LETTER VEDC Had Big Role in Quake Recovery Thank you for your 10-year retrospective issue covering the Northridge Earthquake (Jan. 5). The absence of the Valley Economic Development Center (VEDC) from this issue, however, really missed the pivotal role we played in the rebuilding of the San Fernando Valley. As a former vice president with VEDC, our staff was involved with helping thousands of the small businesses that drive the engine of our local economy. I have been a consultant and coach to small businesses in the San Fernando Valley for the past 15 years, and never before or since, have I experienced such a confluence of professional, volunteer and governmental efforts aimed at improving this large a community. The combined efforts and roles of federal, state and city officials and staff with local leaders brought significant resources and dollars to our community while organizations like the VEDC ushered in improvements to our local economy. Were it not for the efforts of VEDC, thousands of businesses might never have received the financial or technical assistance they needed to rebuild. Ventura Boulevard in Sherman Oaks might not have recovered quite so quickly, home-based businesses might still be illegal, and boulevards throughout the city might never have received business improvement dollars. VEDC played a significant role in all these events. The earthquake afforded VEDC with its largest-ever opportunity to expand beyond its work in economically challenged areas in the Northeast Valley to serve the entire San Fernando Valley. And, it did it in remarkable fashion. In the 30 days following the quake, we conducted some 55 workshops throughout the Valley attended by about 1,500 small business owners who were taught how to apply and qualify for FEMA funds. In the 27 months that followed, VEDC staff helped as many as 8,500 businesses qualified for and met the SBA/FEMA guidelines for funding resulting in nearly $100 million in low-interest capital injected into local businesses. Additionally, we designed a specialized loan program to serve the needs of many small business owners not eligible for the SBA program. The result of our efforts brought $30 million to the region to help earthquake-impacted businesses in the form of revolving loan funds saving hundreds of jobs and companies from economic disaster. Additionally, we played a significant role in the establishment of the Economic Alliance. As a founding organization, VEDC conducted all the community and economic research to prepare a comprehensive economic development strategy for the region. This strategy served as the plan used to capitalize the regional partnership organization and provided a model that was replicated successfully in other areas of the city and county. Jonathan Goldhill, CEO The Growth Coach Woodland Hills

Valley Motel Is Huge Hollywood Attraction Sun Valley’s industrial sprawl of construction companies, factories, and auto repair shops provides a surreal backdrop for the Pink Motel and Cadillac Jack’s Caf & #233;. While the surrounding landscape might have witnessed dramatic demographic and cosmetic alterations over the past 57 years, the Pink Motel remains identical, leaving visitors feeling like “Back to the Future’s Marty McFly: stuck in 1955. Owner Monty Thomulka has run the Motel and Caf & #233; since 1969, when he took over the business from his parents who built the complex in 1945 and opened it in 1946. While the 20-room motel still thrives due to a primarily live-in clientele, Cadillac Jack’s only operates in Hollywood’s fantasy world. Closed to the public in 1989, the caf & #233; has since been used for numerous movies, advertisements, music videos and assorted print work. Cadillac Jack’s echoes a different era, with vintage cigarette, candy bar, milkshake, and pinball machines dating back to the late 1940’s. Faded signs still advertise for a “Barbu-cated top Sirloin Steak Dinner, with salad, spaghetti, French fries, and coffee $4.95.” A fully functioning juke box still spins original 45 rpms of Elvis Presley’s “Heartbreak Hotel. “I closed the diner in 1989 because it was just too much work for me to run it myself. You make a lot more money for movie work. It’s pure profit. All types of entertainment companies have shot the motel and caf & #233;, including “The Last 10 Yards,” with Bruce Willis, “Highway to Heaven,” “Murder She Wrote,” “Columbo,” and “Unsolved Mysteries.” I do anywhere from 50 to 60 movie shoots a year, charging from $2,500 to $3,500 a day. It really holds the business up. The money is with the studios, ever since I closed the caf & #233; down, it’s been really attractive for them. “It’s a competitive business. I’m in the California Film Commission’s locations book and I work with 24 location agencies. You’ve got to have the right look to catch the eye of the director. The television show Las Vegas used us, which is pretty common. The motel and caf & #233; often stand in for Las Vegas, Phoenix, or Miami. In addition, we have a fleet of 55 to 60 classic cars that we often rent out to he studios, with lots of 1950s cars including a 1957 Mercury, a 1957 Ford, a 1955 Cadillac, a 1958 Plymouth, and a 1962 Ford Thunderbird. “My parents started the business back in 1946 and I’ve been here in some capacity since 1950. I began as a dishwasher and now I oversee everything. I’ve got a daughter and several grandchildren. Hopefully, I’ll be able to turn the business over to them when I’m ready to check out.” Jeff Weiss

