Podcast and spoken-word apps experiment with paid-for model

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Podcast and spoken-word apps experiment with paid-for model

While some subscription services exist, the medium is yet to solve its ad problem

Spoken-word apps such as Audm use professional voiceover artists to read out written articles from newspapers, magazines and websites © Audum

Tim Bradshaw — LA

August 18, 2017

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My recent move to Los Angeles has given me a new appreciation for in-car audio. Whereas I biked around London and San Francisco — when listening on headphones can make an already hazardous commute even more dangerous — the “city of stars” is also a city of cars. Lots of them.

Much of my time has been spent catching up with the podcasts that my family and friends had been telling me I ought to listen to, but for which I never seemed to find the time. But bingeing on Radiolab, S-town, Adam Buxton and Stuff You Should Know has brought home one of the format’s biggest drawbacks: advertising.

I cannot enjoy the ad-free experience I have become accustomed to by watching Netflix

By now, my unprompted awareness of certain meal-delivery services, email newsletters and simple website creation is at saturation point. My tolerance is steadily lowering for the vocal gyrations hosts go through to tout their sponsors in “natural” conversation — a style pioneered by American public radio to avoid a canned ad break.

Yes, most podcast players have an easy way to skip ahead a few seconds past the ads, but I do try (really, really hard) not to play with my phone while driving.

All of which got me wondering: why isn’t there a Netflix or Spotify for podcasts? A monthly subscription service that shares its income with podcast producers, without them having to shill for mattress start-ups, stamps or razor blades every half-hour.

Some podcast providers have already started to experiment with a paid model. Acast offers a $2 “show pass” to some individual podcasts, including the Football Ramble and Another Mother Runner, alongside the usual ad-supported offerings. This mixed model has the advantage of putting everything into one place. But it also means I cannot enjoy the ad-free experience I have become accustomed to by watching Netflix.

In the past few months, a few “spoken word” services have popped up that do charge a subscription. Instead of regular podcasts’ chatty hosts, apps such as Audm and Curio.io use professional voiceover artists to read out written articles from newspapers, magazines and websites. Publishers receive a slice of the subscriptions, which are less than $10 a month. Medium, the online publishing service founded by former Twitter executive Evan Williams, also offers audio versions of some articles as part of its new $5 membership scheme.

Audm, which is currently going through Silicon Valley’s much sought-after Y Combinator accelerator programme, carries about half a dozen selected features each week from The Atlantic, Wired, Foreign Policy, the London Review of Books and Marie Claire. Each tends to take between 20 minutes to an hour to listen to, although there are options for accelerated playback.

The appeal of Audm was it solved two problems in one — filling time in the car while also getting to those long-form articles that tend to pile up in my “to read” list on Instapaper. On the six-hour drive between San Francisco and LA, I enjoyed Wired’s tour of the new Apple campus and The Atlantic’s rundown of “how to deal with North Korea”. The latter left me better informed, if not particularly reassured.

Another feature of Audm’s iOS app is that the article’s full text scrolls by as the audio plays — admittedly less useful in the car — allowing you to switch between reading and listening modes, or to skip ahead with more context than the regular slide-the-dot-along-the-bar “seek” model.

For those with a shorter attention span (or faster commute), Curio.io has a larger collection of newspaper-length stories lasting 10 minutes or less, as well as longer features. Publications providing content include the Guardian, the Idler and Lapham’s Quarterly, as well as the Financial Times. Its app lets users select not just by source but by narrator, time and “vibe”, from “analytical” and “opinionated” to “meditative”. Curio.io also offers an Alexa “skill”, meaning it can be accessed through Amazon’s Echo speakers.

These extra listening options, however, could not make up for the fact that — with, ahem, certain exceptions — Curio.io’s content struggles to match Audm’s impressive line-up of publishers.

There are some downsides to this “read aloud” model. Compared with podcasts’ radio-style back-and-forth, listening to a single narrator for an hour can get a little monotonous, especially if the original article lacks the narrative flow of an audiobook. It also sounds a little weird in an interview-centric piece not to hear the voice of the interviewees themselves.

If you do like the audiobook format, though, it is worth noting that Amazon-owned Audible has recently branched out into podcasts, too. Its roster includes news articles from the New York Times, Wall Street Journal and Washington Post, and original audio series such as Butterfly Effect, by Jon Ronson. The Audible Channels service is available as a standalone offering for $5 a month, or as part of the regular $15 monthly audiobook subscription.

Ryan Wegner, Audm’s co-founder, says that he plans to move into the more traditional style of podcasts, too — just without those annoying ads.

“Our sense is that the winner in this space is going to be the one who has the best bundle, which includes spoken-word articles from top publishers, premium podcasts, etc, for its subscribers,” he says.

It took a long time for some online news outlets to migrate to a paywall model and given podcasting’s radio heritage, many hosts may prefer the scale of the free model. But unless the advertising experience for listeners improves, I am rooting for whoever wants to become the Netflix of podcasting.

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Podcast and spoken-word apps experiment with paid-for model

The dawn of the superstar lawyer

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The Big Read
Law

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The dawn of the superstar lawyer

As top performers are offered pay equal to bankers and hedge fund managers, is the lockstep system under threat?

© FT montage / Bloomberg

James Fontanella-Khan, Sujeet Indap in New York and Barney Thompson in London

April 9, 2018

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Scott Barshay had just closed out the finest year of his career. The acclaimed corporate lawyer had advised on roughly $300bn worth of transactions in 2015, most notably AB InBev’s $103bn takeover of rival brewer SABMiller. In the process he generated about $100m in fees for his law firm, Cravath, Swaine & Moore, which ranks among the most prestigious in America.

Just four months later he quit. Frustrated with Cravath’s age-old system of paying its partners according to longevity and seniority versus sheer output, Mr Barshay left the only firm he had ever worked at to move to a New York rival. Paul, Weiss, Rifkind, Wharton & Garrison agreed to pay him more than $10m a year, a package worthy of his thick book of business — which includes blue-chip names such as Qualcomm and Kraft Heinz — in the hopes he could turbocharge its dealmaking practice.

The decision shook the legal industry. Becoming a partner at a firm like Cravath, with access to the global corridors of power, from business to politics, is considered the pinnacle of the legal industry. The so-called “white shoe” firm tried to downplay Mr Barshay’s 2016 move, arguing that its culture and history could weather a one-off departure. But it has turned out not to be an isolated incident. In the past year, two more partners, both younger than Mr Barshay, have left for Kirkland & Ellis, another rival with an aggressive strategy to lure top lawyers with big sums.

Lawyers are hardly poorly paid at Cravath: first-year juniors reportedly start at $180,000 a year while the equity partners earn an average of about $4m a year, depending on business flow. But a group of firms is determined to use remuneration as a means to secure the services of superstar lawyers to disrupt rivals who have dominated the industry, in some cases, for centuries. The behaviour has created a dynamic where top lawyers are now able to command the kind of annual salaries associated with leading investment bankers, hedge fund managers and even top athletes.

The defections threaten the cradle-to-grave culture at venerable firms, such as Cravath and its peers in the US as well as firms like Slaughter and May in Britain. Behind each of these is a payment system known as the lockstep. The system is intended to guarantee collegiality among partners.

For instance, if a takeover specialist has a client who is looking for a lawyer to deal with an antitrust issue, that partner is more likely to recommend a colleague who is better versed in the subject if his or her profits will not be affected.

The antithesis of this approach is a model evocatively branded “eat what you kill”: after sharing certain costs, partners keep most or all of what they have generated themselves. In between the two is the “modified lockstep” — profits are shared partly according to seniority but with some way of rewarding partners who are the best performers and the most valuable to the firm, both financially and reputationally.

“It’s becoming more and more difficult to retain star talent in a purely lockstep model,” says Brad Karp, chairman of Paul, Weiss, which has a modified lockstep. “You’re seeing sums that rival sports free-agent compensation arrangements being offered to star partners at corporate law firms,” he adds. And if lawyers work in a system where older partners make three times as much simply by virtue of having been there longer, why would they not head to a firm that appreciates their talents?

This is more than an arcane question of how lawyers get paid. Cravath is a small firm by today’s standards but it is still an elite one, whose status has been predicated on skill in complex, high-stakes takeovers and trials. Across the world, firms are trying to figure out how to survive — go global, stay local, be boutique. It is an intensifying battle to see which will be left standing in a mature, low-growth market.

