Don’t Be Evil,” the founders of Google, Larry Page and Sergey Brin, proclaimed in their 2004 “Owner’s Manual” for prospective investors in the company. Despite widespread cynicism, criticism and even mockery, the company has never backed down on this core premise, reiterating in its most recent list of the “things we know to be true” that “You can make money without doing evil.”

Yet the company has been dogged for years by widespread allegations that it violates its own pledge by manipulating the search results that remain the core of the company and primary source of its enormous profits.

Google insists that its results have always been “unbiased and objective” and that “our search results are the best we know how to produce.” But for competitive reasons, it never disclosed the secret algorithms that produce those results, so no one outside the company knew for sure. A growing chorus of complaints from companies like Expedia, Yelp and, especially, Microsoft that Google manipulates the results to favor its interests at the expense of competitors led both the United States government and the European Union to take up the issue. On Thursday, after nearly two years of investigation, the Federal Trade Commission rendered a verdict: Google isn’t evil.

It may have been “aggressive,” as the commission delicately put it. But “regarding the specific allegations that the company biased its search results to hurt competition, the evidence collected to date did not justify legal action by the commission,” said Beth Wilkinson, outside counsel to the F.T.C. “The F.T.C.’s mission is to protect competition, and not individual competitors.”

The decision is “a huge victory for Google,” Randal Picker, a professor of commercial law at the University of Chicago Law School and a specialist in antitrust and intellectual property, told me just after this week’s decision. It’s also a vindication of the integrity of Google’s search results and the company’s credibility. “There’s never been any evidence that consumers were harmed by Google’s practices and no evidence that Google ever engaged in any manipulation that violates antitrust law,” Eric Goldman, professor of law and director of the High Tech Law Institute at Santa Clara University School of  Law, said.

The decision is also likely to set standards for competition on the Internet for years to come. It’s a blow to competitors like Microsoft, which has been stirring up opposition to Google for years, not to mention newer rivals like Facebook, Apple and Amazon. “The gloves will be off,” Professor Picker predicted. “The F.T.C. has indicated it’s going to be taking a very cautious approach toward regulating competition on the Internet.”

But will the decision ultimately prove to be good for consumers?

The F.T.C. did secure some concessions from Google regarding patent licensing and advertiser options. But to call those a slap on the wrist would be an overstatement. What mattered most to both Google users and competitors was Google’s search practices, which had never been put under the regulatory microscope to such a degree and which the F.T.C. left untouched.

Google’s search results have evolved significantly from its early, simpler days. When I typed “flight JFK to LAX” on Google this week, I got three categories of results: paid ads at the top and on the right; a Google-produced chart comparing flight options with the disclaimer, which you need to click on, that “Google may be compensated by these providers”; and so-called organic results below that. The first two organic results were entries for Expedia, a rival to Google’s travel site. But given the layout and size of my screen, none of the organic results were visible unless I scrolled down.

However clearly labeled, the prominence of Google’s own travel results gives pause to some antitrust experts. “Location is important,” Professor Picker said. “No one thinks otherwise. Years ago, it was important for airlines’ reservations systems to be on the first screen. But I’m not sure this is an antitrust problem.” Still, the issue is likely to be a focus of the European Union’s ongoing investigation of Google, and the European Union will probably be less sympathetic to unbridled competition on the Internet than the American authorities, and more inclined to protect competitors.

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Scant Proof Is Found to Back Up Claims by Energy Drinks

Energy drinks are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012 — more than Americans spent on iced tea or sports beverages like Gatorade.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

“If you had a cup of coffee you are going to affect metabolism in the same way,” said Dr. Robert W. Pettitt, an associate professor at Minnesota State University in Mankato, who has studied the drinks.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

“These are caffeine delivery systems,” said Dr. Roland Griffiths, a researcher at Johns Hopkins University who has studied energy drinks. “They don’t want to say this is equivalent to a NoDoz because that is not a very sexy sales message.”

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher, Dr. Craig A. Goodman, could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But Dr. Goodman, who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better. “I have no idea what it does in energy drinks,” Dr. Goodman said.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that “more than 2,500 reports have been published about taurine and its physiological effects,” including acting as a “detoxifying agent.” In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

Hiroko Tabuchi contributed reporting from Tokyo and Poypiti Amatatham from Bangkok.

Read More..

Scant Proof Is Found to Back Up Claims by Energy Drinks

Energy drinks are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012 — more than Americans spent on iced tea or sports beverages like Gatorade.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

“If you had a cup of coffee you are going to affect metabolism in the same way,” said Dr. Robert W. Pettitt, an associate professor at Minnesota State University in Mankato, who has studied the drinks.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

“These are caffeine delivery systems,” said Dr. Roland Griffiths, a researcher at Johns Hopkins University who has studied energy drinks. “They don’t want to say this is equivalent to a NoDoz because that is not a very sexy sales message.”

