Business & Society: The Evolving Landscape

p.10 I n te r v i ew wit h PAU L VOLCK E R : Ch a i r m an o f T HE VO LC K E R ALLIANCE

p.22 Corporate PHILANTROPY: INCENTIVES and ETHICS

p.31 St a n d i n g O U T Ea rl y: How College STUDENTS Are Rei nven t i n g ENTR EP R ENEU RSH I P

p.4 4 In tervi ew with R O B ERT J. HU GIN : C h a i rm a n | C EO of C ELG ENE

WORDS FROM THE

EDITOR A

s I sat down to write this letter, unsure of where to start, I browsed the Business Today archives and found that thirty years ago in the spring of 1975, we published an issue of the magazine titled “Business and Governments.” The cover is a relic of the age; a comical series of line drawings showing slide projectors, twisted phone cords, Uncle Sam, women clutching their purses as they enter the workplace. A corner is occupied by a chipper young man with very plaid trousers and a rather severe side part reading a newspaper simply titled “Wall Street.”

Thirty years later, we are asking many of the same questions but in an entirely different context. The dynamic relationship between business and society remains a landscape in constant flux, but as students, we hold more power than ever before. Within this issue, we look at student entrepreneurs, investigating what has made them succeed in ways our 1975 editors could not have imagined. The office drama of twisted phone cords has been replaced by omniscient iPhones capable of tracking every step you take, literally. 1975’s downbeat cover story asking about détente, trade, and “conflicting ideologies” between the US and the U.S.S.R. is replaced by a generation of students eager to explore the world through internships instead of vacations, from Oslo to Cambodia.

But this is not to say that the problems within the relationship between business and society that existed in 1975 have been completely eradicated. The question of how to help women advance in the workplace remains rightfully fresh on everyone’s lips. New technologies such as egg freezing certainly add dimension to the work/life balance debate, but we remain years away from true equality both in and out of the workplace. After all, in 1975 a woman earned 59 cents to a man’s dollar, and today’s number, 78 cents, leaves ample room for improvement.

Beyond the boardroom, we have yet to figure out the best way to structure this intricate relationship politically. Business Today’s Executive Editor, Edward Xiao, and I spoke with Paul Volcker about the widespread reverberations of the Great Recession, the transformed regulatory environment within financial services, and what this means for all sectors of the population, from bankers to consumers. More generally, our discussion tried to address the “what happened” surrounding why government attracts fewer and fewer of the best and brightest college grads. His answer? It appears “stodgy and inefficient.”

The business landscape is punctuated throughout by dichotomies – private and public, corporate and entrepreneurial, domestic and international – all looking to profit at the end of the day and increasingly realizing that they can do so while maintaining a social conscience. Perhaps this is because they see a benefit to the corporate morale, or perhaps it is because they have seen the countless studies explaining how millennials not only hold massive purchasing power, but also expect the companies they support to give back in some way or another. So then what’s next?

As millennials age, and if this trend continues, have we reached an age in which businesses see conscience as profit?

At Business Today, we believe that it is vitally important for our organization to foster communication between business leaders and the next generation of students entering the workplace. And as part of a generation with incredible economic clout, it is also incumbent upon us to use our spending power wisely. But this is impossible if we are not well informed. It thus stands that at Business Today, our most important job is to document, analyze, and illuminate our present, crystallize our past, and try our best to look into the facts of a future where our consumer conscience becomes our corporate mantra as we become the business leaders of tomorrow.

CHANDLER STERLING EDITOR-IN-CHEIF

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The BT Team

Business Today is America’s largest student-run publication. Published at Princeton University, the magazine is distributed at over thirty of the top schools in the country and has extensive online readership at our website, www.businesstoday.org.

Business Today is dedicated to presenting the opinions of students and business leaders. By examining controversial issues facing our world and exploring life after college, we hope to help readers prepare for their futures. The magazine has been published by Princeton University undergraduates since 1968.

VAASVI GOYAL President ERIC DOBOSH Director of Strategy CHANDLER STERLING Editor-in-Chief of Magazine ISABELA PENA-GONZALEZ Editor-in-Chief of Online Journal COLLEEN KANG International Conference Director KELLY ZHOU Startup Conference Director OLIVER QUINTERO Seminar Series Director KRISTEN MCNIERNEY Director of Membership & Outreach EMILY SPEYER Director of Web,Tech & Analytics MIHIKA KAPOOR Director of Design STERLING SIPP Director of Finance & Corporate Contacts DANIEL TORO Director of Investments Business Today Princeton University 48 University Place Princeton, NJ 08540 609.258.1111 magazine@businesstoday.

Business Today is a publication of the Foundation for Student Communication, Inc.. FSC, a 501(c) (3) non-profit foundation, is run entirely by students for students at Princeton University. In addition to the magazine, FSC sponsors International and Regional Conferences held across the country that bring together students and executives to discuss the future of business. For more information, visit our website, www.businesstoday.org.

Photo by Allegra Dobson

CHANDLER STERLING Editor-in-Chief of Magazine EDWARD XIAO Executive Editor of Magazine ISABELA PENA-GONZALEZ Editor-in-Chief of Online Journal ISABEL CASSERLY Executive Editor of Online Journal MIHIKA KAPOOR Director of Design NATALIA PERINA Magazine Business Manager MELISSA FULENWIDER MATTHEW LUCAS ANNA POUSCHINE Editorial Board

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Editorial

Ayesha Ahmed Hammad Aslam Isabel Casserley Jason Choe Jamie Downey Rebecca Fleming Ali Hayat Laura Herman Tim Lau Seyi Lawal Mo Luo Kai Lu Lucas Mazzotti Carly Millenson Liz Ostertag David Sahar Katherine Shifke Isabel Shipman Christina Styer Tammy Tseng Amelia Xu

Design

Kaitlin Demarest Hiba Elbuluk Elaine Fang Natalia Perina Cover design by Mihika Kapoor

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p . 6 BT B I TS : A p p s f o r

P R O DU C T I V I T Y

STUDENT PERSPECTIVES

CAPITAL

BT BITS

B U S I N E S S T O D A Y

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PAUL VOLCKER : Chai rman of T H E VO LCKER AL L I ANCE Busi ness Lead ers i n P O L I T I CS

H ow Col l eg e STU D ENTS Are Rei nvent i ng ENT R EPR ENEURSHIP ENT R EPR ENEURSHIP: The NEXT GENERATION of CEO’s

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JOH N PH I L L I PS : Chai rman | CEO of AR I STOT L E, I NC.

p. 22 Corporate PHILANTROPY

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JONNY CO H EN : Found er | CEO o f GR EENS H I EL DS

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JACK H AR R I S : CEO | Presi d ent of JA GEOR GI A

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BI L LY MCFAR LAND : Found er | CEO o f MAGNI S ES

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EGG-F R EEZING: A Solu tion to the W O R K/ LIFE Bal ance TH ER A N OS : How ON E DROP of Blood Can Have a R IPPLE EFFEC T In ter view wi th R OBER T J. HU GI N: Ch air m an | C EO of CELGEN E

INTERNATIONAL

TECH & MARKETPLACE

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HEALTH

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BT E XP LO R E S N e t N E U T R A LI T Y: Wh o WO N ?

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Private Se cto r: H ow a GR A IN STO R AGE WA R E H O U SE Tu rn e d in to a Th rivin g Fa m ily Bu sin e ss

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BT BITS

BT BITS Apps for Productivity

By Amelia Xu

As our world becomes increasingly digital, it is only sensible that we rely more and more heavily on technological innovation to facilitate our daily life. The advent of laptop computers and smartphones has simplified day-to-day activities by bringing us within reach of ample information, and the constant development of apps featuring innovative technology has served to facilitate this purpose.

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TIMEFUL Timeful is the app for those who are overwhelmed by the numerous activities they have to balance. This impressive hybrid app with a to-do-list and calendar strives to “reduce stress, increase productivity, and bring better life balance,” according to the website’s mission statement. This beautifully organized app features a powerful algorithm that figures out the way you work, based on your use of Timeful and information gathered from all of your existing calendars. Then, it makes suggestions about how you can get more done in a shorter amount of time, all on a personalized basis. Timeful is perfectly suited for working adults, college students, or anyone else with a lot on his or her plate, and is effective at managing workloads, meetings, and extracurricular activities. https://timeful.com

EASILYDO EasilyDo works as your very own portable personal assistant. The app connects to a variety of online services such as email, Facebook, Instagram, weather, and calendar. From there, you can set the app to automatically complete certain tasks on your behalf. For example, EasilyDo can be set so that whenever it spots a phone number, say in an email, it will save that contact to your address book. It’s little tasks like these, which usually add up to a significant chunk of your day, that this innovative app can easily take care of. Priding itself on saving people time and providing its users greater convenience, this app is certainly one that we will be hearing more about in the near future. https://easilydo.com

CLOZE Ever feeling exhausted by all the information arriving to you from different communication channels? If so, Cloze is here to help. This relationship management app collects information from various social media platforms and communication channels such as Facebook, Twitter, LinkedIn, email, and phone calls, to organize all incoming information by prioritizing based on relevance and importance. It can even help keep track of meetings and documents. The unique algorithm devised by this startup allows Cloze to pride itself on being “automatic, smart, and proactive.” It eliminates unnecessary busywork by initially integrating and processing this info, allowing users to be much more productive with their valuable time. https://cloze.com

POCKET In this fast-paced day and age, we all know the feeling when we come across something interesting that we want to read, but simply don’t have the time to at the moment. When we want to revisit it later, the article is nowhere to be found. Pocket is an app that provides a clever solution to eliminate this problem. Come across a cool picture, video, or article? Simply put it in your Pocket, and the app will preserve it for later viewing. What’s more, Pocket will actually save the content of the material, not just the link, so that an Internet connection is not even needed to view the content - perfect for long commutes. This app is simple, yet surprisingly meaningful. https://getpocket.com

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CAPITAL

PAUL VOLCKER Chairman The Volcker Alliance

Paul Volcker was Chairman of the Federal Reserve System from 1979 to 1987. Following this position, Mr. Volcker became chairman of Wolfensohn & Co., a prominent New York City investment firm. He was a founding member and chairman of the President’s Economic Recovery Advisory Board from 2009 to 2011. In 2010, President Obama proposed bank regulations that were dubbed “The Volcker Rule” after Paul Volcker.

Paul Volcker earned his bachelor’s degree from Princeton University and his master’s degree from Harvard University. He attended the London School of Economics as a Rotary Foundation Ambassadorial Fellow, part of a program providing humanitarian services through business and professional leaders. Mr. Volcker appeared in the popular 2010 documentary Inside Job and is known for his unconventional financial views.

Chandler Sterling: After graduating from Princeton, what motivated you to pursue a career in government?

Paul Volcker: After graduation, I wondered, “should I go to graduate school and get a PhD in economics? Law school?”

Either way, I had some feeling that I might end up in government. Where I went is the place that gave me the biggest fellowship – Harvard Graduate School of Public Administration. I got fascinated with economics – money and banking in particular, so I started in the Federal Reserve. I went into private banking for a while, then back into government and stayed there ever since.

Edward Xiao: What was the motivation to go from the Federal Reserve to private banking?

PV: I was at the Federal Reserve and it was a pretty stuffy bureaucracy. I’d been there a few years, and had some very interesting experiences, but someone came along and offered me a position as the Chief Finan-

Government isn’t working very well.