Scott Barshay, left, who left Cravath for Paul, Weiss, Rifkind, Wharton & Garrison, with Lazard chief executive Kenneth Jacobs © Bloomberg

The origins of lockstep compensation, which several elite law firms have adopted at one time or another over the past two centuries, stem from the Cravath system created by Paul Cravath, who in 1883 represented George Westinghouse against Thomas Edison over the patent for the lightbulb.

Every summer a large group of top law students is hired to support Cravath’s senior partners. Fewer than 10 per cent will make the partnership, perhaps after eight or nine years. Working up to 100 hours a week, the junior lawyers rotate across groups and projects to maximise knowledge and versatility. Clients “belong” not to any particular lawyer but to the firm as a whole.

For those who stay the course to become Cravath partners, it is a lifetime career that comes with a guaranteed annual salary of several million dollars. Underscoring the “lifetime” part are traditions such as the Cravath Walk: every partner is entitled to a procession of past and present partners at their funeral, after which the assembled lawyers chant: “The partner is dead, the firm lives.”

In its 200-year history, Cravath has almost never made “lateral” hires from rival firms. And while some partners would leave for government, to become bankers or a general counsel in Fortune 500 companies, it was until recently practically inconceivable for anyone to voluntarily depart for another law firm.

“The Cravath system is designed to develop our talent organically, ensuring consistently high quality throughout the firm while fostering a collaborative and client-centred culture that enables us to deliver the best advice to our clients,” Cravath said in a statement. “We remain confident that our model is the right one for our business, our people and the clients we serve.”

Paul Cravath with daughter Vera in about 1913

When Mr Barshay left Cravath in 2016, many at the law firm argued that losing their top dealmaker was a sacrifice worth making to protect its sacrosanct culture. Mr Barshay is calm and unflappable but he is also ultra-competitive; not everyone at Cravath considered him a team player (others, however, argued that he was very collaborative).

But then two more partners followed him out the door: Jonathan Davis, 35, in 2016 and Eric Schiele, 43, this year, both of whom were seen as future pillars of the firm. “These guys were the next generation of leaders, their departure is worse than Barshay leaving,” says a person close to Faiza Saeed, Cravath’s presiding partner.

Like another star junior partner, Sarkis Jebejian, who left Cravath in 2012, Messrs Davis and Schiele moved to Kirkland, a Chicago-based firm whose historic strength was in litigation (Kenneth Starr, the special prosecutor in the Bill Clinton-Monica Lewinsky case, was a long-time partner). Kirkland has methodically poached deal lawyer talent in both New York and London by offering rich pay and allowing partners to grow their practice without the constraints of the lockstep pay model.

Kirkland’s firepower became abundantly clear just before Christmas when David Higgins, a top private equity lawyer at Britain’s elite “magic circle” law firm Freshfields Bruckhaus Deringer in London, jumped ship for a reported $10m a year. For a UK lawyer that is a great deal of money — perhaps four times as much as the best-paid equity partner at a top 10 City firm.

But what really rankled in that case was that Freshfields had overhauled its lockstep model, allowing top fee generators to make as much as five times junior partners, specifically for star performers like Mr Higgins. Yet no sooner was the new system in place than he left. Freshfields could pay Higgins more — but not as much as Kirkland. (He escaped the furore over his defection by disappearing to Bhutan for two weeks.)

As news spread of higher salaries at Kirkland, Latham, Skadden Arps, White & Case and others, the hungrier lawyers in City firms started to ask whether senior partners were pulling their weight. “Younger partners were looking at their older colleagues at the top of the lockstep and questioned how they justified their bigger slice of the equity pie,” says Stephen Rodney, chief executive at legal recruiter Fox Rodney Search. “[US firms] were able to attract people by paying them a lot more money.”

Superlawyers chart

The risk for the big-spending US firms is they burn through dangerous amounts of cash on lawyers. “History is littered with the corpses of law firms that overspent on lateral hires, so there is always a question of sustainability,” says Steve Cooke, senior partner at Slaughter and May, the UK firm closest in ethos to Cravath. “It’s very hard to hire multiple stars from the outside without damaging the internal ecosystem, if of course the firm has a good one in the first place.” Last year, Slaughter and May hired a pensions expert from Herbert Smith Freehills; it was the firm’s first hire at partner-level in 128 years.

The ghost at this particular feast is the defunct US firm Dewey & LeBoeuf. After several years of rapid expansion, the firm went bankrupt in 2012, torpedoed by lavish contracts for top rainmakers when clients were cutting back on legal work after the 2008 financial crisis.

Law firms in numbers

© Pascal Perich/FT

$10m

Reported salary of David Higgins, Freshfields partner after move to Kirkland

2,500

Billable hours per year lawyers at some non-lockstep firms have to produce

$3bn

Annual revenue of the largest firms, achieved by the likes of Kirkland & Ellis and Latham & Watkins last year

The likes of Cravath, Debevoise, Cleary Gottlieb Steen & Hamilton, Wachtell and Slaughter and May are determined to maintain the lockstep model but recognise it requires conviction. “Lockstep is not easy. It’s an affirmative choice that requires a shared sense of purpose,” said Michael Gerstenzang, the partner leading Cleary.

“For lockstep to work you need three things: first, it must be really hard to make partner; second, partners who are not producing need to go; and third, everyone needs to be making enough money,” says an M&A banker who used to work at one of the lockstep firms.

Lockstep firms also like to tell horror stories about life at hard-charging, eat-what-you-kill firms where partners vie with each other for clients. Instead of producing up to 1,800 billable hours of work a year (work a lawyer can charge for), some are said to demand as much as 2,500 billable hours. “There is a perception of pure lockstep that it is a kinder environment but sometimes there is a huge amount of pressure — you’re either in or you’re out,” says Mr Rodney. “In merit-based firms it is true you can be brought down — but at least you can be brought up again.”

Superlawyers chart

There is no doubt that working for the elite London and New York firms still has enormous cachet. According to Jeffrey Lowe, global practice head at the legal recruiters Major, Lindsey & Africa, defections may continue but such prestigious firms will retain their advantage.

“At a Cravath or a Sullivan & Cromwell, for example, you will always be perceived to be at the top of the food chain. There will always be people at the top of the food chain who could make more money somewhere else. But a lot of people don’t measure themselves in dollars — it’s about where you went to school, where you summer, what firm you work at. It’s all part of a persona.”

Still, Cravath understands the world is changing. Multiple sources close to the firm say it is considering having partners rotate among clients so no single attorney “owns” the relationship. It has also convened a committee to examine its compensation system, launched a social media strategy and made other changes to ensure its appeal to a new generation of young, ambitious lawyers.

Additional reporting by Arash Massoudi

The new hierarchy New York and London firms no longer dominate

The departure of some of their most talented younger partners is not the only indication that the old order in the legal world is fraying around the edges. Once the New York and London firms were considered the foremost outfits. Today, many of the richest firms, and therefore the hottest destinations for new lawyers, are headquartered in Chicago — Kirkland & Ellis and Sidley Austin — or Los Angeles — Gibson, Dunn & Crutcher and Latham & Watkins.

Kirkland recently became the highest grossing law firm in the world with 2017 revenue exceeding $3bn; it beat Latham & Watkins, which only days previously had itself become the first firm ever to break the $3bn mark.

These firms are highly profitable because they have focused on private equity and hedge fund clients whom the top New York firms have eschewed in favour of the Fortune 500 and Wall Street banks. Their bet is that this new crop of deal-focused firms can now also successfully compete for those corporate clients that have traditionally gone to the likes of Cravath, Sullivan & Cromwell, Wachtell, Lipton, Rosen & Katz and Davis Polk.

The younger lawyers who have moved firms have not been motivated solely by the money. Some of those who left lockstep firms say that at less hierarchical institutions they can do more exciting work and assume leadership roles at a younger age. The former chair of a top US firm says that in several years of luring away City lawyers, money had never been the sole issue: “Magic circle partners look at the platform of the top American firms and wonder if UK firms will ever crack the US market.”

A spokesperson for Kirkland & Ellis says: “At Kirkland, young partners are not limited in their development by hierarchy or any other structural obstacles.”

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The Financial Times Limited 2018. All rights reserved.