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher, Dr. Craig A. Goodman, could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But Dr. Goodman, who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better. “I have no idea what it does in energy drinks,” Dr. Goodman said.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that “more than 2,500 reports have been published about taurine and its physiological effects,” including acting as a “detoxifying agent.” In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

Hiroko Tabuchi contributed reporting from Tokyo and Poypiti Amatatham from Bangkok.

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Communications Satellites, Banned as ‘Weapons,’ Now Legal for Export

To the delight of American satellite makers, communications satellites — which orbit Earth to relay phone calls, link ships to shore and broadcast television programs — will become legal for civilian export under legislation that President Obama signed into law on Thursday.

Although the United States founded the industry, manufacturers were forced to pull back from international markets after a 1999 law categorized the satellites as weapons and restricted their export. At the time, Congress was fearful that selling satellites abroad could allow technology secrets to fall into the wrong hands.

The defense bill that President Obama signed will undo that step and let American companies sell communications satellites as civilian technology rather than as deadly arms. Among the beneficiaries will be companies like Boeing, Hughes and Space Systems/Loral.

“This is a tremendous assist for an industry that is inherently international,” said Patricia A. Cooper, president of the Satellite Industry Association, a business group in Washington. “It will ensure our place at the forefront of space.”

As a practical matter, communications satellites made their debut in 1964 and quickly became stars of the space age. The first craft, orbiting at 22,300 miles, relayed signals to the United States from Japan that let American television viewers watch live coverage of the 1964 Olympic Games in Tokyo.

But the industry stumbled 13 years ago after Republicans in Congress pressed for a law that restricted communications satellite exports. The lawmakers praised it as a security precaution that would prevent China and other perceived foes from stealing technology secrets. Detractors saw it as a cynical ploy meant to discredit the Clinton administration and its policy of Chinese engagement.

That law put communications satellites on Washington’s list of export-controlled munitions: tools of war like tanks, bombs, missiles and equipment for making nuclear arms. Foreign companies took the opportunity to increase their satellite sales.

The new law gives Mr. Obama the authority to return communications satellites to their previous status as civilian technology. It retains provisions that restrict the export of satellites to nations like China and North Korea, and to sponsors of state terrorism like Iran.

Senator Michael Bennet, Democrat of Colorado, who introduced a bill to change the policy on satellite exports and whose state is a space industry hub, said the measure offered satellite manufacturers a crucial lift.

“Companies across the country have been operating at a disadvantage due to these policies,” he said in a statement. “These reforms will give our businesses a chance to compete globally while still protecting our national security interests.”

The strict export controls arose from a political fight over satellite launchings by China, which in the 1980s began offering cheap rides into orbit on low-cost rockets. Presidents Ronald Reagan and George H. W. Bush, both Republicans, approved transfers of American spacecraft to Chinese rockets, as did President Bill Clinton, a Democrat.

Starting in early 1998, a series of upsets brought the expanding trade to a halt. Two American satellite makers involved in the Chinese launchings, Hughes and Loral, were accused of giving China advice about making not only commercial rockets, but also military missiles.

Republicans, who controlled Congress at the time, argued that satellite exports could lead to a hemorrhage of secret materials and information, and said that China might already have stolen encryption secrets.

After the strict export rules took effect in 1999, the legal complications involved in selling communications satellites and components abroad contributed to a sharp decline in the American share of the market, from a dominating position to about 50 percent today.

During the 2008 presidential campaign, Mr. Obama said the rules had “unduly hampered the competitiveness of the domestic aerospace industry” and vowed to push for change.

Representative Howard L. Berman, Democrat of California, who for a decade helped lead the movement for change, said its culmination as law would help restore the nation’s competitiveness in the global satellite market.

“Treating commercial satellites and components as if they were lethal weapons, regardless of whether they’re going to friend or foe, has gravely harmed U.S. space manufacturers,” he said.

Mr. Berman added that the benefits extended beyond the manufacturers. The national security establishment relies on the companies and their technological skills to fulfill the government’s satellite needs and to develop spacecraft involved in a wide range of military missions.

“If they can’t compete in the international marketplace,” he said of the companies, “they can’t innovate and cannot survive.”

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Yuval Diskin, Former Israeli Security Chief, Calls Netanyahu a Poor Leader

JERUSALEM — In a harsh interview published on Friday, less than three weeks before Israel’s national elections, a former head of the internal security service accused Prime Minister Benjamin Netanyahu of placing his “personal, opportunistic and current interests” over those of the state when making crucial policy decisions regarding the Iranian nuclear program, the Palestinian conflict and other matters.

