Photo courtesy of Carlyle Group

I interviewed Carlyle Group’s Sandra Horbach, who heads the private equity giant’s consumer and retail group, at the Women’s Alternative Investment Summit in New York last week. I shared a few highlights, and since the session drew terrific audience feedback, it’s worth giving you more of Horbach’s smart talk about managing through the recession, investing into the recovery, and navigating a career in private equity, where few women dare to tread.–Patricia Sellers

If you had to hand over your job to someone else tomorrow, what would you tell them?

Horbach: Be really good to your people. Develop a vision. Inspire confidence because at the end of the day, they must follow you. Listen well, and give them the resources and developmental tools they need. One of the things we do not do well in private equity is develop junior talent.

What’s the lesson of the last couple of years?

Horbach: Bubble bursts, for sure. There is too much of a good thing. There was too much leverage and not enough checks and balances.

Did you make investment decisions you shouldn’t have?

Horbach: We bought a company called Oriental Trading that had 30 years of predictable growth. It’s a direct marketer, and it had years of success and dividends and free cash flow. It looked like the most predictable business you could buy. But there was a dramatic shift in the industry. The U.S. Postal Service, which is essentially bankrupt because of the Internet, raised the price for catalogs 20% in one year. When you mail 350 million catalogs, that’s a very big nut to swallow. We had to take a lot of costs out of the business. We’re not going to have stellar returns. But in general, Carlyle stayed away from the mega-deals in the ‘07 time frame. Knock on wood, we have a very solid portfolio.

You bought Dunkin’ Brands for $2.5 billion in 2006 from a liquor company, Pernod Ricard (PDRDY), where it had been orphaned. How is Dunkin’s strategy now shifting?

Horbach: We went on an aggressive expansion plan. Since we bought the company, we’ve given the cash flows back to the business. We’ve doubled EBITDA.  We’ve added almost 2,500 new stores in the U.S. alone. For every Dunkin’ Donuts store we open, we create 25 jobs.

In a tough category–competing against McDonald’s (MCD) and Starbucks (SBUX).

Horbach: We hold our own. We’re No. 1 in coffee. We’re also investing internationally.  Most people would be surprised to know that Baskin-Robbins has 4000 stores outside the U.S. Dunkin’ Donuts has several thousands. We just opened our first 20 stores in China.

There’s a belief that the consumer is never going back to the level of spending of the past. So, how do you deal with that?

Horbach: The consumer sector accounts for two-thirds to 70% of our economy. You can’t ignore it. We’re shifting to areas where consumers have to spend. Retailers that are value-oriented can still be very attractive. You look for great brands that are under-penetrated. We own a brand called Philosophy, a personal-care business, and we’re growing our top line double digits as we expand distribution and grow awareness–in a very tough economy. You have to pick your spots.

Philosophy is the last company you bought. That was in 2007. Why have you not acquired anything since then?

Horbach: We looked at a lot of things, But credit dried up completely. You couldn’t even find a banker. They wouldn’t return your phone calls. And we weren’t sure where the bottom was. No one was. Now we’re seeing multi-billion deals with high levels of leverage, at attractive rates. We’re back in business. We’re excited about playing offense again.

Do you feel confident that we’ve hit bottom?

Horbach: I believe that we’ve hit bottom.

What have you learned from Lou Gerstner, the former CEO of IBM (IBM), who is on the Carlyle investment committee?

Horbach: I talk to Lou a lot. His office is right next to mine. Very early on, Lou and several other members of our senior team were very aggressive about how bad it was going to get. “You have to take action now! You have to start cutting now! You have to evaluate your CEOs!” He said, “There are good-time CEOs and bad-time CEOs.” Good-time CEOs look good when the market is going up and everyone is acquiring things. But they don’t look so good when markets do down. We probably turned over 40% of our CEOs.

What is Lou saying now?

Horbach: Six months ago, Lou said, ‘Okay, now we have to start playing offense.” So, we are. The management teams that start to play offense will be so much better positioned when things start to pick up.

So you’re not looking for good-time CEOs yet, but rather, hybrid CEOs?

Horbach: Well, none of us expect a robust revenue environment. We’re calling it “the revenue-less recovery.” We’re thinking that there’s going to be a lot of M&A activity. Everyone is looking for share and global opportunities.

How might the private-equity industry attract more women?

Horbach: In order to be successful at anything, you have to love what you do. I think a lot of women have gone into private equity because it’s the right thing to do, or they think, “I’m going to make a lot of money.” Hedge funds, same sort of thing. Women have to step back and know what skills they need.

So, what are those skills?

Horbach: You have to be able to work in a very male-oriented environment and not take it personally. Women have to be adaptable–actually, that’s a strength women bring. But you need to be tough. You need to speak your mind. And you have to be realistic about how hard it is. Women often think that when they’re doing a great job, people will notice. Women don’t self-promote as much as men do. You have to network. And if you’re doing great work, make sure that your bosses notice.

I was not in Germany for the fall of the Berlin Wall 20 years ago today. But I got a front seat to business history-in-the-making three months later, when I went to East Germany to report a story about Coca-Cola’s (KO) aggressive ramp-up in Europe following the Communist collapse.

It seems like yesterday.

Talk about a capitalist invasion. I remember how euphoric–genuinely euphoric–East German consumers and shop-owners were to suddenly have access to not only Coca-Cola but “luxuries” like bananas. Bananas! East Germans were, until the Wall came down, practically as unfamiliar with bananas as they were with Fortune magazine.

The visit was surreal, in so many ways. I flew on the Coke plane (no shame in corporate jets back then) on a glorious sunny Sunday from Weimar, a gray city in East Germany, to Nice, in France. Polly Howes, the young and eager Coke PR woman, and I then helicoptered over the deep-blue Mediterranean to Monte Carlo. Coke’s top brass was convening its senior managers and bottlers at Monaco’s elegant Hotel de Paris.

