BLOOMBERG BRIEFING Number of the day Hear here “Guys say, ‘Gee, I think that Pinterest is only for women. I want to go where there are people like me.’ ” John Manoogian III, co-founder of social $2.5 million advertising firm 140 Proof, on male-oriented image-sharing sites like MANteresting, Du- That’s how much the Finnish mo- depins, PunchPin, Gentlemint and Dart- bile-game developer Supercell is itup. Pinterest is the third-largest social Paul Sakuma / Associated Press 2008 generating in sales of virtual goods network after Facebook and Twitter, with every day. The startup rolled out 40 million users — mostly women — and lots Heads up two popular titles last summer, the of imitators. While it focuses on fashion, Electronic Arts reports quarterly earnings on medieval tower-defense game fingernail art and rainbow fruit kabobs, MAN- Tuesday, and analysts expect net income to drop "Clash of Clans" and the crop- teresting leans toward muscle cars, WD-40 31 percent to $275 million from a year earlier. Sales tending "Hay Day." Both free apps and bacon pancakes. Story on page D2. may slip 24 percent to $1.04 billion. The Redwood feature vivid graphics and addictive City company is restructuring to focus on mobile play, attracting a combined 8.5 Supercell games while still developing titles for a new gener- million registered users and putting The free app “Clash of ation of consoles. Last month EA said it was cut- the pair at the top of Apple’s iOS Clans” is at the top of Bloomberg Market Report ting jobs and would shut down three games devel- game charts since December. Apple’s iOS game charts. More on Page D4 oped for Facebook. Business Report The Chronicle with

San Francisco Chronicle and SFGate.com | Sunday, May 5, 2013 | Section D Prize money an incentive for building better robot

In the days after the Fukushima nuclear di- saster in 2011, the Japanese government sent robots into contaminated reactors and turbines to survey damage, measure radiation and move hazardous debris. Robots also sifted through rubble after the terrorist attacks of JAMES Sept. 11, and disarm- ed or detonated TEMPLE explosives in Af- Dot- ghanistan. Commentary But the promise of such machines to aid in the prevention or aftermath of disas- Photos by Michael Short / Special to The Chronicle ters is still rudimentary. They’re limited by the Blackbird Guitars founder Jon Luttwak checks on an assortment of guitars in varying states of production need to navigate terrain cluttered with wreck- in his shop on Folsom. The shop makes custom carbon fiber guitars at the Mission District location. age, manipulate an unpredictable array of ob- jects and maintain remote connections in ex- S.F. MANUFACTURING treme conditions, among many other challenges. The Defense Advanced Research Projects Agency wants to change all that. And it’s putting up the money to make it happen. Shopping local Temple continues on D5 What college grads is going global face in job market

By Caleb Garling Students graduating from college in the next few weeks face a more uncertain job market Imagine a Chinese college student shopping than they did just a few months ago. for school supplies in Beijing as she gets ready to When the National Association of Colleges start classes. She comes across some stylish mes- and Employers surveyed employers in the fall, senger bags. Eventually, her decision is made in they expected to favor a bag because it has the logo “SFMade” on KATHLEEN hire 13 percent more the side. students from the That’s the vision for SFMade, a nonprofit PENDER class of 2013 than group dedicated to reinvigorating the manufac- Net Worth the class of 2012. turing industry in San Francisco. A free member- But when it polled ship gives manufacturers not only access to myri- them again in Feb- ad business resources, but a voice in the expen- ruary and March, sive and competitive Bay Area economy. they expected to “It’s terrific we have a trade association that hire only 2.1 percent can give (manufacturers) a louder voice, that Gabe Daniels sands down the edges of a fret more. doesn’t get drowned out by Silicon Valley tech,” board on the body of a Lucky 13 guitar. “The momentum says Keith Greggor, CEO of Anchor Brewing Co. for new college This week, the SFMade label will be front and manufacturers work against skyrocketing rents hires seems to have dwindled in the last few center during SFMade Week. Manufacturers will and ever-rising costs of living. Redevelopment months,” says Edwin Koc, the association’s open their factory doors and give San Francis- and water on three sides constrains the available research director. He guesses the payroll tax cans a chance to check out the production lines space for factories in the first place. increase and federal budget cuts that took effect and latest products. Accordingly, the type of manufacturing that at the start of the year were to blame. Making goods in a big city isn’t easy. Local SFMade continues on D7 Although the April employment report is- Pender continues on D5

AUTOMAKERS A tale of 2 high-tech car companies As Tesla prepares to report its first quarterly profit, Fisker struggles and appears headed for bankruptcy