Yuval Diskin, who resigned 18 months ago as head of the domestic security service, known as the Shin Bet, said other prime ministers he had worked closely with — both conservative and liberal — “came from this place in which the interests of the state stand above all else,” in contrast to Mr. Netanyahu and his defense minister, Ehud Barak. Mr. Diskin made headlines last spring with public comments accusing the two men of “messianic” leadership and of “misleading the public” regarding the likely effectiveness of an attack on Iranian nuclear facilities, and in the interview published on Friday — conducted by Dror Moreh, director of a new documentary featuring Mr. Diskin and five other former Shin Bet directors — he expands the critique.

“When I look at Netanyahu, I don’t see a shred of personal example as a leader in him,” Mr. Diskin said in the interview, which ran more than 5,000 words in the weekend edition of Yediot Aharonot, Israel’s leading newspaper. “There is a leadership crisis. It’s a crisis of value, it is total disregard for the public. People may think that I see this in an overly extreme manner. I am telling you that from up close, things look even worse.”

The prime minister’s office issued a statement calling Mr. Diskin’s accusations “groundless,” and “motivated by his personal frustration” that Mr. Netanyahu did not choose him to head the Mossad, Israel’s international intelligence agency. The statement also said the critique was being “recycled for political reasons.” Mr. Barak’s office called the claims “astonishing, both in content and in their timing,” given elections scheduled for Jan. 22.

In the interview, Mr. Diskin recounts a particular high-level meeting on Iran in which Mr. Netanyahu, Mr. Barak and Avigdor Lieberman, then the foreign minister, smoke cigars during the discussion. Mr. Diskin describes the scene as “a kind of total disregard for all the people.”

Regarding the Palestinians, Mr. Diskin said Mr. Netanyahu’s 2009 speech calling for “two states for two peoples” amounted to empty words that were “meant to sound good to the international community.” He said impasse was in fact the prime minister’s main goal because “Netanyahu fears ideologically taking a step toward the two-state solution and furthermore, he is not built for this by nature, he cannot make decisions of the magnitude made by” his predecessors. He further accused Mr. Netanyahu of weakening President Mahmoud Abbas, a moderate whose Palestinian Authority governs the West Bank, and strengthening the militant Hamas faction, which controls the Gaza Strip.

Speaking of his own children, Mr. Diskin said, “When I see the current leadership, I am worried about what we’ll leave for them.”

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U.S. Auto Sales End 2012 on Strong Note

DETROIT (AP) — Strong U.S. sales in December capped a remarkable year for the auto industry — especially Japanese brands — and 2013 should be even better.

Sales of new cars and trucks are expected to total around 14.5 million after all carmakers announce figures on Thursday. That is 13 percent better than 2011 and the best performance in five years.

In 2012, Americans had plenty of incentive to buy new cars and trucks. Unemployment eased. Home sales and prices rose. And the average age of a car topped 11 years in the United States, a record that spurred people to trade in. Banks made that easier by offering low interest rates and greater access to loans, even for those with poor credit.

“The U.S. light vehicle sales market continues to be a bright spot in the tremulous global environment,” said Jeff Schuster, senior vice president of forecasting for LMC Automotive, a Detroit-area industry forecasting firm.

Year-end deals on pickup trucks and the usual round of sparkling holiday ads helped December sales jump 10 percent to more than 1.3 million, auto pricing site TrueCar.com predicted. That would translate to an annual rate of more than 15.6 million, making December the strongest month of 2012.

Toyota, which has recovered from an earthquake and tsunami in Japan that crimped its factories two years ago, said Thursday that sales jumped 27 percent for 2012. Its December sales were up 9 percent. Unlike 2011, the company had plenty of new models stocked in showrooms for most of last year.

Chrysler, the smallest of the Detroit carmakers, had the best year among American companies. Its sales jumped 21 percent. December sales rose 10 percent. Demand was led by the Jeep Grand Cherokee S.U.V., Ram pickup and Chrysler 300 luxury car.

Among European carmakers, Volkswagen dominated, with annual sales up a staggering 35 percent.

But full-year sales at Ford and General Motors lagged. G.M.’s rose only 3.7 percent for the year, while Ford edged up 5 percent. For December, G.M. sales rose 5 percent, while Ford was up 2 percent.

December featured year-end deals on big pickup trucks; G.M. offered discounts of up to $9,000 to help clear growing inventory. The move worked. G.M. cut its full-size pickup supply from almost 246,000 at the end of November to just under 222,000 as the year came to a close.

Over all, though, analysts said the industry eased up on promotions such as rebates and low-interest financing. Car and truck buyers paid an average of $31,228 per vehicle last month, up 1.8 percent from December 2011.