Walking into the bustling lobby, I ran into Don Keough, Coke’s president and Roberto Goizueta, the company’s CEO, who was wearing canary-colored trousers. What a scene! It was stranger still since Goizueta, whom I had come to know, was a quiet, cerebral chemical engineer. Not the yellow pants type of guy. But he was celebrating that day. Here was a man who grew up in Havana and fled Cuba in 1960–now navigating Coca-Cola, the icon of global capitalism, into new markets, now free and open.

Coke’s “speed and seat-of-the-pants decision-making,” as I called it in my 1990 Fortune story, seemed to be just right at the time. Now, 20 years later, we can see how right Coke’s aggressive response really was. Coke’s market share of carbonated soft drinks in Germany stands at 39%. Pepsi’s (PEP) share is 6%, according to Beverage Digest. Consumption of Coke products has risen significantly. And one fellow who was, back when the Wall fell, key to Coke’s European expansion, has risen as well. He is Muhtar Kent, now Coke’s chairman and CEO.

Here’s an excerpt from my 1990 story, “Coke Gets Off its Can in Europe”:

[Coke's bottling plan in] Dunkirk increased production in a flash after the Berlin Wall fell last November. ”If it hadn’t been for this plant, we wouldn’t have been able to move into East Germany so quickly,” says Goizueta. Coca-Cola has left competitors in the dust in East Germany, and the chairman predicts that annual sales there should reach 100 million cases — around $1 billion at retail — in two years or so.

Coke’s success in East Germany shows the increasing importance of speed and seat-of-the-pants decision-making. Heinz Wiezorek, 51, president of the German division, was traveling in Rochester, New York, last November when he saw the Wall fall on TV. He called his West Berlin bottler and said, ”Get Coke out there!” Border crossers in their sputtering Wartburg and Trabant automobiles received free cases of Coke, while East Germans on foot got six-packs and single cans. At one checkpoint, delivery trucks dispensed over 70,000 cans in a few hours. To Wiezorek, diving in fast was crucial. ”There won’t be two colas in restaurants and small outlets,” he says. ”They’ll choose the one that’s first in the market.”

One day in January while strolling East Berlin’s Alexanderplatz, Wiezorek and Coca-Cola senior vice president Doug Ivester (since promoted to head Coca-Cola USA) made a quick, risky decision to accept East German currency, even though they then couldn’t convert it into Western money. Coke and other companies selling in soft-currency markets instead have almost always countertraded, exchanging their goods for local ones, then selling the local products in the West for hard cash. Coca-Cola plans to invest $140 million in East German bottlers, which will package and sell Coke locally.

Ivester, by the way, went onto great success, as Goizueta’s No. 2. After Goizueta died of lung cancer in 1997, Ivester moved up to CEO–and lasted just two years before the board pushed him out. After a couple of poor CEOs and years of disappointing results, Coke finally got back on track under chief Neville Isdell. And now Kent is steering Coke aggressively again.

by Patricia Sellers

Greetings from Atlanta. I’m here for Fortune’s “Most Powerful Women Evening With…” Atlanta is tonight’s stop in a series of regional dinners that we’re hosting annually in addition to the main event, the Most Powerful Women Summit. I’ll be interviewing Food Network star Paula Deen, the silver-haired, Southern-cookin’ entrepreneur and star of the Food Network. Also with us: the top women execs at companies like Coca-Cola (KO), Home Depot (HD), Delta Airlines, (DAL), UPS (UPS), and Turner Broadcasting, which is part of Fortune’s parent, Time Warner (TWX).

It’s fascinating to be here since I grew up, career-wise, learning about business from two Atlanta-based Fortune 500 giants: Home Depot, back in the ’80s and ’90s when co-founders Bernie Marcus and Arthur Blank were running the place, and Coca-Cola, when the late CEO Roberto Goizueta built Coke to be Fortune’s No. 1 Most Admired Company.

Isn’t it interesting that a false sense of invincibility and arrogance eventually poisoned both corporate cultures? Coke and Home Depot fell off the tracks, struggled through lines of wrong CEOs, and had their comeuppance. Only after painful cost-cutting and serious strategic rethinking did they begin to return to prominence.

I spent this morning at Coke with some folks who’ve been key to its recovery. One is SVP Wendy Clark, a hotshot marketer who joined Coke last year from AT&T (ATT) and this year made Fortune’s “Women to Watch” list in the Most Powerful Women issue. I also caught up with Clyde Tuggle, Coke’s global communications chief whom I’ve known since the ’80s, the Goizueta days.

Talking with Tuggle reminded me how radically marketing has changed. In May, he told me, he asked Coke’s social media experts to come up with “a big idea” that would be unique and turn consumers into brand marketers–what smart brand-owners must do today. The team delivered an idea called Expedition 206. It’s an online contest in which consumers vote, via Facebook and Twitter and other social networks, to elect a trio who will visit every country in the world where Coke sells its products. (Yes, Coke is in 206 countries.). Consumers have selected three finalist trios–who, if you look at the Expedition 206 site, you’ll see are from all around the world, literally. The winner will emerge in two weeks. Starting January 1, that trio will spend 365 days globetrotting “on a mission, quite simply, to find happiness,” as Tuggle puts it.

It’s a gimmick, but maybe a clever one in this new era when consumers, not companies, control public image.  “We have to move into a space where we let go,” as Tuggle says. “The world gets to experience the brand through the eyes of the consumer, not the company.”

Indeed, the consumer is now the chief marketing and communication officer.

“You’re seeing less of Ford and G.M. and more of Oscar Mayer and Kellogg.”

– George Belch, chairman of the marketing department at San Diego State University, in the New York Times. While financial services companies like Citigroup (C) and automakers like Ford (F) and General Motors (GM) are cutting ad budgets, companies like Kellogg (K) and Kraft (KFT), maker of Oscar Mayer products, are stepping into the advertising void to pitch their basic food brands to budget-minded consumers. –Jessica Shambora

Hey, Starbucks lovers–and critics too! Have you taken the Starbucks Via Taste Challenge? The drip vs. instant coffee faceoff began this morning in Starbucks (SBUX) stores across North America.