By David R. Baker shared similar dreams. Both Analysts credit differences in wanted to make plug-in cars strategy and timing. There’s Come Wednesday,Tesla that could snare buyers also an element of luck. Fisker, Motors will report its first prof- through sheer sex appeal, after all, lost a shipment of more itable quarter ever, as drivers something the previous wave of than 330 cars to Hurricane snap up the company’s pricey electric vehicles never tried. Sandy last year when the storm and powerful electric cars. Both marketed to the rich, try- plowed into the New Jersey port Meanwhile Tesla’s onetime ing to initially sell small num- facility where the vehicles were rival, Fisker Automotive, is bers of very expensive cars parked. expected to file for bankruptcy before rolling out more afford- More importantly, however, any day now. Based in Ana- able models over time. Both analysts point to differences in heim, Fisker fired most of its received big government loans the cars each company pro- staff last month and hasn’t built to make those dreams real. duced. Fisker Automotive a car this year. So why is Tesla thriving Tesla’s Model S, introduced The Fisker Karma, introduced at the 2008 Detroit Auto Show, The two California startups while Fisker fades out? Cars continues on D7 is a hybrid. The company is facing bankruptcy. San Francisco Chronicle and SFGate.com | Sunday, May 5, 2013 | D7 BUSINESS The Chronicle with

chased by Consumer Reports died and had to High-tech car be towed away from the track before the official driving test even began. companies see “Our Fisker Karma cost us $107,850. It is su- per sleek, high-tech — different fates and now it’s broken,” the product rating service reported on its blog. “We Cars from page D1 executive officer of the buy about 80 cars a year Edmunds.com auto in- Sarah Rice / Special to The Chronicle 2011 and this is the first time in last summer, has received formation service. “When The distinctive Fisker Karma, above, made a big splash at auto shows. Tesla’s memory that we have had mostly stellar reviews for you think about Fisker Model S, below, the company’s second car, is less showy than its Roadster. a car that is undriveable its performance, comfort and Tesla, the remarkable before it has finished our and quality. Priced from thing is that Tesla is still check-in process.” roughly $70,000 to around.” $95,000, it now outsells From its beginning in Public scrutiny comparable luxury se- 2003, Tesla CEO Elon Tesla’s first car, the dans from such estab- Musk focused on build- Roadster, went through lished brands as Audi and ing pure electric cars. The two recalls as well, one to BMW and has fast be- Palo Alto company’s two Photo caption Dummy text goes here. fix rear bolts improperly come a status symbol cars to date, the Roadster Dummy text goes here. Dummy text installed by Lotus, the among well-heeled Cali- and the Model S, run on goes here. Dummy text goes here. other to better protect a fornians. nothing but batteries. cable for the car’s back-up Fisker took a different power system. But Tesla Glitches and bugs approach, choosing to Mike Kepka / The Chronicle 2012 had the good fortune to The $100,000 Fisker make advanced hybrids recall those cars in 2009 Karma, in contrast, devel- instead. For the first 32 At the same time, both A123 Systems filed for and 2010, before govern- oped a reputation for miles of a trip, the Karma Tesla and Fisker planned bankruptcy in 2012, Fisk- ment loans to green-tech glitches and bugs. Re- operates as an electric car. to move production in- er was stuck. The compa- companies had become viewers complained Then it switches on a house for their second car ny hasn’t built a car since. the focus of intense public about its cramped interi- gasoline-powered engine. models, opening factories “They had a very dif- scrutiny. Fisker wasn’t so or, hefty weight and noisy At one point, the two in the United States. And ferent approach to how lucky. engine. One Karma broke companies were partners. due to the 2008 financial much they were willing to Despite a New York down on Consumer Re- In early 2007,Tesla hired crisis, each