The Polk auto research firm predicted even stronger American sales for 2013, forecasting 15.3 million as the economy continues to improve. Polk, based in Southfield, Mich., expected 43 new models to be introduced, up 50 percent from last year. New models usually help sales.

The firm also predicted a rebound in sales of large pickups and midsize cars. All eight of the top manufacturers are strong and introducing new vehicles, and that should bring competition and lower prices in those segments, according to Tom Libby, lead North American analyst for Polk.

But the firm’s optimistic forecasts hinge on Washington reaching an agreement on government debt limits and spending cuts.

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5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 13 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

An earlier version of this article misstated the number of deaths in which the Food and Drug Administration said 5-Hour Energy possibly played a role. The number was 13, not 15.

Read More..

5-Hour Energy’s ‘No Crash Later’ Claim Is Disputed

The distributor of the top-selling energy “shot,” 5-Hour Energy, has long claimed on product labels, in promotions and in television advertisements that the concentrated caffeine drink produced “no crash later” — the type of letdown that consumers of energy drinks often feel when the beverages’ effects wear off.

But an advertising watchdog group said on Wednesday that it had told the company five years ago that the claim was unfounded and had urged it then to stop making it.

An executive of the group, the National Advertising Division, also said that 5-Hour Energy’s distributor, Living Essentials, had publicly misrepresented the organization’s position about the claim and that it planned to start a review that could lead to action against the company by the Federal Trade Commission.

“We recommended that the ‘no crash’ claim be discontinued because their own evidence showed there was a crash from the product,” said Andrea C. Levine, director the National Advertising Division. The organization, which is affiliated with the Council of Better Business Bureaus, reviews ad claims for accuracy.

The emerging dispute between Living Essentials and the National Advertising Division is unusual because the $10 billion energy drink industry is rife with questionable marketing. And Living Essentials, which recently cited the advertising group’s support in seeking to defend the “no crash” claim, may have opened the door to greater scrutiny.

Major producers like 5-Hour Energy, Red Bull, Monster Energy and Rockstar Energy all say their products contain proprietary blends of ingredients that provide a range of mental and physical benefits. But the companies have conducted few studies to show that the costly products provide anything more than a blast of caffeine, a stimulant found in beverages like coffee, tea or cola-flavored sodas.

The dispute over 5-Hour Energy’s claim also comes as regulatory review of the high-caffeine drinks is increasing. The Food and Drug Administration recently disclosed that it had received reports over the last four years citing the possible role of 5-Hour Energy in 13 deaths. The mention of a product in an F.D.A. report does not mean it caused a death or injury. Living Essentials says it knows of no problems related to its products.

The issue surrounding the company’s “no crash” claim dates to 2007, when National Advertising Division began reviewing all of 5-Hour Energy’s marketing claims. That same year, the company conducted a clinical trial of the energy shot that compared it to Red Bull and Monster Energy.

At the time, Living Essentials was already using the “No crash later” claim. An article on Wednesday in The New York Times reported that the study had shown that 24 percent of those who used 5-Hour Energy suffered a “moderately severe” crash hours after consuming it. The study reported higher crash rates for Red Bull and Monster Energy.

When asked how those findings squared with the company’s “no crash” claim, Elaine Lutz, a spokeswoman for Living Essentials, said the company had amended the claim after the 2007 review by the National Advertising Division. In doing so, it added an asterisklike mark after the claim on product labels and in promotions. The mark referred to additional labeling language stating that “no crash means no sugar crash.” Unlike Red Bull and Monster Energy, 5-Hour Energy does not contain sugar.

Ms. Lutz said that based on the modification, the advertising accuracy group “found all of our claims to be substantiated.”

However, Ms. Levine, the advertising group’s director, took sharp exception to that assertion, saying it mischaracterized the group’s decision. And a review of the reports suggested that Living Essentials had simply added language of its choosing to its label rather than doing what the group had recommended — drop the “no crash” claim altogether.

That review concluded that the company’s 2007 study had shown there was evidence to support a “qualified claim that 5-Hour Energy results in less of a crash than Red Bull and Monster” Energy. But it added the study, which showed that 5-Hour Energy users experienced caffeine-related crashes, was inadequate to support a “no crash” claim.

Ms. Levine said Living Essentials had apparently decided to use the parts of the group’s report that it liked and ignore others.

Companies “are not permitted to mischaracterize our decisions or misuse them for commercial purposes,” she said.

She said the group planned to notify Living Essentials that it was reopening its review of the “no crash later” claim. If the company fails to respond or provides an inadequate response, the National Advertising Division will probably refer the matter to the F.T.C., she said.