If you want to know the science (it involves micro-grinding) behind Starbucks’ new instant, check out this story today by my Fortune tech-writer colleague Michael Copeland. He talked with Andrew Linnemann, Starbucks’ director of green coffee quality and operations, whose mission these past two years has been to make Via worthy of Starbucks branding.

The mission is incomplete, as I see it: I did my own taste tests earlier this week and gave Via lukewarm reviews. So, what do you think of Via?

P.S. To read a barista’s advice to Starbucks CEO Howard Schultz, click here.

by Jessica Shambora

The 2009 Fortune Most Powerful Women in Business list is out today. You can find the 50 women, ranked in order, here.

Topping our charts: Pepsico (PEP) chairman and CEO Indra Nooyi. She’s been No. 1 in our rankings every year since 2006, when she ascended to the top job.

Last week, Nooyi sat down with Pattie and talked about leading a $43 billion global corporation in the “age of thrift,” as she calls this challenging era:

Our post, “Why CEOs should do housework,” drew a bunch of interesting comments, including one from Dr. LPC in Canterbury, England, who cites research showing that “couples where husbands contribute to housework are also more likely to have additional children.” Dr. LPC surmises that this “must result from all that additional sex they get…”

Whatever.

That August 11 Postcard was about a new book, due out next month, called Women Want More, by Boston Consulting Group senior partner Michael Silverstein. The book is a Women’s marketer’s guide to capturing “the world’s largest and fastest-growing market.” Last week I had lunch with Silverstein–who labeled me a “fast-tracker,” which is one of his six consumer categories. And I guess it’s the best one to be in since fast-trackers, 24% of the female population, comprise 34% of female earned income. Fast-trackers seek adventure and learning, the marketing man says.

Okay, as I sought more learning on this topic of female buying power (women spend over 70% of consumer dollars globally, I learned, and are outpacing men in income growth), I dove into the data he left for me. One chart, in particular, struck me as practically as interesting as Silverstein’s stats about where in the world husbands do housework and where they don’t.

Practically as interesting–and much more practical, if you’re a marketer.

When Silverstein and his BCG colleagues asked 12,000 women in 22 countries about her “favorite brands,” here are the ones that got the most mentions, in order: Nike (NKE), Apple (AAPL), Sony (SNE), and Banana Republic and its retail sister, Gap (GPS). After those came Adidas (ADDDF), Target (TGT), and Dove (UL).

Investment companies and banks and automakers, Silverstein says, don’t stand a chance in this “favorite brand” tally because women, the BCG research shows, say those businesses don’t understand their needs. “The providers effectively diss women,” Silverstein says.

Hmm, I would add that financial firms and car companies often confuse customers more than simplify. They complicate their offerings. Nike, Apple and the other favorites score because their pitches are clear and direct, even when the products are complex.

And what do women want more of most of all? Time.

That, we all could’ve guessed!

Home Depot (HD) hammered it home this morning–earnings beat expectations, and the stock is up 3%, to just under $27. Nice surprise after Lowe’s (LOW) disappointed yesterday. The No. 2 home-improvement retailer reported a 19% profit dip in its second quarter and, even more worrisome to investors, a 9.5% decline in same-store sales.

So what is Home Depot, the market leader, doing right? The new Fortune, hitting newsstands this week, delivers some intelligence on that. My colleague Geoff Colvin did a comprehensive interview with Home Depot CFO Carol Tome, who has seen it all. I remember when Tome joined Home Depot from Riverwood International Corp., a packaging and paper products company, 14 years ago. (I was a student of Home Depot back then.) We’ve followed Tome via our Most Powerful Women tracking and watched her weather the tumult as the mega-retailer has gone through four CEOs. Tome has worked for Bernice Marcus, Arthur Blank, Bob Nardelli, and Frank Blake.

Now Blake is Home Depot’s chief, and Tome has an expanding purview. (She’s also on the UPS (UPS) board, where she chairs the audit committee, and last year she joined the board of the Federal Reserve Bank of Atlanta, where she’s deputy chair.) Blake and Tome and their team are doing a lot of smart things. Since you probably don’t yet have your new Fortune in hand and since the Tome interview won’t be on Fortune.com and CNNMoney.com until Thursday, here’s a preview of what the savvy survivor says about “Renovating Home Depot”:

Recognize what you’re good at. “We have a three-legged strategy, and you will recognize this from Jim Collins’ book Good to Great. What are we passionate about? We are passionate about our customers. What are we the best at? Product authority. And what drives our economic engine? Productivity and efficiency. It is no longer driven by square-footage growth. We’re still going to open stores–we’re opening 13 stores this year. But it’s not about that any longer. It’s about how do we get more sales per square foot in the existing stores.”

Rethink your people strategy. “We introduced something we call power hours inside our stores. In the hours when traffic is heaviest, we stop all activity that is not customer-facing–pack-down activities, say–and spend 100% of our time taking care of customers…Even if you’re in the receiving area, if you’re in the vault, you come out on the floor.”

Remember that  the devil is in the details. “The professional contractor is a very important customers to us–3% of our transactions and about 30% of our business. We serve coffee at the pro desk. By changing the brand of coffee–not stopping the coffee, because coffee is important–but by changing the brand, we will save our company $500,000. It doesn’t take too many $500,000 decisions to make a penny per share.”

P.S. Credit Suisse (CS) analyst Gary Balter today reaffirmed his bullish view and raised his estimates on Home Depot, noting that HD’s U.S. quarterly same-store sales, while down 8.5% company-wide and down 6.9% in the U.S., beat Lowe’s for the first time in memory. Guess that cheap coffee isn’t turning off too many Home Depot customers.

The female economy is on my mind. That’s the subject of an upcoming book, Women Want More, that I told you about in yesterday’s post, “Why CEOs should do housework.”

A survey of 12,000 female consumers, by the Boston Consulting Group, was conducted to research the book by BCG marketing expert Michael Silverstein–as I was telling Tory Burch and our dinner companions last evening. The female economy is of interest to Burch since she, in a scant five years, has built a fashion empire with 18 boutiques and sales through 450 other retail outlets. (She doesn’t disclose revenues, but Mexico-based Tresalia Capital last month invested in Tory Burch LLC, giving her company a valuation reportedly around $600 million).

