IFJ December 2013 Edition by The IFJ

The

intercollegiate finance journal DECEMBER 2013

Twitter vs. Facebook: IPO Style By Alon Galor, page 20

Some free advice about free stuff By Steven Adler, page 4

Social entrepreneurship in the 21st century By Amber Teng, page 28

Speaking from experience: how to find & learn from your summer internship By Tiffany Chang, page 12

The IFJ Team

The Intercollegiate Finance Journal December 2013

Contents

PerSOnal FInance Some Free Advice about Free Stuff, by Steven Adler

What Are Credit Unions? by Julia Verbrugge Poker: An Art, a Lesson, or Simply Gambling?

6 7

alSO:

How to Successfully Budget in College, by Ebony McCaksill

by Ana Rosenstein alSO: Top 3 Finance Books to Read, by Carter Johnson

“Some Free Advice About Free Stuff ” We all love free things. Unfortunately, there really is no such thing as a free lunch. When looking at a free offer, you may want to consider the hidden price of “free.”

Marriage & Acquisitions, by Christian Ackmann Ten Easy Ways to Scrimp in College, by Eric Han Score with Your Credit Score, by Perry Feldman alSO:

Five Reasons to Start Saving Now, by Lauren Tsai

8 9 10

“Twitter vs. Facebook: IPO Style”

careerS & InTernShIPS Speaking from Experience: How to Find & Learn from Your Summer Internship, by Tiffany Chang 12

The IFJ Team The execuTive Board Alex Drechsler Co-President & founder Brice Gumpel Co-President & founder Max Deutsch Co-Head of Business Matthew Ostrow Co-Head of Business Stephanie Hennings Head of Layout Steven Adler Head of Content Felicia Iyamu Head of distriBution Michele Narbonne Head of reCruitment Alexandra Nuttbrown Head of styLe Lauren Tsai Head of oPerations Wonnie Sim treasurer Emily Law Head of design Business Team Max Deutsch Co-Head of Business Matthew Ostrow Co-Head of Business Lauren Tsai Head of oPerations Wonnie Sim treasurer Christopher Heo, Yuta Inumaru, Kaden Lee, Nicholas Pucel, Destin Sisemore design & LayouT Team Steph Hennings Co-Head of design Emily Law Co-Head of design Madeleine Johnson Head iLLustrator Christin Aucapina, Israel Carrete, Chandelle Heffner, Quinn Herrera, Aleksandr Khomyakov, Kaden Lee, Sarah Lee, Kimberly Meilun, Amy Yao Meng, Nicholas Pucel, Kaitlyn Rothamer, Lorraine Salim, Mili Sanwalka, Claire Su, Sirena Turner, Kayla Tyrrell WeB & sociaL media Team Yuta Inumaru Head of WeB & soCiaL media Sara Hartse, Madeleine Johnson, Tung Nguyen, Nicholas Pucel

ediToriaL Board Christian Ackmann PersonaL finanCe Sarah Park PersonaL finanCe Andrea Wistuba-Behrens Careers & internsHiPs Alon Galor markets & investing Alex Lloyd George markets & investing Carter Johnson Business & startuPs Caroline Vexler intervieWs & otHer Content senior sTaff WriTers Tiffany Chang, Eric Han, Christopher Heo, Kaden Lee, Ebony McCaskill, Camila McHugh, Tung Nguyen, Thomas Pesce, Ana Rosenstein, Claire Su, Daniel Tatar, Angela Marie Bernadette Teng, Amanda Yao sTaff WriTers Alexander Behnke, Shreya Bhargava, Frances Chen, Christopher Dedrick, Perry Feldman, Miguel Ferreira, Alexandra Garcia, Michael Golz, Quinn Herrera, Peter Hix, Kristina Hu, Nathan Johnson, Kyle Law, Joanne Low, Lehm Maguire, Giuliano Marostica, Alisa Owens, Kiera Peltz, Christian Petroske, Ignacio Perez-Pozuelo, Graham Rotenberg, Jordan Schochet, Kelsey Sherman, Kjetil Stiansen, Carolyn Stichnoth, Mark Valdez, Jonathan Vu copy ediTors Nathan Johnson, Elizabeth Studlick, Lauren Sukin, Caroline Vexler

We at the IFJ pose a question: Is finance fun? For many students, the answer is an emphatic no. Students see the word “finance” on our cover and are instantly turned away by thoughts of long hours, tedious spreadsheets, and screams of “buy, buy, buy” (no, we’re not referencing ‘N Sync’s 2000 chart-topping hit.) We’re here to prove you wrong. As you shuffle through these pages, we hope you will find that these articles are entertaining, useful, relatable, and interesting. No matter your background – whether you’re an English concentrator hoping to balance your checkbook or an Economics concentrator hoping to ace your banking interview – we’ve got you covered. You may find yourself chuckling or nodding your head in agreement. You may even find yourself having fun. Flip through the pages and you will realize that we have broken up articles into four main sections to make it easier for students to navigate: personal finance, markets & investing, careers & internships, and business & startups. So, whether you’re interested in improving your credit score (see page 10), hoping to fill your wallet with bitcoins (see page 22), landing an internship this summer (see page 12), or wondering what makes Chipotle such a great business (see page 33), we’ve got an article for you. So throw away the Wall Street Journal, turn off CNBC, and close your Huffington Post tab. Sit back and enjoy the December edition of the IFJ!

facT checkers Christian Ackmann, Shreya Bhargava, Arielle Schacter, Scott Schubert inTercoLLegiaTe coordinaTors Mohammed Atallah, Peter Chodas, Vansh Talwar, Marisa Werner

alSO: Internship, Conference, or Job in NYC? Here Are 10 Ways to Save in the City, by Mark Valdez

leTTer FrOM The edITOr

Alex L. Drechsler Co-President & Editor-In-Chief

Beating the Bot: Why Your Resume May Never Reach Human Hands, by Kaden Lee

Student Spotlight: Laura Flanagan & Danielle Waldman, by Caroline Vexler

Learning to Tango: Case Interview Style, “Speaking from Experience: How to Find & Learn from Your Summer Internship” When weighing your summer options, it’s easy to lose track of the what’s most important: gaining experiences. Take a quick look at what a few Brown students have to say about choosing the right internships for you and how to best make these experiences worthwhile. Includes important and informative perspectives on making it all count.

by Alisa Owens

Thread of Life: Doctors in Danger Zones, by Tung Nguyen

20 22

E-Cigarettes: Smoke in Our Eyes or Shock to the Industry? by Carolyn Stichnoth

by Sarah Park

Interview with Akash Shah from Morgan Stanley, by Kyle Law

BuSIneSS & STarTuPS Social Entrepreneurship in the 21st Century, by

in which innovators focus on systemic, grassroots change in order to achieve social progress.

Amber Teng

Start Me Up: Six Startups to Watch, by Michael Golz

From Wayland to Wall Street, by Jonathan Vu

Carnitas & Coldplay: The Chiptole Business Model, by Camila McHugh

alSO:

The Digital Future of Marketing, by Alexandra Garcia

“What Is An Index Fund?” by Alexander Behnke “Money Saving Mistakes You Could Be Making” by Amanda Yao “Starting Early or Starting Big?” by Joanne Low Contact Us

The Obamacare Market, by Thomas Pesce

Current Accounts, the Politics of Debt Ceilings, & America’s Economic Future, by Christopher Dederick 26

“Social Entrepreneurship in the 21st Century” In today’s rapidly changing world, entrepreneurs constantly seek new opportunities in answer to the diverse social and economic questions of the 21st century. The result is

The IFJ Online www.theifj.com Check out additional content including:

Twitter vs. Facebook: IPO Style, by Alon Galor Bitcoin: Myth and Reality, by Shreya Bhargava

alSO:

Just before Twitter’s leap from Silicon Valley to Wall Street early last month, investors jittered at the possibility of a Facebook-like IPO debacle. When the first trade came in at 73% above Twitter’s IPO price, Goldman Sachs head banker perfectly articulated the market sentiment, tweeting ‘Phew’. Ex-post, many ask what allowed for the polar outcomes of the twin social media giants? Why did Facebook’s IPO tank while Twitter’s soared?

MarkeTS & InveSTIng alSO:

On the cover...

See alSO: Interactive Features: Personality Quiz 34 & Personal Finance Word Search, by Caroline Vexler

To submit or become part of the team... Email: team@theifj.com Facebook: facebook.com/theifj1 Twitter: @the_ifj

Volume I Issue II “Serving the collegiate community with news and knowledge on finance, economics, and business topics, all at your fingertips!”

PerSOnal FInance

Personal Finance

The Intercollegiate Finance Journal December 2013

Let’s Make A Budget: How to Successfully Budget in College to the Basics: What Are Credit 6 Back Unions, and Why Should You Care? An Art, a Lesson, or Simply 7 Poker: Gambling? 7 Top 3 Finance Books to Read 8 Marriage & Acquisitions 9 Ten Easy Ways to Scrimp in College 10 Score with Your Credit Score 10 Five Reasons to Start Saving Now 5

for these articles:

Starting Early or Starting Big Money Saving Mistakes You Could Be Making

Here is a great example from Dan Ariely, a behavioral economprevent falling for the promotion? Perhaps the simplest recomics professor at Duke University: A New York City nightclub recently gave out “free tattoos” mendation is to pretend that the item is not free, but is instead with admission to promote an event and over 70 people signed very cheap. For instance, Ariely suggests imagining that the tattoo costs $1. At that price, up for the promotion. On it is certainly below market the surface, this appears value, but it no longer has to be a great outcome: the the same effect as a prodclub was able to attract customers for its event, and In the above case, if the customers who came How To Successfully Budget in College the customer would still presumably had wanted College is a balance between academic and social life. Howwant the tattoo merely at to get a tattoo anyway. So, ever, it can be hard to have fun without any funds. Luckily, it a cheap price, then chooswhat’s the big deal? is not hard to create a balanced budget on your own. Here are ing the free option might It seems that the peosome tips for creating a successful college budget. be the right choice. There ple in line for tattoos were By Ebony McCaksill is still the chance of future not attracted so much by costs, but at least the custhe tattoos as they were by realistic. tomer is making a sound their price. In fact, Ariely 1 Be When developing a budget, estimate how much infound that of all the peocome you expect to earn. Do you work? Does your family incentives and not soleple in line, roughly 70% of give you an allowance? This step is the foundation of your budget. The more honest you are with yourself, the more ly because the tattoo is a them said that they were effective your budget will be. giveaway. only getting the tattoos because they were free.