Valley Gains Strength After Temblor’s Shock The Rebirth of CSUN By SLAV KANDYBA Staff Reporter On January 17, 1994, one of the costliest disasters in U. S. history struck the San Fernando Valley, causing some $44 billion in initial damages. The Valley’s economy was already taking a beating, suffering from the loss of thousands of aerospace jobs, recession and a depressed housing market. Some businesses never recovered, others have only recently gotten back on track with the help of the roughly $30 billion in federal and private insurance funds. Here, the Business Journal looks at how the quake forever changed the Valley’s economy. Cal State Northridge will mark January 17 as the day that changed it forever for the better. “What started as a disaster turned into a great opportunity,” said Blenda Wilson, now president of Boston area-based Nellie Mae Education Foundation. She was CSUN president when the 6.7-magnitude earthquake decimated the campus in 1994. Wilson referred to the post-quake construction boom that transformed the campus into a modern university from an aging state school with little visual appeal. That January morning in 1994 marks the single most defining moment in the school’s 47-year history, with wide-ranging effects: Worst for the irreparable damage to many of the school’s buildings, best for the chance it provided to rebuild. And not only was it rebuilt and bettered, it barely cost administrators or students a dime. Immediately after the quake, the campus hardly gave hope to its inhabitants. The fine arts building, a parking garage and a dormitory tower had collapsed and all other buildings were unusable, said Carmen Ramos Chandler, a CSUN spokeswoman. The university opened two weeks late for the spring semester on Valentine’s Day. More than 300 “portable classrooms,” commonly described as trailers, were brought in; domes were set up to carry on administrative business. More than 25,000 students attended 5,400 classes that semester while all of the buildings on campus were inspected, Chandler said. Students and faculty were disoriented, not knowing if the spring 1994 semester would proceed or if the school would reopen. Faculty set up a tent that served as a makeshift office from which to field calls from concerned students. Then-president Wilson arrived to the campus in the afternoon on the day of the quake, after catching a flight from Bakersfield. Driving up to CSUN, she stopped by her office to find it sustained serious damage. Driving further, on the eastside of campus, one of the first things she saw was the parking garage. “I pulled off the road because I was shaking so badly all the buildings were mashed,” Wilson said. Seeing some buildings standing, though, she had a “sense of optimism that we weren’t completely destroyed.” Teamwork After four days of assessment, she and her colleagues decided there was a need for a “portable campus,” so trailers were ordered. Geography faculty helped organize them into villages, she said, while engineering, music and many other departments contributed. “It was that total combination of total fear and responsibility to make a bad situation not bad,” Wilson said. “At that time there were (thousands of) students, they would’ve had their careers interrupted. You had to find a way because so many lives were harmed that was a powerful incentive.” Having last visited the renovated campus one year ago, Wilson says her favorite new addition is the library steps. She said the damage sustained by the library was the most “emotional,” because it was the center of campus, and its inspiration. “It was an emotional blow,” she said. A “total commitment to students” that Wilson said characterized CSUN’s administration at the time is echoed by administrators, faculty and employees who worked with her. “We were galvanized very quickly,” said William Watkins, associate vice president for student affairs and the dean of students. Cynthia Rawitch, associate dean of the College of Arts, Media and Communication agreed. “(There is) no question whatsoever that the leadership wasn’t just adequate, it was superb,” Rawitch said. Disaster declaration In the aftermath of the earthquake the federal government declared Northridge a disaster area, and President Clinton, Vice President Gore and a host of other politicians local, state and federal came to the campus. Soon after, federal funds began to flow and construction commenced. More than $390 million came from the Federal Emergency Management Agency. The state contributed $17 million more. Manzanita Hall, Sequoia Hall, the Arts and Design Center, a new parking garage and the recently added Sierra Center were built with that money. The campus was extensively landscaped, with a green quad where students can be seen resting or studying. Walkways were repaved, and renamed to give the campus a new feel. Further, FEMA-funded construction may have initiated a trend. Students, as if taking a cue, approved a referendum (raising their tuition fees) to build a new University Student Union, which is currently under construction. A new parking structure will soon be up, as well as a Parking and Public Safety Building, which will house the police department and a California Highway Patrol office. There are no special ceremonies planned to mark the anniversary, as the university will be on winter break. Current president Jolene Koester, however, will send out a letter to all students, faculty and university employees, spokeswoman Chandler said. Meanwhile back in Boston, former president Wilson reminisced over the old days and pointed to the silver lining presented. “It may be true there is an opportunity under every mishap,” she said.