Burch is expanding her business, opening her first boutique abroad, in Japan, in December. So when I told her about Silverstein’s intriguing global research—such as his finding that Brazilian women are most optimistic of all women about their financial prospects–she was eager to hear more.

So here, for Burch and other global-minded marketers, are a few more stats, from BCG’s recent research…

Women in Mexico fall right behind Brazilians in optimism about their own financial outlook. Five years from now, say 89% of them, their financial situation will be better than it is today.

Women in BRIC countries–China, India, Brazil, and Russia–are most optimistic about “the world, your country and community.” Chinese women express the most optimism: 82% expect improvement. Among American women surveyed, only 39% do.

And who are the most pessimistic worldwide? Japanese women–in terms of both their own financial prospects and their outlook on their country and the world.

Hmm, yesterday’s Postcard noted that Japanese husbands do fewer chores at home than men in the rest of the world. Do you think that Japanese women’s pessimism and their mates’ disregard, domestically speaking, have anything to do with each other?

Tuesday’s Guest Post by Starbucks barista Sun Min Kimes jolted Postcards readers like a pot of extra bold Joe. We got over 50 comments–the most comments, as well as the most traffic, of any Guest Post we’ve run except for “The Great Depression, as I remember” by Walt Stoiber.

She struck a chord. As one reader, Oliver in Chicago, said, “Move this person to the Executive suite ASAP!”

Thank you for the comments. We welcome them, always.

And in this case, we’re hoping that Howard Schultz, the man who built Starbucks (SBUX) and is now the company’s chairman and CEO, read his passionate employee’s–or as says, partner’s–good advice.

For Schultz and all the other folks rooting for a Starbucks turnaround, here are a few highlight comments:

Tom in Denver wrote: “PLEASE, Howard, dedicate just one register in the morning for drip coffee. I have a simple order: ‘Grande House.’” Several Starbucks managers replied that this idea is good in theory but not in practice–and not a path to better profitability.

Jim in Florida suggested more promotions to compete with an ever-more aggressive McDonald’s (MCD): “SBUX could probably get more business if they offered some more promos. McD’s has been giving out coupons for free breakfast sandwiches with purchase of a latte ($3 in my area). It ends up being not a bad deal, considering the latte itself is kind of pricey IMO.”

John, a former Starbucks manager in Philadelphia, griped that corporate is more “focused on communicating profit than they are communicating the side of Starbucks that matters.” He noted that “Howard Schultz went on a training rampage about 2 years ago.” But training has slipped, and “a store manager faced with mandatory spending cuts will likely cut training for a Shift Supervisor or Barista and put them directly on the floor.”

Kevin, a Starbucks store manager in Pittsburgh, agreed thay more training is needed, adding, “I have parters ready to attend the Starbucks Experience class but can’t because no one is available to teach it. What happened to Situational Leadership class, or Supervisory Skills class?”

And Donna in Christiansburg, Va. offers advice that I wholeheartedly agree with: “Please turn down the music. Sometimes it is so loud I can’t concentrate on what I’m reading or hear my partner’s conversation.”

Starbucks (SBUX) is one of our favorite topics on Postcards. We’re in the stores everyday. We vigilantly watch CEO Howard Schultz’s efforts to slash costs, revive the brand, treat employees respectfully, satisfy investors, and fight incursions by very aggressive McDonald’s (MCD) and Dunkin’ Donuts. Today’s Wall Street Journal has an interesting story about Starbucks’ latest efficiency efforts–which could compromise the brand “romance,” which Schultz has long said distinguishes Starbucks, and employee (or “partner”) morale. Sun Min Kimes, a behind-the-counter barista at a Starbucks in Ashburn, Virginia felt strongly enough about the struggles to write this Guest Post. We hope Howard Schultz reads it.

by Sun Min Kimes

I started working for Starbucks a couple of years ago, after I returned to the U.S. from Seoul.  I first moved to America 30 years ago, but my husband and I went back to my native country, South Korea, when my daughter–who is a writer-reporter at Fortune–left for college. Upon our return to Ashburn, Virginia, I wanted to get a part-time job, so I drove to the Starbucks near our house and filled out an application.

I was hired after my second interview. When I started the job, I was very nervous about the long lines of customers and complicated terms for everything. Although I came here from Korea many years ago, English is my second language. Sometimes, customers were frustrated if I took too long or made mistakes.  So I made my own homemade notebook of Starbucks recipes and studied it every night.

Eventually, I became comfortable at work. I began to see the same customers every day, and we became friends, even talking about our lives. I met a 45-year-old woman whose teenage son loves sports (like my children did), and a Filipino girl who thought she had to leave the states but received permission to stay.  There’s a gentleman whose wife is terminally ill–he comes in, sits down, and reads a book most days. I think being here comforts him.

Over time, I grew more interested in the company. In fact, many of us “partners” feel this way. We track what is happening through various blogs. We know the business has been going through tough times, so I was happy to hear that profits recently improved. However, I wish we could increase earnings without cutting costs.

It is very difficult sometimes when there are only two people on the floor doing everything. I think that Howard Schultz has made a lot of smart decisions, but I have some suggestions for him.

Howard, I think you have done a good job of being transparent, but it would be wonderful if you communicated more with the workers. I would like to get an internal newsletter, with information about what successful locations are doing, new products, and the company’s strategy. Additionally, customer service would improve if we received reeducation. I know many of us want the opportunity for advanced training.

I’ve heard that, in Seattle, you’re creating new “stealth coffee shops,” called 15th Avenue stores, without the Starbucks brand. Customers will see through this. Instead, why not empower–and incentivize–managers to appeal to their communities by sourcing food, music, and artwork from locals while sustaining our brand?

A few more suggestions: During the morning hours at busy stores, I think many of our customers would appreciate it if a single register were designated for drip coffee. And regarding new products: I just don’t think the company is successful in creating excitement. We’re told to provide samples, but I rarely see them in stores.