LeT’s MaKe A BuDgEt!

Hidden Costs

Some free advice about free stuff FREE THINGS CAN COME AT A STEEP PRICE

Getting a tattoo is a costly decision—even when it is free. To start, the tattoo will be on your skin for life. Of course there are removal procedures, but they are often extremely expensive and it can take years to repair the skin entirely. When you get a tattoo, even a free one, you are either committing to a very long-term design, or committing yourself to expensive operations down the road. Neither one gets labeled as a cost by the nightclub, but each is certainly important. Not only do “free” transactions sometimes (think of the free furniture

by Steven Adler

I’m going to let you in on a little secret: Sometimes, free things aren’t really so free. You might think that you’re getting a great deal, but sometimes free can be downright costly.

Personal Finance

What to Do?

Free Tattoos?

also In This Section

Visit

The Intercollegiate Finance Journal December 2013

Understand your needs versus wants.

Prioritize your wants.

Treat savings like a necessary expense, not a luxury.

Do you pay rent? Are you off meal plan? Is tuition due? Rent, food, and tuition are necessary for your survival at school. That new crewneck? Not so much. You could still buy the sweater, but an effective budget takes care of necessary expenses first. Wants are always secondary.

Know yourself. If you value eating out more than having the newest technology, make sure your budget reflects that. Great budgets prioritize the allocation of funds. It keeps the budget consistent and realistic. Most importantly, it is more likely to keep you happier as well.

Creating an emergency fund can help you when unexpected expenses arise, such as car repairs or medical fees. You can also create a non-emergency fund for expenses in the future like a new down coat or spending cash for spring break. If having different accounts is a bit overwhelming, you can combine them, but make sure that you can differentiate between the two.

Make sure that you budget is balanced.

After all of the expenses are paid, the goal is to break even or have cash left over. If your budget turns out to be unbalanced, it is time to reflect, readjust, cut expenses, or increase your income.

Creating a budget is an important skill that can be perfected while in college. Well planned budgets can erase the past, secure the present, and ensure the future.

of a school year and then must pay to put into storage), but they can also have unexpected health consequences. In the case of the free tattoos, it seems that low price also came with low health standards. The customers, attracted by advertising “Free HIV” or “Free Hepatitis C.” When framed as a free good, these costs were not apparent.

Reframing the Costs

Another suggestion is to outline the hidden costs of a transaction. This can costs are often disguised. For example, if you receive a coupon for a free soda with the purchase of a hamburger, you might tend to overlook that the soda is not free; you still have to pay for the hamburger. Similarly, if you the basement of a dorm, the cost of keeping and maintaining these “free speakers” includes purchasing a bunch of connector wires. The deal may not be so great after all.

Conclusion

None of this is to suggest that you should always turn down “free.” Sometimes free is a great what you are looking for at

other times, the power of free can cause us to make decisions we would otherwise not make. In many cases, it can be helpful to consider what hidden costs there might be. If the item still seems desirable, then go ahead. If it doesn’t, free is not really free.

Personal Finance

The Intercollegiate Finance Journal December 2013

Back to the Basics: WHAT are Credit Unions, and Why Should you Care?

ization: I did not really understand what a credit union was. While I initially assumed that I must be the only one in the dark, after many of my peers responded with similar and smile whenever the term is mentioned without actually comprehending it. After overcoming my initial embarrassment, learning everything I could, and interviewing some credit union executives, I made two important discoveries: 1) credit unions are actually really cool, and 2) many other people are in the dark just as I once was. For those of you who have always nodded and smiled, it is time for Credit Union 101. What are credit unions, how are they different from banks, and why should you this framework, they operate very differently:

by Ana Rosenstein 1.

: While banks operate as

by private investors, credit unions are This means that at the end of the year, banks pay out declared earnings only to stockholders, whereas credit unions pay back their earnings to members (account-holders) directly in the form of lower loan rates and higher savings rates. 2. Members, not Customers: Unlike banks, which are open to the general public, credit unions serve the interests cally based on a common bond, such as locality (New England FCU) or industry (Navy Federal CU.) When you become a member and deposit money, you are not a customer; rather, you are actually buying shares in the company and becoming part-owner. As a co-operative, credit unions are run by the members, for the members. 3. Favorable Rates: Compared to banks, credit unions have lower rates on loans and higher rates on savings on average. The higher rates of return apply to both savings accounts and to more complex

“Credit unions are similar to banks in the services they offer, but different in the way that they operate.”

poKer

An Art, A Lesson, or Simply Gambling?

by Julia Verbrugge

The Intercollegiate Finance Journal December 2013

of deposit. Additionally, credit unions typically have lower banking fees than large commercial banks when it comes to checking account fees or penalty fees for overdrawing your account. 4. Customer Service: Credit unions struggle to match the convenience offered by larger banks like Bank of America, but they do challenge the larger banks when it comes to customer service and customer satisfaction. Known for their outstanding customer service, credit unions go beyond commercial banking in their commitment to their members and community.

In essence, credit unions are similar to banks in the services they offer, but different in the way that they operate. Though the contents of this article may seem elementary, I am not ashamed of my previous ignorance because it highlights the principal pain point that credit unions are currently confronting: Gen-Y is simply not familiar with them. Go ask a few of your friends whether they can really explain how a credit union functions. If they cannot, spread the knowledge. I am not saying that we should all become

ountless successful hedge fund managers, investors, and business magnates from Warren Buffett to Bill Gates have praised the game of poker and its positive implications on their professional lives. Harry Truman used to hold nearly nightly poker games where he would invite members of Congress and Supreme Court Justices to the White House to play. He always paid his poker debts by check, cognizant that anyone who received one of his checks would likely frame it, never cashing it. However, this hobby is not exclusive at Brown University have taken to playing poker not only as a leisure activity, but also to enhance skills integral to careers ation invest in the stock market and in their poker skills – the latter sometimes outperforming the former. Some have even come to view trips to the casino as a dependable source of income. Jonathan Greb, a junior at Brown and an avid enthusiast of the game, calculated that he earns an average of forty dollars an hour during each trip to the casino. He began playing poker at age thirteen purely for recreation; he had no athan does not think of poker as crucial spheres but he believes that it undeniably bolsters experience with risk manto managing a considerable amount of money. He recommends poker as a hobby for people who strive to go into the nitely not a prerequisite.” Hunter Massad, also a junior at Brown, began playing poker at a young age, initially taught by his father, and quickly developed a penchant for the game. He played online, engaged in family-wide tournaments, and soon realized that there was more to poker than gambling for the sake of enjoyment or

valuable experience for a future career it must be treated as an educational exdisregarded. Hunter has dedicated time and effort to improving his technique, a commitment he deems fundamental to success. Playing consistently is not good enough for him. In order to be good, to perfect the craft, and to actually reap the art of poker and learn from the absolute is about emotional control in the sense that you disobey your emotions to obey rationality.” Poker has taught him to value logic above emotion not only from an investing standpoint but in various facets of his life as well. While there is value in the game, we must not lose sight of the fact that it perpetuates a habit of gambling. Can aspiring investors legitimately gain invaluable skills by playing poker? Keeping in mind of the possibility of loss is critical. A player has to be willing and comfortable with the prospect of going into a game and leaving with nothing but regret. Poker – particularly in a casino where the stakes, competition, and pressure are very high – is not for the timid. Ultimately there is value in the game pirations, though playing is not a necessity. Poker teaches risk, strategy, probability, human behavates the unique rush that comes from gambling, having money on the table, and the possibility of winning or losing it all. But beyond the thrill and the Wall Street ambition, the educational imperative trumps all.

Personal Finance

TOP 3

FINANCE BOOKS TO READ By Carter Johnson

Benjamin Graham, The Intelligent Investor A classical treatise on value investing, Graham’s 1949 book has high praise from the Oracle of Omaha himself: Warren Buffett calls it “by far the best book on investing ever written.”

John von Neumann and Oskar Morganstern, Theory of Games and Economic Behavior The 1944 publication was in ness and political strategy for years to come.

Daniel Kahneman, Thinking Fast and Slow A more recent publication written by Nobel laureate Daniel Kahneman in 2011 examines dual modes of thinking and delves into the question of why humans are not always rational thinkers.

Personal Finance

The Intercollegiate Finance Journal December 2013

marriage & ACQUISITIONS

The Intercollegiate Finance Journal December 2013

nancial at all. As much as marriage is about love and

between two people and should be approached with the same with risks. Here are some ways to ensure your post-marriage

Revise Your Budget for the new addition to the company. The easiest way to imsimple to create a budget for yourself, but budgeting for both you and your partner presents a completely new challenge. You

to make payments on a joint account can lower the other person’s credit score. Another reason to maintain separate credit cards and bank accounts is to help monitor spending habits and optimize your budget. Having an individual spending record However, there are some instances when sharing an account is more logical. For example, if you want to secure a mortgage based on the income of both you and your spouse, it may be adverse effects to your credit score. You will suffer with higher interest rates if your spouse has a lower credit score than yours, but you will be eligible for a larger loan amount.

Understand the Risks

As with any merger or acquisition, marriage comes with both risks and rewards. The risk of divorce is more than just emotional. In the unfortunate event of a divorce, both parties ing the most equitable allocation of assets, there will still be tributed unevenly, there is an even greater cost to divorce. To hedge against this risk, it can be helpful to create a prenuptial agreement. Nobody gets married and expects a divorce, but it is in your best interest to protect yourself. Any big merger always runs the risk of falling through, so it is important to understand these risks and take steps to avoid them.

“The biggest financial decision of your life may not be financial at all.”