Despite Its Wall Street Woes, United Online Competitive CORPORATE FOCUS By SHELLY GARCIA, Senior Reporter Watching the Internet service market is a little like playing a game of telephone. By the time word of a new price plan gets around, it starts to sound like all the other players are doomed. Lately, it has begun to look like United Online Inc. is caught in just such a game. The company’s stellar earnings and revenue results don’t seem to matter to Wall Street, which has shunned the stock ever since AOL announced it would introduce a new, lower cost service and broadband providers began offering discounted prices on their Internet services as well. Since the price-cutting began last fall, shares in United Online have lost nearly 40 percent of their value, falling from a high of nearly $28 in September to the mid-teen range recently. On Wednesday, Dec. 31, shares in United Online closed at $16.79 per share. “You’ve seen the stock take its lumps,” said Peter Mirsky, digital commerce analyst with Oppenheimer & Co. in New York, which does not hold a position or do any banking business with United Online. “It sort of ignores the fact that even the big competitors, while they can play in the value price space, they are somewhat hamstrung by their legacy core premium price product.” United Online, which was formed in 2001 by the merger of Juno Online and NetZero, carved out a niche Mirsky describes as the Wal-Mart of the Internet, offering a no-frills dial-up service at $9.95 a month. The discounted pricing helped the company to compete against far larger, entrenched players like AOL and Earthlink, which were charging an additional $10 or more per month for their services. The subscriber base at Westlake Village-based United Online has been growing exponentially as a result, up 47 percent to 2.7 million subscribers as of the quarter ended Sept. 30, compared to the same period last year. For the same period in September, the company’s fiscal first quarter, United Online recorded net income of $8.9 million or $0.13 per diluted share, (after adjusting for a three-for-two stock split in November) on revenues of $88.8 million. That compares with earnings of $1.5 million or $0.02 per share on revenues of $58.1 million for the like period last year. In its guidance for the quarter ended December 30, 2003, United Online projected operating income of $13.4 million to $14.4 million on revenues ranging between $93 million and $95 million. That would compare with operating income before taxes of $5.2 million on revenues of $65.8 million for the same quarter last year. Higher-speed dial-up The recent growth, in part, has come from a new service, so-called “accelerated” dial-up, a speedier version offered at about $5 above the basic price, which now accounts for about 15 percent of United Online’s subscribers. But even as United Online has increased its penetration, rivals have moved into lower-priced alternatives. Broadband companies including SBC Communications Inc. and BellSouth Corp. are promoting cut-rate services and AOL announced plans to offer a $9.95 service dial-up service. That has led to the jitters on Wall Street. “I would call it a perception issue,” said Mirsky. “Their numbers have been very strong.” Many say the competition is more likely to impact premium dial-up services, not United Online, which never really competed with broadband and still can go toe-to-toe with competitors on basic dial-up, a theory backed up by the company’s performance. “We have been getting a hail storm of competition, and our business went up almost 50 percent in paid subscribers,” said Mark R. Goldston, United Online’s chairman and CEO. “And look at our profitability. So for me it was astonishing that our stock would have taken the hits it took, and it was based, in my view, on inane announcements.” That the stock price has remained depressed may be due to nothing more than a rash of profit taking by Wall Street, Goldston added, particularly since the company’s stock has been one of the winners on the street. Despite the recent declines, the company’s stock price is still trading at twice what it traded at last January. “I think there are a lot of people who made a lot of money during the 12-month period on United Online stock, who said, ‘hey, this has been great. I’m going to take my winnings and lock them in,'” Goldston said. “It doesn’t mean that’s the entire case, but there’s a strong argument to be made for that scenario.”

Affordable Housing Funds in Jeopardy Due to State Woes By SHELLY GARCIA Senior Reporter About $9.6 million of funding to help boost the city’s stock of affordable housing is in jeopardy as a result of the budget crisis in Sacramento. While the funding won’t halt development efforts, some say it could put a significant crimp in what was hailed as a major step toward solving the housing crisis in L.A. No one is yet certain of the fate of the funds, which come out of the city’s general fund, but officials say they are girding for the cutback. “We have tough times across the board and cuts are going to have to be made everywhere,” said Yusef Robb, spokesperson for Mayor James Hahn. “It was suggested it might be appropriate to reallocate that money for other uses.” The city almost three years ago established an Affordable Housing Trust Fund to help finance new construction of low-and moderate-income apartments by providing subsidies to developers. The fund, financed through a combination of federal, state and city money, was expected to reach $100 million by 2005 through a series of matching programs including a share of a $2.1 billion war chest established by the state’s Proposition 46. City officials point out that the Prop 46 funding is unaffected by the budget crisis. But the funds available are based on a formula that takes into consideration city funding contributed to the effort, and developers could be at a competitive disadvantage if the city’s funding is withdrawn. Sacramento’s budget woes could also affect tax credits available. So far, the Housing Trust Fund has spent about $26 million, leveraging more than $175 million worth of state and federal financing, tax credits and others for development. In 2003, the trust fund program generated about 1,100 new housing units.