I know that Starbucks has been successful with social media, but I think you should reconsider your resistance to nationwide television advertising.  We need to work harder to create buzz.

Regarding our retail items: I haven’t seen sales data, but I question the strategy. The various mugs, stuffed animals, tumblers, etc. look colorful and add to the store’s ambiance, but they sit on our shelves forever.  We always end up marking them down. I think we should offer fewer items, and choose them more carefully.

Finally, you should develop a new plan to reward frequent visitors. Recognition is important to them.

These are pretty small ideas, and they are coming from someone who hasn’t been at Starbucks for that long. But even in my short time, I’ve become invested in the company. I love how it fosters diversity by bringing together people from different countries and walks of life.  After I left my native country for the second time, Starbucks gave me a community. I hope you can keep it thriving.

by Patricia Sellers

Reed Hastings, the founder and chief executive of Netflix (NFLX), came by our offices on Monday. He’s one of the more down-to-earth CEOs you’ll ever meet.

He’s a Bowdoin grad like my boss, Fortune managing editor Andy Serwer. Post-college, Hastings joined the Peace Corps and taught school in Swaziland. Then he played Silicon Valley start-up guy for a stretch and eventually struck gold with his movies-by-mail idea, aimed at easing the hassle of in-store drop-offs and pesky late fees.

He didn’t name his start-up “Movies by Mail” or anything like that to limit the company’s evolution — which helps explain why Netflix continues to grow briskly, even in this brutal environment. The guy had vision when he launched Netflix in 1999. The company went public in 2002 at $7.50 a share, and today the stock, at $45, isn’t far below its all-time high.

Netflix is due to announce quarterly earnings tomorrow after the closing bell, so we’ll see how well it’s riding the the digital revolution, as well as the bad economy. But the ride seems to be pretty smooth. Referring to subscribers, which today total more than 10 million, Hastings, 48, told us, “We were growing 25% when the economy was growing. We’re growing 25% now.”

Among the things that he and his team are doing right, the smartest may be choosing what they don’t want to be. As Hastings told me on Monday, he learned from Jim Collins, the renowned management guru, that it’s just as important to decide what not to do in business as it is to determine what to do.

Especially today, when change is happening so fast and unpredictably,  it’s critical to prioritize. For Hastings, this has meant not competing with Blockbuster at retail. That was smart, given that video-rental stores industry-wide are down to some 10,000, from 20,000 at the peak. “In five or 10 years, video stores will be gone,” Hastings predicts.

A more recent choice he made — “really hard,” he admitted — was deciding not to enter the ad-supported web-video fray against Hulu, YouTube (GOOG), and CBS.com (CBS). “Commercial-free subscription is where we can compete. It’s our best shot,” Hastings says. Netflix offers unlimited DVDs by mail and unlimited instant streaming to computers and TVs for a flat $8.95 a month.

Hastings decided not to compete with pay-per-view purveyors like HBO (TWX)  and cable companies. And recently, he opted not to go head to head against Redbox. That’s the fast-growing start-up that places kiosks–more than 15,000 to date — in McDonald’s (MCD), supermarkets and other heavy-traffic locales. Videos cost $1 a day.

Despite inordinate disruption and confusion around distribution — or maybe because of it — Hastings is clear about his game. An engineer by training and a Microsoft (MSFT) board member, he’s determined  to make video-watching more personal and satisfying — via advancing technology, of course.

Hastings looks forward to the day, a decade or less from now, when an Internet browser will be built into every television, he says. We’ll be calling up movies and channels and websites with a click of a button or just a spoken word: “Wizard of Oz.” Or “ESPN.” Or “Netflix.”

Take a look at my conversation with Hastings for more about how he sees the future…

by Patricia Sellers

David Ogilvy, arguably the most influential advertising man in history, died 10 years ago today.

Courtesy: Ogilvy & Mather

Measured by his creativity, Ogilvy was most famous for the man in the Hathaway shirt, his pitch for Rolls Royce (“At 60 mph, the loudest noise in this Rolls-Royce comes from the electric clock”), and his clever insight to market Dove soap as 1/4 cleansing cream.

But beyond the ads, this elegant and eclectic Brit pioneered consumer research, direct marketing–and built an industry-leading juggernaut, Ogilvy & Mather. Now owned by WPP Group (WPPGY), Ogilvy is the longtime brand steward for Fortune 500 companies such as Ford (F), IBM (IBM) and American Express (AXP).

I had the privilege of getting to know David Ogilvy in the ’80s and ’90s, when I was growing up at Fortune and writing about big-brand consumer-goods companies. We were at the Fortune 500 Forum in Charleston, S.C. in 1991 when I asked Ogilvy, then a vigorous 80-year-old, to share his advice for building and running a business.

Why I asked him, I can’t recall–maybe because he loved sharing his principles of management. In any case, I’m glad I did. I’ve kept his pencil-scrawled note in my desk drawer ever since. What better day than today to share it with you. So, here is David Ogilvy’s best business advice:

1. Remember that Abraham Lincoln spoke of life, liberty and the pursuit of happiness. He left out the pursuit of profit.

2. Remember the old Scottish motto: “Be happy while you’re living, for you are a long time dead.”

3. If you have to reduce your company’s payroll, don’t fire your people until you have cut your compensation and the compensation of your big-shots.

4. Define your corporate culture and your principles of management in writing. Don’t delegate this to a committee. Search all the parks in all your cities. You’ll find no statues of committees.

5. Stop cutting the quality of your products in search of bigger margins. The consumer always notices — and punishes you.

6. Never spend money on advertising which does not sell.

7. Bear in mind that the consumer is not a moron. She is your wife. Do not insult her intelligence.

David Ogilvy

Charleston

November 15, 1991

Google (GOOG) is barging into the business of computer operating systems—via Chrome, due next year. Microsoft (MSFT) is vigorously defending its turf–via Windows 7, its new operating system due in October. Simultaneously, Microsoft is striking at the heart of Google, via Bing. “We should have been earlier in search,” said CEO Steve Ballmer two weeks ago in France when asked to name his greatest regrets over the years.