Congress, but it will take some time to carefully create a budget that accommodates the needs of each person. Understand that you will be varying degrees of “spenders” or “savers” and make

Disclosure of Assets and Liabilities

A savvy business owner would never enter a business contract without analyzing its strengths and weaknesses and the same holds true for marriage. The emphasis here is to disclose your liabilities. As potentially recent college students, your liabilities will likely be more pressing than your assets. It is particularly important to fully discuss any student loan debt you may have accumulated. Each person may have varying amounts of debt, which means you should work together to create a manageable payment plan.

Separate Accounts

Mergers are all about sharing and shareholders. Sharing is an important part of any relationship, but immediately signing up for joint credit with your spouse can be dangerous. For exam-

Integration

nancial implications should be evaluated with the same thought process as any other investment. By carefully analyzing your spending habits, you can create a budget that works for both people. You can also make intelligent investment choices if you have a full understanding of each other’s debt and credit hisfollow these guidelines, your merger will have a much smoother integration.

Easy Ways to Scrimp in College

Name: Eric Han Students have to spend a lot of money without earning what most people need to survive. Expenses can quickly rack up from items like gourmet food to textbooks, to buying winter clothes for the imminent ice age that we call “winter.” As college students, we need to learn how to save money anywhere we can. We need to scrimp. So without further ado, here are 10 easy ways to scrimp.

1 by Christian Ackmann

Personal Finance

Do not buy textbooks University Bookstore.

from

the

have to buy all the required texts. Cool. There goes another $1000. There is no point in buying a new and overpriced textbook from the Bookstore. Instead, ask friends and peers who have already taken the course and get that “friend discount.” At the very least, buy or rent it online for a third of the price. You can even use a comparison shop-

Be smart about traveling.

Create a budget.

Save on the little things.

Split.

Walk anywhere you can. Walking is free. If it is too far, see if your university has student discounts for the bus, trolley, or other public transportation. You paid for that tuition, so you might as well take advantage of cheaper transportation for the next four years.

the week or month and stick to it. Discipline is key.

Get the meal plan that is right for you.

Your friend runs 5 miles a day, benches 450 pounds, and weighs 320 pounds of raw muscle. He is on the highest meal plan your university offers and is devouring 30 egg whites a meal (those poor chickens). But the real question is, “Do you even lift, Bro?” No. So save your money and pick the right meal plan.

Limit how much you eat out.

I know restaurant food is delicious, but you are already on a prepaid meal plan. You still want to go out with your friends. I get it. Just try to limit yourself.

Amazon and Ebay.

You need a new winter jacket, jeans, bed risers, and the list goes on. Going to the mall leaves you with a receipt of $368.65. On top of that, $50 of the bill came from tax. Utilize Amazon and Ebay where the retail prices are cheaper and there is no tax. Shop from home instead. You will save money and you will not have to waste those precious calories walking around the mall.

This means drinking tap water over expensive soda (you would not want the freshman 15 anyway). Do not buy music. Utilize Spotify, Pandora, YouTube, or the actual radio if you are feeling oldschool. When you need caffeine, make your own tea or coffee. The possibilities are endless.

A gorgeous girl or boy is in front of you. You want to impress, but the bill at the end of dinner is $150 (Did you have to get steak?). If you pay for it all yourself, you will be in tears later, pulling your hair out, and questioning the cruel laws of the world and universe. Just split it. No shame.

all else fails, date a generous sig10 Ifnificant other.

If you are lucky, he or she will buy you expensive, gourmet meals, unless your date is like you and follows number 9 of this list. Keep “forgetting” to bring that wallet to dinner. This is your coupon to at go “On To The Next One.” Who needs love when you have food?

In your leisure time, do something free.

Read a book from the library (if you are not already burned out from reading all those Economics books), play pick-up soccer, or enjoy the company of friends at the park. Movie theaters are overrated anyways.

Personal Finance

The Intercollegiate Finance Journal December 2013

Personal Finance

The digits

5 Reasons to Start Saving Now

300 - 850

by Lauren Tsai

score with your credit score by Perry Feldman

If a portion of income is placed in a Roth IRA (Individual Retirement Account), as opposed to a traditional IRA where earnings are subject to tax, all future distributions are tax free. Because the account balance will grow, it is typically better to pay taxes now rather than on a larger amount of money in the future. You will have more ties in the future. There might be student loans and textbooks to buy, but it is even harder to set aside money to save once you leave school and will have even larger living expenses. Gain saving experience. responsible habits at a young age translates into a higher likelihood of keeping a balanced budget, paying bills on time, and being motivated to contribute to retirement funds in the future. Financial security in old age. The future of social security at present appears uncertain, so it is important to nancially stable in old age.

ypically, we associate credit scores with borrowing money, but today, insurance companies and even employers are making use of credit scores. Credit scores are good indicators of a person’s behavior and prospective employers can use this information to determine whether an applicant might be a risky employee. Having a high credit score can allow you to acquire lower insurance premiums, more favorable credit card terms, and higher credit lines. A credit score is determined by a complicated formula that is not made public. The generic FICO score can range from 300 to 850 and is based mainly on your payment history (35%) and credit utilization (30%). Other factors include the length of your credit history (15%), types of credit used (10%), and recent searches for credit (10%). The three credit bureaus (Experian, TransUnion and Equifax) are responsible for calculating this score. Generally, a score of 680 or higher is considered to be a good credit score. A higher score is indicative of less risk. Lenders are more inclined to lend to individuals with high credit scores since they are less likely to default on payments. Here are a few things you can do to improve or maintain your high credit score:

Check Your Credit Report For Errors You are responsible for ensuring the accuracy of your credit report. Every twelve months, you can go to www.annualcreditreport.com and obtain a free credit report from Experian, TransUnion, and Equifax. These reports will not provide your exact credit score, but they will 35 percent of your credit score is based on the payment history of your credit accounts, it is important to make sure that this information is accurate. Although cases of identity theft do occur, these can be avoided by checking your credit reports for errors or by placing a security freeze on all of your credit reports.

“Building a credit score and credit history is an active process.”

Make Timely Payments Making payments on time will result in a positive credit history which is an important factor in calculating your credit score. And if you do miss a payment, pay it off quickly so that the harm does not accumulate. Do Not Apply For Too Many Credit Cards trouble and can actually hurt your credit score. Even applications for retail credit cards, such as department and specialty stores, can have this effect.

Keep Old Credit Cards Active Simply having old unused credit cards will not positively affect your credit history. It is important to use those cards periodically so that they will be reported. A longer credit history is always a positive factor when calculating a credit score. Closing an account will remove that credit history from your report. Additionally, once that card and its associated credit credit utilization ratio (total outstanding balance divided by total credit limit on all your cards) will increase and negatively impact your credit score. Use Only 30 Percent Of Your Credit Limit Experts recommend that you use around 30 percent of your credit limit each month on each credit card and never carry a large balance. Should you need more credit, utilize another card. You can also make more than one payment a month in order to use less than 30 percent of your credit limit. Micropayments will lower your credit utilization ratio, which accounts for 30 percent of your credit score. Keep in mind that building a credit score and credit history is an active process. Following these steps will lead to greater control over your credit score, lines of credit, insurance rates, and even career prospects.

35%

payment history

30%

how often you use credit cards

15%

length of history

10%

Types of credit used

10%

amount of recent credit searches

use this percent of your credit card limit a month

Percent of total credit score

Your investment has a longer time to grow. Even though the annual rate of return may be small, the compounded return over many years can translate into large gains. Set aside a little money now, and reap great rewards in the future.

}

generic FIcO score range

>680

<30%

considered a good credit score

careerS & InTernShIPS

Careers & Finance

The Intercollegiate Finance Journal December 2013

13 Internship, Conference, or Job in NYC? Here Are Ten Ways to Save in the City 14 Beating the Bot: Why Your Resume May Never Reach Human Hands 16 Student Spotlight: Laura Flanagan & Danielle Waldman 17 Learning to Tango: Case Interview Style 18 Thread of Life: Doctors in Danger

Why Everyone Should Attend Conferences The Five People You’ll See At An Info Session Five Things A Company’s Website Won’t Teach You

Speaking from Experience:

How to Find and Learn from your Summer Internship by Tiffany Chang

Learning from the Job banking and what banking is in the real world,” Clarence stated,

Careers & Internships

also In This Section

Visit theifj.com/careers--internships for these articles:

major part of the fall semester for any sophomore or junior is spent in the grueling and browbeating search for the perfect summer internship. With the abundance of applications, info sessions and other recruiting events on campus, it is easy to get overwhelmed and lose sight of the goal: getting an experience in which you can learn, grow, and—if you’re lucky—discover what exactly it is you want to do with your life. To gain more insight, I spoke with three Brown students who have had incredible summer internship opportunities.

The Intercollegiate Finance Journal December 2013

wish to pursue it full-time. Angel agreed—while attending information sessions are a great way to get an initial introduction to a company, “[there’s] nothing like actually being on the job, even for the summer, to see what it is like…there is only so much information sessions can tell you about a job,” she says. She adds that interning is internship, you can still gain insight on what you don’t want to do—which helps narrow your future job search. Myron realized after interning at IBM that he did not enjoy working at such a large corporation. “I felt that my contribution was lost—I couldn’t see the results of what I was doing.” He instead hopes to intern at a start-up this coming summer.

clarence ho '14

angel lee '14

concenTraTion: Applied Mathematics – Economics inTernship: Bank of America Merrill Lynch, Investment Banking

concenTraTion: Economics inTernship (1): Bank of America Merrill Lynch, Investment Banking and Sales & Trading inTernship (2): McKinsey & Company

Finding the “Right” Internship for You

Angel advises students to “look widely” beyond the obvious come recruit on campus are the only options… But there are actually tons of opportunities outside of that.” She instead advocates students on the internship search to take initiative in researching different career paths and internship options. Myron says that you should look past the name of a company when applying for internships, as what you truly enjoy may turn out to be different from initially expected.

“Look past the name of the company when applying for internships.”

Myron lam '14

concenTraTion: Economics and Development Studies inTernship: IBM, Business Intern

“Interning is the easiest way to figure out what it is that you love or hate.” Clarence echoed this view by advising students to remember to “diversify their applications” by applying to a large variety of as many people as possible. Make connections,” says Clarence— through hearing others’ experiences, you can more easily gauge what you would like to spend your summer, and future, doing. are a great place to start—they are usually happy to chat!”