It doesn’t seem exciting compared to all the technological change and the money you can make on Wall Street. Government seems both inefficient and stodgy.

cial Economist in private banking, which I took. My old boss at the Federal Reserve later became the Under Secretary of Treasury and said, “Why don’t you come back down to the Treasury?” So I went to the Treasury, then back to the bank, and again to the Treasury.

CS: How have you seen public opinion towards government and regulation change from the start of your career to today? What has changed?

PV: When I got out of college, we had just won a great war, and the United States was on top of the world. There was the recovery in Europe, along with new economic development, and we had come out of the great depression with a great sense of challenge. It got a little dull in the 1950’s, but then Kennedy came along and there was great excitement about the “new frontier” There was a lot of prestige associated with going into government.

Not really anymore – as I understand it.

Government isn’t working very well. It

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There is no shortage of speculative trading in today’s markets, but the question here is if you’re in a part of finance that’s heavily protected by the government (as banking was during the crisis), conducting risky business that isn’t relevant to the public interest is questionable.

doesn’t seem exciting compared to all the technological change and the money you can make on Wall Street. Government seems both inefficient and stodgy. I don’t think it has to be, but that’s the issue. Back in the “good old days”, take an agency like the SEC or the IRS: those were prime places for a young lawyer to go to. They had a mission of collecting taxes and rooting out corruption. The SEC is a guardian of financial markets. You could go to those agencies for a few years, and that was like an extra degree, like getting a PhD. If you had worked for the IRS or worked for the SEC, then all the big law firms would want you. You had good training and experience. It still happens now, but not so much.

They aren’t getting the cream of the crop like they used to. From my point of view, that’s too bad.

At some point before the crisis (and it’s still high now), finance accounted for almost 40% of all the profits of all countries. The size of the industry and number of people working in it is nowhere near 40% of the country. That’s an indication of a swollen finance industry.

CS: How do you think the financial atmosphere has changed since the crisis with added regulations, and what does that mean for the place of the financial services industry within the wider U.S. economy?

Do you see further room for improvement?

PV: From one point of view, there’s too much regulation, but when you look at the crisis, you begin to understand why there’s

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a great desire to regulate – to prevent the massive dislocation that took place in markets that were relatively unregulated at that time. There had been a feeling that got quite pervasive, supported by many economists, that markets would take care of themselves. Detailed regulation was a mistake, and who knows how to better assess the risks than the people running the business? Under some circumstances, that’s a reasonable proposition, but that theory fell apart when we were faced with the massive crisis and massive unemployment. People looked at it and said, we have to prevent that from happening again. That means some things that weren’t regulated before had to be regulated now. Traditional regulation has been focused on the banks, and still is, but a lot of trading is going on in the financial markets outside of the banks – they’re not as comprehensively regulated as banks.

EX: How does the Volcker rule aim to change finance in the future?

PV: There is no shortage of speculative trading in today’s markets, but the question here is if you’re in a part of finance that’s heavily protected by the government (as banking was during the crisis), conducting risky business that isn’t relevant to the public interest is questionable. Speculative trading is more related to the private interests of the people doing it than the public interest. Banks are protected because they lend money, and they keep track of the payment system and the money supply.

Those services have been around for cen-

turies and are important for the economy.

Having those same institutions take on a lot of extraneous risks, not in developing new technology or new efficiencies in business but trading to make their own money should not be allowed for government-supported institutions.

For some, it can be a satisfying career, but I hope the talents can be spread more widely.

CS: Then what’s next, and what does it mean for the next generation of college graduates?

PV: It has become a lot more complex, that’s for sure.

PV: In the old days, among the options you’d have is going into government.

That’s much less true now, and that’s too bad.

Twenty-five years ago when I became a professor at Princeton after I left the Federal Reserve, a student came to my office once and asked if I had a few minutes to talk. He said, “I’m being offered a job at several investment banks in New York, and I wanted to know which one you’d advise me to take.” “Why are you interested in this at all?” “I just got my PhD in aeronautical engineering.” “You just spent all that time getting a PhD – why are you fooling around with investment banks in New York?” He looked at me as if I was nuts. “If I go to Boeing, I might make 40,000 dollars a year and they’ll give me a golden watch when I retire 40 years from now, making 60,000 a year. If I go to Goldman Sachs in New York, I’ll be making 100,000 the first year.”

And that’s why a lot of people like to go into finance. I’m not sure the attraction is still as great as it was 5 or 6 years ago before the financial crisis, but it’s still there.

EX: How do you think the financial services industry has changed over the years?

Do you think it’s good that people are coming up with new products to invest in?

I’m not a believer that financial innovation does all that much good because one byproduct is greater complications and obscurity, with more risk rather than less.

When new types of derivatives came out, like credit default swaps, people argued that the products would deal with uncertainty and risks in such an efficient way that we wouldn’t have to worry about big collapses. I think in a way, they haven’t helped prevent crisis. They’ve become a speculative vehicle in rather than just an insurance policy.

I read an interesting example this morning in the paper. Approximately 1/3 of the costs of an airline are fuel. If prices of fuel go up or down, that has a big impact on airlines. As I understand it, traditionally, they didn’t hedge using derivatives. It was the same for everybody – if the fuel costs go up, the companies increased prices. But then some airlines began hedging, and that messes it up because then your competitor is in a different place. You don’t face the same price anymore with a competitor who’s hedging if you’re not. The piece in the paper this morning asked, “Why aren’t

air fares going down when fuel costs are going down?” Part of the answer is that many airlines had hedged against a change in fuel prices, which means that fuel costs for them were not going down, since they had protected themselves against an increase AND a decrease. Here is a case where it’s arguable whether that industry or the country as a whole has profited a lot from derivatives.

Another case is if your financial life depended on a crop that comes in once a year, and your profitability could depend on the price being at or above the correct price “X”, you may want to hedge that because if the price goes way down, you’re financially sunk. If the price goes way up, you’re profitable, but you can’t take risk of a big decline. If you have enough money that you don’t need to worry too much about the gains or losses in any particular year, then why pay the extra money it costs to hedge? Turns out that if your investment banker says that’s what you ought to do, a lot of people do it. There are the wellknown cases in Birmingham, Alabama and Orange County, California a few years ago.

They are good examples of sophisticated investment bankers selling the county treasurer all these fancy derivatives. Turns out they were profitable mainly for the investment banker and not for Orange County or Birmingham.

So we’ve got to be careful!

Interview by Chandler Sterling and Edward Xiao

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The Engagement of Business Leaders in Politics Should They Take a Stance or Stay Quiet?

By Melissa Fulenwider

A

s participants in modern society, corporation and the business leaders who run them often have clear political stances. While some corporations choose to make their opinions about political issues public, others prefer to conceal their views from public eyes. Should CEOs and VPs from major corporations broadcast their political and social opinions or should this information remain private?

From a normative standpoint, there is no clear right or wrong answer, but it’s interesting to look at the public’s preference.

On October 29, 2014, Global Strategy Group (GSG) released the second edition of its annual study, “Business and Politics: Do They Mix?” The study sought to determine American public opinion surrounding the extent to which businesses should engage in politics. The study took a large sample of adults 18 and older, and demographically matched the U.S. Census values on variables pertaining to race, ethnicity, religion, gender, and income, to get a representative cross-section of public opinion.

The study found that 56 percent of Americans believe that “corporations should stand up for what they believe politically regardless of whether or not it is controversial,” while 44% believe “it is inappropriate for corporations to take a stance on a polit79% of Americans believe corporations should cast an opinion on political issues that influence their business

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ical issue that has nothing to do with their business.” Interestingly, these preferences had been reversed in the Fall 2013 study.

In order to understand the broader implications of this study, let’s first break down four key questions that were asked.

First, GSG asked individuals if they believed that corporations should openly discuss their political opinions. 77 percent of Americans said yes—a 5 percentage point increase from 2013. Next, GSG found that 79 percent of Americans believe corporations should cast an opinion on political issues that influence their business, and 80 percent believe corporations should also engage in societal issues—both increased since 2013. Lastly, GSG found that 89 percent of people believe corporations can bring about social change, demonstrating an 8 percentage point increase from the 2013 study. What changes could be leading Americans to increase their support for social and political activism from corporations?

Upon recognizing the impact that corporate activity can have on a particular cause, it is likely that people are increasingly aligning their customer loyalties with companies that share their beliefs. As GSG discovered, corporations have realized how taking a stance on political and social issues 80% believe corporations should also engage in societal issues

not only allows them to spread awareness to a broad audience about issues that affect them, but also boosts their business. Taking a public stance is a heavy decision, however. Business leaders need to take into account the current opinions of their target audience, as well as try to anticipate how public opinions might shift in the future. In this way, the engagement of businesses in political and social issues is not purely philanthropic - it is also strategic.

For risk averse companies that do not want to make controversial statements, GSG concluded that promoting environmental conservation is generally a neutral stance that companies can take without risk to their bottom line. Voicing opinions about heavily controversial issues, however, rarely goes under the radar. It may result in positive payoffs, but it also has the potential to leave the company backpedaling for years. Chick-fil-A, for example, ran into trouble in 2012 when its president, Dan Cathy, made a statement that was interpreted as denouncing same-sex marriage.

Chick-fil-A, in the words of GSG, “fueled the rallying cry” for supporters of gay marriage and is still apologizing for its misstep.

How have other companies gone about making their social and political opinions widely known? Several have used an external event that directly affects the wellbeing of the company and its customers. For instance, after supporters of firearms rights posted up with rifles outside one of its Texas restaurants, Chipotle advocated for gun control. While taking a stance on such a controversial issue may have been a risky move in other contexts, Chipotle was wise to promote it under the objective of creating a safer environment for its employees and customers. To name a few more examples, Walt Disney promoted an increase in the minimum wage, Nordstrom, Expedia, JCPenney, and Chevrolet advocate for legalizing same-sex marriage and LGBT equality, Costco supports sustainable fishing practices that reduce bycatch, and Nike has a pro-environment stance.

56% of Americans believe “Corporations should stand up for what they believe politically”

44% believe “It is inappropriate for corporations to take a stance on a political issue that has nothing to do with their business”

Public Opinion:

28% 2013 72%

Given these examples, companies must carefully consider the best ways to ensure that getting involved in a particular political or social issue is the right decision.

Common guidelines suggest first, that companies evaluate the scope of a particular issue and the time horizon needed to make a difference before getting involved.

A goal that seems unfeasible will be less likely to inspire customers and less threatening to opponents. Second, a company must anticipate how its audience will react to its stance and give special attention to the opinions of millennials, a generation with incredible purchase power. Third, it must know all of the nuances and implications of an issue before lending support to it. It is much easier to put out a statement than to retract one. Fourth, incorporate your company’s support of a particular issue into the long-term objectives of the company, and ensure that the issue is publicly supported

Voicing opinions about heavily controversial issues rarely goes under the radar. throughout the company’s ranks. As Ken Powell of General Mills put it, “Done right, social engagement is incorporated into the mission of the company, which means that the CEO must be the person who shapes the agenda and communicates the message around it.” Lastly, focus on specific issues, rather than political parties. In other words, since supporting political campaigns is complicated and often leads to polarization, it’s often wiser to take a stance on a specific issue.

Certainly, while some companies may choose to weigh in on elections through

publicly supporting one candidate or another, others express support more privately. GSG asked survey respondents to identify the party affiliation (Democratic or Republican) of 24 different companies.

As the study found, 22 out of the 24 companies displayed clear political identities.

For example, 77 percent of respondents reported that Nickelodeon was Democratic, and many reported that Tiffany & Co. was Republican, despite a lack of overt support for any particular political issues from either company. Even if a company chooses not to declare political opinions, people may still perceive it as either Democratic or Republican, and in the end, this perception is what matters the most to the company’s brand and reputation.