We may be at a tipping point in tech. The spending will rise. So will the sparring. And as the sparks fly, have you noticed? Google and Microsoft both seem to be doing their own searching…to answer that most basic business question: Who am I?

Ballmer riffed on this question, actually, at the Cannes Lions International Advertising Festival. I did an  on-stage Q&A with him there (you can find details and video clips by searching “Ballmer” on Postcards‘ homepage), and afterwards, I followed him to a meeting with the Cannes “Young Lions.” These are rising-star marketers and creative execs age 3o and under. One of them asked: “What does Microsoft stand for?”

Ballmer seemed to love the question. “This is a real debate inside Microsoft,” he replied. “It’s rumored that we’re going to open retail stores,” he added, and then he surveyed the Young Lions about whether it would be wiser to call the stores “Microsoft” or “Windows.” Ballmer suggested that “Microsoft” means “software company” and “well-run business.” What does “Windows” mean? “Access” and “guide to technology,” he said.

Ballmer didn’t get what he hoped for in this mini-focus group. The young stars of the ad universe appeared evenly divided on the ideal name for the prospective retail outlets. Microsoft’s chief ended the discussion by asking: “How many people here use Macs?” Most in the room raised their hands. “Biased!” Ballmer bellowed.

For what it’s worth, we’ll likely see in October what Microsoft can do retail-wise. The company is mum on its plans, but it’s a pretty safe bet that stores will open this fall, accompanying the Windows 7 marketing onslaught. Retail is a gamble; except for Apple (AAPL), consumer tech giants have stumbled. Managing conflicts with existing retailers, like Best Buy (BBY), is tricky too. Moreover, who would bet that Microsoft, which has never oozed sex appeal or product-intro pizazz, would be good at this game?

Then again, Microsoft is redefining itself–or trying to, at least. To command its retail drive, the company recently recruited a heavy-hitter: David Porter, previously head of worldwide product distribution at DreamWorks Animation SKG (DWA). Before the movie gig, Porter spent 25 years at Wal-Mart (WMT).

One of the smartest takes on consumer tech retailing is a story that Fortune ran in 2007: “Why Apple is the best retailer in America.” It’s worth reading again.

The ideal career path may be: reaching the top of the corporate world, then taking time off for family when your kids need you most, and then jumping back into a primo job at a top-tier global company.

Impossible in this dreadful economy? Here’s someone who’s done it. Remember Jeanne Jackson? At Gap (GPS) in the 90s, she built Banana Republic and then went to help Wal-Mart (WMT) take Walmart.com from start-up stage. But after leaving Wal-Mart seven years ago, Jackson was out of the big game, except for board gigs at McDonald’s (MCD), Nordstrom (JWN), and Nike (NKE).

She’s back. Actually, I follow these Most Powerful Women (and Jackson was one, on our annual list a decade ago), but the announcement four months ago that she landed at Nike–as President, Direct to Consumer, reporting to the CEO–was so low-key that I’d missed it. A few days ago, I spotted Jackson’s name and Nike title on the participant list for our upcoming Fortune Most Powerful Women Summit. I popped her an email. We talked yesterday.

“I made a commitment to my family,” Jackson, 57, told me, explaining why she had dropped out for so long. Since 2001, when she joined the Nike board, Jackson actually had talked on and off with chairman Phil Knight and CEO Mark Parker about joining the company. But not until this year, when her son graduated from high school and her daughter accepted an internship in London, at Burberry, did she decide to jump.

She didn’t think the jump would be to Nike first thing. “I thought I’d do something related to private equity,” says Jackson, who has been quietly running her own private equity/consulting business, MSP Capital, out of Newport Beach, California for the past several years. She expected one of the companies she backed “would speak to me.” But nothing did. (Along with “some spectacular failures,” she says, she scored a couple of hits, including Pure Digital, which sells the Flip camera and recently was acquired by Cisco.)

As the global economy tanked, she felt ever more drawn to the thing that she has focused on throughout her career: strong brands. Says Jackson, who was at Disney (DIS) and Victoria’s Secret early on: “In this economy, consumers default to strong brands.” Now, in this new role that Nike CEO Parker created for her, she oversees the company’s global retail holdings. That includes some 3,500 franchised Nike stores, more than 600 wholly-owned Nike and Cole Haan stores, and five e-commerce sites. Some $3 billion in revenues annually travels through these “direct to consumer” channels.

And despite the global meltdown, Nike is performing well. Revenues reached $19.2 billion in the year ended May 31. Profits fell 21% after five years of 20%+ annual growth, but investors have stayed with the stock: It’s up nearly 40% in five years, while the S&P has dropped 20%. The world’s largest athletic shoe and apparel marketer, Nike has smartly reduced spending and layers of management, while selectively adding key talent like Jackson.

Of course, she’s contending with the retail slowdown–Nike too has cut new-store expansion. But in some ways, Jackson is returning to the sort of thing she did inside Gap and Wal-Mart: playing entrepreneur inside a corporation. Last week, she opened the first Hurley/Converse/Nike store, in Orange County, California. The Hurley brand is for surfers and skateboarders and other cool kids. Converse, she says, has particularly broad appeal–from high school kids to musicians to “my mother-in-law, who is 87 years old and wears Converse.”

The family dynamic–usually a complication when executives, especially women, return to big jobs–is alright for Jackson. At least until her son heads off to SMU this fall, she’s commuting from California to Oregon, where Nike is based. Husband Doug, a retired airline pilot, is flexible and always has been. “I could take any job and he would just relocate,” Jackson says. (He has his own passion: cars. He owns the Batmobile–one of four built in 1966 for Batman on TV.)