Internship, Conference, or Job in NYC? by Mark Valdez

Here Are 10 Ways to Save in the City

For living: SubFor those over For shopping: the giggles: 1 For The Upright Cit- 3 lease instead of 5 21: Buy your bev- 7 If you’re an im-

izen’s Brigade has weekly shows that range from free to $15 dollars. Chances are you’ll see one of your favorite comedians. I saw Amy Poehler four times…for free!

For commuting: Buy a monthly MetroCard to commute. For $113 dollars a month, you can ride any subway train as many times as you want without having to rack up hefty taxi charges.

spending on university housing. With a sublet, you’ll probably have air-conditioning and won’t have to pay for a meal plan with the university you’re living in.

erages before heading out on the town! New York City bars are notoriously expensive. Spend $20 dollars for a couple of weeks rather than on one drink.

pulse spender, head to trendy thrift stores like Beacon’s Closet or try your hand at a sample sale.

the BroadFor food: Bring 4 For w a y - i n c l i n e d : 6 your lunch to

ey now if you’re looking to be in the city this summer. It’ll help you cover initial moving costs and possibly your

Want to see the hottest musical on Broadway? Camp outside for Student Rush tickets on a Saturday morning. Feeling lucky? Enter the musical’s daily lottery ticketing system for discounted tickets!

work. Buying lunch in midtown every day can rack up some serious charges. Head to the supermarket and pack your lunches to eat with co-workers who are doing the same.

general life: 8 For Start saving mon-

oupons: 9 GIf ryou’re looking

for a neat weekend adventure or a fancy meal

at half the cost, New York City Groupons have tons of discounted packages. For an 10 ocean view: Take a free boat

trip. Visits to Governor’s Island by boat are free. Pack a cheap lunch and enjoy a lunch on an island for free.

Careers & Finance

The Intercollegiate Finance Journal December 2013

Beating the Bot:

Why Your Resume May Never Reach Human Hands e have all heard the super-urban myth that a recruiter will on average spend no more than 6-10 seconds looking at a resume; alright, so what’s new? The truth is, even that estimate is being generous. Statistically speaking, the average time spent on a resume is probably closer to 0 seconds because there’s a high chance that most resumes will never even reach the recruiter. Large companies receive thousands of resumes a month, sometimes just for one position. Even at 6 seconds a resume, it’s doubtful that anyone has the patience or compassion to go through every resume. Recruiters are people, too— and as we know: ain’t nobody got time for that.

NEXT LEVEL TACTICS 4

Be the match. Make sure to know the job inside out, and tailor your resume to it. A targeted approach is more likely to be effective than a one-

to current employees is an excellent way to get a sense of exactly what the company is looking for in its new hires. Again, LinkedIn is a great resource for this.

by Kaden Lee

The Intercollegiate Finance Journal December 2013

THE EASY STUFF 1

Keep the font plain and simple. This is common sense, but use conventional fonts (some sources even recommend sticking to strictly sans-serif fonts) that are standard on common operating systems. You don’t want your amazing summer internship to become a bunch of ☐☐☐☐.

Remember “keyword search”? Keywords: those hot, young things from 2002 have grown up, suited up, changed their names to “buzzwords,” and are now working in the recruiting world. If a job description contains a word more than twice: applicable.

Location, location, location...? Surprisingly, addresses can limit eligibility for a position! Especially for summer internships, companies that do not provide housing allowances may limit their search to local candidates. (If you don’t believe me, I almost got passed over for my summer position because of this very reason. Luckily, they gave me a second chance.) For this, it doesn’t hurt to note in your resume or in your cover letter that you are willing to relocate.

“Sometimes even the smallest details can ruin your resume’s chances of survival, so it doesn’t hurt to know the system and play by its rules.” That’s why over 90% of large companies use resume screening softwares (called Applicant Tracking Systems—creepy) to make preliminary cuts to the applicant pool. And if you’ve ever been improperly/awkwardly auto-corrected, or struggled with a temperamental printer, then you know that technology has its limits. Most of these software packages use parsers, programs that attempt to make sense of human language for computational analysis. These buggers go into your resume, strip it of all of its pretty formatting, chop up the content into strings of text, sort the pieces into relevant categories like contact information, education, and technical skills, and spit out a score based on precan ruin your resume’s chances of survival, so it doesn’t hurt to know the system and play by its rules. Here are some tips to make sure your resume—and you—gets a

Go easy on the formatting. Avoid using features like headers and footers, tables, or columns. The software may have trouble processing the information or may ignore it altogether.

A picture’s worth a thousand… errors. Images, graphics, and logos can trip up a program expecting strings of text. Instead, include the URL -

Alternatively, if while reading this you’ve: (a) rolled your eyes, (b) groaned loudly and with lung-engaging passion, or (c) lost a little faith in the system – congratulations, you’re human! And for you, there’s some more good news: this binary-beast is not yours to slay. You should still follow these simple resume-building rules because they’re generally good practice, but additionally and comparatively to all of the extraneous fuss and formatting issues that go alongside making a resume, putting on a suit or slipping into your power pumps for an info session shouldn’t seem so bad anymore. The recruiters are right there! In So take their business cards and make some noteworthy connections... Go get ‘em, tiger.

Careers & Internships

Careers & Finance

The Intercollegiate Finance Journal December 2013

Learning to Tango:

Student Spotlight

by Caroline Vexler

laura Flanagan

Careers & Internships

Case Interview Style

daniiele Waldman

by Alisa Owens

s fall interview season draws to a close, those of us who dusted off our parents’ business attire for interviews and company presentations just last month can now raise our glasses to new jobs, new opportunities, and new appreciation for the bizarre role-play that is the Case Interview.

Laura Flanagan ’14 is concentrating in Psychology. She is a member of Kappa Alpha Theta, a singer in Disney A Cappella, and a trained mediator. Last summer Laura interned at American Express in Operations and Marketing.

How did concentrating in Psychology prepare you for an internship at American Express? I get that question a lot, especially from bosses and job interviews. My internship with American Express was pretty much straight business. I was working in operations and marketing. I wouldn’t say that psychology as my discipline has applied all that much as far as my classes. I would say that Brown has prepared me for working hard, handling late nights, thinking critically, and being a good writer more so than learning about abnormal psychology and what schizophrenia is. What was your day-to-day role at Amex? It was a very formally set up and structured program. Like many time positions. There were 120 interns, half undergrad and half grad students. It was ten-weeks, and I had my own individual a system, and I talked to a lot of people to ask “What’s wrong with this process right now?” and “What slows you down?” I did a lot of interviews in the beginning trying to learn how the system runs. Basically, Amex puts out marketing campaigns such as emails or “junk” mail. There are a lot of steps that go into designing the mail piece and making sure that it goes to the right address; there are a lot of checks. The system that they were using was slow, and that was what I was trying to improve over the summer. Day-to-day would include interviewing, thinking

Danielle Waldman ’14 is concentrating in History. She is the president of Challah for Hunger and vice president of Women in Business. Last summer, Danielle interned at Morgan Stanley in the Media, and Telecommunications Group in the Investment Banking Division, and will start in the fall of 2014 as part of a two-year full-time analyst program.

How did you know that you wanted to go into investment I wanted to go into investment banking because I thought it was the best job out of college where you can make the biggest impact on companies as a 21 year old. There is not another industry to get exposure at a young age and so quickly. I always knew I wanted to go into business and I felt that investment banking would be the perfect crash course after Brown.

courtship dance in verbal form, simply measures our ability to put on a show. What if we—and our interviewers—actually said what we were thinking? Aaand, action:

InTervIeWer

Come on in! I vaguely recognize you from an info session...weren’t you the one hoarding hors d’oeuvres and SnapChatting during my presentation?

Great, it’s a pleasure to have you here. So why are you interested in working for us?

industry? What was your due diligence process like? who you mesh with best and who is fun to talk to is important because you spend a lot of time with them. What mistakes do you see Brown students making that you think they should change? The number one thing people need to do and biggest mistake is not networking enough. I feel that networking is ultimately the most valuable thing. Another mistake is thinking that just

the second half it was about my presentation and putting my PowerPoint together.

people take classes that they aren’t interested in. This is the ultimate mistake. If you aren’t passionate about what you are doing, you won’t have as much to say and you won’t do as well.

What advice would you give to current undergraduates for

People hate to hear this but I would say: start early. I had this oh-my-god-what-am-I-going-to-do-with-my-life moment as I was going into my junior year. It stressed me out, as it stresses out ed, decided and did all of my applications. I had the chance to hit all of the deadlines that were in November, December, January and February, and I wasn’t spending that time worrying about what I was going to do. If I had missed that opportunity I wouldn’t be in the place where I am now, having nothing to worry about my senior year.

handshakes complete with a “We’ll be in touch,” we have somehow morphed into marionettes with Marc Cosentino and Victor Cheng tugging at our wooden wrists to the tune of “market sizing,” “value-chain microanalysis,” and “management needs to hedge currencies, stat!” Want to know how many lavender-scented candles are sold every year in Iceland? Done. Calculate our imaginary client’s share

nomics class.

What was your day-to-day role at Morgan Stanley like? There was no typical day at Morgan Stanley. You get on a ton I did due diligence for an Initial Public Offering (IPO), built a model for a Leveraged Buyout (LBO), and went to meetings about potential pitches. Other days, I would do research for a managing director. It really depended, and it could change by the hour. The best part was the breadth of all the different things you were learning and the variety of your day.

To read more about Laura and Danielle’s experiences, including Major Do’s & Don’ts, please visit www.theifj.com

Sounds like you’d be a great fit! Now, our company looks for applicants with a broad range of applicable skills, including (a) unjamming the shredder, (b) tuning out your cubicle-mate, a borderline hyperactive grad named Chip, and (c) enthusiastically accepting your bonus check which leaves you at a net positive of $23 after rent for your micro-apartment in this city. Super! On that note, let’s get started with the case. Your client is a major yogurt manufacturer that suffers from an inferior product, food poisoning allegations, and a CEO who recently spent 60% of revenue on Beyoncé tickets. Could you please tell me what 17.9% of 13,485 is?