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COMMENTS (148)
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ad iudicium

2 hours ago

There are plenty of "irreplaceable" lawyers in the cemetery as there are bankers and football players who also thought they were irreplaceable. If hypothetically, through direct taxation, annual earnings were say maxed-out at USD500,000, neither the standard of lawyers, bankers nor footballers would overall fall, I am reasonably sure of that. It is all a hype game.

The void

4 days ago

In house vs law firm hiring trends… it would be useful to compare those against total fees paid to big law and total revenue of those same companies. Learning through pain?

The Lobster

4 days ago

Lockstep also provides stability within the partnership because younger partners are comparatively underpaid for their contribution but look to recoup that investment in later years when they are comparatively overpaid for their contribution because of their higher position on the lockstep.

This is key to the partnership culture because it disincentivises moving. If another firm wants to buy a senior partner then they have to pay that higher rate and the departing partner leaves its historic investment at hit or her old firm. There are always going to be examples of good and high profile hires, but the general case is far more mixed. Whilst the loss of a senior partner is frequently disruptive and is almost always a blow to pride, the hard truth is that the firm is rarely worse off in the medium term. A good firm with a good pipeline will have plenty of younger (and cheaper) talent in its partnership and those partners will mop up much of the departing partner’s business, however good that individual thinks he (because it is almost invariably a man) thinks that he is.

likeli1

4 days ago

As a client, the firms I have worked with that are on ‘lockstep’, have invariably provided more effecient, effective and yes, nicer, service than their ‘eat what you kill’ counterparts…

EuripidesOnRedBull

4 days ago

Hahaha this will not include Stephan Roh! http://www.bbc.co.uk/news/world-us-canada-43488581

Anthony Fitzsimmons

4 days ago

The question for White Shoe and Magic Circle law firms is deceptively simple.  To what extent do you value putting clients first, cohesiveness and long term success?

By paying out on the demands of the greedy, "Eat-what-you-kill" undermines all three and turns the firm into a magnet for the greedy.  We all know what that did to the banking sector.  Whilst the effect in law firms will be different, you can expect it to be deleterious.  But not to the public purse since none are systemically important.

Goodbye

4 days ago

Excellent article. Such extreme compensation packages essentially are based on a commission-based system where the "rainmaker" gets a larger cut of the revenue he or she brings in.

As long as there are companies out there willing to pay ridiculous fees for services that mostly clean up mistakes that are caused by managers’ bad judgement and poor planning, then the approach will thrive.

Given that the supply of executives and managers with bad judgement and poor planning and execution skills seems to be endless and growing, the demand for the legal services these lawyers provide will continue and their legal services will remain a seller’s market. 

Teuchter

4 days ago

A "lifetime" career….  It’s life, Jim, but not as we know it.  Many of my university peers joined law firms.  As we’ve aged, those who remain in the legal profession have, inevitably (because it’s generally "up or out"), ascended to the partnership and have become increasingly senior.  The effect on them is interesting for any student of the human brain.  Their time is sliced into ever-smaller chunks and, like French geese or ducks, they sit being force-fed knotty problems to think about.   Their time is rented out at eye-watering hourly rates – except of course an hour is too long a period, which is why their days are chopped into ten minute units.  They make a lot of money that they have no time to spend.  Their marriages fall apart and, often, this is either caused by or is followed by office affairs, since they don’t see anyone but colleagues and clients most of the time.  Their attention spans shorten inexorably.  All in all, quite scary – but often well paid.

AF100

4 days ago

@Teuchter  I have friends at some of the firms mentioned and I don’t begrudge them the money they earn, if anything I think they are underpaid vs. hedgefunders, traders, investment bankers etc.  They literally have no life at all with the hope of getting to partner for the ultimate payday but even then tend not to make as much as the above whose work at least looks far more interesting.  I also think it is far more difficult to make it to partner than it was 20-30 years ago.  I certainly wouldn’t advise my son to go anywhere near the law, although knowing my luck he’ll probably just want to go on X-Factor which will present me with other problems, such as my failure as a parent!

Teuchter

4 days ago

@AF100 @Teuchter I don’t begrudge it either (except when settling the most recent invoice from Sue, Grabbit and Run LLP) but it has recently become apparent that many law firms, especially below the magic circle level, are struggling to attract and retain talent.  For better or worse, millennials are not very interested in 100 hour weeks or work that they regard as menial, boring and repetitive – in other words, the life of a trainee or junior associate lawyer.  The current crop of partners, with their multi-million annual profit shares, may be relaxed about what the onwards march of technology means for them, but it will inevitably nibble away at – or possibly bite big chunks out of, their business model.  Whether this will balance out the reduced supply of good quality graduates or compound the problem remains to be seen.

Decuraaaa

5 days ago

Young men, you see this. Go getting a law degree 

Tasio Xaolin

5 days ago

Now, this is what FT is all about- no looping around with Russia, Stormy Daniels, and Soyabeans.

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Cliff Richard sues BBC for filming police raid on his home

Case will establish if there is right to privacy in early stages of an investigation

Sir Cliff Richard arrives at the High Court in London on Thursday © Yui Mok/PA

Cliff Richard, the singer, had his private life “shattered” after the BBC live broadcast a police raid on his home, which amounted to a “very serious invasion” of his privacy, the High Court heard.

Sir Cliff, 77, is suing the UK broadcaster in a civil case for breaching his privacy under the 1998 Data Protection Act and is seeking “very substantial” damages. The BBC is defending the lawsuit.

The raid on his Berkshire home in August 2014 was part of an investigation into allegations of historic child sex abuse. Sir Cliff was later told by the police that the allegations against him were false and that he faced no further investigation.


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The dawn of the superstar lawyer

The wealthy ‘Next Gen’ with their eyes on your assets

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The wealthy ‘Next Gen’ with their eyes on your assets

Scions of family businesses are spurning partying in favour of prepping to take over
Claer Barrett

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In my day, they were called trustafarians. Then came The Rich Kids of Instagram. Today, children with wealthy parents who shun conspicuous consumption have coined their own term — the “Next Gen”.

I first heard the term last month, when I attended the Family Business United conference — a huge gathering of successful family-run firms held at the Royal Geographical Society in Kensington. Ironically, I got completely lost on the way to the venue and arrived just in time for the talk on succession planning.

Being born into a successful family business is not the bed of roses you might think it is. Many of the next generation worry whether they are good enough to take the reins or fret about the “entitlement issues” of their siblings.

An audience member in his mid-twenties stood up and introduced himself as a “next genner”. At the conference, it was used to mean someone set to inherit, as distinct from “generation next”, an occasional synonym for millennials. He was proud to work for the family business that his father had set up before he was born. Although he aspired to be the boss one day, it had been made clear to him that this was not a given.

He wanted to prove his worth and move up the ranks on merit. He reported to a director, who was not a family member, who had no qualms about putting him right when he was wrong (brave man!) and he came across as a grounded, yet driven individual. By the end of his story, I wanted to hug him.

Next up was a female “next gen”. Her family business was in the science sector, yet this was never her strong suit at school. So she went to work in marketing instead. Now, after establishing her career outside the family business, she was coming back to work in its marketing team. She received enthusiastic applause.

On the sidelines of the conference, advisers to wealthy families noted the strong work ethic of these family members waiting in the wings and others like them striving to forge a career — rather than spraying around mummy and daddy’s money partying on yachts. (This is essentially what “entitlement issues” is shorthand for).

If your offspring know a lot of dough is coming their way, the danger is they could contract “rich kid-itus” and lose any aspiration to achieve success in their own right.

Advisers told me many “next genners” secretly fear their talents will never match the towering wealth-generating achievements of their parents. Others feel guilty, saying they want to give away most of the family fortune as soon as it passes to them.

These “inheritance issues” are not just a problem for those with successful family businesses. An estimated $4tn intergenerational wealth transfer will flow from one generation to the next over the course of the next 20 years in the UK and North America, according to research from the Royal Bank of Canada. How do you prepare your children for the wealth that could be coming their way?

I had some fascinating conversations with readers at last month’s FT Money Talking About My Generation event. One reader was adamant that it was better for inheritance tax purposes and his own happiness to give his children the bulk of their inheritance during his lifetime so he could live to see them enjoy it. Another griped that he might live to see them marry gold-diggers who could then make off with the bunce.