Jackson, meanwhile, has simplified her business extracurriculars. She quit the boards of Nordstrom and Harrah’s Entertainment, as well as Nike. The one board she’s staying on: McDonald’s. After all, you can never get enough lessons in smart retailing.

by Patricia Sellers

As speculation ever swirls about Yahoo (YHOO) and Microsoft (MSFT) joining forces to give Google (GOOG) a better run for its money in search, one party in the on-and-off  negotiations has been notably evasive this week. “If we ever have a deal with Microsoft, it will be announced publicly and until we do, we have nothing to say,” declared Yahoo CEO Carol Bartz at the company’s shareholders meeting yesterday in Santa Clara, California.

A world away in France, one day before, I did an onstage interview with Steve Ballmer, Microsoft’s CEO, at the Cannes Lions International Advertising Festival, And of course I asked him about the likelihood of a deal with Yahoo. Some industry watchers have speculated that the early success of Bing, Microsoft’s new search venture that debuted June 1 (and in less than a month boosted Microsoft’s share of U.S. search results pages to 12% from 9%, according to comScore) makes a Yahoo deal less essential–for Microsoft, at least. Here, in this excerpt from our Wednesday conversation in Cannes, Ballmer suggests that’s not necessarily so…

Sellers: For every share point that you gain in search thanks to Bing, by what percent does that decrease the need to do a deal with Yahoo?

Ballmer: Have you ever heard of a more back-handed way of asking the question than that?  Oh my God… (He waits for audience laughter to die down.) OK, I’m going to try this one time. First of all, we have no interest in acquiring Yahoo.  Can I…? I’ve said that 88 times. I’ll say it the 89th just to make sure it’s clear.

I have said, and I will continue to say, we remain open to a partnership with Yahoo. I think the thing that advertisers. probably more than anything else, appreciate is: When you have two players that are fairly low-share, sitting in an advertiser’s shoes, you have to decide how many of the “search engines” do you bid on and how many key words do you bid on per platform? More people, more advertisers bid on more key words on Google than on Yahoo or Microsoft–even more dramatically outside the U.S. than in.

Forget the economic side to that story, it also affects the product.  The more relevant ads the search engine can serve up, the more relevant the whole page looks. When your average consumer looks at the search page, they don’t just say, “I’m going to look at the algorithmic results.”  They look at the whole page, including the ads.

So, I will tell you, I have a friend who rents apartments–mostly to American tourists. She rents apartments in Paris. If I wasn’t her friend, she would not submit bids. In the old days of 8% share–this goes back a year–she wouldn’t probably bid on our system. She’d only bid on the market leaders. So now somebody types “apartments in Paris for rent. And they’re going to get the relevant ad on the market leader. And they may not get the relevant ad on Yahoo or on Microsoft.

So a partnership makes sense, not because of technology just. Or business just. It makes sense because I think we can provide a better product through scale to our users based upon the kinds of interactions we have with advertisers. I want every bid on every key word that every advertiser in every part of the world would put on Google, I want on our system. As much not just for the revenue, but as much for the value in terms of the relevance of our offering as anything else.

So, am I open to a partnership with Yahoo? We remain open to a partnership with Yahoo.

Sellers: So what’s the likelihood that there will be a partnership in the next year?

Ballmer: Who knows?  Who knows?  I can…

Sellers: Carol Bartz wants “boatloads of money.” Don’t you have, like, almost $30 billion of money in cash?

Ballmer: We’ve got shareholders who want to make sure we take good care of it.

– Thanks to Joshua Glasser and Jessica Shambora for additional reporting.

“I believe, this is my own marketing philosophy, that you degrade your brand value if you’re saying, this is not worth but half. At some point people go, ‘I guess it’s not really worth what they charge.’ ”

– Rick Hendrie, senior vice president for marketing at Uno Chicago Grill, in Wednesday’s New York Times. Uno Chicago Grill, currently offering a $9.99 pizza meal deal, is embroiled in a discount showdown with competing chain restaurants like Ruby Tuesday (RT) and DineEquity’s (DIN) Applebee’s. But even if the chains, which grew rapidly in recent years, can ride out this economic storm, they may find they’ve done irreparable damage to their pricing power. –Jessica Shambora

I had breakfast this morning with an old friend, Scot Safon, a fellow Wahoo from UVa Class of ‘82. He’s now chief marketing officer of CNN. We both work for Time Warner (TWX) now (and we both think we have the best jobs in the world, even as our jobs get harder everyday).

Scot, who lives in Atlanta, was here in New York this week because he’s on the board of Promax, an association for marketing and promotion execs in the entertainment industry. And Promax had its annual confab at the New York Hilton.

Scot told me this morning about a talk by Jim Margolis, whom he introduced at the powwow on Wednesday. Margolis, a senior partner at a political advocacy and advertising firm called GMMB, was a top strategist on Obama’s Presidential campaign.

“I studied 18 different Presidential marketing campaigns in 2007 and 2008, and I found every one interesting,” Scot told me over breakfast. “But the Obama campaign rewrote the rule-book in so many ways.”

Margolis laid it all out–creating a movement around the brand, grassroots organizing, social networking–in a case-study presentation called “Obama for President: The Campaign that Changed Everything.”

What really struck this crowd of marketing pros, though, was Margolis’s main message, which he illustrated by showing a video of Barack Obama speaking. If Margolis hadn’t noted that the clip was from the 2004 Democratic National Convention, most people would likely have assumed it was President Obama speaking today. The point: Brand consistency is everything.

Why did Barack Obama become President against all odds, and why are his favorability ratings still high? His message and his values have stayed consistent for five years. Great marketing starts with the product and a consistent brand.

Good to think about as I head to the Cannes Lions International  Advertising Festival in the south of France. (Goodbye, soggy Manhattan!) I’m interviewing Microsoft (MSFT) CEO Steve Ballmer — the Lions’ Media Man of the Year — on stage there next Wednesday. What should I ask him? Let me know!

by Patricia Sellers

You might call Al Koch the world’s biggest trash collector. As bankrupt General Motors (GM) splits into two parts — New GM, containing Chevrolet, Cadillac, Buick, and GMC, and Old GM, containing designated bad assets such as Pontiac, Saturn, Hummer, Saab — Koch is the hired gun who’s supposed to create value from that latter lot.