A Democratic lawmaker, Representative Edward Markey of Massachusetts, has asked that the agency review energy drink marketing claims.

Asked about the position of the National Advertising Division, Ms. Lutz, the 5-Hour Energy spokeswoman, stated in an e-mail that the “no sugar crash” language had been added to address the group’s concern.

This article has been revised to reflect the following correction:

Correction: January 2, 2013

An earlier version of this article misstated the number of deaths in which the Food and Drug Administration said 5-Hour Energy possibly played a role. The number was 13, not 15.

Read More..

TIMESCAST: A First in Grammy Nods

January 2, 2013By Fritzie Andrade, Emily B. Hager, Krishnan Vasudevan, Pedro Rafael Rosado and Samantha Stark

TimesCast Media+Tech: Austin Wintory, Grammy-nominated composer. | Apps to help keep New Year’s resolutions. | Ben Horowitz, entrepreneur and venture capitalist.

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Central Africa on the Brink, Rebels Halt Their Advance

Ben Curtis/Associated Press

A convoy of soldiers from Chad who are fighting in support of President Francois Bozize of the Central African Republic, traveled on the road to Damara, north of the capital, Bangui, on Wednesday.

Rebel forces halted their advance on Bangui, the capital of the Central African Republic, on Wednesday and said they were prepared to enter into peace talks with the government.

The announcement, made by rebel spokesmen, heralded the possibility of a peaceful resolution to a conflict that has driven thousands of civilians from their homes and into the dense Central African forest, seeking refuge from the violence that has accompanied similar uprisings in recent years.

President François Bozizé has in recent days declared his willingness to negotiate, and peace talks are already being planned in nearby Gabon, though the government gave no official response to the rebels’ negotiation offer. In a separate development, Mr. Bozizé announced in a radio address on Wednesday that he had fired his son from his post as defense minister and would fill that position himself. Mr. Bozizé has criticized the army for failing to contain the rebel uprising.

As a precondition to talks, the rebels have demanded that government forces stop arresting members of the Gula tribe, from which many rebels hail, said Col. Djouma Narkoyo, a rebel spokesman. In negotiations, the rebels would insist upon the departure of Mr. Bozizé, another spokesman said.

The rebels were refusing peace talks just a few days ago. Their decision to change course may be linked to the arrival in the Central African Republic of additional troops from a coalition of neighboring countries, sent as reinforcements for Central African government forces.

The rebels of the Seleka Coalition, an alliance of several factions mostly from the country’s north, have overrun and occupied several northern cities in a drive toward Bangui, in the south, that gathered speed last month, seeking to depose Mr. Bozizé. A military officer who seized power in 2003, Mr. Bozizé has since been elected president twice; the rebels say he has not given the north a voice in government and has failed to live up to the terms of peace agreements signed with rebels beginning in 2007.

Confronted by a growing multinational African force outside Damara, the final strategic city on the road to the capital, the rebels halted their advance, according to news reports. A contingent of about 700 soldiers was deployed to the city on Wednesday, including soldiers from Chad, Gabon, Cameroon and Angola.

“I have asked our forces not to move their positions starting today because we want to enter talks in Libreville for a political solution,” said another rebel spokesman, Eric Neris-Massi, referring to the Gabonese capital, Reuters reported. He said the rebels continued to demand that President Bozizé step down “because we doubt his sincerity,” according to Agence France-Presse. He could not be reached for further comment.

Should the rebels press on with their offensive, they risk setting off a regional conflict, according to the commander of the multinational African force in the country, which operates under the aegis of the Economic Community of Central African States.

“If the rebels attack Damara, it’s a declaration of war” against the 10 member states, said Jean-Félix Akaga, the Gabonese general leading the coalition force. “Damara is the red line that the rebels cannot cross.”

Coalition forces are preventing Central African soldiers from advancing north of Damara as well, General Akaga told journalists.

In Bangui, residents have stockpiled food and water. Clusters of soldiers and police officers are stationed throughout the city, and a curfew is in effect from 7 p.m. to 5 a.m.

France, the former colonial power, has deployed about 600 French soldiers to Bangui to protect French assets and citizens in the Central African Republic. President François Hollande has insisted that France will not use its military to defend Mr. Bozizé’s government, as it has in the past.

Hippolyte Marboua contributed reporting from Bangui, Central African Republic.

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Case Study: A Start-Up’s Dilemma: A Lack of Capital, or Lack of Control

Eatwhatever is a two-step, breath-freshening product created four years ago by a then-26-year-old Australian expatriate named Jacqui Rosshandler. Starting with $60,000 in capital, contracting out production and working solo from her New York apartment, Ms. Rosshandler and her company, Jacquii L.L.C., managed to grab a promising but tenuous toehold in the billion-dollar breath-freshening industry.