Insightful indeed! Well, we will certainly be in touch soon. By this I mean that you should repeatedly refresh your email for the next 4-6 weeks until you receive an automated rejection detailing the “large volume of qualified applicants” when really the job went to the guy in your Econ class who booked me box seats at the Super Bowl.

hOPeFul aPPlIcanT

Yep! I’m hoping that gaining “facetime” there will make up for when I mispronounce the company name during this interview. To be honest, I’m not, but the people at Dropbox didn’t think my double major in Punjabi Poetry and Ceramics reflected “relevant skills,” whatever that means. Frankly, anything would help me out with the debt I incurred from purchasing Case in Point. Sure, but first I’d like to distract you by asking irrelevant questions about gas prices, mortgage rates, and the current strength of the yen. Next, I’ll present an overly complex framework that makes me seem like a budding consultant but is really a regurgitation of Victor Cheng’s “Business Analysis” approach that I illegally downloaded from YouTube.

Now, will this method of transparency land you a job? Probably not, unless your interviewer decides to hire you on the spot simply to avoid having to hear another How I Worked on a Team / Handled a Crisis / Demonstrated Leadership Skills anecdote. Otherwise, though, it seems our best bet to land that elusive entry-level gig is to put on our Consultant hats with all the unabashed enthusiasm of a Broadway hopeful. And to those who call us borderline brainwashed semi-robots: that’s Junior Analyst robot to you.

A Thread of Life:

Doctors in Danger Zones by Tung Nguyen

The Intercollegiate Finance Journal December 2013

It is 2008, and you’re a surgeon. The mission in Somalia you’ve been working for, Médecins Sans Frontières (MSF), has provided innumerable treatments to Somalis in need. As the monotonous engine of a car on a beaten road hums, your thoughts wander, perhaps to your family, your kids and wife in a different and safer country. You are traveling down the beaten road, and only a split-second later—a boom. An explosion engulfs the vehicle in heat, and it is all over. Such stories, those of killing, assaults or kidnappings, are common fears of zones. But of course, doctors sign up, fully knowing the dangers. After all, MSF, or more commonly known to English-speakers as Doctors Without Borders, is a Swiss-based international medical aid provider for perverse regions in the world where access to healthcare is very limited. Disasters and Circumstances in Need Super Typhoon Haiyan, named locally “Yolanda,” devastated the Philippines with wind speeds equivalent to that of a Category 5 hurricane as it passed through the Southeast Asian archipelago on November 8. The largest city affected, with more than 200,000 people, Tacloban on the peninsula of Leyte was

Careers & Internships

annihilated in the typhoon’s destructive surge. While the Philippines are accustomed to an average of 20 typhoons per year, most strike north on the big island of Luzon, but Leyte’s exposed geography and ill preparation allowed the tsunami-like conditions to make a thunderous amphibious landing. “It was as if a giant hand had come down from the sky and just crushed,” described a CNN correspondent, still awed at the sight of the aftermath. Corpses makeshift houses characteristic of the surrounding villages now reduced to heaps. The bodies salvaged by the local population and aid workers were left on the side of the road, accumulating in piles of men, women and many children, readied for mass burial. Among the many medical teams, including those, according to CNN, sent from nearby Asian countries and those from international organizations such as AmeriCares, International Medical Corps and Direct Relief, MSF has a team in place. An NBC report explains the lack of potable water, shelter and food, demands overwhelming local hospitals, pharmacies, and other assets, as well as the rise of pneumonia, diarrhea and the concerns of tetanus and dysentery causing a “public health nightmare.” This

reQuIreMenTS to join msf Quoted from their website, the MSF requires from doctors these following:

t At least 2 years of relevant professional experience. Medical t t t t t

residency counts for this. Availability for a minimum of 9-12 months, shorter for surgeons, anesthesiologists, nurse anesthetists, and ob-gyns for short assignments of 1-3 months due to rigor of those specialties. Relevant travel or work experience outside of the United States to demonstrate effectiveness in working in foreign environments. Experience as a supervisor, manager, teacher, and/or trainer, to oversee others and teach them how to administer basic treatment. Ability to work with diverse group of professionals of all nationalities, able to forgo language and cultural barriers. Flexibility and adaptability to dynamic situations that hap-

t Computer skills for data collection. t Commitment to MSF’s principles of organizational inde-

pendence and neutrality and also commitment to impartial care of patients.

Furthermore, MSF recommends language skills predominantly in French due to MSF’s missions in French-speaking countries in Western Africa, while Portuguese, Russian and Arawith MSF missions in Syria—are also useful.

makes the contribution of medical teams and supplies crucial What’s Your Motivation? Some pre-meds in college have yet to answer the question of “Why do you want to be a doctor?” Young pre-meds like me once would have said, “I want to help people,” forgoing the fact that many other professions, such as teaching, also aim to help people in some way or another. Sometimes it seems to be about the money—however, keeping in mind that an investment banker can earn more after a fraction of the schooling makes this motivation less powerful. And for others, the answer may lie in wanting to aid the advancement of health technologies, for example, becoming a part of the team that one day allows a rapidly fading patient with a failing liver to receive an in vitro 3D-printed replacement. So still, the idealism of helping peoaccomplishment that is not as easily realizable through other professions as it is through medicine. One very hands-on approach is as a medical aid relief personnel. There are many medical relief agencies that take in medical doctors, nurses, and logistics support staff. Here, we highlight MSF:

your compensation website:

t t t t t

Starting gross monthly salary of $1498 Per diem during assignment in local currency Round-trip transportation Room and board in project country Comprehensive medical, disability and life insurance coverage t Emergency evacuation insurance In 1999, the Nobel Peace Prize went to the MSF, as the NY Times says of MSF staff members “[having] a reputation as saster strikes and the last to leave.” Whereas the life of a docbegs the question, “Would you be up for it?”

Where humanity has virtually lost all hope, a few extraordinary medical volunteers risk it all.

MarkeTS & InveSTIng

Markets & Investing

The Intercollegiate Finance Journal December 2013

also In This Section

22 Bitcoin: Myth and Reality Interview with Akash Shah from 23 Morgan Stanley’s Sales & Trading Division Smoke in Our Eyes or 24 E-Cigarettes: Shock to the Industry? 25 25 The Obamacare Market Current Accounts, the Politics of 26 Debt Ceilings, and America’s Economic Future Visit theifj.com/markets--investing for these articles: What Is An Index Fund? Top 5 Recent & Upcoming Market Events What Is Impact Investing? Investing in Biotechnology Stocks

Twitter by Alon Galor

The Intercollegiate Finance Journal December 2013

So, what was the root of these two polar outcomes? Why did Facebook's IPO tank while Twitter's soared? A stark undervaluation compared to the market consensus

A matter of maturity

believe that Twitter purposefully underpriced their IPO. In other words, it opted to forgo capital funds in exchange for a margin of safety that would reward its investors and protect itself from a Facebook-like debacle.

Social media frenzy, “lock-up” regulations and the right exchange

In pricing an IPO, underwriters engage in a delicate balancing act between raising as much capital as possible for a company

facebook ipo Style

Growth potential is attractive to investors. While Twitter went public during a hyper-growth stage, Facebook entered the mar-

Some additional factors that are speculated to have facilitated Twitter’s successful IPO include the growing investor appetite

“Twitter has held up well since its IPO, remaining in the neighborhood of $40-45 per share. But how accurate is the market’s current valuation of Twitter after all? Although annual revenue has more than doubled in the past year to upwards of $500 million, many skeptics point to the fact that Twitter has yet to post a profit and may not until 2015.” Favorable market environment

vs.

Markets & Investing

Twitter’s entrance into the public realm comes at a time of solid market performance, with the S&P 500 and the Dow Jones Industrial Average setting record highs. In particular, the S&P was up in 16 of the 21 trading days prior to the IPO, gained 8% in the relevant two month period and is currently up 26% year to date ( YTD). Furthermore, November has proven to be a favorable time of year in terms of seasonal market gains. In contrast to the market’s strong performance leading up to Twitter’s IPO, in the six weeks before Facebook’s mid-May IPO (a seasonably unfavorable period according to the old maxim “sell in May and go away”), the S&P lost 7.5% as renewed concerns over the European debt crisis plagued the markets.

the enforcement of stringent “lock-up” regulations - Twitter instituted a 181-day mandatory lock-up period for executives, directors and owners of substantial amounts of stock. Finally, in comparison to Facebook’s NASDAQ debut, whose glitches cost investors nearly $500 million, Twitter’s IPO was smooth sailing. The New York Stock Exchange (NYSE) handled the stock’s listing successfully, executing the offering in an orderly and timely manner.

What does the future hold?

Twitter has held up well since its IPO, remaining in the neighborhood of $40-45 per share. But how accurate is the market’s current valuation of Twitter after all? Although annual revenue has more than doubled in the past year to upwards of $500 million, many skeptics point to the fact that Twitter has yet to post assumptions about future growth despite the lack of present 248

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Early last month, Twitter took the leap from Silicon Valley to Wall Street in the largest U.S. technology initial public offering (IPO) since Facebook. The social media messaging giant debuted strongly, opening at $45.10 – up 73% from the $26 Initial Public Offering – and closed with the biggest day-one jump since 2007 for an IPO of more than $1 billion. In light of strong market demand, with investors asking for 30 times the 70 million shares offered in the IPO, the company raised about $1.8 billion and established a market capitalization of over $20 billion. Around 18 months ago, fellow tech titan Facebook also made the leap of faith, only to face a host of trading glitches and a hefty selloff, from which shares failed to recover until a year later.