Bringing “New GM” out of bankruptcy will be difficult enough. Why would anyone take the tougher slog at “Old GM”?

This is what Koch does — the toughest turnarounds. He’s vice chairman at restructuring consultancy AlixPartners, which works on saving sick comapnies globally but has been a Detroit mainstay for decades. AlixPartners’ clients have included DeLorean’s creditors in 1984, Detroit (the city itself) in 1994, and Kmart in 2002.

Koch, now 67 and a 14-year veteran of the firm, has served as interim CEO of crippled companies such as video-game distributor Handleman (HDLM) and manufactured-home builder Champion Enterprises (CHB). But his most memorable job was at Kmart in 2002. Kmart was the largest retail restructuring in history and, as it turned out, one of AlixPartner’s big successes.

As Kmart’s interim CFO through its bankruptcy, Koch got lucky. When I interviewed him in late 2005 for a story about investor Eddie Lampert, he said that he and his restructuring-expert colleagues had never heard of this young investor who had swooped in and bought Kmart bonds at 40 cents on the dollar. “To most people, Kmart looked like a pile of trash,” Koch said. “We were told that this hedge fund guy had bought a huge portion of Kmart and wanted to get it out of bankruptcy fast.”

Lampert pressed Koch and the other restructuring pros, who were earning $10-20 million a month during Kmart’s bankruptcy, to exit Chapter 11 quickly. Lampert argued that neither customers nor management talent would be attracted to a bankrupt Kmart. The company emerged from bankruptcy in May 2003, a year ahead of schedule. Lampert, who had invested some $800 million for a 54% ownership stake, merged Kmart with Sears two years later to form Sears Holdings (SHLD).

Old GM won’t be as smooth or as quick as Kmart was. As my colleague Alex Taylor notes, “new GM” will have an incentive — from the U.S. government, new owner of a 60% stake –  to exit Chapter 11 rapidly, possibly in 60 to 90 days. The Old GM restructuring, meanwhile, could take years.

As Old GM’s chief restructuring officer, Koch will be negotating separation agreements with New GM and commandeering efforts to unload or liquidate those dud brands such as Saturn and Hummer.

His influence could turn out to be broader than his marching orders designate. After all, he’s worked with GM several times over the years. These past few months, he’s helped negotiate the sale of New GM assets to the government. Now he’s reporting to CEO Fritz Henderson and to GM’s board as well. As a guy who lives and dies by finding value in junk, Koch surely won’t take his shot at making history lightly.

Defining a brand and sticking to it is always difficult. Particularly in a downturn.

Which is why the success of Bravo – the NBC Universal cable network that serves up food, fashion, beauty, design and pop culture to upscale audiences – is all the more impressive.

This morning, I went to Bravo’s “upfront” presentation, where NBCU’s Lauren Zalaznick, who built the network, and her team pitched their new season and their growth story: a 38% year-to-year rise in adult 18-49 TV ratings, bigger gains online, and 97 new advertisers, including AT&T (ATT) and McDonald’s (MCD) and BlackBerry (RIM), in the past year.

Sales chief Susan Malfa noted that Bravo’s “affluencer” audience (the network claims to have the most upscale and educated viewers in cable) is “fairly recession resistant.” So she says, but don’t you think that investors in Saks and Coach and other beaten-down high-end brands would wonder about that?

Here’s the thing: Bravo’s success derives, really, from brand consistency that other marketers could learn from. The network’s unscripted programming – primarily, cutthroat creative competitions like Top Chef and over-the-top docudramas like Real Housewives of Orange County – are pure escapism. That escapism syncs with boom times but may resonate even more during times of crisis like we’re in right now. Among the new shows on Bravo’s let’s-deny-the-downturn slate: NYC Prep, which follows six privileged kids who attend private school in New York City, and Miami Social, a lush-life version of Friends set in Miami Vice territory.

Double Exposure, another new show that Bravo previewed this morning, features backstabbing fashion photographers. It looks as loud and annoying as CNBC’s Jim Cramer (another over-the-top character in General Electric’s TV cable stable). The new Bravo program that might appeal to business folks: Design Sixx, about entrepreneurs Bob and Cortney Novogratz, who have six kids (now seven, since the show’s filming) and make their living buying, rehabbing, and selling homes to rich people. Great people, the Novogratzes – I know them, though not well, since Bob is the brother of Jacqueline Novogratz, the CEO of Acumen Fund, and of Mike Novogratz, the president of Fortress Investment Group (FIG). (See Jacqueline’s Guest Post about her investing in to help the poor in Asia and Africa.)

Bravo also announced today that it’s branching out into scripted programs. More escapism – what else would it be? One show is called Blueprint, about best friends, one straight and one gay, who run an architecture and design firm in Manhattan. The other is 30 Under 30, which tracks the interconnected lives of 30 young people who have been christened superstars by a hot magazine (Fortune?!).

And scheduled to launch next week, April 20: Bravo’s first iPhone application. The Real Housewives: Personal Favs app will be city shopping guides with recommendations by Bravo talent including, yes, those Real Housewives of the OC, Atlanta, New Jersey…and who knows where else that brand can travel?

As for NBC Universal, the boss, CEO Jeff Zucker, told me this morning, “It’s not as bad as it could be.” The local TV news business is “a disaster,” he admitted. But Universal’s movie business has held up surprisingly well, he said. And NBCU’s cable channels – including USA Network and SciFi and MSNBC, as well as CNBC and Bravo – are a much-needed growth engine for struggling GE (GE), which reports first-quarter earnings on Friday. Stay tuned, as they say in TV land.

P.S. Did you catch my boss, Fortune managing editor Andy Serwer, on The View this morning?! Andy was on with Joy and Whoopi and the gals to talk about Fortune’s cover story, How to Get a Job. He named two companies that are hiring: Wal-Mart, (WMT), which added 33,000 jobs last year alone, and HCA, the Nashville-based hospital giant. An HCA exec who was in the show’s audience said that 9,000 jobs are available there. Hard to believe!

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