THE CHALLENGE Running low on inventory early in 2011 and lacking the money for another production run to fulfill orders to her Web site and restock her Manhattan retail accounts, Ms. Rosshandler feared she would have to shut down her start-up. She had been rejected by bank after bank (some citing her lack of American citizenship). She had decided against asking friends for money — or her parents, who had already helped at the outset — and she had come up dry with venture capitalists. As her prospects dimmed, she started interviewing for jobs.

THE BACKGROUND Ms. Rosshandler was working at a Manhattan events and interior design company when, on New Year’s Day in 2007, she decided that like her father, a successful plastics industry entrepreneur in Australia, she would prefer to work for herself. Her idea: to improve upon a South African product called Odor-Go that she had seen in her native country but nowhere in the United States. Her product would have gel caps to be swallowed, similar to Odor-Go, but it would package them with follow-up mints to be sucked. Plus, her breath-freshening duo would be gluten-free and vegan. “I wanted to be able to take my own product,” she said, explaining that most gel caps are made using meat byproducts. She filed to trademark the name Eatwhatever.

It was her understanding that the way to vanquish bad breath caused by oniony, garlicky foods was to go to the source of the problem, the stomach. Having studied acting and law, not chemistry, Ms. Rosshandler left the product formulation to a contract manufacturer. “Parsley has been used for generations to freshen breath,” she said. “People know, just from everyday life, that freshening the mouth only — especially after consuming pungent foods — doesn’t get rid of the smell that comes from within the stomach. We found that the combination of concentrated organic peppermint and parsley oils, when dissolved in the stomach, provides this fresh feeling from within. Your breath actually smells good, from deep inside, not just superficially from the mouth.”

She hired a package designer and prominently displayed the tagline: 2 Steps to Kissable Breath. Also on the packaging was a cheeky instructional mash-up of the two operative steps (swallow and suck). She was, after all, seeking a young demographic. “I had no idea what I was doing,” said Ms. Rosshandler, laughing.

She began her sales efforts in 2008 by walking into the C.O. Bigelow flagship apothecary store in Manhattan and asking, “Who does the buying here?” She left with a sale. A month or so after Eatwhatever’s debut, a friend in public relations helped her get a mention on DailyCandy’s main page. That brought $20,000 worth of orders to her Web site in 12 hours and generated plenty of buzz. With the help of a distributor, Eatwhatever soon cracked New York retail outlets like Ricky’s, Joe Coffee and Zitomer, a specialty department store; Ms. Rosshandler even opened retail beachheads in Paris and Sydney.

But lacking contracts with mass merchants, sales volume remained low. The company’s annual revenue failed to top $40,000 in 2008, 2009 and 2010. Squeezed for cash, Ms. Rosshandler could not pay for marketing or, eventually, even for her next production run. That is when she interviewed for a job selling high-fashion hair accessories.

THE OPTIONS And then in rode her white knight. Or was he? She had networked her way to Arthur T. Shorin, an investor and former chief executive of the Topps Company, a confectionary company known for its baseball trading cards, who promised candy industry expertise and contacts and an immediate infusion of $250,000, with more to come if justified. But Mr. Shorin’s nonnegotiable terms were stark. In return, he wanted 75 percent of the enterprise. Ms. Rosshandler would retain 25 percent with the opportunity to earn back another 15 percent should certain benchmarks be met. The offer included a salaried job in Mr. Shorin’s New York company, Artuitive, an incubator for start-ups.

Friends advised Ms. Rosshandler against the deal, citing the tough terms, even if she were to rebuild her stake to 40 percent. But Mr. Shorin had impressed her in their exploratory meetings, and she asked herself this question: Isn’t 25 percent of something better than 100 percent of nothing?

WHAT OTHERS SAY Steve Schuster, founder of Schuster Products in Milwaukee, maker of Blitz mints: “Ms. Rosshandler finds herself in a precarious cash-flow position and — typical of many start-up entrepreneurs — may not completely grasp how much money she actually will need to grow her brand to a reasonable level of distribution. Arthur Shorin presents a very shrewd and unique proposition. Basically, he is her lifeline. Shorin, who made a staggering amount of money selling Topps to Michael Eisner’s private equity company, has great knowledge of the candy industry. It is imperative for Ms. Rosshandler to move forward with this proposition.” 

Josh Kopelman, a partner at First Round Capital, Philadelphia: “I believe that entrepreneurs, not investors, create great companies. In my experience, if a founder doesn’t retain meaningful equity at the seed stage, it greatly reduces their motivation and creates a real misalignment between investor and entrepreneur. I’d encourage Ms. Rosshandler to keep looking for alternatives, including the possibility of raising money from her friends. If she believes the company is going to create value and be successful, then she is actually doing her friends a favor by letting them invest — assuming she is candid about the extreme level of risk and that they don’t invest money they aren’t prepared to lose. I’d encourage her to consider tweaking the branding to make it more PG-13 than R-rated, as it might reduce some investor’s unease. I know it’s hard to turn down money — especially when a company really needs it.”