As parents, can we really influence the financial decisions our children will make when they are older? Most readers felt children learn by the example their parents set. “My children have grown up knowing they could have anything they wanted,” one said. “However, we never allowed them to go out and just buy it. They always had to come to us and make the case — and often, the answer would be no.”

How to teach children about the value of investing money for the long term, rather than spending it today, was another key theme.

One reader said he had several children, each exhibiting different degrees of financial responsibility. He wanted to give them equal amounts to invest for themselves, but feared that while one might do well, another might fritter it away. Would losing the lot be a valuable lesson for them — or simply an expensive one for him?

The panel agreed that exposure from an early age was vital. The FT’s Jonathan Eley said he gave his teenage daughters monthly pocket money to teach them how to budget. We also discussed the merits of showing children how their Junior Isa investments have built up over the years — although few parents were prepared to hand over the reins completely when the kids turned 18.

Charlotte Ransom, founder of Netwealth, which sponsored the event, has given her children visibility of their Isa investments. Her 22-year-old son recently called up from a year abroad as a student of modern languages to say: “Mum, I see my portfolio’s gone down — what should I do?”

“For a child who has previously had absolutely no interest in finance, I thought this was fantastic,” she said. “You know what? Your portfolio will go up and down. Get used to it, and try to get a sense of what drives the overall returns over time.”

Once started, these conversations need to keep going. Rosie Carr, deputy editor of the Investors Chronicle, spoke movingly of the pain of untangling the finances of a parent with dementia.

Whether you’re “Next Gen” or “Older Gen”, the best form of succession planning is talking to your children about money when you are still alive and of sound mind.

Claer Barrett is the editor of FT Money: claer.barrett@ft.com; Twitter: @Claerb

FT Money event

Are You Ready for Your 100-year Life? The next FT Money Investment Forum will be held on Monday June 18 in the City of London. Chaired by Claer Barrett, guest speakers at the evening event include London Business School professors Lynda Gratton and Andrew Scott, authors of “The 100-Year Life: Living and working in an age of longevity”, and Lindsay Cook, the FT’s Money Mentor columnist. Tickets cost £35 including canapés and a glass of wine. To register your interest in this event, email money@ft.com

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Left behind: can anyone save the towns the UK economy forgot?

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6 days ago · Soaring antidepressant usage, falling life expectancy: Blackpool embodies much of what is going wrong on the fringes of Britain. … But in Britain, it is increasingly on the country’s physical edges, in its seaside towns, that you find people on the outside of the economy looking …
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In economic terms these places are now negative assets. Trying to save them is just throwing good money after bad  …
6 days ago · Soaring antidepressant usage, falling life expectancy: Blackpool embodies much of what is going wrong on the fringes of …
6 days ago · Soaring antidepressant usage, falling life expectancy: Blackpool embodies much of what is going wrong on the fringes of …
6 days ago · Soaring antidepressant usage, falling life expectancy: Blackpool embodies much of what is going wrong on the fringes of …
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A hard landing for the Gulf’s airlines

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A hard landing for the Gulf’s airlines

Three carriers face disruption to their role as ‘superconnectors’ as the state-owned groups fight to justify a business model built around hubs in a volatile region

September 6, 2017

by: Tanya Powley in London and Simeon Kerr in Dubai

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They have been the great aviation disrupters of the 21st century. Over the past decade, Dubai’s Emirates, Etihad Airways of Abu Dhabi and Qatar Airways have quadrupled the number of passengers they fly each year.

They have tempted travellers with competitive pricing, superior service and luxurious premium cabins and turned the Gulf into the stopover destination in global air travel. In the process they even earned themselves a nickname: the “superconnectors”.

But after years of what seemed like unstoppable growth, the three Middle Eastern airline upstarts are experiencing their own period of disruption.

In a short time, the state-owned Gulf carriers have been assailed by a mixture of economic, political and business crises. The economic slowdown triggered by the oil price collapse two years ago has sharply cut travel demand in the region.

Terrorist attacks across Europe and political tension over migrants and security in the US have hit their business hard. As if that were not enough, the United Arab Emirates is one of four Arab countries to impose an embargo on Qatar over accusations of sponsoring terrorism.

Gulf airlines face turbulence

Emirates

82%
Fall in profits for 2016-17, the Dubai-based airline’s first drop in profitability for five years

2%
Average annual growth in 2017 for seats departing from Dubai, based on current schedules, compared with 11% in 2012-16

Etihad Airways

$1.9bn
Losses in 2016, which included $808m of impairment charges associated to the Abu Dhabi carrier’s equity stakes

3%
Average annual growth in 2017 for seats departing from Abu Dhabi, based on current schedules, compared with 14.6% in 2012-16

Qatar Airways

18
Destinations shut off in Bahrain, Egypt, Saudi Arabia and the UAE by their embargo, about a fifth of its seating capacity

1%
Average annual decline in 2017 for seats departing from Doha, based on current schedules, compared with a rise of 16.2% in 2012-16

With competitors challenging some of their most prized routes, the airlines have to justify a business model that is built around hubs located in a volatile region.

“The three superconnectors have hit some serious turbulence for the first time,” says Andrew Charlton, a Geneva-based aviation analyst. “They’ve managed to go for 10-15 years on a perfect run, withstanding a bunch of issues, but now they are suffering.”

The impact of this instability is directly affecting earnings. Profits for all airlines in the Middle East are forecast to more than halve, from $1.1bn in 2016 to $400m this year, according to Iata, the global airline trade association. The region’s carriers will make an average $1.78 per passenger in 2017, compared with a global average of $7.69.

Each of the three carriers is suffering from the shift in fortunes. Emirates, the oldest and largest of the Middle Eastern airlines, is assessing its strategy after the carrier posted its first full-year profit decline for five years in May, as earnings plummeted 82 per cent.

Etihad’s grand plan to catch up with its regional rivals by buying stakes in airlines around the world is unravelling and, in doing so, has had a big impact on the European aviation market. Over the summer, two of Europe’s biggest airlines, Alitalia and Air Berlin, filed for bankruptcy after Etihad pulled the plug on further funding following a review of its acquisition strategy.

Meanwhile, Qatar Airways, the Gulf’s fastest-growing supercarrier, faces its own problems following the unprecedented blockade. Qatar’s airline saw a collapse in bookings after Saudi Arabia, the UAE, Bahrain and Egypt implemented an air and sea embargo against the gas-rich state in June.

After a decade of untrammelled expansion, the fall in capacity growth for the three carriers now projected for calendar year 2017 is dramatic.

For Emirates, annual growth in scheduled seats departing from Dubai has averaged 11 per cent between 2012 and 2016, while at Etihad and Qatar, from Abu Dhabi and Doha respectively, they increased 14.6 per cent a year and 16.2 per cent a year over the same period.

According to current schedules for 2017, the average annual increase in seats for the UAE carriers will now be 2 per cent and 3 per cent respectively over 2016, and Qatar Airways will drop 1 per cent, figures from Flight Ascend Consultancy show. Peter Morris, its chief economist, says political problems and US visa issues have had a big impact on the capacity deployed in different countries.

“Qatar Airways has been particularly hit on markets to Saudi, Egypt, Bahrain, UAE and Emirates on routes to the US,” he says.

Sir Tim Clark, Emirates’ president and founding member of the carrier, is a well-known optimist but the past year has taken its toll on the airline veteran. In May, he told the Financial Times that the airline has “just got to tough it out”. While Emirates is no stranger to turbulent conditions during its 32-year history, Sir Tim says that, while it previously may have had two major “traumas” a year, it now seems to have one a month, pointing to the growing number of terrorist attacks in European cities.

An image of Abu Dhabi’s expanded midfield terminal

Its US business has been a particular problem since the beginning of the year. New restrictions on immigration procedures into the US and cabin bans on some electronic devices hit demand for travel to the US. In April, a month after the laptop ban was introduced, Emirates announced it was cutting flights to five of its 12 US destinations in response to the fall in demand. Since the ban was lifted in July, Sir Tim says business has improved but adds that it is still too “early to say” whether it would reinstate its flights to the US.

Etihad has spent the majority of this calendar year grappling with problems related to its investments in struggling airlines. In July, the Abu Dhabi carrier posted a $1.9bn loss for 2016, which included an $808m impairment associated to its equity stakes.