The debate over mixing business and politics is important not only from the perspective of businesses, but also from the perspective of consumers. Regardless of whether someone believes that it is right for business leaders and corporations to articulate political beliefs, it has become a common practice. As a college student highly influenced by branding and corporate innovation, I find it particularly important to recognize the ways that the political opinions of businesses, particularly the brands we loyally use, can shape our opinions without us even realizing it.

GSG’s study reminds us how powerful it can be to place our loyalty in companies whose stances align with our own political and social agendas.

We won’t know until Fall 2015, when GSG’s third annual, “Business and Politics: Do They Mix?” study is released, if the American public will continue to increase its support for the intervention of business leaders in politics. For now, however, it is worth reflecting on what our own opinions are about this debate and working to understand how we can behave as a more informed consumer.

72% of Americans believed that corporations should openly discuss their political opinions

19% 2013 81%

81% of people believed that corporations can bring about social change

23% Present Day 77%

77% of Americans believe that corporations should openly discuss their political opinions

Present Day

11%

89%

89% of people believe that corporations can bring about social change

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JOHN PHILLIPS Chairman | CEO Aristotle, Inc.

John Aristotle Phillips is CEO of Aristotle, Inc., a Washington D.C.-based political data mining company. Aristotle, Inc. has been revolutionary in bringing technology to politics, which has affected campaigning, consulting, and data availability itself. By making data public, Aristotle has changed the playing field of political campaigning and fundraising. Every United States president has used Aristotle’s data and services since Reagan for its unrivaled cutting-edge data and technology. Phillips started Aristotle, Inc. with his brother, Dean, in 1983. Prior to this, Phillips had already gained fame through a 1977 term paper in which he reportedly built a nuclear bomb that was classified by the FBI after Pakistani buyers contacted him for his designs. Phillips graduated from Princeton in 1978.

The notoriety that came with my physics project at Princeton got me interested in how public policy is made, and that grew into an interest in politics and political campaigns...

Isabel Shipman: You came into the national spotlight at a young age in the late 70’s when you alerted the public and policy-makers to the dangers of weapons proliferation by designing a nuclear weapon for your senior thesis at Princeton. How did this experience contribute to the creation of AristotIe International?

John Phillips: My younger brother and I started Aristotle from the ashes of an unsuccessful congressional campaign. I was the candidate and he was the campaign manager, and together with the help of some of my Princeton classmates and others who shared our concerns about nuclear proliferation, or just wanted to get into politics themselves, we mounted a great campaign, winning the Democratic primary in an upset, but then lost the general election. With a campaign debt and student loans to pay back, we all needed jobs. We liked politics and in particular the thrust and parry of campaigns, and Dean had written a computer program – the first,

... because that’s where you principally make issues adjucating any legislation as serious and as brave as the spread of nuclear weapons.

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The disruptive part, and the part we’re most proud of over the years, has been empowering campaigns with the means to go outside the traditional party structure.

by the way – for any campaign. Word spread about the program we called “Campaign Manager”, a few democrats and republicans asked for it, and pretty soon we figured out we could sell it.

That’s how Aristotle was started.

IS: How do you compete with the national political parties and SuperPacs, who often seek to squelch competition from primary challengers?

JP: We have to be better in every way that counts. Whether we’re competing for customers or competing for employees, Aristotle’s ideal customer or employee is looking for the very best. And so we need to attract the very best people who will work here. Party affiliation is the least of our concerns. It doesn’t matter whether you’re a Democrat or Republican; we just want the best programmers, the best lawyers, the best customer evangelists. It’s why we have won the Award for Top Customer Service from the Public Affairs Counsel every year for the past four years. You don’t have to agree with your boss’ political beliefs, or your boss’ boss’ political beliefs to work here. You do have to be really good at what you do.

IS: Since its founding in 1983, how has Aristotle’s technology evolved?

JP: Our initial insight was the transformative impact of introducing technology into political campaigns. But the disruptive part, and the part we’re most proud of over the years, has been empowering campaigns with the means

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to go outside the traditional party structure. Aristotle was first to build a registered voter list and make it available on a non-partisan basis, accessible to anyone running for public office. We were the first with software dedicated to running a political campaign, one of the first to bring online fundraising to politics, and the first to go mobile.

IS: On the issue of campaign financing, how does Aristotle maintain transparency?

JP: Campaigns at any level have to report certain financial disclosures by law. Between who gets the money, how it’s spent, and so on, there are a number of regulations regarding what you have to disclose. To be able to comply, one of the things Aristotle does better than anyone on thousands of campaigns in the United States alone is help campaigns stay on the right side of the law in terms of finance disclosure.

IS: What advances do you see arriving in the future of campaign technology, and how do you see Aristotle as able to grow?

JP: That’s a tough question. We are always trying to look five or ten years forward, while still doing the best we can with the current election cycle. Part of our focus in the 2016 election cycle, already well underway, is asking how we can help our customers run the very best campaigns, raise the most money, report it accurately, and spend it efficiently.

This isn’t only a question for 2016, but 2018, 2020, and so on. What you need

to do as a CEO of a company as I am is more obvious than what is going to need to be done down the road.

Looking past the 2016 election cycle, what matters most to us is to remain in the number one position and be able to help our customers the most. We need to be embracing new ways for those who want to make a case at the ballot box to do so. That means our customers will need to use social media, for instance, better than anyone. They have to be able to understand how prediction markets work, which we are pioneering at Princeton AND with various universities, and how these markets will influence how campaigns are run and how public policy is made. We need to help our customers not only register voters, but also recognize who supporters are and then focus especially on getting them to the polls on election day.

One other thing I’d like to add is that, Internet voting, remote voting, and vote by mail are going to eclipse much of the traditional methods by which people vote. This isn’t just for local or federal elections, but for all kinds of initiatives that may span the globe. Aristotle has played a role in campaigns from Kabul to Caracas and many thousands of domestic campaigns, and so we’re always looking for ways to contribute to the democratic process.

interest in how markets predict outcomes. There’s also a practical interest among political professionals in alternatives to traditional polling which is increasingly difficult. And let’s face it, PredictIt is really, really fun to play, especially so since you can make a little money being smarter than your friends when it comes to predicting political outcomes.

IS: What was the genesis of the idea of PredictIt, your prediction market platform, and can you explain how you envision the product being used?

JP: It’s all about the data…and having fun.

IS: Do you see this kind of platform eventually shaping future election cycles? What about the voting patterns of young people who might be some of the platform’s most active users?

JP: PredictIt was recently voted one of the most innovative new services by judges at the American Association of Political Consultants. It’s taking off on college campuses by word-of-mouth and through our Brand Ambassador program where students can make money by referring their friends to the site.

IS: Reflecting on both your experience at Aristotle and now at Predictit, you have managed to quantify parts of political sentiment that might otherwise seem unquantifiable. Assuming this trend towards numbers continues, what advice would you give to students about to enter the workforce?

We need to be embracing new ways for those who want to make a case at the ballot box todo so. That means our customers will need to use social media, for instance, better than anyone.

Interview by Isabel Shipman

JP: There is a lot of serious academic

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CORPORATE PHILANTROPY Incentives and Ethics

By Lucas Mazzotti

C

haritable giving and cause marketing are universally recognized as noble, and there are many different types of giving and angles that a particular person or organization can take to benefit a cause. In the case of the individual, philanthropy tends to be as simple as a monetary donation to a cause. In a corporate sense, however, altruistic motives can be (and often are) confused with profit motives.

Decades have passed since the debate over corporate giving began. Economist Milton Friedman wrote a piece in The New York Times in 1970 titled “The Social Responsibility of Business is to Increase its Profits,” in which he argued that a corporate executive is reaching beyond the reasonable limits of what a business should be doing by allocating funds for charity. He believed that shareholders rely on executives to look after the best interests of the company with regards to profit or company growth. Therefore, philanthropy is essentially spending shareholder money poorly. On the other hand, others believe that corporate philanthropy is totally justified. Harvard professors Michael Porter and Mark Kramer addressed Friedman’s argument directly in a 2002 issue of The Harvard Business Review, refuting Friedman’s claims because they failed to recognize the benefits that are granted to a business through philanthropy. Their article is titled “The Competitive Advantage of Corporate Philosophy.”

At times, even interpretations of data seem to contradict one another. A Forbes article last year titled “Giving at Work: ‘The Most Dramatic Shift We’ve Ever Seen’” praised the increasing efforts of corporations to emphasize philanthropy. According to the article, “more than 50% [of] companies [have] increased the number of giving events they offer. Over 90% of companies surveyed give their employees the opportunity to select from a wide and diverse range of charitable organizations.” This article seems to indicate a paradigm shift whereby corporate philanthropy has not only become a given in modern business, but is also being consolidated and centralized to accommodate the desires of Millennials.

On the other hand, a Slate article from last year titled “Why Don’t Corporations Give to Charity?” criticized businesses over the past 30 years for steadily decreasing the percentage of profits that they donate to charity. While corporate donations have increased over time, the “relative generosity… has fallen far down.” The article attributes this decline to the increased pay and shifted focus of CEOs, as well as the poor example set by Fortune 500 companies, which generally give below the average rate.

Why does corporate philanthropy incite such debate? What are the motivations behind giving to a cause, and does this giving ultimately affect profits and the social perception of the business?

The motives behind corporate philanthropy are undoubtedly the reason for contention in the vein of Freidman’s thought.

While the act of charitable giving itself is noble, it also makes for very successful marketing. Philanthropic efforts help foster a good public image, make employees appreciate their company more, fuel a competitive work environment, help the company with branding and influence, and help expand an executive’s or company’s resume.

Public Image Business incentives are molded by consumer preferences. One of the cornerstones of consumer preferences lies with public image of the corporation. A consumer feels better about buying from a charitable company or a socially involved company than a company that does not have philanthropic initiatives. A 2010 “cause evolution” study

by Cone Communications revealed that 83% of Americans wish more of the companies whose products they bought would support charitable causes, 85% of consumers have a more positive image of a product or company when it supports a cause they care about, and 90% of consumers want companies to tell them how they have been contributing to charitable causes.

88% of consumers (middle aged women and millennials in particular - 95%

and 94% respectively) believe that cause marketing is acceptable. Cause marketing is the cooperation between a business and a non-profit organization for a mutual benefit.

One example of this marketing in action comes from Sears Roebuck in 2001. The company donated $50,000 worth of products to needy families, and this action was captured on a nationally syndicated television program, resulting in a sales increase of $13-$40 million (source: Measurement demystified: determining the value of corporate community involvement, by Steven Rochlin, the director of research and policy development at the Center for Corporate Citizenship in Boston) Creating a more valuable environment for employees and consumers Another major incentive offered by corporate philanthropy is its ability to inspire loyalty, confidence, and a sense of purpose in employees. It adds value to the business environment. Porter and Kramer generalize this term and call it competitive context - “the quality of the business environment in the location or locations where they operate.”

There is a positive correlation between the loyalty of employees and the extent to which they are involved in corporate philanthropy events and efforts. In the Cause Evolution Study, 97% of employees who were very involved felt a strong sense of loyalty to the company, compared to 61% of employees who were uninvolved.