6 Nov

What is an #IPO? Details

Team IFJ @the_ifj

6 Nov

stock to the general public. An IPO is generally done through an underwriter who is typically an investment bank that works to publicize the offering, gauge investor interest and thereby determine the appropriate price for the stocks. A type of equity issuance, an IPO provides an important alternative to debt issuance by allowing companies to raise capital in support of their activities through the sale of the right to ownership in a company, rather than through the incurrence of debt. #TheIFJ Details

Markets & Investing

The Intercollegiate Finance Journal December 2013

MYTH & REALITY by Shreya Bhargava

arlier this month, the Wall Street Journal reported that the price of Bitcoins

BITCOIN

currency could be used for traditional payment methods sometime in the near future. The momentum is coming from around the world, as amateur investors, venture capitalists and technology enthusiasts pump money into businesses Bitcoin to buy goods and services. A bit about Bitcoins Bitcoin is a four-year-old virtual currency that enables two parties to transact over the Internet. There are two ways to obtain and then utilize at a virtual exchange like Tokyo-based Mt.Gox where they’re sold at their market price against the value of other currencies such as the Euro. Secondly, one can download a special software that’s similar to Paypal called a Bitcoin client that allows for the transfer and stock of Bitcoins. Bitcoin’s market price has historically been highly volatile. For instance, on Wednesday, November 13th, its value in terms of USD was $425, nearly double the amount it was at the start of the month and up from roughly $13 at the beginning of the year. The recent jump in Bitcoin prices is also being attributed to surging demand from China, where a local exchange is drawing trading from around the world. A little bit of everything Bitcoin has numerous advantages. Firstly, anyone with an Internet connection can get involved with Bitcoins. Moreover, within the Bitcoin network, people can transact without divulging who they are since transactions are carried out using series of numerical digits as pseudonyms. Likewise, while Bitcoins can be traded on a number of exchanges, they can be swapped amongst individuals and corporations privately. Furthermore, Bitcoins have been recognized for having lower transaction costs than credit or debit cards. Nonetheless, Bitcoin has certain disadvantages too. In particular, anonymity may encourage people to use the virtual currency for malicious purposes. Since the Bitcoin ecosystem is completely decentralized and not backed by a central and easy to carry out fraudulent activities. Thus, Bitcoin’s unregulated status makes it ideal for money laundering and the buying and selling of illegal goods. Another major drawback of Bitcoin usage is that capital gains incurred from using Bitcoins cannot be monitored and hence, there

is no way to monitor tax payment on these capital gains. Bitcoin’s merits—anonymity, decentralization, lack of regulation—could be reasons for its potential downfall. While the Bitcoin doesn’t offer the stability or safety of a central bank-backed currency, it can be compared to other units of value that can be transferred between peers, such ecosystem may be relatively small, its undeniable value to criminals has put it high on the agenda thieves are constantly seeking methods of payment that allow them to pocket their illicit proceeds in peace. While Bitcoin hasn’t yet earned that level of rhetoric, it has the same ability to mask transactions. Anyone who buys Bitcoin at $100 and uses it to buy $110 worth of goods is technically supposed to report that $10 in gains to the government. It’s a safe bet that few, if any, Bitcoin users do. Why bother, when both buyer and seller are anonymous? Even Bitcoin’s creator, who operates under the pseudonym Satoshi Nakamoto, remains unknown. With Bitcoin values producing wild gains and losses for its users, Bitcoin has caught the attention of tax authorities, too. Bitcoin prices also are being buoyed by a crackdown on illegal activities that have been tied to the virtual currency and increased regulatory scrutiny. Such measures help make Bitcoin more legitimate. Federal agents last month closed an online mart where customers allegedly could use Bitcoin to buy anything from heroin to forged passports, according to a criminal complaint. And over the summer, the Securities and Exchange Commission charged a Texas man with raising more than $4.5 million worth of Bitcoin from investors who were “falsely” promised a weekly interest rate of 7%. Mystery still surrounds Bitcoin. Its creator -– or creators -– has remained

The Intercollegiate Finance Journal December 2013

Markets & Investing

Interview with Akash Shah: Morgan Stanley Sales & Trading by Kyle Law Akash Shah went to Brown and concentrated in Economics with a Political Science focus. He studied abroad junior year at Oxford and interned at Morgan Stanley, where he got a full-time position and has been working for over two years.

Was there anything in particular that made you decide that sales and trading? I gue organization in high school and also had a business during my time at Brown, so sort of that combination and those aspects of

courses at Brown prepared me for basics of what I needed to know whether if it was for interviews or just for generally how the markets work. So yeah, I would say multitasking is the most important skill. From your perspective at Morgan Stanley, how challenging would changing divisions or career paths be for people

of the reasons why I wanted to go into the business realm, and then I think I got the information on sales and trading because I have my own portfolio and I was trading stocks and I was talking with other people. So that combination of having my own portfolio whether it was a real one or a practice one combined with me being entrepre-

I don’t think it’s too hard. I mean, Morgan Stanley always encourages mobility. If you’re not happy with your job, then I think people are okay with you mov-

people feel happy and comfortable. Obviously, it’s hard and dif-

history of the virtual currency remain fuzzy. Yet, the buzz is growing.

How would sales and trading differ from investment banking? The biggest difference is going to be the hours. Sales and trading, you work 11 and 12 hours but it is literally constant work; when the markets are open it’s literally non stop. Sometimes you barely have time to get up and get a glass of water. It’s really busy. And I’m the type of person that likes to stay busy and when I’m not, I just get frustrated because I feel like I should be doing something. I think that investment banking is a little slow at times and then picks up and it’s irregular, but I’m the kind of person who likes to stay busy all the time so that’s why I chose sales and trading. Also, I like seeing how sales and trading is affected by legislation or the government shutdown right now, whereas I don’t think investment banking sees as much of that.

Biting the dust? The rise of this virtual currency has piqued the novation that makes online transactions easier? Or is there more to the issue than that? Should Bitcoin be regulated? Is its volatility a threat to the world economy? Is Bitcoin’s use in markets for illicit goods a reason to doubt the currency overall? How much should the Bitcoin currency be expanded? Could it ever be a predominant currency around the world?

What best prepared you for working at Morgan Stanley? I think t the ability to multitask, and I can’t stress that enough. Because I’m so active during the day, I get multiple client requests at the same time and you have to be able to prioritize and manage your work. I think I learned that from Brown just because a lot of the work is challenging; even if you only have 3 or 4 or 5 classes it is very intensive and it is a lot of work and if you can put the time in and develop study habits, then I think that will best prepare you. In terms of material, I think a lot of the

“The combination of having my own portfolio whether it was a real one or a practice one combined with me being entrepreneurial, made me want to focus on business and finance.”

something and some job for every person that wants the opportunity. I think it’s our job as people in the

but I think if you want to you have the ability to. What are your plans for the future? Do you plan on staying at Morgan Stanley? What I want to do right now is just learn as much as possible. For me now, I’m learning so much and I get that mixture of Latin America, which I think is unique because most people don’t get that exposure. So for me right now, I think I’m getting exactly what I wanted to get out of working here. Who knows what the future holds but right now I’m happy where I am.

Markets & Investing

The Intercollegiate Finance Journal December 2013

E-Cigarettes:

Smoke in our Eyes or Shock to the Industry?

The Intercollegiate Finance Journal December 2013

The Culinary impaCT of

DeflaTion

by Sarah Park

by Carolyn Stichnoth

lectronic cigarettes, or e-cigarettes, are battery powered devices which deliver nicotine to the user in the form of a vapor. They gained popularity in China in 2004, and were introduced to the United States a few years later. Their popularity has soared, with some predicting that e-cigarette sales will overtake sales of traditional cigarettes by 2021. E-cigarettes are currently not subject to regulation be sold online. Consumer Appeal Their popularity can be attributed to their wide appeal. They appeal to new smokers, mostly teenagers and young offered in e-cigarettes since ditional cigarettes. Current smokers view e-cigarettes as a healthier alternative, and smokers who are trying to quit use e-cigarettes as their this last group may raise some doubts about the sustainability of the growing e-cigarette market because much of the tobacco industry’s success is due to their consumers’ addiction, which guarantees a consistent source of sales. But if people are using e-cigarettes to quit, there will not be such an assured market. As it turns out, however, although many people turn to e-cigarettes as a means to quit, only a small portion of those actually end up quitting; most continue to use e-cigarettes.

FDA Regulation Looms All eyes have been on the FDA, which was expected to make a decision regarding the regulation of e-cigarettes a few weeks ago. Whatever regulation is put in place, there will be positive and negative consequences for e-cigarette manufacturers. On the one hand, regulation will mean consistency and safety in terms of the purity and amount of nicotine delivered, which would mitigate some concerns. On the other hand, regulation would draw attention to the hazards of e-cigarettes; they would not be seen as such a healthy alternative. Regulation could also take away a lot of the unique benetraditional cigarettes, such cant federal and state taxes, and internet sales would be discontinued.

The e-cigarette industry is an intriguing one, and one that could see strong growth in the next few years. Despite this potential, however, the industry is still very much at an embryonic stage and it remains to be seen whether the e-cigarette can grow enough to challenge the historical and contemporary hegemony of the tobacco cigarette.

Impact on Big Tobacco Does the rise of e-cigarettes mark the downfall of Big Tobacco? Of course not; the “big three” tobacco corporations (Reynolds American, Lorillard, and Altria) have noticed the trend and are taking action. Reynolds American and Altria have each launched their own lines of e-cigarettes, while Lorillard has bought two e-cigarette manufacturers, including national market leader Blu. For the time being, however, e-cigarettes represent only 1% of the $100 billion tobacco market in the U.S. Thus, the superiority of unlikely to be challenged in the near future.

fter experiencing a period of tremendous economic growth in the late 1980s that culminated in a dramatic stock market crash, Japan is still struggling to overtion, high unemployment, stagnant growth and a growing debt to GDP ratio. The 2007-08 Global Financial Crisis and the 2011 Great East Japan Earthquake and Tsunami both greatly exacerbated these issues, and in the past six years alone the country has fallen into a recession three times. Although several recent events, including Japan’s successful bid to host the 2020 Summer Olympics and the implementation of “Abenomics” (an aggressive set of economic policies introduced by Prime Minister Shinzo Abe last year) have indicated Japan’s economy may be on the road to recovery, the effects found and widespread and continue to be felt in society. One sector that evidently has been affected by the country’s economic downturn recently garnered worldwide attention: the food industry. Origins of the Scandal A nationwide food scandal has recently erupted in Japan, resulting in intense public outrage and calls for heightened scrutiny and investigation into the authenticity of menus and food labeling. The “deceitful labeling” scandal, as the media named it, began in October with the Hankyu-Hanshin Hotels’ admission that from April 2010 to July 2013, the chain of 17 hotels and 111 restaurants had mislabeled 47 different food items, affecting over 78,000 customers. In addition to engendering public anger and protest, the revelation also led to the resignation of the President of Hankyu-Hanshin Hotels and has sparked dozens of major hotels, restaurants, and department stores to come forward with confessions over the past few weeks about their own food mislabeling practices. Examples of these “deceptions” range from the substitution of cheaper Whiteleg shrimp for similar but 50% more expensive Shiba shrimp to the use of Korean chestnuts to garnish a dessert rather than French ones. Why the Japanese Care Although this food scandal hasn’t caused any illness or detrimental health effects, the revelations have ignited intense controversy because of the country’s longstanding emphasis on and adherence to “omotenashi” - the word used to describe Japan’s pride in its culinary culture and commitment to excellent hospitality and service. Taking into account this fundamental were willing to mislabel or misrepresent their menu items. The answer? Japan’s economy.