was able to Henrik Elon outsource,” said Andrea Times story this year that ports’ test track. Another a predecessor of Fisker buy an abandoned Amer- Fisker Musk James, research analyst criticized the Model S caught fire in a Bay Area Automotive — Fisker ican auto plant for a fire- with the Dougherty & Co. battery pack’s perfor- grocery store parking lot. Coachbuild — to design sale price. Tesla got the the loan agreement.) investment bank. “Fisker mance in cold weather, “Most of us who review an all-electric sedan that New United Motor Manu- For all the similarities, put the parts together, but Tesla’s sedan has so far cars for a living would say would follow production facturing Inc. facility in however, key differences a lot of the parts were built a reputation for the Tesla Model S is a of the Roadster. Six Fremont for $42 million, separated the companies. designed individually quality. Anwyl said the better product and a months later, Fisker kicking in an additional Fisker’s founder and and separately. The prob- company, which today better value than the Coachbuild and another $17 million for some of the namesake is Henrik Fisk- lem with doing that is you employs about 3,000 Fisker Karma,” said Jack company, Quantum Fuel plant’s equipment. Fisker er, a well-respected car have no control when people, used its experi- Nerad, editorial director Systems Technologies bought the Boxwood designer. He gave the things go wrong.” ences with the limited- and executive analyst at Worldwide, formed Fisk- Road Plant in Delaware Karma a distinctive shape And for Fisker, quality edition Roadster to work Kelley Blue Book. “But er Automotive as a joint from General Motors for — a marriage of hot rod became a big issue. out the kinks in its tech- there’s more to it than venture. So in February $20 million. and rocket ship — that The company missed nology. that.” 2008, Tesla sued Fisker And in both cases, the grabbed attention at auto several release dates for “They brought out the Both businesses start- for breach of contract, federal government shows. But his company the Karma, finally ship- sports car, and they didn’t ed out facing long odds. saying the company had helped. Tesla won a relied on partners for ping the car in 2011. It was really have any volume New car companies rarely taken Tesla’s ideas and $465 million loan from a much of the car’s tech- recalled twice, once for a expectations there,” he survive, even when their trade secrets to set itself Department of Energy nology and used many faulty fan unit and again said. “It was all about cars feature familiar, up as a competitor. An program encouraging parts off the shelf. The for a coolant leak that testing things out. It al- gasoline-powered en- arbitrator ruled in Fisk- auto companies to build Karma’s gasoline motor, could lead to a battery lowed them to tiptoe into gines. Global companies er’s favor. cleaner, advanced-tech- for example, came from fire. One Bay Area dealer- the car business. There with intricate supply nology cars. The same GM. A123 Systems in ship received five Karmas Outsourced production was a lot of learning going chains and vast dealer program agreed to lend Massachusetts supplied in early 2012, only to see on there.” networks dominate the Both companies hired Fisker $529 million. (The the battery pack. four of them quickly market. someone else to build company received At first, this looked like develop software glitches. “To put it in perspec- their first car. Tesla con- $192 million before the a good way to keep costs The Consumer Reports David R. Baker is a San tive, the normal scenario tracted with Britain’s Energy Department froze down. But it meant that incident in March 2012 Francisco Chronicle Staff for new car companies is fabled Lotus, while Fisker the loan, noting that Fisk- Fisker couldn’t solve seriously damaged the Writer. E-mail: dbaker@ that they don’t make it,” hired Valmet Automotive er had missed production quality-control problems car’s already shaky rep- sfchronicle.com Twitter: said Jeremy Anwyl, chief in Finland. milestones required by on its own. And when utation. The Karma pur- @DavidBakerSF