In Academy of Management Review, Daniel Turban and Daniel Greening discuss how prospective employees view strong community involvement as attractive for a company. Additionally, employees who have participated in corporate-sponsored volunteer initiatives report higher job satisfaction and loyalty. One example of this is Microsoft’s contribution to various charities for every volunteer hour that an employee works. Since 2005, Microsoft has donated $17 to a cause of the volunteering employee’s choice for every hour he/ she volunteers. After Microsoft announced its volunteer program in Egypt, employee satisfaction increased from 61 percent to 91 percent, according to an August 2010 issue of The Chronicle of Philanthropy.

The motives behind corporate philantropy are undoubtedly the reason for contention in the vein of Freidman’s thought.

Branding A corporation’s sponsorship of a charity or charitable event can have excellent advertising potential. Branding is related to public image in that both associate a company with a cause. Branding is distinct, though, in that its focus is more long-term.

A crucial aspect of corporate philanthropy from a profit perspective is the company’s effort to associate a certain charity with

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the company name. This is achieved most generally in the form of sponsorships. The monthly IEG Sponsorship Report showed that cause sponsorship grew by 3.9% last year and is projected to grow another 3.7% this year. The same report shows an upward trend in companies’ attempts to brand their names onto charitable causes: cause sponsorship spending last year was $1.85 billion, while in 1990 it was only $120 million.

Choosing the most marketable cause to a particular brand is a crucial aspect of branding. Predictive assessments can be made to determine whether charity A or charity B sponsorship will generate more consumer engagement with the brand.

Which charities a company chooses to support is also largely dependent upon the sort of image that the company wants to foster.

An example of strategic branding is the case of Fido, a Canadian mobile carrier.

Launcht.com reports that in 2009, they partnered with an environmental non-profit

organization called Evergreen and allowed people to vote on 20 charities that they believed would make an impact in Canada.

They gave over $100,000 in donations and effectively established themselves as the “Green Carrier” of Canada. They were able to generate a lot of press about being an environmentally concerned company through these efforts and solidified their market presence.

61% of employees who were uninvolved in corporate philantropy events and efforts felt a strong sense of loyalty to the company

97% of employees who were involved in corporate philantropy events and efforts felt a strong sense of loyalty to the company

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Executive Profile

of Corporate Governance for The Conference Board, Inc. reads, “because charitable causes benefit from corporate giving, many stakeholders perceive it as a benevolent and

Choosing the most meritable cause to a particular brand is a crucial aspect of branding.

One of the more controversial aspects of corporate philanthropy is the amount of control exerted by the CEO and other members of the executive board. Executive control over corporate philanthropy can, in some cases, be much more loosely regulated than other aspects of business. A Harvard Law School blog post written by the Director

unconditionally laudable activity.” The post goes on to highlight the ways that an executive can reap personal benefits from charitable giving under his/her company’s name; this includes receiving honors and accolades, benefiting pet charities of family members, and furthering his/her own career by gaining favor with board members.

A study by The McKinsey Quarterly from 2008 reports that in a survey of 721 companies, 45% of respondents indicated that their CEO and board members were responsible for determining the focus of philanthropy. Porter and Kramer write, “Rather than being tied to well-thoughtout social or business objectives, the contributions often reflect the personal beliefs and values of executives or employees.”

The pair argue that corporate philanthropy as it is currently practiced supports Friedman’s argument that corporations should leave philanthropy to the individual.

Arguments about the efficiency, benefits, ethics and disadvantages of corporate philanthropy will likely continue for a long time. One can see corporate giving as an excellent opportunity for a powerful entity to leverage its wealth and capital for a good cause. However, one can just as easily see these efforts as a veiled platform of self-promotion. The loose regulation that allows executives to reap personal benefits through charity and the clear correlation between charitable giving and future revenues do not help the moral soundness of the practice. Contention stems largely from the fact that most do not actually believe that corporate impact in philanthropy is high. According to The Cause Marketing Forum, only 1 out of 5 customers actually believes that companies are making a positive impact on social or environmental issues. Their concerns are not without warrant. Despite the increases in corporate donations and sponsorships each year, corporations are responsible for only 5%

of charitable giving that occurs each year (in 2013 corporations gave approximately $16.76 billion out of $335.17 billion), while individuals are responsible for a healthy majority of over 70% (over $240 billion), according to the National Philanthropic Trust.

There are many doubts and controversies surrounding the true utility of corporate philanthropy. It is hard to imagine that someone would object to a company using its power to make a positive difference in the world by donating, starting a charity, and improving employee morale while doing so. Friedman proclaimed in 1970, “Whether blameworthy or not, the use of the cloak of social responsibility, and the nonsense spoken in its name by influential and prestigious businessmen, does clearly harm the foundations of a free society.� Should corporate philanthropy be condemned or celebrated? Whatever the answer, all that can be said is it gives an undeniable competitive advantage.

Corporations are responsible for only 5% of charitable giving that occurs each year

Individuals are responsible for over 70% of charitable giving that occurs each year

What are companies doing?

10%

90% Over 90% of companies surveyed give their employees the opportunity to select from a wide and diver se range of charitable orga-

50%

50%

50% of companies have increased the number of giving events they offer

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(left) Jack Kosakowski, President and CEO of Junior Achievement USA and (right) Jack Harris, President and CEO of Junior Achievement of Georgia

JACK HARRIS CEO | President Junior Achievement of Georgia

Jack Harris is the President and CEO of Junior Achievement of Georgia. JA is a national and international non-profit dedicated to teaching practical work readiness skills and financial literacy to K-12 students through hands-on programs. JA in Georgia has partnered with Atlanta school districts to deliver a 20-hour series of courses as part of the students’ standard classroom curriculum, working in concert with immersion trips to JA’s own new hands-on learning facilities, “Biztown” and “Financial Park”. The program served 30,000 Atlanta middle schoolers in its first year alone.

Joanna Mieczkowska: For background, please tell us a little bit about your time at Princeton, jobs you worked before your time at Junior Achievement, and how you ended up in the position you’re at today.

Jack Harris: I was at Princeton, graduated 1998, and went through about three different majors. I ended up majoring in politics with a certificate in political economy, and came out of Princeton teaching for a couple of years at a private school in Atlanta.

Really more of just doing that for a couple of years—it was like the private school version of Teach for America. Obviously very different, but the same kind of experience — teaching for a couple of years, then moving on to something else. The something else for me was working as a financial advisor at Smith Barney. I worked there for a short time before I realized there was something else tugging at me, to get involved in something bigger. At that point, I was interested in international economic development and tying back into a lot of my studies at Princeton around international politics. It was at the point in time that I got rather serendipitously hooked up with Junior Achievement through their international operations, not having been familiar with the organization before, but seeing that their organization really aligned with a lot of the areas I was interested in.

I spent 3 years in about 30 different countries doing a variety of different activities with JA. In some cases, I helped brand new organizations and get funding to develop

an infrastructure within those countries. In other cases, I worked with more mature and developed organizations that were looking for a higher degree of board development or interaction with multinational companies. But really, my experience completely hooked me on the mission of JA. What I was seeing outside of the US in terms of this fervor and energy around career readiness, countries taking seriously what JA had to offer, and then bringing that knowledge back into the US when I started about 8 years ago.

JM: Could you please tell us a little more about Biztown and its approach to learning, and what it is that you’re doing at JA in Atlanta?

JH: The way we define our work over the past two years is transforming the way JA delivers on its mission outcomes in financial literacy and career readiness. So even though JA has a long history of about 100 years, the mission has always been the same in terms of connecting students to skills and experiences that will help them be prepared for the future. A lot of the ways this was being done before were getting to be a bit stale. So the concept between JA Biztown and JA Finance Park is to create a very immersive, interactive, authentic environment, where it’s not just concepts being learned, but also put into action in a way that feels really real. When students are there, they’re internalizing those decisions and making applications for their own life

choices that they’re going to end up making in these areas.

JM: Walk us through a typical day of a student at Biztown. What academic planning do they need beforehand? How does Biztown integrate into normal school curricula?

JH: That’s a big change from where things have normally been. So before—and a lot of other places still consider it this way— JA was an extracurricular activity or a supplementary activity coming into the classroom. It might be a particular teacher or a particular school signing up for JA and they’re connecting business volunteers with that school to help facilitate the lessons. The big difference here is that when we set out to build this 50,000 square foot facility and open up a $15 million dollar campaign, we didn’t want to do it in a “build it and they will come” mentality. We wanted to do it in partnership with the school systems that would have a more dynamic impact.

The current one that we have open, it for 4 different school systems, Atlanta Public Schools, and then a few of the surrounding urban counties around the heart of the city. There’s agreements we have with the superintendents, so for each of those programs, there’s 20 hours of curriculum that those students have in the classroom ahead of time that prepares them for their visit to Biztown or to Finance Park. We reinforce those concepts in the classroom that they are then able to put into action, so that cur-

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riculum is now part of core curriculum for these systems. It’s embedded in social studies, it’s mandatory across the board, and we train the teachers on how best to deliver it. I even got the question again yesterday: “so which kids get to do it?” No, that’s the great thing, it’s everybody! It’s truly a part of core curriculum for all middle school students (6th and 7th grade). They get the 20 hours ahead of time, they have the 5 hour simulation time at the discovery center, then there’s curriculum on the back end as well, and we’re starting construction in two months on the second one that we’re building in Gwinnett County, and a similar setup—another 50,000 square feet of space. But the cool thing about this is that between those two centers, there will actually be a quarter of all of Georgia’s middle school students that will have this experience now.

JM: Wow. So you were the founder of this idea of Biztown, correct?

JH: Not originally, no. I wish I could take credit for it. The concept’s actually existed in the JA world for about 15 years. It started in Tampa and then it’s gone through different iterations. What you see in Atlanta is really like the fourth generation of the concept. So in terms of the design, the technology being used, the corporate activation, all of that is really taken to the next level. And what we’re seeing is that because this is downtown in a major metro market, it’s attracting a lot of new attention too, so we’re getting visits from a lot of major cities, and maybe they’ll kick it up a notch.

But really we’re trying to motivate the education communities and business communities across the country to come together in a way that’s going to make learning for students more relevant. So even the ones who may not be doing particularly well academically will feel more engaged.

Hopefully they’ll feel more connected and more motivated about what they’re doing in the classroom.

JM: Could you walk us through a simulation of what a student would go through upon entering Biztown, after they’ve done the 20 hours of curriculum work?

JH: The main difference between the two is JA Biztown is a macroeconomic simulation, whereas for Finance Park is more of a microeconomic simulation. On the macro side, students come in and work on business teams, and at Finance Park they’re doing personal budgeting and household consumer decisions. So for a 6th grader coming in to JA Biztown, there’s 18 different companies. The city itself represents Atlanta, so it’s built out like downtown Atlanta. We’ve got our Centennial Park, we have our World of Coke, a lot of Georgia Brick gets used, and then its companies that have been activated in the space that call Atlanta home—Delta, UPS, the Falcons,

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Rubbermaid, AT&T, Mobility, a lot of these big Fortune 500 companies, but then it’s also other national companies that have a big Atlanta presence. And in some cases, Atlanta’s technology startups—they’re a big part of Atlanta’s economy. The idea is that students come in and they see all these different brands, all these different types of companies that represent the local economy that they probably have no idea about yet. Especially all these different sectors and industries that they might not quite be familiar with. In the classroom ahead of

The business community is looking for tangible, meaningful ways to invest in education in a way that’s going to make a difference. time, they actually interview and apply for which job they’re going to have at Biztown, so 125 kids every day, 125 different job roles: 18 CEOs, 18 CFOs, a Mayor, Marketing & Sales, IT, Operations. When the students come in, they get their positions, their job description, and their roles and responsibilities that they have to carry out for the course of the day, and just like in an MBA simulation where you’re trying to figure out how to price things and market things, and try to get the best rate of return, and manage your expenses, that’s exactly what the kids are doing. And they’re changing their decisions as they go through the course of the day, and it’s a competition between the different companies. Who’s going to draw the most revenue? Who’s going to make a profit? Who can actually pay off their loan to the bank? In the process, the kids are get-

ting paid twice a day, and learning banking services, and making consumer decisions.