Markets & Investing

The Culprit Behind the Scandal

vated the effects of its various recessions and contributed to the country’s poor economic growth. For hotels, restaurants, and forcing many to seek ways to cut costs. Because the substitutions and misrepresentations were often almost impossible for peared to be higher quality food. Apparently this practice has been going on for over 20 years thus coinciding with the Japanese stock market’s sharp plunge that launched the nation into a recession in 1990. It will certainly be interesting to see how and when the food industry will recover from this scandal and regain the trust of consumers but in the meantime, be aware that food mislabeling is by no means limited to Japan. Because crisis, be conscious of the fact that what you read on the menu is not always what you get.

The Obamacare Market by Thomas Pesce The Affordable Care Act (ACA), commonly referred to as “Obamacare,” has been at the center of Washington discussion for months. While its goal of providing more Americans access to healthcare is certainly meritable, the implementation of the signup process has proven far from praiseworthy. low enrollment rates: The White House Administration reports that in Octoof 106,185 people enrolled in ACA health care plans through government exchanges. The administration had predicted and hoped for many more. However, it may be preemptive to write off Obamacare. In 2007, Massachusetts’ universal healthcare plan also suffered severely low enrollment. Although only 123 people in the state signed up in the exponentially and the plan is now considered a success. Previously insured dropped: Low enrollment rates are not Obamacare’s only problem. Contrary to President Obama’s promise that “if you like your plan, you can keep it,” an estimated 4.02 million Americans’ policies have been cancelled. In response, the President declared that insurers can continue providing for another year plans that did not comply with the Act. The problem remains that plans have already been cancelled and insurers are not obliged to reestablish them. While it is certainly premature to call Obamacare a failure, it has clearly had a rocky start. Expect reporters, politicians and economists to continue monitoring enrollment numbers over the next few months.

Markets & Investing

The Intercollegiate Finance Journal December 2013

Current Accounts, the Politics of Debt Ceilings,and America’s Economic Future by Christopher Dederick

They say the road to hell is paved with good intentions.

Although many on the left and right in the United States harbor genuine concerns about the federal government’s indebtedness, the debt ceiling crisis nonetheless nearly forced the U.S. Treasury to default. Some studies suggest an association between high levels of central government debt and slower GDP growth. At the same time, austerity policies to reduce debt adversely affect demand and impede growth. Still, while the nation bickers over the debt, brinksmanship is chipping away at something of the international monetary order. Over the past decades, the U.S. has consistently imported more than it has exported. This imbalance is nothing new. Howevat 6.5% of GDP in 2005, and their frequency. Standard

The Intercollegiate Finance Journal December 2013

ports, denominated in dollars, should depreciate the U.S. dollar, making exports cheaper and more desirable, thus Currency and Capital The United States’ unique role as the world’s currency leader distorts this adjustment process because there is always underlying demand for the dollar. The U.S. dollar serves as the reserve currency for the international monetary system and is used in the majority of all economic sition for various reasons, including the size of its economy, the depth and liquidity of its capital markets, and most assets, particularly U.S. treasuries. Private actors, institutional investors, and central banks looking for security and dollar liquidity invest in dollar-denominated U.S. treasuries. When the global economic crisis was at its worst, the This process even led to negative real interest rates; for a brief moment, investors were actually paying the U.S. Treasury to safely hold their capital. International Relations The self-imposed near-default of the U.S. government was particularly troubling for China and other major exporters, which reinvest their immense surpluses in the United States. The prospect of a U.S. default threatened their massive holdings of U.S. treasuries. This has led some to question the security of U.S. treasuries, and consequently, the wisdom of U.S. currency leadership. In the wake of the debt-ceiling crisis, China’s leading state-run editorial encouraged the world to “de-Americanize” the international monetary system.

Markets & Investing

An “Exorbitant Privilege” The U.S. trade balance has improved in recent years, down to 2.4%. Nonetheless, currency leadership continues to allow the U.S. to live beyond its means. Rather than have its imports and what it exports. These investments accord the U.S. a higher standard of living than it can fund with its exports. Strong demand for treasuries reduces the rate of return the U.S. Treasury needs to offer, resulting in unusually low government borrowing costs. This has led some to call U.S. currency leadership an “exorbitant privilege”. The loss of the dollar’s reserve status, followed by a current account reversal, could put an end to this privilege. The dollar would likely depreciate, making imports more expensive, and reducing standards of living. With a smaller pool of available capital, real interest rates would rise, impeding investment. The resulting spike in government borrowing costs would, ironically, further balloon the debt. A study by Sebastian Edwards suggested that current account reversals can reduce GDP growth by 3.5% to 5%. Conclusions For now, alarmism seems premature. With Japan’s stagnant economy, the ongoing Eurozone crisis, and China’s could supersede the dollar. That being said, growing concerns over the U.S. government’s stewardship of its economy could prompt the world to move towards a multipolar monetary system, with a basket of currencies replacing the dollar. The unnecessary loss of U.S. currency leadership calamities of our time. The United States must ensure con-

BuSIneSS & STarTuPS

Business & Startups

The Intercollegiate Finance Journal December 2013

also In This Section

28 30 31 32 33

Social Entrepreneurship in the 21st Century Start Me Up: Six Startups to Watch The Digital Future of Marketing From Wayland to Wall Street: An Introduction to Business from a PreMed Carnitas & Coldplay: The Chipotle Business Model

Visit theifj.com/business--startups for these articles: Millenial Mentality Valve Corporation: A Fable of Flatness

S cial Entrepreneurship

in the 21 Century st

by Amber Teng

“Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.” - Bill Drayton, CEO & founder of Ashoka

What is social entrepreneurship? solve societal and economic problems. Others say that a social enterprise is a kind of business itself, while bringing sustainable change and moving society to a stable and more just equilibrium. Still others, like Muhammad Yunus, a well-known social entrepreneur, claim that a social the entrepreneur takes to get there contributes to economic inclusion and opportunity at the seek to solve some of the most pressing societal problems using innovative solutions.

The Intercollegiate Finance Journal December 2013

Business & Startups

Types of social entrepreneurship In accordance with legal structures, there are three main types ganization’s goals rather than to provide payment or salary to the company’s employees. Despite the misleading name of this kind of business, are allowed to attain surplus to sustain the company and further its expansion. er hand, give their shareholders part of the money that they make. Though cial enterprises defeat the purpose of social entrepreneurship, the difference

zations is not so clear. According to a number of social entrepreneurs, the type of business organization one can have, whether it be constraints and funding origins. The legal term under which their organization falls does not

each other, yet sometimes these two business models are bound by long-term contracts which they fulsions. The hybrid ideal is, according to the Stanford Social Innovation Review, to be able to have a social impact on the world while also creating commercial revenue.

“Social entrepreneurs seek to move large systems, and social enterprise is based on the belief that it isn’t possible to achieve such movement within the constraints of the system itself.” Why social entrepreneurship? Social enterprises have a sustainable impact and delivery. Their impact should last — they lobby for permanent change that will remain even if the said organization were to disappear. The processes by which they deliver results should be maintained. Even if they have to keep applying and reapplying the solution, social enterprises deliver in such a way such that they pay for themselves without necessarily looking for funding over and over again. Social entrepreneurs seek to move large systems, and social enterprise is based on the belief that it isn’t possible to achieve such movement within the constraints of the system itself. The system either needs to be broken down or turned on its head. Social entrepreneurship is a viable career path for many students in that it allows them to start their own business and thus attain real-world experience while contributing to the betterment of society. It is a middle ground that

Business & Startups

The Intercollegiate Finance Journal December 2013

Start Me Up:

Six Startups to Watch by Michael Golz

The Intercollegiate Finance Journal December 2013

The digital future of Marketing

by Alexandra Garcia

eharmony for

not-for-Profits

Offshore Opportunities

For anyone interested in pursuing a ca-

Started in Silicon Valley in 2011, Blue-

CatchaFire bridges the gap between

caused by the U.S. Work Visa system that serve as a barrier to foreign entrepreneurs operating and attempting to develop their ideas and projects in America. The company aims to establish an offshore ship community located in international waters that will allow foreigners to collaborate with American minds and gain access to new resources without the headache of getting approved to work in-country.

in need of talent. Through an interview and resume review process, the company matches applicant organizations with potential professionals interested in working for the cause. Fast Company magazine equates CatchaFire to “an eHarmony

Financial literacy for Families aimed at families with growing children. The purpose of the site is to provide a user-friendly interface so that families can set up a “virtual family bank,” based on chores, allowances, borrowed money from family members and other variables. ty management for children not yet aware of the connection between the completion of work responsibilities cial habits. Any steps forward in proage are a plus in my book.

Business & Startups

The rise of globalization and access to technology has pshed more and more businesses to digital media marketing. The emergence of social media platforms has driven marketing to be more customer-centric, allowing consumers to interact with a business despite the limitations of distance, experience, or other factors. This new age of marketing facilitates the ability for businesses to gain loyalty from their customers by being instantaneously available across various screens— computer, phone, and television. The shift from conventional to personalized marketing establishes a deeper connection between businesses and their consumers. Furthermore, companies will be able to gain business exposure and a greater return on investment, while developing a community of devoted customers.