The airline has poured hundreds of millions of dollars into investing in Air Serbia, Air Seychelles, Air Berlin, Alitalia, Etihad Regional, Jet Airways and Virgin Australia over the past decade. A review of its strategy last year prompted the departure of James Hogan, its chief executive and principal architect of its business plan, as well as Alitalia and Air Berlin being put into administration after the Abu Dhabi-based airline pulled its funding support.

Bonds worth $1.2bn linked to Etihad special purpose vehicles have slumped in value as investors fret over whether the government will offer support. “It’s like Dubai’s [sovereign debt scare] in 2009 all over again. Investors bought on the assumption that the government will step in, even if there is no explicit guarantee,” says one Abu Dhabi-based banker. “Let’s see what happens.”

Etihad’s new chief executive, who is expected to be announced by the end of this year, will face a tough challenge. They must decide how to move on from the airline’s messy equity stake strategy in an era of austerity while reviving growth in increasingly competitive markets, according to analysts.

“This is a big, public, toxic mess to sort out,” says one Abu Dhabi-based investor.

Qatar had been the star performer among the Gulf airlines. In contrast to its rivals, it announced net profit growth of 22 per cent to QR1.97bn ($541m) and an increase in revenues of 10 per cent to QR39.4bn in the financial year ending in March. Its blend of wide and narrow-bodied aircraft provided the flexibility to navigate weaker demand in a region hit by falls in the oil price.

But the blockade by its neighbours in June affected the carrier, instantly closing off 18 destinations and about a fifth of its seating capacity. While Qatar has refused to outline the impact of the move, it is likely to be incurring huge costs on rerouting aircraft and changes to crew rostering. The airline has threatened legal action to recoup its losses.

All three Gulf carriers have been forced to discount fares in an effort to retain market share. John Grant of OAG, an aviation data consultancy, says connecting traffic, which is central to their business models, is “always vulnerable to price”.

Mr Grant adds: “Such low local market demand, particularly for Qatar and Etihad, does highlight a real risk in their traffic and business structure.”

The Gulf airlines are facing competition from low-cost long-haul airlines, such as Norwegian Air Shuttle and Singapore-based Scoot, which are luring customers with cheap fares on some of the same routes between Europe and the US and Asia.

In the face of tougher conditions, the Gulf carriers are adapting their businesses. Emirates has agreed a tie-up with its low-cost sister airline Flydubai, which will see the two airlines align systems and operations at their Dubai hub.

Low-cost long haul competition – Norwegian Air Shuttle and Singapore-based Scoot

The partnership has added weight to rumours of a potential Emirates merger with Etihad, which analysts say could help relieve the latter’s losses and pare back excess capacity in the region. Both emirates have embarked on airport expansion plans at Dubai World Central and Abu Dhabi’s midfield terminal, concentrating on the need to operate more efficiently to sustain growth. Insiders say a merger has often been raised internally, but is a decision for the sheikhs running both emirates.

As well as cutting operational costs across their businesses, Emirates and Etihad have realised the importance of boosting revenue by charging more for services, particularly in economy class. This follows a trend of full-service airlines aping the practices of their low-cost peers.

Emirates now charges for seat assignment in economy while offering a pay-per-access service to its lounges, and aims to introduce other charges in the coming months. In June, Etihad revealed plans to charge for chauffeur services, which were previously included for business and first class customers.

“Passengers who didn’t previously have the option of using the lounge can now do so, and that revenue is almost pure profit,” says Mr Horton. “Gulf airlines stood out by offering chauffeur services. Perhaps it was inevitable there would be sensibility [on charges].”

For Emirates, Sir Tim says the second half of this year “should be much better”. Some of its changes have already helped its performance this year.

“Last year was certainly a challenging one for Emirates, but we’ve made some changes in order to accelerate growth,” says Sir Tim. “Across the network, load factors are strong. Yields are still under pressure, but business is definitely better than in the first half.”

One thing that has been clear is that Gulf airlines can expect little sympathy from their peers. Rivals in Europe have complained vociferously about their tactics in the European market, claiming that they exploit a state subsidised model to steal long-haul market share, while US airlines have run a concerted campaign against allegedly unfair competition because of subsidies, asking their government to tear up its aviation agreements with Qatar and the UAE.

Delta Air Lines, one of the US’s big three carriers, released a 15-minute video highlighting the danger the Gulf airlines pose to the US industry. The Gulf airlines, which deny receiving subsidies, argue that their order books sustain the US aeronautics industry.

Aviation analysts say those hoping for the decline of the Gulf airlines will be disappointed, despite the turbulence they are experiencing. They enjoy more efficient cost bases than their competitors, now enhanced by cuts and restructuring. The Gulf governments, while smarting from lower oil prices, are committed to transportation and tourism as sources of diversification away from oil.

The UAE, for example, is introducing a sales tax in 2018 to boost non-oil revenues, but has exempted aviation from the 5 per cent levy.

“They will continue to be a strong force in the aviation market, there’s no doubt about it,” says Mr Charlton.

Hub theory: Geography and fleets offer the ‘perfect combination’

Emirates, Etihad Airways and Qatar Airways have shaken up the aviation world over the past 30 years by using their prime geographic location to connect any two places on earth with one stopover in the Gulf.

Emirates came up with the model, fuelled by Dubai’s position between east and west — with two-thirds of the world’s population living within eight hours of the city state.

City and airline developed a symbiotic dynamic to generate growth: Emirates’ global connectivity feeds off Dubai’s role as a global tourism and commercial hub, and vice versa.

While all three may compete for passengers travelling mostly between the same pairs of city, each has developed a distinct strategy for growing market share. The airlines have wooed travellers from longer established airlines based in Asia, Europe and the US. In 2006, the three Gulf carriers carried 26.5m flyers between them. Ten years later, this has risen to 104.5m.

“The fact is their geography, where they’ve got their hubs, combined with the long-range capability of their modern fleets, is the perfect combination,” says John Strickland, an aviation analyst.

The Middle Eastern airlines have also been helped by their vast airports designed for the seamless transfer of millions of passengers. Connecting traffic outnumbers the number of travellers destined for the Gulf.

Part of their rapid growth comes down to timing. Newer aircraft enabled them to link “secondary” cities such as Manchester in the UK and Stuttgart in Germany to major destinations, rather than passengers having to fly via their own country’s hub. Around the same time, low-cost carriers ate into the short-haul market share of legacy carriers by taking passengers directly to more destinations.

“The low-cost carriers were stealing the legacy airlines’ lunch. Then suddenly the Gulf carriers came and ate their dinner,” says Andrew Charlton, an aviation analyst.

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COMMENTS (121)
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Richard

1 day ago

They’re heavily subsidized airlines.

BetaByNature

22 hours ago

@Richard Allegations from random voices in the dark are not evidence.  Why waste the screen space with them?

FTDX

1 day ago

Fly Emirates and Etihad all the time, service is great on both, excellent airport lounges and large comfortable seats (even on short haul flights), just flew on BA from Heathrow to Italy, paid 2.8 times the price of the economy price to fly in "Club Europe" (highest tier available for this route), and the seats were 100% identical to the economy seats, the only difference was they left the middle seats empty in "Club Europe". The Gulf carriers are decades ahead of the poor products on offer from the US and European airlines. 

notmyrealname

1 day ago

Another significant source of advantage of course are lower labor costs due to a lack of worker protection.

p266

1 day ago

The middle eastern aviation model was based on being in the right spot between Europe, Asia, and Africa as well as a chance to buy home-sold very cheap fuel (that’s why e.g. Qantas moved there temporarily.  Refueling was substantially cheaper in Dubain than in Singapore, now a little less so).  

The first will probably persist (one doesn’t understand that Russia didn’t emulate this business model, but it’s Russia and they know everything best, so what do we expect?).  The second one is a big question mark for the future.  We have new technologies of mining and alternative power systems for ground transport coming in favour of cheap fuel and increasing demand in favour for expensive fuel.  Only future will show tell us.

K

1 day ago

The region is not volatile.

notmyrealname

1 day ago

@K Qatar is not facing a boycott. Iran and Saudi Arabia are not engaging in a cold war. Yemen is perfectly fine. There is no IS in Iraq or Syria. The Arab revolution never happened.

Joe90

23 hours ago

@notmyrealname @K  These events are not taking place in Qatar or the UAE and hence do not affect passengers flying in and out of Dubai and Doha. Just like the war in Ukraine does not stop people flying to London or an ISIS attack in Paris does not affect someone Frankfurt. 