So it’s a whole economy that’s running in a 5-hour period, so students get the whole concept of how to plan a business, do the business plan, start up the company, get through a whole marketing and sales cycle, understand how b2b works, exposure to the different pieces. And then, as y’all have seen, the space itself is really hard to describe. It’s one thing for me to talk about what the kids are doing, but when you can see the space itself, that’s what really brings it to life, and people say “Oh wow! This is actually really cool.” So it’s not like you’re going around to cardboard shacks. Also the other thing is it’s not like a children’s museum, where kids come in and they play with the fake apples and all that—it’s not, this is real business. The CFOs are actually working on an accounting software platform as they’re keeping track of their revenues and expenses, so they’re learning real business skills that are going to help them down the road. And Finance Park, they come back as 7th graders, and in this case it takes it down to a much more personal level. They’re each given a different life scenario—age, job, annual income, how many kids you have, married, single, educational background—this whole life persona that kids take on for the day. And they’ll go through this city and it’s a similar setup. They have to figure out what they’re going to do for housing, so there’s a realtor and apartments, they have to decide if they’re going to rent or buy, they go into a KIA storefront to figure out what kind of car they can afford, a clothing store, Publix for groceries, SunTrust for savings, Falcons and Hawks for entertainment, and the big one always is AT&T for cell phones—all the kids want to go there first. But they learn through the course of it how much money it truly takes to live on a monthly basis, how these decisions interact with each other, and that if you just go for the highest options of the things that you want you might forget that you actually need to have a place to live and some food to eat along the way. It really helps the students

to internalize what their parents go through in terms of financial decisions that have to be made, and how to better plan out their own futures, so that whatever lifestyle they think they might want, they can actually make the right decisions now to help them prepare for that.

JM: What has been the student response to this, and how has the community received Biztown and Financial Park?

JH: It’s been pretty amazing, actually.

We’ve had a little over 30,000 students come through in this first year, and we’re getting ramped up to start the second year in August (next month) [August 2014].

I think that when we look at evaluations there’s a couple main things the students go through. The first is when they come into the space there’s this awe of just taking it all in, there’s wonder and excitement at just what this world is at their fingertips that they’re able to explore and consume. But I think the magic of the program is that it’s not just this fun play-day, there’s real meaningful topics for their own lives and as they start uncovering these things through the course of the day it’s changing their entire paradigm, changing their whole mindset on how they think about school and how they think about their futures. So the evaluations that we start getting back are here are students, walking out of there, completely understanding to a much greater degree the relevance of education and the importance of staying engaged in the classroom.

They start recognizing the importance of the types of career decisions and education decisions that they’re going to make along the way. They recognize a little bit more the financial savviness of what it takes to come into a job role, to make a decision.

One thing we’ve looked a lot at is this idea of social capital, that you can learn a lot in a classroom, but until you’ve actually been in an environment where you feel comfortable and that you belong, then it’s really hard to feel like you can actually transcend some of the barriers that you might feel like are around you. And what we’ve found is

that because the space is built up to be so authentic, it actually gives kids that social capital. When they walk into the SunTrust, even though it’s not a real SunTrust branch, it feels like a real SunTrust, so when they go to the SunTrust on the corner of their neighborhood or in the city, they feel like they’ve been there before. They feel like they belong, like “I understand this.” And that goes a really long way in terms of how students then engage in some of these decisions. In terms of the broader Atlanta community, Atlanta metro area has 15 Fortune 500 companies, and 14 of them are deeply involved in this project, and we’re working on the 15th. There were 9000 different business volunteers involved throughout the course of our year. It’s something the whole business community has embraced.

It’s not just something that’s going to help students—it’s like a whole economic development education reform movement.

JM: Why do you think the business community has gotten so heavily involved in your programs? What do you think the main pull for them was? What do you think makes JA Biztown and Finance Park different from other projects?

JH: I think Atlanta is a bit different. There’s something about the Atlanta business community. You can go all the way back to the civil rights movements in the ‘60s, then when Atlanta got the Olympics in the ‘90s…there’s something about the Atlanta business community. When there’s an idea that has civic importance, the business community really leans in together. It did become a bit of a domino effect. As we would talk about the project, at first we got skeptical responses, you know, “Can you guys really pull this off? Will it actually be as good as you’re saying it is?” But as we talked more and more to the major companies and the more we got them to see the vision and align to it, it became that much easier with the other ones we were talking to. I think the other thing also is that—and this stretches across the whole country—I think right now, with everything that’s

being written about and addressed from an education perspective in terms of where the U.S. is lacking…all kinds of measures, math, science, career readiness, post-secondary enrollment—the U.S. is falling behind a lot of the rest of the industrialized countries over the past decade or so.

And the business community is becoming very aware of this and also very concerned about this because this has a lot of implications just for overall economic growth moving forward. And so I think as a whole the business community is looking for ways, tangible, meaningful ways, to invest in education in a way that’s going to make a difference. And there have been some hits and misses to that. I think what we’ve struck a chord with here is that this is a way for the business community to invest in something that is very tangible, very transparent in terms of where the money is going, and something that really aligns to business mission at the same time. And so they can see both the short term and the long-term case for investment here.

JM: One final question—as someone who’s been in business and in the real world for several years and has this phenomenal project, what more general advice do you have for current undergraduate students who are just starting out their careers?

JH: Two things. One is that more and more, no matter what career people go into, the most successful people are the ones who can come to the table with a lot of critical thinking, analytical thinking, problem solving, innovative [emphasized] kinds of ideas.

We’re becoming a nation whose economy is growing based off of the ideas and the innovation of our people, not necessarily any one particular product or another. So one of the encouragements is that no matter what career pathway someone coming out of Princeton [undergrad] might choose, that idea of just leaning in, learning the business but also being proactive in terms of finding new solutions to old problems or really being a seat at the table thinking analytically and helping to drive things. That plays into the second thing—any career right now in any business is lined up not just to drive whatever that business is, but also the greater good. And bringing expertise to the table in thinking not just about business problems but also social problems as well is a good thing. There’s this whole movement around social entrepreneurship and all of these different aspects, and that, to me, isn’t a separate strand that you either go into or you don’t. To me, that’s for everybody. It’s a matter of figuring out where somebody is, but everyone can have some small bit of social entrepreneurship as a part of whatever it is they’re doing.

Interview by Joanna Mieczkowska Transcribed by Matthew Lucas

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COLLEGE ENTR The Next Generation of CEOs:

By Laura Herman

C

ollege students are busy. Between studying for exams, applying to internships, working on problem sets, attending parties, going to sports practices, working in a lab, leading student government committees, and being involved in extracurricular clubs, the average college student barely has time to breathe. Yet, some incredible millennials have found the time to build world-class enterprises. Many investors are learning to appreciate college-based startups for their attentiveness to current trends and use of the most modern technological methods.

Barron Roth, a junior at Boston University, is a co-founder of Downtyme, an app that seeks to integrate friends’ daily calendars and allow them to make plans during mutual free time. Perfect for those awkward hour-long gaps between math class and soccer practice, Downtyme will give you a list of your nearest contacts that are also available to meet up - thus providing a software that bridges the gap between the real world and the universe of social networking. “As a computer engineering major, I literally take things I learn in class one day and apply them to my software the next,” Roth says. Thanks to this never-ending cycle, Downtyme is equipped with the most up to date software and coding techniques. As Roth explains, the downside is that “spending time on homework seems pointless when [he] can apply the knowledge to something substantial.” Luckily, schools like BU are beginning to realize the educational value of such projects: Roth and his team have begun receiving course credit for working on Downtyme.

Valentin Perez, a freshman at Brown University, also notes the benefits of entrepreneurship within a college community. “It’s the perfect place to find co-founders and try out a lot of ideas. If you’re doing something

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related to college students, you have an advantage over older people since you live with your target market and everyone around you can provide very valuable feedback,” he says. In fact, Perez and a classmate recently launched Join, a social platform that seeks to integrate a student’s various social networks into one seamless profile. They are currently distributing Join to their peers at Brown for feedback, a strategy that a middle-aged programmer in Silicon Valley would have trouble implementing.

The spring of energy and ideas coming from college campuses is not unfounded: an impressive number of apps have roots at universities. XFund, Rough Draft, and Dorm Room Fund are all student-run venture groups whose portfolios contain only startups founded by their collegiate peers. At two years old, XFund had raised $100 million in fresh capital. Though confined to a narrow demographic, the funds’ portfolios are thoroughly diverse.

In addition, student startups range greatly in their target audiences. Wigo, founded at Holy Cross as the ultimate “Who’s going out?” app, allows college students to see who is going out and where. Mimo, a software from MIT, allows concerned parents to monitor their babies’ audio and sleep activity on a smart device from anywhere in the world. Grove, co-founded by students at MIT and Harvard, seeks to bring productive aquaponic ecosystems into home kitchens across America.

Trak is a Stanford-based software platform designed to manage and streamline local delivery services for items such as pre-made food or flowers. At MIT, a recent philanthropic startup called Charitweet enables users to donate directly to their charity of choice simply by tweeting. NYU students have founded Suneris, a biomedical engineering firm, after they developed a unique

EPRENEURSHIP Startups on College Campuses

gel technology that is able to stop the bleeding of severe wounds in seconds. Another NYU student, 19-year-old John Meyer, recently dropped out of college to focus on his startup, Fresco News, which crowdsources photos of breaking news events from social media sites such as Twitter and Instagram.

In contrast, 21-year-old Daniel Fine recently chose to remain enrolled in college at the University of Pennsylvania, despite being the founder of four (yes, four) startup companies during his college career. His largest company, Glass-U, has been licensed by universities, music festivals including Lollapalooza, and the FIFA World Cup. Fine was in the second round of the Thiel Fellowship, a $100,000 grant that awards students who choose to forgo college in favor of nurturing their own startup, when he chose to withdraw his application.

“While I understand the appeal of dropping out of college, I’m avidly against it, especially in early years, because of what college does for an individual. From engaging with peers to being a part of a similar aged community, the value of college goes well beyond the classroom to how young adults find themselves, growing and changing as people,” Fine explains. He also notes the corporate advantages of being part of a college community, “From getting opinions to hiring interns and employees right out of your friend groups, the access that a college campus can provide for a startup is invaluable.”

Leora Friedman, who started Music is Medicine while at Princeton University, also notes the benefits of having inspired peers in close proximity. She says, “By collaborating with peers who shared my passion for the mission but also possessed a set of diverse perspectives and skillsets, we were able to envision new, more effective strategies. One of my favorite college memo-

ries will always be sitting in a classroom with my team, brainstorming new ways to refine and scale methods for using music as a vehicle for social change.” Music is Medicine connects critically ill children with musicians; the artists write a song in the child’s honor, which is then officially released on iTunes and YouTube. This is both a thoughtful gift for the child and an uplifting experience for the artist.