Adeo Ressi, founding member of TheFunded and head of The Founder Institute, an early stage business accelerator based in Silicon Valley: “Ms. Rosshandler should definitely not take this deal. First, she loses complete control of the company, and she can be removed or wiped out of her equity at any moment without notice. Second, the deal is very unusual, so she will never be able to attract other investors again. Third, the round values the operating business under $75,000, around two times revenue. As the terms indicate, she will be an employee of Artuitive, so this deal resembles a generous employment offer rather than a viable investment. This is an angel investment opportunity, and there are the largest number of angel investors in history. The volume of investors is both good and bad. On the positive side, if Ms. Rosshandler dedicates four months and meets with a lot of angels, she will raise $500,000 with a seven-figure valuation. On the negative side, she will need to meet with over 150 angels and waste a lot of time pitching to people that will try to take advantage of her, like Arthur Shorin.”

THE RESULTS Offer your thoughts on the You’re the Boss blog at nytimes.com/boss. Next week, on the blog and on this page, we will give an update on what Jacqui Rosshandler decided to do.

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Safed Journal: New Insights on Marijuana in Israel, Where It’s Illegal

Baz Ratner/Reuters

Tikkun Olam, a medical marijuana farm in Israel, blends the high-tech and the spiritual.

SAFED, Israel — Among the rows of plants growing at a government-approved medical marijuana farm in the Galilee hills in northern Israel, one strain is said to have the strongest psychoactive effect of any cannabis in the world. Another, rich in anti-inflammatory properties, will not get you high at all.

Marijuana is illegal in Israel, but farms like this one, at a secret location near the city of Safed, are at the cutting edge of the debate on the legality, benefits and risks of medicinal cannabis. Its staff members wear white lab coats, its growing facilities are fitted with state-of-the-art equipment for controlling light and humidity, and its grounds are protected by security cameras and guards.

But in addition to the high-tech atmosphere, there is a spiritual one. The plantation, Israel’s largest and most established medical marijuana farm — and now a thriving commercial enterprise — is imbued with a higher sense of purpose, reflected by the aura of Safed, an age-old center of Jewish mysticism, as well as by its name, Tikkun Olam, a reference to the Jewish concept of repairing or healing the world.

There is an on-site synagogue in a trailer, a sweet aroma of freshly harvested cannabis that infuses the atmosphere and, halfway up a wooded hillside overlooking the farm, a blue-domed tomb of a rabbinic sage and his wife.

In the United States, medical marijuana programs exist in 18 states but remain illegal under federal law. In Israel, the law defines marijuana as an illegal and dangerous drug, and there is still no legislation regulating its use for medicinal purposes.

Yet Israel’s Ministry of Health issues special licenses that allow thousands of patients to receive medical marijuana, and some government officials are now promoting the country’s advances in the field as an example of its pioneering and innovation.

“I hope we will overcome the legal obstacles for Tikkun Olam and other companies,” Yuli Edelstein, the minister of public diplomacy and diaspora affairs, told journalists during a recent government-sponsored tour of the farm, part of Israel’s effort to brand itself as something beyond a conflict zone. In addition to helping the sick, he said, the effort “could be helpful for explaining what we are about in this country.”

Israelis have been at the vanguard of research into the medicinal properties of cannabis for decades.

In the 1960s, Prof. Raphael Mechoulam and his colleague Yechiel Gaoni at the Weizmann Institute of Science isolated, analyzed and synthesized the main psychoactive ingredient in the cannabis plant, tetrahydrocannabinol, or THC. Later, Professor Mechoulam deciphered the cannabinoids native to the brain. Ruth Gallily, a professor emerita of immunology at the Hebrew University of Jerusalem, has studied another main constituent of cannabis — cannabidiol, or CBD — considered a powerful anti-inflammatory and anti-anxiety agent.

When Zach Klein, a former filmmaker, made a documentary on medical marijuana that was broadcast on Israeli television in 2009, about 400 Israelis were licensed to receive the substance. Today, the number has risen to about 11,000.

Mr. Klein became devoted to the subject and went to work for Tikkun Olam in research and development. “Cannabis was used as medicine for centuries,” he said. “Now science is telling us how it works.”

Israeli researchers say cannabis can be beneficial for a variety of illnesses and conditions, from helping cancer patients relieve pain and ease loss of appetite to improving the quality of life for people with post-traumatic stress disorder and neuropsychological conditions. The natural ingredients in the plant, they say, can help with digestive function, infections and recovery after a heart attack.