BetaByNature

21 hours ago

@Joe90 @notmyrealname @K You didn’t state that UAE and Qatar was all that was included in your "region". And how is the boycott not affecting both countries? I could name 50 corporates in Dubai that complain about it, and probably 100 in Qatar. Are they all lying about regional instability?

Joe90

19 hours ago

@BetaByNature The comment was on the effects of regional instability on long haul international traffic to and from the hubs. Of course, UAE’s boycott of Qatar has disrupted traffic between the hubs. However, Intra hub traffic is not the main source of income for Etihad, Emirates or Qatar Airways. It might be interesting to note that much of the Dubai/Doha traffic has now moved to Kuwait and Omar Air as passengers, including Sales Clerks, fly via Kuwait or Oman to get around the boycott. 

The lower profits for Etihad and Emirates are more to do with over capacity and over ambitious investment in foreign airlines.

1 reply

AJ

1 day ago

All those airlines are vanity projects in the same category of "Mine is bigger than yours". Their countries have too much money and have no idea where to spend it.

Dubai is an hour away from Abu-Dhabi yet there are 5 airlines between those two emirates and each is spending massive amounts of money and getting subsidies from the government just to legally line the pockets of their owners, the respective ruling families.

Qatar, which capital did not have paved roads and lived Saudi charity no 20 years ago, wants to become Dubai 2.0 which is why they bribed their way into hosting the WC. There are only 2 million people living in Qatar 70% of them can’t afford a taxi fare let alone a ticket.

K

1 day ago

How did those 70% get to Qatar if they cannot afford a ticket

AJ

1 day ago

@K

If you want to building 50 skyscrapers and 10 stadia and want cheap labour you have to bear the cost of bringing them. It also helps if you own the airline bringing them to your country as well.

Joe90

23 hours ago

@AJ  It’s called competition. 

St Andrean

1 day ago

Where the Gulf carriers have really scored is in using regional airports.     We fly to Singapore a couple of times a year and use Qatar out of Edinburgh.     Two easy 7 hour flights instead of braving a change at Heathrow with a connecting domestic flight which BA will cancel at the first whiff of Heathrow delays.       Having flown hundreds of flights through LHR we will now do everything to avoid it.     Non stop connections to places like Adelaide and Auckland make Doha a great hub for Aussie and Kiwi friends who visit Scotland regularly.     The growth may be slowing or stalling, but the passenger experience of flying directly from regional airports and connecting through Doha is going to keep Qatar’s appeal going

Pravda

1 day ago

This is just another unnecessary piece of information.  Personally, still going to to choose 100000%  the above mentioned airlines over any European or American. Always better service and experience.

BasedonFundamentals

1 day ago

@Pravda  Glad you’re happy supporting the regimes of these countries. Shamefully our airlines these days are often partly owned by said regimes, like BA for instance by Qatar.

Pravda

1 day ago

@BasedonFundamentals I would fly with those airlines that provide good experience and service. Period. Has nothing to do with supporting regimes. I wonder how many British people would choose these airlines over the local….. 

BasedonFundamentals

1 day ago

@Pravda @BasedonFundamentals  If its really service and price you can still find good airlines in Europe like KLM and Lufthansa.

Pravda

1 day ago

@BasedonFundamentals thank you for the suggestion.  

RandomFtReader

1 day ago

@BasedonFundamentals  KLM and Lufthansa…LOL!

KLM: that nickles and dimes for everything. Lufthansa: that has seats so small that only "half the Americans" would fit there (both, literally and figuratively). The fact that American airlines are shittier does not make them any good!

Frost

1 day ago

In fact most people don’t care where their money goes.

If it goes to encourage slavery, or destroy the planet, or finance terrorism, who cares.

As long as one gets a good service. That is all that matters.

Pravda

1 day ago

@Frost Dear Frost, i would not even start this discussion with you because i know that it will probably never end …. 

Frost

1 day ago

You must realise that what you wrote was rather shallow? But no worries, humanity is capable of far worse. Yours is just a normal attitude that probably represents the attitudes of 99% of humanity. No one really cares. After all, someone putting gas in their cars is financing the mass diffusion of radical Islam, but how many people care? Hardly anyone. Everyone is focused on themselves and sees as long as their nose.

BasedonFundamentals

1 day ago

@Frost  Not caring or not capable of doing anything about it. I mea,  the example of oil and the petrochemical industry is a good example. I can’t stop using plastic products and I can’t even possibly trace where the raw material comes from. However, such simple things as avoiding these slave bays, that I can do and I am.

BasedonFundamentals

1 day ago

@RandomFtReader @BasedonFundamentals  I life in Europe, this is a European paper, I couldn’t care less what Americans do. In fact, all airlines should force people who do not fit in 1 seat to pay for 2 (or how many additional ones they may need) and nickles and dimes? On what is that nonsense based?

BetaByNature

21 hours ago

@Frost I don’t think I have read something so reductively simplistic in the FT. It is deeply shocking the British and US governments support the atrocities in Yemen and Egypt. Perhaps by your logic we should also refrain from paying our taxes? The UK is actually in a position to stop the Saudi regime (as a swing opinion former), but instead it legitimises it. Perhaps your time would be better spent addressing that issue.

8 replies

DamianB

1 day ago

When will these gulf carriers allowed to purchase US based
airlines? Given the disastrous state of travel, airlines and airports, it cannot get any worse. 

RandomFtReader

1 day ago

@DamianB  Never. After 9/11, that’s a remote possibility.

Clouzo

1 day ago

This decline in growth rates and profits is a drop in the ocean compared to the combined losses that US and European airlines have made over time – even when including the write downs of Etihad. And all gulf carriers can easily afford to "tough it up" much longer. They will continue flying and growing even if oil prices remain low. I don’t see how their market share gains will stop as the service and pricing for economy/business/first is consistently better than US and European competitors. Even if one prefers their legacy carrier, hard not to be tempted by the cheaper and better service of gulf airlines – especially considering that Qatar offers tier points/miles on the BA loyalty card.  

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A hard landing for the Gulf’s airlines

The 12-Hour Goodbye That Started Everything

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The 12-Hour Goodbye That Started Everything

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Brian Rea

The first time he slept over was an accident. He came to watch a movie, which for me became an exercise in remaining perfectly still while I focused on the proximity of his legs. After the credits rolled, we talked until dawn. Then he began listing his hesitations about “us,” even though we had never touched.

“I’m working through a breakup,” he said. “Well, it ended a year ago. I’m leaving the city soon. But I’ll be back in a month. I’m not sure I’m grounded.” After a long pause, he asked what my hesitations might be.

I wasn’t sure where to start, so I pointed out that it was getting late — or early, depending how you look at it — and asked if he wanted to sleep over. “If you do sleep over,” I added, “you don’t even have to kiss me.”

He laughed. As we slept through the morning, he reached for me shyly and held on.

He was like a living version of my favorite books, records of places I dreamed to go: “Voodoo in Haiti,” “Moby-Dick,” even “A Field Guide to the Birds of Australia.” He was the perfect castaway, a man who would be at ease whittling driftwood into fish hooks while lost at sea.

The second time he slept over, he brought a toothbrush. A clue that this was no accident.

The third time, he said he had never met anyone who looked like me, murmuring, “You’re lean and lithe.” Later he would compare me to an ocelot, those leopard look-alikes that slink through the Amazon.

Continue reading the main story

I was flattered. In my previous relationship, I felt more like a hamster, a classroom pet purchased in a rush and forgotten over spring break. Now I had moved on to men like this one, who saw me as a wild cat, and whom I pictured as a cross between a sea horse and a deer, track-star tall with a dancer’s grace.

Not long after, he set off on a cycling tour overseas. My expectations of commitment were low. I was surprised to receive messages every day from remote villages with weak reception, and invitations to connect on Skype. He sent me links to hit songs from the ’80s — “Don’t You (Forget About Me)” — and pictures of luminous markets at night. We snapped photos of handwritten letters and emailed them to each other, like postcards twisted by time travel.

“Animal reporting to watering hole,” I wrote.

“I’ve been thinking a lot about you, too,” he replied.

Months after his return, I lay next to him thinking I couldn’t have asked for a person who more closely fit my heart.

“I feel love for you,” I whispered as he fell asleep.

“What?” he asked, twitching awake.