Some college startups strike an even more personal chord. At Princeton, Evan Corden, Jack Hudson, and Colin Lualdi were eager to become friends. However, Colin is Deaf and the three were frustrated by the inefficiency of using unemotional written messages to communicate. Together, they decided to form SignSchool, an online platform that provides user-friendly instruction tools for American Sign Language (ASL). While bridging their own gap between the hearing and the deaf, the three students hope to also improve knowledge of ASL across America. Colin wrote to me saying, “the college environment, rich with motivated and aspiring peers, is a treasure trove of some of the most remarkable people you will meet in your life. These friendships can lead to amazing adventures - SignSchool came into existence after I first met my co-founders during a casual dinner.”

So college students: next time you sit down in the dining hall after a day full of schoolwork, meetings, and extracurriculars, be thankful for the wealth of energy and innovation that surrounds you. After all, it could lead to a multi-million dollar collaboration with the friend next to you who says, “Hey, we should make an app for that!”

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JONNY COHEN Founder GreenShields

Chandler Sterling: To begin, can you tell me a bit about how you came up with the idea for Greenshields?

I feel that a very connected world is a much more socially responsible world, and issues like the environment are becoming too big to ignore.

JC: I guess a lot of people could have seen the problem but I think that it’s important not to just think that someone’s going to change it or someone made it or designed Jonny Cohen: I came up with Greenshields it that way. I find that people often just when I was in 7th grade after I took this accept things but if we really want to make class at Northwestern where we built derby things more efficient, we need to question cars and I got excited by the concept of them. We should constantly be questioning aerodynamics. I was thinking about things everything about our surroundings. I think that could be made more aerodynamic and that’s a way we could optimize our exisI came across the school bus as something tence – not seeing things as the way they that could be improved upon. In high are but the way they could be made more school I began to work on it at high school efficient. I have a philosophy that everyat first with one of my physics teachers. thing can be improved and it’s just a matter Then after I got a larger grant from Pepsi of time until someone does it. for 25,000 dollars we partnered with the Northwestern Segal Design Institute and CS: What were some of the biggest chalstarted researching, building, and optimiz- lenges you faced in this process? ing a prototype. We went through wind tunnel tests, virtual wind tunnel tests, and JC: Right now the biggest challenge is regeventually on to road tests. We started a ulations. In the beginning it was trying to pilot program in April 2014 and now we figure out where to go and where to start, are working on projects in Florida and Illi- and I think if you search around and send nois, which are super exciting. lots of emails someone will take an interest in what you’re doing. Especially if you’re CS: What motivated you to take this idea fortunate enough to be a student. and transform it into a reality, versus being intimidated by the prospect of starting CS: Do you think college campuses in something? general are equipped to help startups and

entrepreneurial students achieve their potential?

JC: I do. I got accepted into some incubator programs where I’d be required to drop out and I didn’t accept any of them. I think that school is an incubator in itself. When you’re a student you get to have that fantastic label that allows you to talk to all sorts of people and ask professors questions. Then there’s the access to competitions, events, and alumni resources. I’ve been connected with tons of alumni who have been very helpful. This is not to say that very successful startups haven’t come from dropping out, I admit that the biggest weakness for Greenshields is that I don’t have enough time to work on it, and dropping out gives you that time.

Now, getting the data back from our program in Florida is incredible. Also meeting other entrepreneurs is always exciting. At these conferences it is always insane to have famous entrepreneurs interested in “my little Greenshields” where they’re worth millions of dollars and I’m just trying to put hats on school buses.

CS: Where do you think this sudden, widespread interest in socially conscious entrepreneurship has come from?

JC: I think that society has become more moral as time has gone on; it’s just kind of become pretty cool to do something socially responsible. In general we’re so much more aware of the bad and good that’s happening in the world now than in the years before us. For example, the horrible CS: What were some clear moments of shootings at the university in Kenya, thirty success? to forty years ago we might not have heard about that. More positively, the fact that we JC: I have a pretty vivid image of when can hear about inventions from the other we initially did trials with Northwestern. side of the globe just as they’re launched We did the same distance with our prod- is pretty cool. I feel that a very connected uct on and off the bus and with it off we world is a much more socially responsible kept seeing the numbers increase, indicat- world. Plus, issues like the environment are ing inefficiency, where it didn’t with it on. becoming too big to ignore. With innova-

tion and technology we’re trying to make things more efficient, and there’s money in things like big data.

CS: Finally, what advice would you give to college students looking to invent something with a social conscience?

I think that there are a lot of social issues around, and I picked a small niche nut there are more than enough lying around.

Be critical to how things are designed. It’s easier with things that interact with humans on a day-to-day basis. So for Greenshields, I would see a school bus passing by every single day and I started to question its efficiency. I love the human-centered design philosophy and try and think about that a lot. The other thing would be that if you’re young and a student, you’re at a university and surrounded by so many great opportunities. There are lots of people trying to innovate and just brainstorming with friends and being around people who want to do something is a great way to learn.

Interview by Chandler Sterling

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BILLY MCFARLAND Founder | CEO Magnises

Edward Xiao: Could you give a summary of the Magnises card and some of your favorite perks of becoming a member?

We’re valuable because our successful members are all valuable in their own way.

Billy Mcfarland: For a general background on Magnises, the whole concept is building a better and more relevant brand for a credit card. We issue a heavy metal black card that connects to whichever debit or credit card you currently have. That’s our way into the wallet and into the mindset of our customers. The card is really cool and it’s a great marketing tool, but the concept is about building a really great community around the card. It connects people in major cities from every industry (ie, the finance guys, the tech people, fashion kings) and brings them together around the card.

We offer relevant events and perks every day – we partner with restaurants, clothing stores, and gyms, where they create a specialized experience for Magnises members.

Personally, my favorite perks are the concerts, backstage passes, and meeting different artists using the card. I really enjoy all of that.

EX: How did you come up with the idea for Magnises? It’s very different from your traditional credit card.

BM: Before Magnises, I started an enterprise software company called Spling. I was selling software to a lot of strategic networks, and there was a gap between technology and entertainment. A lot of technology types like programmers (myself included) really want to work with entertainers. And all of these entertainers, particularly musicians who were no longer selling as many songs as they were before, felt that if you incorporated technology with their concerts and their brands, they’d make a lot more money. But when you put the tech guy and the entertainer in the same room, they couldn’t really speak to each other – nothing happens. I was really interested in bringing all of those worlds together as a community.

The idea clicked when I was at dinner with ten friends, and we all pulled out debit or credit cards to split the bill. I asked my friends how they chose their bank, and it turns out that everyone picked theirs based on physical location of the branch or other factors that weren’t really relevant to them.

I thought that a new card would be a great way to get in and create more relevant perks and benefits. Now we use that as a portal to create a community that connects people from every industry.

EX: Could you share some of the highlights/milestones of starting Magnises?

What do you have planned for the future?

BM: I think the highlight is that we’re now close to 6,000 members in New York City.

It’s been a fast year one for us so far – we actually just hit our one year anniversary yesterday on March 1st.

What I’m really excited about for the future is expanding and seeing how many markets we can replicate the concept in.

We’re hoping to open up in three or four more cities in 2015. Washington D.C. is going to be next – we’re going to do that in April. After D.C., we’ll probably go to Boston and then London.

EX: What were some of the hardest problems that you faced?

BM: I think the hardest issue when we started was a chicken-egg problem. We would go to all of these local brands in New York, and say “Trust us, we’ll get so many great members.” Then we would go to these members, and say, “We’re going to have so many partnerships. There’s nothing yet, but we will have them.” At the beginning, we had none of each. It was

getting past that initial hurdle and finding our first core of true believers in the product that really helped push our efforts to the brand partners and show that Magnises is a real thing. That was probably the hardest part.

EX: It’s been said that Millennials are very socially conscious as consumers, and there seems to be growing sector of companies that are now looking to have a larger social impact with their business model. Could you share your thoughts on the rise of these social entrepreneurs and what you think some of the factors might have been?

BM: The best way to drive sales for anything is by building a community. Marketing directly to a customer and just trying to get them to buy your product is pretty hard.

But when you’re gathering a group of people to go out together and collectively have a great experience, the process feels and becomes more natural and organic. That’s the best way to drive sales.

Our whole concept is that we’re not a credit card company advertising these perks and how we’re the best and that you should buy our product. It’s that we’re more of the architecture and the backbone

of bringing all of you guys together. We’re valuable because our successful members are all valuable in their own way. All of our members have something unique going for them, and we’re the ones that provide the perks and events that bring them together to build a community. The real value of our brand and company is the support that we provide to our 6,000 awesome members who make us who we are.

EX: What advice would you give to college students interested in business?

BM: Particularly for entrepreneurship, I think it’s all about going for it. You never really know anything when you’re first starting and the best way to learn is by trying and messing up. Once you go out there, you learn what you’re good at and what you’re not good at. The best way to find your strengths in business is trying everything and seeing what those couple of things are where you’re better than everyone else.

Interview by Edward Xiao

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for helping to shape the future.

Four years of hard work. A lifetime of respect. PNC is proud to salute our next generation of young professionals.

Because we know what it takes to achieve.

For more information, visit pnc.com

Š2015 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC

A global healthcare company on a mission Millions of people around the world still lack access to basic healthcare. And there are still many diseases without adequate treatments. We want to change this.

Join our scientists and engineers who are working hard to develop medicines, vaccines and consumer healthcare products for people who need them.

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HEALTH

Egg-Freezing A Solution to the Work/Life Balance?

By Anna Pouschine

I

n the past few months Facebook and Apple, two of the nation’s highest-profile technology companies, announced that they would cover charges for female employees to freeze their eggs. Facebook began offering this policy in October under its surrogacy benefit, and Apple began covering costs in January under its fertility benefit. Both companies will pay up to $20,000 for their female employees to undergo the procedure and store frozen eggs. Though the programs intend to provide women with greater flexibility in family planning, debates arose surrounding whether this policy would ultimately provide health and lifestyle benefits to female employees. The time of significant career development overlaps with the ideal years for motherhood, and traditionally, ambitious women have faced the difficult decision of choosing between the two. It’s possible that these policies could put further undue pressure on women to sacrifice their family ambitions in favor of their careers. Ideally, the egg freezing

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process should provide women the option to delay reproduction without sacrificing their ability to have children later on.

Society’s growing affinity for innovative, scientific solutions positions this cutting-edge medical procedure well for fast prominence. Working women could finally get to have their cake and eat it too - spend a few more years advancing their careers before choosing when to start a family. The fact that the adoption of this policy is being spearheaded by some of today’s most inventive companies is unsurprising. The procedure offers an alluring, high-tech answer to the topical “having it all” debate. However, this solution seems to be a quick fix – a means for progressive companies to throw money at the problem without resolving some underlying issues.

The main concern with the procedure is that it encourages women to delay having children until an age when conceiving is difficult, ultimately diminishing their chances of having children at all.

According the USC Fertility

Center, the egg is the largest cell in the human body and is comprised largely of water. When the egg freezes, ice crystals that form can damage the cell. Consequently, the egg is dehydrated and water is replaced with anti-freeze to prevent the formation of ice crystals. Previously, eggs were frozen in a “slow-freezing” process; however, a newer and faster process called “flash-freezing” or vitrification has become more popular and reliable. The eggs are frozen at a temperature of -196˚C for up to ten years. When ready for use, they are thawed, fertilized via sperm injection, and placed in the uterus.

One key issue of egg freezing, or oocyte cryopreservation, is that the results are not particularly impressive. The egg freezing process generally proves more effective than natural conception; however, the numbers do not suggest the procedure is fully reliable. Depending on the age at which eggs were frozen (as well as on other factors), the average woman has a 1-in-5 chance of giving birth through this process.