The marijuana harvest, from plants that can grow over six feet tall, is processed into bags of flowers and ready-rolled cigarettes. There are also cannabis-laced cakes, cookies, candy, gum, honey, ointments and oil drops. The strain known as Eran Almog, which has the highest concentration of THC, is recommended for severe pain. Avidekel, a strain rich in CBD and with hardly any psychoactive ingredient, allows patients to benefit from the drug while being able to drive and to function at work.

Working with Hebrew University researchers, the farm has also developed a version in capsule form, which would make exporting the drug more practical, should the law allow it.

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Safed Journal: New Insights on Marijuana in Israel, Where It’s Illegal

Baz Ratner/Reuters

Tikkun Olam, a medical marijuana farm in Israel, blends the high-tech and the spiritual.

SAFED, Israel — Among the rows of plants growing at a government-approved medical marijuana farm in the Galilee hills in northern Israel, one strain is said to have the strongest psychoactive effect of any cannabis in the world. Another, rich in anti-inflammatory properties, will not get you high at all.

Marijuana is illegal in Israel, but farms like this one, at a secret location near the city of Safed, are at the cutting edge of the debate on the legality, benefits and risks of medicinal cannabis. Its staff members wear white lab coats, its growing facilities are fitted with state-of-the-art equipment for controlling light and humidity, and its grounds are protected by security cameras and guards.

But in addition to the high-tech atmosphere, there is a spiritual one. The plantation, Israel’s largest and most established medical marijuana farm — and now a thriving commercial enterprise — is imbued with a higher sense of purpose, reflected by the aura of Safed, an age-old center of Jewish mysticism, as well as by its name, Tikkun Olam, a reference to the Jewish concept of repairing or healing the world.

There is an on-site synagogue in a trailer, a sweet aroma of freshly harvested cannabis that infuses the atmosphere and, halfway up a wooded hillside overlooking the farm, a blue-domed tomb of a rabbinic sage and his wife.

In the United States, medical marijuana programs exist in 18 states but remain illegal under federal law. In Israel, the law defines marijuana as an illegal and dangerous drug, and there is still no legislation regulating its use for medicinal purposes.

Yet Israel’s Ministry of Health issues special licenses that allow thousands of patients to receive medical marijuana, and some government officials are now promoting the country’s advances in the field as an example of its pioneering and innovation.

“I hope we will overcome the legal obstacles for Tikkun Olam and other companies,” Yuli Edelstein, the minister of public diplomacy and diaspora affairs, told journalists during a recent government-sponsored tour of the farm, part of Israel’s effort to brand itself as something beyond a conflict zone. In addition to helping the sick, he said, the effort “could be helpful for explaining what we are about in this country.”

Israelis have been at the vanguard of research into the medicinal properties of cannabis for decades.

In the 1960s, Prof. Raphael Mechoulam and his colleague Yechiel Gaoni at the Weizmann Institute of Science isolated, analyzed and synthesized the main psychoactive ingredient in the cannabis plant, tetrahydrocannabinol, or THC. Later, Professor Mechoulam deciphered the cannabinoids native to the brain. Ruth Gallily, a professor emerita of immunology at the Hebrew University of Jerusalem, has studied another main constituent of cannabis — cannabidiol, or CBD — considered a powerful anti-inflammatory and anti-anxiety agent.

When Zach Klein, a former filmmaker, made a documentary on medical marijuana that was broadcast on Israeli television in 2009, about 400 Israelis were licensed to receive the substance. Today, the number has risen to about 11,000.

Mr. Klein became devoted to the subject and went to work for Tikkun Olam in research and development. “Cannabis was used as medicine for centuries,” he said. “Now science is telling us how it works.”

Israeli researchers say cannabis can be beneficial for a variety of illnesses and conditions, from helping cancer patients relieve pain and ease loss of appetite to improving the quality of life for people with post-traumatic stress disorder and neuropsychological conditions. The natural ingredients in the plant, they say, can help with digestive function, infections and recovery after a heart attack.

The marijuana harvest, from plants that can grow over six feet tall, is processed into bags of flowers and ready-rolled cigarettes. There are also cannabis-laced cakes, cookies, candy, gum, honey, ointments and oil drops. The strain known as Eran Almog, which has the highest concentration of THC, is recommended for severe pain. Avidekel, a strain rich in CBD and with hardly any psychoactive ingredient, allows patients to benefit from the drug while being able to drive and to function at work.

Working with Hebrew University researchers, the farm has also developed a version in capsule form, which would make exporting the drug more practical, should the law allow it.

Read More..