SFMade Week Shakira Simley says that Label aims to boost local goods among its various en- San Francisco’s maker culture shows off its wares all terprises, Bi-Rite employs SFMade from page D1 giant Twitter to keep its week with a series of tours, discussions and, of course, a more than 250 people in headquarters in S0Ma as party. San Francisco. A second has developed recently is an example. Tours: Choose from among five to 10 factory/workplace store opened on Divisade- what Janet Lees, senior “We don’t see those,” he tours at various times Monday through Friday. Among ro in March, but currently director of SFMade, calls says, though he readily the businesses taking part: Rickshaw Bags, Blackbird the SFMade member is “artisanal manufactur- acknowledges Twitter has Guitars, Anchor Brewing, Mission Bicycle and T-We Tea. content to sell its branded ing” — goods made in alarger impact the city’s Discussions: The Intersection of Design, Craft and products only through its small, customizable finances. Technology: 6 p.m. Monday, Tech Shop Annex, 910 How- own stores rather than batches. While more recent ard St. Making it in SF — Understanding and Leveraging seek out larger channels That can mean quality payroll tax breaks by the Local Resources and Networks: Tuesday, 6 p.m., Tech such as Whole Foods. products, but ones that city will make Timbuk2’s Shop, 926 Howard St. By contrast, Anchor carry higher price tags. tax burden “more favor- Party/Fundraiser: "Ramp It Up! Making It Real" Wed- Steam’s beers are now Yet with the boom in the able,” Meneghetti says nesday, 6 p.m., Heath Ceramics, 2900 18th St. sold in 17 countries. The high-tech sector and a that moving the San Fran- company would have run More information: www.sfmade.org generally healthy San Lance Iversen / The Chronicle cisco factory to the out- out of room in its bottling Francisco economy, Lees A sign at the Timbuk2 skirts of the Bay Area plant in the next two said, those price-points shop says its products would be far cheaper in years, Greggor says. But are supportable for now. are made locally. terms of property ex- campaign — is use of the SFMade is aware of with support from pense. But he says that Brooklyn Navy Yard. The such a possibility. “Eat SFMade, Anchor worked ‘Final transformation’ “It’s important that The financial benefit would be industrial area is run by a while the buffet is full,” with the city and the San To be labeled SFMade, Mission not just be for outweighed by losing the nonprofit group. The idea Sofis says, but adds: Francisco Giants to devel- Lees says, the “final trans- bridge ’n’ tunnelers and SFMade distinction — is to lower building and “While we’re feasting, we op plans for another fac- formation” of the product dot-commers.” and the available talent rehab costs for industrial need to be managing the tory in a new develop- must happen within city pool to manufacture and real estate and create back end of the house.” ment just south of AT&T limits. So though Joe Web sales market the high-end bags. industrial-specific areas SFMade advises its Park. Luttwak’s Blackbird Timbuk2, one of “We’ve learned to live less subject to sharp eco- members on how to navi- “In search of trying to Guitars sources materials SFMade’s larger mem- here and adapt,” he says. nomic fluctuations. gate regulations and taxes squeeze out a few more from around the world, it bers, was founded by a “We’ve never considered Asimilar project would and manage capital. Com- dollars, moving is not makes the handcrafted bike messenger in 1989 moving.” be well-suited for under- panies that build custom- really within our strategic instruments in the Mis- and its messenger-style SFMade executive developed, yet industri- ized goods sold through aim,” he says. “The over- sion. bags, it likes to say, have director Kate Sofis points ally zoned areas, like the their websites usually riding concern was stay- The carbon fiber-body since become “the un- out that certain sectors, Central Waterfront and don’t build product until ing in the city.” guitars and ukuleles official briefcase of high like food and beverage, the Bayview area, she they receive an order — represent something of an tech culture.” Today face a different hurdle: a says. avoiding inventory sur- Next generation emblematic crossroads. roughly 95 percent of the dearth of contract manu- pluses. SFMade is also think- While the instruments company’s sales are facturers — large factories Bursting bubble? Were the bottom to ing about the future. Lutt- are acoustic — a millenni- through its website; it that handle capital-in- The sometimes strug- drop out of the tech sector, wak notes that one of his ums-old technology — the opened just its second tensive tasks like packag- gling “maker” community some manufacturers most recent employees bodies are modeled on retail store on Saturday in ing food or bottling has a funny kind of sym- could in fact benefit. was hired via SFMade’s computers and built with Seattle. drinks. biotic relationship with Plunging rents and lower job board. “I didn’t know high-tech routers. “We Luttwak says his sales In the past, upstart the booming tech sector. cost of living might help people went anywhere can set up the guitar be- are not dependent on food companies could While the latter drives up an already-lean business but Craigslist anymore,” fore we cut anything,” he Silicon Valley’s health. focus on their product rents and can make man- —like those with a sizable he says. says. “Twenty years ago? Blackbird guitars does and not worry about ufacturing space scarce, customer base outside the Also, in partnership Good luck.” about half its business buying and managing its armies of workers are city. At least half of with youth development Such efficiencies re- through its website — heavy equipment. With- often significant patrons SFMade member compa- outfit Yuma Ventures, duce the floor space need- “The margins are through out that infrastructure of many locally made nies ship goods outside of this summer the group ed for his factory. When the roof” — and the other available, small food com- goods. Thus, with venture the United States, Sofis will launch YouthMade, a he started in 2005, he half through retailers panies here have trouble capital seemingly flowing says. program for low-income, designed the guitars with around the country. making that leap to larger in the streets, SFMade college-bound high school manufacturing in San Tony Meneghetti, Tim- production and distribu- companies can charge a The Bi-Rite model students to intern at about Francisco in mind. buk2’s chief operating tion. premium for their prod- The busy kitchens for 10 member companies. “That was the driver,” officer, notes that the city “If we don’t start to ucts. Bi-Rite Market are nestled “We’re preparing the he says. “We worked of San Francisco clearly build some of this, we’re But with that economy in and around the flagship next generation to think backward from there.” wants to create more jobs, going to lose the amazing spurring myriad apps of store on 18th Street, which about what manufactur- Luttwak joined but points out that its food companies we’re debatable business merit is soon to celebrate its ing will look like,” Lees SFMade during its in- under “conflicting pres- incubating,” Sofis says. and high-profile stock 50th anniversary. The says. ception and appreciates sures” when figuring out Asolution that has flops like those for Grou- smell of freshly cooked the resources and forums, how to build a business worked well for New York pon and Zynga, many local produce drift Caleb Garling is a San but also respects how it tax base. He points to City — where a group is worry that another burst- through the aisle as shop- Francisco Chronicle staff has become a loud voice sweetheart deals like the relaunching a similar ing tech bubble may be pers fill their baskets. writer. E-mail: cgarling@ for San Francisco makers. one the city cut with tech “Made in New York” around the corner. Community director sfchronicle.com