At age 40, the expectation drops to 1 in 8, and by age 45, a woman is looking at 1 in 20. Results after three rounds of in-vitro fertilization (IVF) treatments are not much more promising: 31.5% for women who froze their eggs at age 25, 25.9% at age 30, 19.3% at age 35, and 14.8% at age 40.

Around the world, there are an estimated 1.5 million IVF procedures performed per year, roughly 1.2 million of which fail.

One explanation for the low success rates is that the current average age for egg freezing is 37.4, an age when most eggs have lost a substantial amount of their fertility. Dr. Caitlin Fiss, a New York City based general OB/GYN advises, “They usually say the younger the person is at the time of egg freezing the better. But there are some poorly defined risks of taking the medications to stimulate the ovaries to produce multiple eggs at one time. So you have to weigh that risk against the likelihood of needing or using the harvested eggs.”

Moreover, the medical community has been hesitant to support egg freezing as a trustworthy means of delaying childbirth. The American College of Obstetricians and Gynecologists does not support the procedure. The American Society for Reproductive Medicine (ASRM) lifted the name “experimental” in 2012 only in reference to women with fertility problems stemming from medical ailments, such as cancer. The ASRM’s practice committee is cautious of widespread use, stating that there is “still not enough known about the egg freezing procedure’s safety, efficacy, cost-effectiveness, and emotional risks” and that the procedure may “give women false hope.”

So how did this fairly unreliable procedure become so attractive? One explanation is because it’s highly marketable. The target clientele, 25 to 45 yearold working women without families, has the interest and disposable income to pay top dollar for these procedures. At the end of 2012, the IVF market was worth $9.3

billion. By the end of 2020, the market is expected to be worth $21.6 billion. Companies have begun hosting egg-freezing parties to recruit groups of women to participate in the phenomenon. EggBanxx is the first national network of doctors to facilitate and promote the egg freezing process.

They estimate the costs of medications, doctors appointments, and retrieval to be around $15,000 per woman, with egg storage for roughly $800 per year. EggBanxx offers discounts for subsequent cycles if the procedure fails or continues to fail. IVF treatments remain a lucrative procedure for fertility clinics.

Many women are surprised by how intensive the egg freezing procedure truly is. The egg freezing cycle, consistent with the initial stages of the IVF procedure, is approximately four to six weeks long.

How did this fairly unreliable process become so attractive?

Women spend the first two to four weeks self-administering hormone injections and birth control pills to temporarily turn off natural hormones. The next two weeks are spent undergoing more hormone injections to stimulate the ovaries and prepare eggs for freezing. Pamela Tsigdinos of Wired bluntly describes the process: “To secure any eggs you must first submit to a demanding series of rigorously scheduled blood tests, hormone injections, and ultrasounds conducted over several weeks prior to the actual egg retrievals… a doctor collects the eggs by punching a series of holes into your ovaries and applying suction.” In most instances, women hedge their bets by undergoing this process multiple times.

The egg-freezing approach could prove risky by encouraging women to delay childbirth. Though at most ages IVF with frozen eggs is typically more successful than natural conception, conception at a younger age is still the ideal for ensuring a live birth. Furthermore, by having a company policy that encourages women to give birth later, women may feel less comfortable taking time off from their career to conceive earlier - an option they may have considered had this procedure not existed.

In addition, many women face emotional distress due to the highly intimate nature of the procedure. Studies have demonstrated that women undergoing fertility failures are as distressed as those with cancer. Women who experience multiple failed IVF procedures can also experience post-traumatic stress disorder and depression. Even women whose procedures are

successful have cause for fear. Scientists are concerned the freezing techniques can be toxic to the egg and can affect child development. As of 2011, fewer than 2,000 people worldwide have been born through the egg freezing process. With limited long-term data, we are still unaware of the potential negative health consequences down the line, both for mothers and their children.

Some women suggest that instead of facilitating later pregnancies, companies should strive to have greater flexibility for working parents. Programs such as flexible work hours, greater maternity and paternity leave, daycare benefits, and kids-atwork policies could effectively shift the conversation away from when women should have children to how working women can raise their children. Instead of dedicating $20,000 towards this unreliable procedure, putting this money towards a fund for “emergency” childcare could better quell stress stemming from work/life balance issues.

Though the procedure potentially holds negative effects, many women still find that an egg freezing option can provide a sense of empowerment by facilitating a means to protect their fertility. Especially for women in occupations that require many additional years of intensive work beyond a bachelor’s degree (for instance, doctors, academics, and entrepreneurs), the procedure, when administered early in their career, can significantly mitigate stress for starting a family later on. The ability to take action and quell a source of stress in their lives can ultimately provide many women with relief.

Hopefully the attention and money currently being devoted to this procedure will spark positive developments. Dr. Fiss is optimistic: “I do think the process will get even better over the next ten years. Egg retrieval is well developed, as it is the first step in IVF. Freezing the eggs, storing the eggs and then defrosting them are areas that will likely benefit from experience and I imagine will improve.” As there is an evident demand for delayed conception, and the procedure itself is still essentially in its infancy, science’s abilities will quickly catch up to society’s demands.

The fact that women have the opportunity to freeze their eggs to maximize their opportunity for pregnancy is wonderful.

Hopefully, the procedure will benefit more women who struggle to give birth on their own. However, given the notable drawbacks of the procedure, companies should not be treating this procedure as a substitute for natural conception. Companies should instead strive to make women feel comfortable giving birth on their own time and to support working parents throughout their careers. Until the statistics prove more reliable, we ought to treat the procedure as one option among many, rather than a magic bullet policy to solve work/life balance issues.

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theranos

How One Drop of Blood Can Have a Ripple Effect

By Katherine Shifke

19

year old Elizabeth Holmes took a tremendous risk when she dropped out of Stanford University in 2003 to found Theranos, a private blood diagnostics business that is revolutionizing lab testing and diagnostics. Holmes developed blood tests based on a few drops of blood drawn from a finger stick for a fraction of the costs of traditional tests obtained by venipuncture using a long needle. Just over a decade later, investors value Theranos at around $9 billion as it advances healthcare technology, one drop at a time.

The company and its resolute leader, both little known to the general public, have accumulated many accolades from industry experts. Theranos’s ground-breaking approach to laboratory blood sampling and diagnostics recently earned “Best Health Start Up” at the 8th Annual Crunchies, and Holmes recently graced the front of Fortune Magazine, appearing in its exclusive 40-under-40 list. A combination of scientists, inventors, technologists, and creative entrepreneurs, Theranos is poised to be not only an authority on blood analytics, but also a powerful entity aiding individuals around the world.

Typical laboratory testing can be physically taxing and expensive. In order for a lab to obtain the requisite quantity of blood, patients must often suffer through an expensive process where blood is drawn through intimidating needles. Furthermore, the samples must then go through lab processing, which often results in an inefficient process to slowly diagnose the patient.

Holmes and her team have dedicated their time to developing a novel approach that makes blood sampling faster, cheaper, and easier. This process, which used to involve days of lab work and multiple appointments, can now be streamlined into a single consultation.

The reduced quantity of required blood for the CLIA-certified laboratory services introduced by Theranos has already

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demonstrated promising convenience for key groups of patients. Theranos labs can run a full range of lab testing at a fraction of the cost, using 1/100th to 1/1000th of the amount of blood of traditional testing. One-drop samples lower risks of blood sampling in cancer patients who face the possibility of anemia or other complications from drawing larger quantities of blood. For geriatric patients or others with hard to access veins, Theranos provides a simpler solution than poking the arm to find the vein or drawing blood from the hands or knuckles.

Clinicians can integrate Theranos’s

Theranos is empowering patients with knowledge by making the often confusing world of medicine and diagnostics manageable.

technology into their practice to perform efficient diagnostic testing within their offices. The testing equipment takes up 10 times less space than that of a traditional lab, allowing a wider range of possible loca-

tions f o r testing centers. For example, Theranos has recently partnered with Walgreens pharmacies to provide accessible health care. Walgreens draws blood samples from patients and sends them to a Theranos lab, where the samples are quickly processed.

The Theranos smartphone app streamlines communication between physicians and patients, providing results within 24 hours alongside a user-friendly explanation and eye-catching charts and graphs. In addition to the shortened turnaround time, prices for various tests are drastically reduced: a cholesterol test that would cost $50.00 at a traditional lab is now $2.99 at Walgreens.

Theranos is empowering patients with knowledge by making the often confusing world of medicine and diagnostics manageable.

Theranos is revolutionizing the healthcare system at every level. Decreased waiting time, lower costs, and ease of accessibility make Theranos appealing for patients, clinicians, and major labs and hospitals.

This company, the brain-child of a then 19-year-old college student, has the potential to reshape the system of modern medicine around the world and bring improved medical care to the masses, all in a hyper-efficient manner.

Where does the world start to change?

It’s wherever better ways of doing things are found. So we invent ways to do more, use less and waste nothing — and we use our position where countless brands, consumers and supply chains meet, to help bring about positive, sustainable change.

It all starts inside the hearts and minds of our 25,000 employees who challenge themselves and each other to reach higher and think bigger. That’s how we’ve been a leader for over eighty years, and how we’ll continue to lead for generations to come.

www.averydennison.com/careers

ROBERT J. HUGIN Chairman | CEO Celgene Robert J. Hugin has been the CEO of Celgene Corporation since June 2010 and its Chairman since 2011. Before this, Mr. Hugin was the company’s Chief Financial Officer from June 1999 through April 2006 and its President and Chief Operating Officer from May 2006 until his promotion to CEO. During his time as CEO, Celgene’s market cap has approximately quadrupled.

Prior to joining Celgene, Mr. Hugin was a Managing Director at J.P. Morgan & Co. Inc., where he had worked since 1985. Mr. Hugin is the immediate past Chairman of the Board of The Pharmaceutical Research and Manufacturers of America and is a member of the Board of Trustees of Princeton University, The Medicines Company, and The Darden Foundation, University of Virginia. He also sits on the Boards of Atlantic Health System and of Family Promise, a national non-profit network assisting homeless families. He graduated from Princeton University in 1976 with an AB in Politics, received his MBA from the University of Virginia in 1985, and served as a United States Marine Corps infantry officer during the intervening period.

CJ Harris: To start by talking about the pharmaceutical industry in general, what is the current climate like and how do you see opportunities for growth in the industry in the near future?

Bob Hugin: Opportunity [in the life sciences industry] is at the peak of what has been possible for a long time. We’re really in the early days of a revolution in molecular biology and it’s really being accelerated by the convergence of the revolution in information technology. Healthcare ten years from now is going to be so fundamentally different than it is today in a very positive way – better outcomes, lower cost in many ways, certainly better value. So it’s an incredibly exciting time to be in the life sciences industry, where we are really a part of the solution to very serious issues our societies face.

CH: What do you see as the major variables in the healthcare regulatory climate in the coming years?

BH: The key issue in the regulatory environment around the world – and it’s not just in U.S. – is that the science is chang-

ing so fast, and the technology is changing, so regulators, despite their best efforts, are always going to have a challenge keeping up with the advance of science and in medicine. Ensuring that we have 21st century

Opportunity is at the peak of what has been possible for a long time.

regulatory science in the regulatory agencies around the world is a challenge because governments are under pressure; we have got tough economic times in a lot of parts

of the world. It’s very hard to have that balance between investment and proper regulation that has a sophistication of technology that can keep up with innovations happening on the research side of the equation. So there are challenges, but there has probably never been a better time, at least in the last 20 years, where there is an alignment between the things that need to be done and the regulatory world.