3d Printing & Biomedicine of the Future

Biotech Innovators

Fresh Water, less energy

Oncosec, a biotechnology startup founded by Punit and Avtar Dhillon, has developed a more effective method for treating melanoma. Their electroporation treatment allows a DNA plasmid drug, which is toxic to humans at the levels necessary to get it into cells through normal cell transport, to enter target cells more easily. This means melanoma can be treated with lower concentrations of the drug. What is really promising about the company is that they market their ImmunoPulse technology as a true consumer product, promising less cancer treatment side-effects due to the lower concentration of drugs. This impressive technology combined with sharp marketing makes it hard to ignore the potential of Oncosec.

Started by Yale environmental engineering graduate Robert McGinnis in 2009, Oasys has developed a method of desalinating ocean water that reduces the energy impact of the process. McGinnis’ innovative method involves drawing water out of saltwater into an even saltier “draw” solution through osmosis. This consists of solutes that allow for vaporization at lower temperatures than the 212 degrees Fahrenheit required for normal salt water, meaning less energy can be

Founded by Keith Murphy and Eric David in 2007, Organovo is a vanguard of a revolutionary new idea: 3D tissue printing. The company has designed the technology and procedures for growing cells in a matrix such that cultures can be grown in 3D, creating full tissue samples. This is a major breakthrough for pharmaceutical companies, which have struggled with the process of pre-clinical drug testing for lack of realistic human tissues with which to perform tests. Even without the capability of printed tissue systems (and perhaps organs in the future), the concept of reducing the development to market time is one to get excited about.

distillation. This is a fascinating company that uses clever engineering to solve the worldwide issue of rising freshwater demand. According to Oasys, global demand for freshwater will exceed supply by 40 percent in 25 years.

Business & Startups

The Intercollegiate Finance Journal December 2013

Carnitas & Coldplay:

from WaylanD to

The an inTroDuCTion To Business from a pre-meD by Jonathan Vu

QuiCK view hours

Investing Banking: 90-100+ hours per week, volatile, “on-call” hours Consulting: 60-80 hours per week, subject to client whims as well

eXiT opportunities

Investment Banking: Private Equity, Hedge Funds, MBA, Industry Consulting: Private Equity, Hedge Funds (though Bankers), Entrepreneurship, MBA and other Grad School, Industry,

noTaBle firms

Investment Banking: Goldman Sachs, J.P. Morgan, Morgan Stanley, Credit Suisse, Deutsche Bank, Barclays, UBS, Citi, Bank of America Merrill Lynch Consulting: McKinsey & Co., Bain & Co., The Boston Consulting Group, Booz and Company, Deloitte Consulting, Monitor Group, Olivery Wyman, Accenture, IBM

noTaBle people

Investment Banking: Jim Cramer, Hank Paulson, Erin Burnett, Tony Blair, Steven Rattner Consulting: Mitt Romney, Meg Whitman, Benjamin Netanyahu, Ira Magaziner, Bobby Jindal

The Big Three vs. the Bulge Bracket I came to Brown as a pre-med, and as a member of the Program in Liberal Medical Education (PLME) concentrating in Public Policy and American Institutions, I can unabashedly say that until this summer I had no idea what an investment did, let alone the difference between the two. However, after speaking with a Brown alum now at Boston Consulting Group and an uncle who put some time in at Goldman Sachs, I’ve found that opportunities for those of you who just can’t stand another SN2 reaction. Even if you are set on Wall Street and have found yourself attending information sessions ad nauseum this fall, I feel for you; even blur together. As a result, I offer the following distinctions between investment banking and management consulting to get you on your way. What does an investment bank do? What is management consulting? An investment banker provides two services to its clients. First, she helps companies to raise money, either by issuing stock (an ownership in the company) or debt (basically, an I.O.U). Second, she can provide certain advisory services, such as helping its clients decide whether to acquire another company. Management consulting is the practice of advising senior business execuciency and overall performance of their serve businesses, but may be hired by as well. Consultants are expected to research case-related information, derive insights, and communicate solutions to their clients. Life as an analyst or a consultant Hours for investment banking typically run from 90 to 100 hours a week. Often-

Business & Startups

business model

times, these hours are volatile, meaning analysts or investment bankers are often “on-call.” Those who work in investment with the rare opportunity to travel to client sites. Investment bankers usually earn around $70,000 a year, often accompanied by a $60,000 to $70,000 bonus. Consultants work a 60 to 80 hour work week, and, like investment bankers, are also subject to the working needs and whims of the client. Those who work in management consulting travel frequently, usually accompanied by weekly checkusually earn around $75,000 to $85,000 a year, plus other bonus matching proExit opportunities Coming from investment banking, employment opportunities are typically in private equity, hedge funds, or industry. Returning to school and receiving an MBA is always an option. Management consulting often leads to jobs in private equity, hedge funds banking does), entrepreneurship, inin the public sector. Just as with investment banking, those who work in management consulting often go to graduate or business school upon their departure from the industry. Interviewing The interview process for investment banks is characterized by “Super Days,” in which an applicant is interviewed in rapid succession by several members test of endurance for the applicant, and something for which the Bulge Bracket Banks are known. A hallmark of the management consulting interview is known as “casing,” where applicants are asked how they would approach a client issue.

by Camila McHugh Organic Beginnings Chipotle positions itself at the forefront of a fast food revolution under the banner “Food with Integrity.” In 1992, founder Steve Ells was inspired by an assembly line of burrito-makers in San Francisco’s Mission district, and Chipotle was born. Ells’ empire grew quickly, expanding outside Colorado after McDonalds acquired a majority stake in Chipotle in 2001. Chipotle had begun serving naturally raised pork a year earlier when they found that their pork, or carnitas, was not selling as well as other meats. After some investigation, Chipotle found that a partnership with Niman Ranch, a purveyor of humanely raised, high-quality meat, would not only make their carnitas more popular, but also allow them to develop a narrative around the partnership. Ells declared that he did not want to support the disturbing conditions of factory farmed pigs, and public relations director Christopher Arnold recognized the potential in emphasizing Chipotle’s commitment to naturally sourced ingredients. Now, the majority of chicken and meat served at Chipotle is naturally raised, 40 percent of the beans are organic. Chipotle serves

50 percent of an ingredient (when it in season) from a local grower. Chipotle’s stock went public in 2006, and immediately rose. It continues to climb—today, it is near its all-time high at 433.4. Food with Integrity Chipotle’s “Food with Integrity” campaign, expressed largely in qualitative terms of commitment and goals, is ultimately just as strategic as it is revolutionary. Initially, Chipotle misgauged public interest in sustainable food as a means of maintaining long-term customers across the country. CEO Mark Crumpacker commented that Chipotle had overestimated their customers’ concern about animals and the environment: “It turned out to essentially not be true, only 20 to 30 percent of those people actually care about that stuff.” Chipotle also suffered attacks for its lack of transparency; it became unclear what “integrity” really meant. Hesitating until after a vocal protest outside its headquarters to sign a contract with a tomato pickers’ NGO, which placed a penny per pound surcharge on tomatoes, tarnished Chipotle’s reputation. In turn, Chipotle launched an initiative to attract new cus-

tomers and re-inspire existing ones to eat their burritos with pride. Chipotle realized that its brand could not depend on the assumption that touting their conscientiousness would draw customers. They had to generate content to garner interest in food integrity as a concept. The company debuted this shift most clearly through their award winning commercial “Back to the Start,” which featured music from Coldplay performed by Willie Nelof the viewer, inspiring him or her to support a sustainable food system, and lends Chipotle the image of a committed purveyor of naturally raised food. The recently released “Scarecrow” advertisement and app follows a similar narrative ultimately, a lone farmer breaks out from a factory farming dystopia. The caring consumer Such advertisements are indicative of Chipotle’s “Cultivate a Better World Campaign,” which revolves around the establishment of an emotional connection with the customer, usually through descriptions of their commitment to the food awareness cause. Chipotle continues to accomplish its goals. It has grown to reach nearly 2,000 locations, and it recently opened ShopKit, a similar business model for a streamlined build-yourown South East Asian inspired bowl. If Chipotle wants to remain a leader in this movement, its next step should be to increase its credibility by quantifystandards. Chipotle has the potential to transform the relationship between fast food and sustainability but must reveal the facts behind its feel-good burrito to legitimize its model.

Interactive Features

The Intercollegiate Finance Journal December 2013

quiz: Where in the world should I go for a career in finance? by Caroline Vexler

Where would you go on an ideal vacation? a. The Middle East b. Central Europe c. China d. The United Kingdom e. Asia f. Western Europe

What is your favorite food? a. Shawarma b. Frankfurters c. Chinese food d. Fish and chips e. Sushi f. Chocolate

What kind of city do you want to live in? a. Up-and-coming b. Many tourist options c. Crowded d. Old and cultured e. Fun f. High quality of life

How high can you afford a cost of living? a. Low b. Moderately low c. High d. Moderate e. Extremely high f. Very high

What climate do you prefer? a. Extremely hot b. Temperate c. Humid d. Rainy e. Hot summer/mild winter f. Windy

What languages can you speak? a. Arabic and English b. German c. Mandarin or Cantonese d. English only e. Japanese f. German, French or English

Check out your result on our website, www.theifj.com!

Word search: College Financial Aid Terms to Know by Caroline Vexler

J X A T E P V N Q V L K C

P X B W O J T V Y O H G R

J X I U K H N W A E P R I

F M X X J H C N Y G F X X

Q F A F S A S Q S O X Y S

I I Y Q C K X S I D H Z T

S P I H S R A L O H C S N

L O N W O R K S T U D Y A

N O I T I U T K O W U Q R

V A X S X N A W A R D K G

P D R A O B D N A M O O R

E J Q M R Q C W C B O L E

F I N A N C I A L N E E D

Words Award FAFSA Financial Need Grants Loans Room and Board Scholarships Tuition Work Study

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