“I feel love for you.”

“Really?”

I was never sure if he heard me clearly or if my words were more like the sound of an alarm clock that steals its way into a dream.

One day, we sat down at a small cafe for breakfast. We laughed at sketch comedy clips on my phone, calculated the relative lengths of Chile and Canada and pondered cycling across both.

When we got back in his car, he said, “I guess there are a few things we should talk about.”

It was another couple of hours before I realized he was breaking up with me. It was a 12-hour conversation in all; I spent 10 of them feeling as if I were slipping off a craggy cliff face, clawing at every sapling while trying to make sense of the downfall.

Our talk moved from his car to sitting lakeside near my house, after which I had to meet friends for dinner — a previously planned engagement that became an awkward confession of the day’s events. Then back to his car, where our breakup resumed.

“Don’t chase a man who doesn’t want you,” I told myself.

“This is sad,” he announced blankly at one point, staring out the window.

It was the middle of the night before I finally slipped away and into my house. Pausing to turn the key, I felt physical pain in my limbs and on my face, my skin wind-whipped and hot from the free fall.

I had begged him not to give up on us.

I woke up the next day with regret that I had spent so many hours ending things, for believing a person could be talked into feeling something he didn’t. (When he sent me an email several days later, I wrote back like a secretary politely responding on someone else’s behalf, signing off with, “I wish you well.”)

I focused on what I learned during our marathon breakup: that he wasn’t feeling connected, either to me or more broadly. I couldn’t tell if he was actually struggling or just trying to let me down easily, but his words gave me hope that the problem had little to do with me and was resolvable.

“How do you expect to feel connected to me if you don’t feel connected to yourself?” I asked.

“That’s a great question,” he said, offering a shrug instead of an answer.

I thought if the fog lifted, he would surely return, and we would resume our talks about tree houses to vacation in, animals we would like to be. But as days turned into weeks and then months of silence, I began to move through a fog of my own, deeply questioning the masks people wear, the parts of our interiors that can be seen by others only if we choose to reveal them.

Hearts and minds can be as opaque as a rain forest; only small pieces of them are ever visible. And I realized this, too: You can’t contain the people you love. You can’t contain your own love, either.

I looked for ways to manage the hurt, denial and rage. I took up kickboxing, which helped. I contacted a therapist I had seen, a powerful woman nearing 70 who often spoke with the air of a monk meditating on a mountain.

“There are no shortcuts to love,” she said. “Honor the truth inside yourself and give that to another.”

After months of meditating on the parts of him that had blindsided me, I started to consider the parts of myself that I had hidden from him. Not just from him but from myself as well, parts of my life where I wasn’t living honestly.

While we were together, I had anxiety attacks every day, though I never mentioned them while dancing across the kitchen to offer him oven-baked salmon and glasses of wine.

I’m not sure if we fall in love with people or if we fall in love with the way they make us feel, the ways they expand who we are and wish to be. The last time we spoke, I told him how moved I was by a photo in National Geographic of hundreds of shark fins drying on a rooftop in Hong Kong. I pictured the finless sharks drowning after being cast overboard, the marine equivalent of being buried alive.

He had seen it too.

“I’d like to get involved somehow,” I said, ignoring that the ocean is nearly a thousand miles from Toronto. If I had learned anything from therapy, it was to pay attention to everything that lit a fire inside. Listen. Feel. Tend that flame.

One day, I ran into a friend at a coffee shop who, as it happened, was working on a film about sharks. Excited, I offered to volunteer. He took me on and eventually hired me. It felt as if I were casting off the husk of who I had been so I could emerge as the person I wanted to become.

I can’t help but think that if it weren’t for how those interests were stoked in that relationship, I might never have recognized how badly I craved a life like those depicted in the books on my shelf, a patchwork of stories about faraway places.

Shortly after starting my new role, I went back to my therapist and told her: “It’s been a year since we broke up. I thought my dream job and exercise would heal me, but I still think about him every day. What more can I do to let go?”

First, she told me a story about a man she loved in her early 20s, nearly 50 years ago, whom she still thinks about to this day. Then she said: “You’re asking the wrong question. It’s not about getting over and letting go.”

I looked down at my hands and considered how this could possibly be about anything else.

“It’s about honoring what happened,” she said. “You met a person who awoke something in you. A fire ignited. The work is to be grateful. Grateful every day that someone crossed your path and left a mark on you.”

Miriam Johnson has worked in documentary film and is a songwriter in Toronto.

modernlove@nytimes.com

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A version of this article appears in print on July 23, 2017, on Page ST5 of the New York edition with the headline: Lessons From a 12-Hour Goodbye. Order Reprints| Today’s Paper|Subscribe

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The 12-Hour Goodbye That Started Everything

The 12-Hour Goodbye That Started Everything – NYTimes.com

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Modern Love
By MIRIAM JOHNSON

The first time he slept over was an accident. He came to watch a movie, which for me became an exercise in remaining perfectly still while I focused on the proximity of his legs. After the credits rolled, we talked until dawn. Then he began listing his hesitations about “us,” even though we had never touched.

“I’m working through a breakup,” he said. “Well, it ended a year ago. I’m leaving the city soon. But I’ll be back in a month. I’m not sure I’m grounded.” After a long pause, he asked what my hesitations might be.

I wasn’t sure where to start, so I pointed out that it was getting late — or early, depending how you look at it — and asked if he wanted to sleep over. “If you do sleep over,” I added, “you don’t even have to kiss me.”

He laughed. As we slept through the morning, he reached for me shyly and held on.

He was like a living version of my favorite books, records of places I dreamed to go: “Voodoo in Haiti,” “Moby-Dick,” even “A Field Guide to the Birds of Australia.” He was the perfect castaway, a man who would be at ease whittling driftwood into fish hooks while lost at sea.

The second time he slept over, he brought a toothbrush. A clue that this was no accident.

The third time, he said he had never met anyone who looked like me, murmuring, “You’re lean and lithe.” Later he would compare me to an ocelot, those leopard look-alikes that slink through the Amazon.

I was flattered. In my previous relationship, I felt more like a hamster, a classroom pet purchased in a rush and forgotten over spring break. Now I had moved on to men like this one, who saw me as a wild cat, and whom I pictured as a cross between a sea horse and a deer, track-star tall with a dancer’s grace.

Not long after, he set off on a cycling tour overseas. My expectations of commitment were low. I was surprised to receive messages every day from remote villages with weak reception, and invitations to connect on Skype. He sent me links to hit songs from the ’80s — “Don’t You (Forget About Me)” — and pictures of luminous markets at night. We snapped photos of handwritten letters and emailed them to each other, like postcards twisted by time travel.

“Animal reporting to watering hole,” I wrote.

“I’ve been thinking a lot about you, too,” he replied.

Months after his return, I lay next to him thinking I couldn’t have asked for a person who more closely fit my heart.

“I feel love for you,” I whispered as he fell asleep.

“What?” he asked, twitching awake.

“I feel love for you.”

“Really?”

I was never sure if he heard me clearly or if my words were more like the sound of an alarm clock that steals its way into a dream.

One day, we sat down at a small cafe for breakfast. We laughed at sketch comedy clips on my phone, calculated the relative lengths of Chile and Canada and pondered cycling across both.

When we got back in his car, he said, “I guess there are a few things we should talk about.”

It was another couple of hours before I realized he was breaking up with me. It was a 12-hour conversation in all; I spent 10 of them feeling as if I were slipping off a craggy cliff face, clawing at every sapling while trying to make sense of the downfall.

Our talk moved from his car to sitting lakeside near my house, after which I had to meet friends for dinner — a previously planned engagement that became an awkward confession of the day’s events. Then back to his car, where our breakup resumed.

“Don’t chase a man who doesn’t want you,” I told myself.

“This is sad,” he announced blankly at one point, staring out the window.

It was the middle of the night before I finally slipped away and into my house. Pausing to turn the key, I felt physical pain in my limbs and on my face, my skin wind-whipped and hot from the free fall.

I had begged him not to give up on us.

I woke up the next day with regret that I had spent so many hours ending things, for believing a person could be talked into feeling something he didn’t. (When he sent me an email several days later, I wrote back like a secretary politely responding on someone else’s behalf, signing off with, “I wish you well.”)