FAMILY BUSINESS Owners Need to Develop Internal Customer Service By ERNEST A. DOUD JR. Taking care of the culture in a family business means cultivating an organizational environment that encourages success. Always remember: A going business is going because of its employees. Make your company a place where people want to work, want to excel, and are recognized and rewarded for their achievements. Much attention has been devoted to the importance of superior customer service. Making every aspect of your company “user friendly” for your customer is an important stepping stone on the path to business success. Here’s another interesting proposition: Your employees are your customers too. You know how much your business can suffer if you make things convenient for yourself, but inconvenient for your (external) customer. If your organization does not take care of its internal customers (the employees), they won’t be able or motivated to do a very good job of caring for the external customer. Here are some of the major factors that impact the quality of internal customer service. -Quality and Values Of Management and Supervision: It all starts here. The values of top management are easily picked up by immediate subordinates, and are quickly passed on down the chain of command. We’re all the same. Each of us is going to behave in ways we believe our boss will value. If you really value people, treat them with respect, and hold your direct subordinates to similar behavior, it will be reflected throughout the company. If you don’t … well, that will be reflected too. -Performance Management: There are always exceptions, but as a group: we want to know what is expected of us; we value having input to those expectations; we are willing to be held accountable for meeting agreed upon performance standards; we need timely and constructive feedback about our performance; and we’re anxious to improve. After all, our jobs depend on it. Many companies do performance appraisals that don’t lead anywhere? A good performance management process establishes performance criteria up front, regularly reviews measurable results, explores needs for improvement, develops action plans for making those improvements, and ends by establishing performance expectations for the next period. Anything short of that is a waste of time. A couple of other thoughts on this subject. First, make sure that family members in the business are included in the performance management process. They have as much need and right for guidance, improvement and feedback as do non-family member employees. Finally, for those who consistently fail to meet performance standards, if you’ve taken all the steps suggested above and have not met with success, you have done a responsible job of laying the groundwork for definitive disciplinary action. -Systems, Policies, and Procedures: When I was much younger, I once went to work “undercover” in a factory as part of a consulting assignment. The first thing I encountered was a guard standing under a sign that read: “No admittance without proper identification and safety gear”. The catch was that to check out the safety gear, I had to first get into the plant past the guard who was instructed not to let anyone in who didn’t have it. Don’t take anything for granted. Review your systems, policies and procedures to make sure you aren’t creating impossible (or even unnecessarily inconvenient) situations for your employees. -Recognition and Reward: In many businesses, criticisms are a dime a dozen and compliments are as rare as hen’s teeth. Recognition is one effective (and inexpensive) way to build a positive organization climate. Look as diligently for successes as for failures, and never underestimate the motivational power of a public pat on the back. If recognition by itself is a motivator, just see what happens when you mix in a reward system. Select behaviors and outcomes that spell success for your business, measure performance, and reward exceptional contributions to better than expected results. Cash is always nice (see below), but be creative. Your options are virtually unlimited. An extra paid day off, a dinner for the employee and his/her spouse (with babysitter costs thrown in), a name and picture on a plaque in the reception area, a preferred parking place for a month, a write-up in the house newsletter. -Performance-Based Incentive Pay: As a business owner you have a right to expect a fair return on your investment. Once that rate of return is exceeded, consider sharing the “excess” with the people who helped make it possible. The annual year-end bonus that is tied to nothing but your generosity has little motivational value. To be blunt, it is a waste of money in most cases. To realize a return on your investment in additional compensation, make it meaningful by tying cash incentives to pre-established performance measures. Ernest A. Doud Jr. is the managing partner of DoudHausnerVistar, a consulting practice focusing on assisting clients to successfully manage family/business dynamics. Listen to Customers, Suppliers to Keep Up In Competitive World “Common sense is not an acceptable substitute for tradition.” Years ago, fresh off of active duty in the Army, I went to work for a company that exemplified the real implications of that saying. The founder was an inventor, craftsman, and in a way a bit of an artist. He had invented a product and built a business around it. The trouble was, his customers were changing their ways and new and better technologies were rapidly rendering his product obsolete and overpriced. Dave’s company became one of the statistics on family business failures. One of those 70 to 75 percent of all family businesses that never make it to the second generation. When you look at that statistic, keep in mind that many of those businesses fall victim to the same dynamic. Common sense is not allowed to prevail over tradition. Here are five things you can do inexpensively that can make an important difference. First, listen to your customers. Make sure you are aware of even gradual shifts in their needs and preferences. Second, talk with your suppliers. They are tapping into the same markets, and for much of the same information. They are not different than you really. You both want the products and services you provide to be in tune with the demands of the ultimate consumer. So suppliers can represent a good source of market data. But you have to ask the right questions. Third, keep a close eye on your competitors. I don’t mean you should always copy them, because that assumes that they are right and you are wrong. Fifth, do a good job of the external diagnosis portion of your strategic planning process. Your future success depends in large measure on the assumptions you make about the external environment in which you operate. Ernest A. Doud Jr.

CSUN to Begin New Semester With Huge Financial Challenges By SLAV KANDYBA Staff Reporter As school officials prepare to mark the 10th anniversary of the earthquake that nearly destroyed its campus, Cal State Northridge is beginning 2004 on a bleak note but this time troubles are due entirely to finances and not Mother Nature. Rather than accepting students up to the last minute before a semester begins as has been a common practice, school officials will only accept students for the upcoming spring semester who applied between Oct. 1 and Nov. 30, 2003. The university is also perilously close to using up its reserves, which when they run out could result in fewer classes and layoffs, according to CSUN officials. “We truly don’t know what is going to happen in the next academic year,” said Carmen Ramos Chandler, CSUN spokeswoman. CSUN’s troubles are being caused by $328 million in budget cuts from the entire California State University system due to the current state’s fiscal woes. The initial budget cut of $304 million was included in former Gov. Davis’ CSU budget for 2003-04. Gov. Schwarzenegger announced last month he was cutting an additional $23.7 million, redirecting the funds to local governments. When the governor’s 2004-05 fiscal year budget proposals are released in the next few weeks, CSU funding is expected to be cut again, campus officials said. Plans for a CSU hiring freeze were outlined in a memorandum from the governor’s office to the office of CSU Chancellor Charles Reed last month. Across the CSU system, the budget cuts are having an effect. Because of the latest cut, Reed announced the Board of Trustees decided to cap enrollment growth at 3.3 percent throughout the system, a 1 percent drop from its 4.3 percent projection. The board chose to cut enrollment growth over eliminating outreach programs for low-income students, CSU officials said. As a “destination campus” CSUN is first choice for many applicants seeking admission to the CSU. California Master Plan for Higher Education, which went into effect in 1960, guarantees the top one-third of California’s graduating high school class a spot at one of the CSU’s 23 campuses. But the budget cuts may be chopping away at that plan. CSUN is operating on a budget of approximately $242 million this year. That figure includes about $8 million in reserves. For the next academic year, university officials said they will have scarce reserve money, if any, and probably not enough to patch up the budget gap. Because of this, the university may have to resort to drastic measures, including, but not limited to, cutting classes and layoffs, CSUN officials said. “This (next year) could be the most devastating,” said Cynthia Rawitch, the associate dean at the university’s College of Arts, Media and Communication. “There will be more students that want to come in to (CSUN) than we have room for.” CSUN, the third largest CSU campus, is one of the most severely hit by the budget cuts. Only San Diego State, which will not admit new students for the fall semester, is having bigger problems, said Clara Potes-Fellow, a CSU spokeswoman. “At a certain point you can’t continue to grow and not have the dollars,” said William Watkins, CSUN’s associate vice president and dean of students. For those who are able to get into CSUN, tuition has increased drastically in recent years. The undergraduate tuition fee at CSUN was $714 for full-time students in the late 90s. In 2002-03, the fee was raised to $786 per semester and in 2003-04 it stands at $1,023. “I think it’s a sign of the times when it comes to higher education,” said Marcus Vanderberg, a former CSUN student, now attending Santa Monica College, who was turned away for enrollment this spring. “I can’t argue with the increased fees but turning away students is pretty crazy. It’s meant for the students in California,” he said. CSUN’s Chandler said the university is pushing its fundraising efforts and departments will scrutinize purchases, before considering laying off employees.