I focused on what I learned during our marathon breakup: that he wasn’t feeling connected, either to me or more broadly. I couldn’t tell if he was actually struggling or just trying to let me down easily, but his words gave me hope that the problem had little to do with me and was resolvable.

“How do you expect to feel connected to me if you don’t feel connected to yourself?” I asked.

“That’s a great question,” he said, offering a shrug instead of an answer.

I thought if the fog lifted, he would surely return, and we would resume our talks about tree houses to vacation in, animals we would like to be. But as days turned into weeks and then months of silence, I began to move through a fog of my own, deeply questioning the masks people wear, the parts of our interiors that can be seen by others only if we choose to reveal them.

Hearts and minds can be as opaque as a rain forest; only small pieces of them are ever visible. And I realized this, too: You can’t contain the people you love. You can’t contain your own love, either.

I looked for ways to manage the hurt, denial and rage. I took up kickboxing, which helped. I contacted a therapist I had seen, a powerful woman nearing 70 who often spoke with the air of a monk meditating on a mountain.

“There are no shortcuts to love,” she said. “Honor the truth inside yourself and give that to another.”

After months of meditating on the parts of him that had blindsided me, I started to consider the parts of myself that I had hidden from him. Not just from him but from myself as well, parts of my life where I wasn’t living honestly.

While we were together, I had anxiety attacks every day, though I never mentioned them while dancing across the kitchen to offer him oven-baked salmon and glasses of wine.

I’m not sure if we fall in love with people or if we fall in love with the way they make us feel, the ways they expand who we are and wish to be. The last time we spoke, I told him how moved I was by a photo in National Geographic of hundreds of shark fins drying on a rooftop in Hong Kong. I pictured the finless sharks drowning after being cast overboard, the marine equivalent of being buried alive.

He had seen it too.

“I’d like to get involved somehow,” I said, ignoring that the ocean is nearly a thousand miles from Toronto. If I had learned anything from therapy, it was to pay attention to everything that lit a fire inside. Listen. Feel. Tend that flame.

One day, I ran into a friend at a coffee shop who, as it happened, was working on a film about sharks. Excited, I offered to volunteer. He took me on and eventually hired me. It felt as if I were casting off the husk of who I had been so I could emerge as the person I wanted to become.

I can’t help but think that if it weren’t for how those interests were stoked in that relationship, I might never have recognized how badly I craved a life like those depicted in the books on my shelf, a patchwork of stories about faraway places.

Shortly after starting my new role, I went back to my therapist and told her: “It’s been a year since we broke up. I thought my dream job and exercise would heal me, but I still think about him every day. What more can I do to let go?”

First, she told me a story about a man she loved in her early 20s, nearly 50 years ago, whom she still thinks about to this day. Then she said: “You’re asking the wrong question. It’s not about getting over and letting go.”

I looked down at my hands and considered how this could possibly be about anything else.

“It’s about honoring what happened,” she said. “You met a person who awoke something in you. A fire ignited. The work is to be grateful. Grateful every day that someone crossed your path and left a mark on you.”

Miriam Johnson has worked in documentary film and is a songwriter in Toronto.

modernlove@nytimes.com

To hear Modern Love: The Podcast, subscribe on iTunes or Google Play Music. To read past Modern Love columns, click here.

Continue following our fashion and lifestyle coverage on Facebook (Styles and Modern Love), Twitter (Styles, Fashion and Weddings) and Instagram.

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More In Modern LoveA series of weekly reader-submitted essays that explore the joys and tribulations of love.

    The 12-Hour Goodbye That Started Everything – NYTimes.com

    America Doesn’t Need More Olive Gardens – Bloomberg Gadfly

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    Photographer: David Paul Morris/Bloomberg


    Consumer

    Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.


    March 29, 2017 11:36 AM EDT

    Olive Garden can teach other restaurateurs a lesson.

    No, not how to salt pasta water or bake breadsticks. The purveyor of unlimited salad and pasta might not be on the cutting edge of culinary excellence, but it seems to be ahead of its competitors in realizing that restaurants need to curb their appetite for expansion. Otherwise they’ll end up making the same overbuilding mistake that retail chains made over the last decade, creating a surplus of stores that only now are they starting to rein in. 

    Darden Restaurants, Olive Graden’s parent company, said this week that it would buy Cheddar’s Scratch Kitchen for $780 million, sending shares up 9 percent. Investors were mostly cheering the earnings and sales growth bump that comes with acquiring a new chain, as well as a pretty hearty third-quarter earnings report.

    There’s the Cheddar
    Darden’s acquisition of Cheddar’s Scratch Kitchen sent shares up Tuesday. The stock is up 24 percent in the last year.

    Source: Bloomberg
    Intraday times are displayed in ET.

    But more telling was the admission by CEO Gene Lee that one of the big reasons Darden wanted to buy another chain, rather than rely on building more stores under its current roster of restaurant brands, is that he thinks the industry is ripe for consolidation.

    "There’s been an oversupply for 10 years in our industry," he said, explaining that when the company opens a restaurant today it’s not creating new sales in the marketplace but stealing share from another restaurant. 

    He said that Olive Garden was "getting closer and closer" to full penetration and that it was becoming more difficult to find new locations where it could generate enough of a return to justify the cost of building a new restaurant without cannibalizing sales elsewhere.

    In other words, America doesn’t need any more Olive Gardens. 

    Restaurant chains typically shy away from discussing publicly the outsize growth in the restaurant industry in a negative light, preferring to talk about how restaurants are attracting millennials because dining out is viewed as an experience rather than an expense. They also like to point out that sales at restaurants overtook sales at grocery stores in the U.S. for the first time in 2015.

    Appetizing Sales
    Restaurant sales overtook those at grocery stores in 2015

    Source: U.S. Census Bureau

    The problem is, restaurant sales growth, particularly at big chains, started to slow as soon as the industry hit that milestone. (It also happened to coincide with the introduction of the first exchange-traded fund that tracked restaurants, BITE. It has since announced plans to close). Labor costs ballooned. And just like what happened at retailers, customer traffic started to fall off. One analyst deemed it a "restaurant recession." 

    Pain on the Menu
    Restaurant sales have fallen during nine out of the last 10 months compared with those from the year before

    Source: MillerPulse and Bloomberg

    Meanwhile, competition has been rising from lower-priced grocery stores, home delivery and meal kits. That last point is particularly salient, as data from Slice Intelligence shows that after consumers sign up for at-home meal delivery from a service like Blue Apron, restaurant spending falls off more than spending at grocery stores. 

    Many restaurant chains are ignoring these trends and continuing to build. Many are even expanding into malls and other retail spaces left empty by stores that have closed. The amount of space typically dedicated to food within existing properties has grown from 5 percent a decade ago to 10 to 15 percent in some European markets, and 8 to 9 percent in the U.S., according to real estate firm JLL. 

    Chipotle is one of the worst offenders, pursuing aggressive growth strategies at its own peril. It plans to keep expanding its footprint by hundreds of stores a year despite falling sales and deeply declining returns on invested capital. Of course, Chipotle has its own problems to deal with as it tries to rebound from a food-safety crisis, but other companies like Dunkin’ Brands Group Inc. and Starbucks Corp. are among those with lofty store opening plans in the U.S. and abroad. 

    Empty Calories
    Chipotle’s return on invested capital, a measure of how much bang the burrito maker is getting for its buck, used to be double the industry average. Now it’s approaching zero.

    Source: Bloomberg Intelligence

    It’s that kind of refusal to see the writing on the wall that hurt retailers, which saw sales fall off as shoppers stopped going into stores for purchases that could more easily be bought online and delivered straight home. 

    Food Wars
    Global sales estimates for food delivery are growing rapidly

    Source: ICSC
    Note: Future years are estimates

    Critics might question Darden’s recent acquisition as an attempt to buy growth and overspend on M&A that might not turn out as good as its recipe promises. But the company’s realization that building more Olive Gardens has its limits is a smart one. Other chains with large store footprints and declining sales would be wise to follow suit. 

    This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

    1. Chipotle said it would reduce the number of restaurants it plans to open temporarily as it tries to rebound from its food safety crisis but still plans on 195 to 210 in 2017.

    To contact the author of this story:
    Shelly Banjo in New York at sbanjo@bloomberg.net

    To contact the editor responsible for this story:
    Daniel Niemi at dniemi1@bloomberg.net

    America Doesn’t Need More Olive Gardens – Bloomberg Gadfly