CH: What is the state of the relationship between the public and private sectors as it relates to healthcare and pharmaceuticals today?

BH: Not that there have been many positive results of the economic crisis of 2008 and 2009 – and the continued economic challenges around the world in many different economies, including the U.S. not being on the kind of growth trajectory you’d expect after such a prolonged recession – but one of the few benefits of the recession has been the recognition that integrated solutions and collaboration have to be part of the conversation. I think you see a much better environment today for people recognizing that you can’t do it yourself, whether

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in academic medicine, the government in basic research, or corporations – big companies or small companies. So I think the recognition that with the complexity of the science and the importance of the issues and challenges that we face, we need to look for and find integrated and collaborative solutions. That recognition partly driven because very few parts of the ecosystem have the resources to do all the things that need to be done to take advantage of the opportunities or manage the challenges.

To really maximize the potential of the science and turn it into reality, integrated efforts have to be a big part of the solution.

CH: As the leader of such a forward-thinking and fast-growing company, how do you divide your time at work?

We are very fortunate to be a company whose mission is focused on making meaningful improvement in people’s lives who are underserved today.

BH: I’m very fortunate – I do a lot of different things. I think what’s important in any organization that you’re at, certainly at Celgene, is commitment to becoming a more dynamic company, a greater company. That requires a culture that’s focused on change and risk taking. So I think it’s important that I spend time ensuring that we continue to sustain and enhance the environment of our company, where every single individual matters and we don’t hire people if there’s not a real job where they can have impact. Learning from our successes and our failures and really setting aspirational goals. So I spend a reasonable amount of time on things that are internally focused to ensure that we have the environment that again encourages people to take risks and seek bold solutions to problems and take advantages of opportunities.

At the same time, dynamic organizations are those that really understand the forward-looking environment that they live in, so that your plans and resource allocation and strategies are in consonance with the environment that you expect to see over the next three to five years. So I also spend considerable time externally really understanding what are the new opportunities, what are the challenges, and what is the dynamic in the world we live in, so that we ensure

that our internal strategies are consistent with both the opportunities and the challenges that we expect to see over the next three to five years.

CH: To what extent do your five pillars of corporate social responsibility inform mission-driven decisions you make at Celgene?

BH: We are very fortunate to be a company whose mission is focused on making meaningful improvement in people’s lives who are under-served today, in the areas where we have great expertise – looking for disruptive technologies that will transform the practice of medicine in certain areas. Our mission allows us to wake up every day and say, “we’re trying to do something that’s good for somebody.”

It’s also in our industry a very good business proposition because it’s very hard, if not impossible, to believe that you can extract and create value unless you are making meaningful improvement in the lives of patients. So we think we have a great mission for the kind of life that people want to live to do great things, and at the same time it’s a great business proposition.

CH: Looking at Celgene within the context of the pharmaceutical industry, what are some of the major factors that differentiate it from its competitors?

BH: Every company is unique, and we have our own vision for success. We don’t want to be somebody else. We want to be an organization that sets bold goals, is willing to take significant risk (in many cases we’ve taken risks that other companies haven’t been willing to take), and really seeks to turn adversity into opportunity and create bold solutions for people. We’re still a small player in this field, and we have great opportunity for the future, so we’re very much focused on how we can broaden our impact and be more influential and impactful in the things we do. We’re excited we’ve been successful in a number of ways, but again we just see tremendous opportunities ahead of us, and we want to be an increas-

ingly meaningful part of the solutions our society needs, especially in terms of the aging populations and the tremendous issues that will cause.

CH: You’ve had a wide variety of experiences throughout your career. After graduating from Princeton, you spent time serving in the Marine Corps, did business school at UVA, worked as a Managing Director at JP Morgan, and have since played a variety of roles at Celgene culminating in CEO, all while sitting on a number of corporate and non-profit boards. What have been some of your most gratifying moments?

BH: I’ve been a very lucky person in that I’ve been in lots of different environments throughout my career.

The one thing that has been common among all of them, and that I think is incredibly important, is that it’s a never-ending learning experience. Those people who are focused on life-long learning are the ones who are going to ultimately create the most value for the organizations they serve and for themselves also. I’ve been so fortunate to be in institutions that are committed to helping people maximize their full potential and really have the opportunity to build skills and learn for your whole life.

That’s been an important dynamic that’s made my life very satisfying – I continue to learn so many things, and it makes you more valuable as a person.

I think my most satisfying business successes certainly are fundamental in the sense that we’ve taken on challenges like building a global company from a very small seed and taken on risks that people thought were not the best risks to take. We’ve proven them wrong. There have been many people over the years who doubted Celgene and who bet against us, and some of the most satisfying events have been to prove those people wrong.

CH: What skills or lessons that you learned prior to you time at Celgene, in the Marine Corps and at JP Morgan, have been most helpful to you since you joined the company, both personally and professionally?

BH: I think again, the importance of learning, and moreover that you shouldn’t rush the learning process. The most successful people over time are the ones who really understand the basic building blocks of value creation in whatever business or organization they’re in. This gives you the opportunity to be a creative leader when change happens, and change happens time. Those people can figure out how you can dynamically reposition these building blocks so that when circumstances change, you can recreate value and Learning is fundamental, knowing the basics of everything you do is so critical, so that when things change you can really assemble those building blocks and create additional value.

Also, being a risk taker. Recognizing that you can’t produce pure returns or great outcomes if you don’t take significant risk.

It just doesn’t happen. Anybody is going to be average at best if they just take the same risk as everybody else.

And another thing that I think is very important is self-esteem. How do you find that inner peace and feel good about what you do and feel good about yourself ? Not arrogance, because I think arrogance is a very disabling and disruptive characteristic.

But have a sense of understanding of who you are. A self-awareness, knowing what you can do, and having the confidence that doing your best will produce great things.

So it’s a combination of things. Life-long learning, willingness to take risk, and confidence in what you’re doing are so important.

CH: As someone with so much valuable experience and so many places and organizations that would benefit from your time and leadership, what advice would you offer college students about making a real impact and choosing where to commit our time?

BH: One of the things I learned from a great mentor of mine is that there are a few important things in life and that affecting society and having a very positive impact

My own personal rule is that it’s very important I only do the things I honestly believe are impactful, that I will also learn from.

I do think that young people today have a great sense of intellectual freedom, not necessarily having to think about things in a uniform way.

on your community is something that people with some influence have an obligation to do. The opportunity for me to sit on the Princeton Board, for example, is one to pay back but also importantly because Princeton is such a great institution. It’s so important for our society for great institutions to flourish because they’re the ones that set the standards for the future, advance basic knowledge, and advance the issues that will continue to help our society.

My own personal rule is that it’s very important I only do the things I honestly believe are impactful, that I will also learn from. Because I do believe that it’s important that I continue to learn and grow. You want to have the time and the resources to be able to make a positive impact on those organizations. The worst thing you can do is take on things where you know you’re not going to have the time to have impact and learn. All it does is end in disappointment and frustration, along with guilt at not being able to do as much as you’d like to do. It’s important to pick your spots, recognize you can’t do everything all the time, and do the things that you do the very best that you can.

It’s very hard. It’s easy to get yourself overextended and not do well enough in the things that you need to do well in so that you can build a great future. Success builds on itself and people want to help and advance people who are doing outstanding things today. Those are the people who are going to have the great opportunities to do new, different things in the future.

CH: One final two-part question that Business Today always likes to ask the leaders we work with: What would you have liked to know as a college student that you know now, and what do you think you and your peers in positions of leadership would do well to learn from today’s generation of college students?

BH: I’m not a big fan of looking backwards.

I’m fortunate that things have turned out

well, but I think it’s not so much about what you achieve but the journey is so important. I’m really not sure I would have liked to know any more. Princeton was a great place for me because I came as an affirmative action beneficiary and wasn’t sure I had the skills to be as successful here as a lot of other people could have been.

The journey is more important than the end. I think if you live your life in a way that you really are looking to learn, take risks, and maximize impact, it’s a great life.

If people are risk-averse or don’t seek to learn and maximize their full potential, I think their journey (no matter where they end) will be a hollow one that people won’t be happy with. So I think it’s more important to be focused on what matters to the individual and be satisfied and maximize your own personal opportunities.

I think that the willingness of people to learn from whomever they deal with is a great thing. I think the most creative solutions often come from people who are not necessarily experts on what they’re talking about. So the ability to bring people together and learn from whoever people are, depending on their experience and perspectives, is the sign of a very smart person.

I do think that young people today have a great sense of intellectual freedom, not necessarily having to think about things in a uniform way. I think there are a lot of lessons that people can learn to be liberated in some ways and not have to think about what other people think is important.

There is a great energy and enthusiasm and freedom that come from both learning from people who are college age and young people in general. It’s energizing to see people with great opportunity and enthusiasm, and it reinvigorates and reenergizes those of us who have become a little bit distant from those days.

Interview by CJ Harris

“The ability to bring people together and learn from whoever people are, depending on their experience and perspectives, is the sign of a very smart person.�

- Robert J. Hugin

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Photography by Brigitte Lacombe

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At Business Today, we believe that students occupy an important place in the global business dialogue. But this cannot be realized without a real diversity of opinions. That’s why we’s like to hear from you, and help you set up a Business Today editorial team at your university, where you can curate, write, and edit pieces for our online and print publications.

Interested? Email magazine@businesstoday.org

TECH & MARKETPLACE 52

Fitness Startups

By Tammy Tseng

The latest trend in the wave of personally tailored technology?

Fitness.

W

ith the rapid growth of personalized technology in recent years, nearly all devices now offer a customized experience for consumers. Your cell phone isn’t just a mass-produced walkie-talkie anymore – now it recognizes your fingerprint, greets you by name, and knows your favorite songs. Your television remembers your most-viewed channels and automatically tapes those weekly Scandal episodes. Even your thermostat knows your ideal heating and cooling schedule. The latest trend in the wave of personally tailored technology? Fitness.

In the last few years, the health and fitness startup sector has skyrocketed. From Apple’s iOS 8 Health app, which tracks statistics including body measurements and sleep cycles, to Peloton, an indoor bicycle and app package that gives you the experience of a cycling class in the comfort of your home, tech companies are catching on to the consumer demand for innovative fitness products. Companies are making it easier to integrate physical health into smartphone technology; tracking your health is now as easy as tapping a screen or clicking a button. They’re changing the way we experience fitness: it’s simultaneously becoming more personalized and more easily shared with a group. Currently, apps cater to a broad spectrum of users, from the seasoned triathloner to the gym newbie. It’s simple to customize your fitness experience to help attain your personal goals. Additionally, many of these apps incorporate a sharing feature. Just broke your personal record for a 5k run? You can post your statistics on Facebook so your friends can celebrate your accomplishment with you. Want tips on how to work out your quadriceps? Post a question and other users can offer answers.

As technology increasingly focuses on creating the best experience for you rather than for the mass population, it provides a more user-friendly digital environment that impacts our day-to-day lives. Fitness is one of the sectors in which this effect is most prominent – finding the right product and accessing the necessary information can have tremendous results in improving your well being. Here at Business Today, we’re helping you find the right fitness products for you – starting with mobile apps. Read on to discover which app best fits your lifestyle!

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Fitbit: for the “on the go” person These brightly-colored activity trackers look like innocuous rubber wristbands from afar – but they are actually wireless devices that measure statistics such as the number of steps you walk in a day or the quality of your sleep. Besides the physical activity tracker, the Fitbit package includes a mobile app and online dashboard that sync with the device, so you can view your statistics and track your progress over time. The dashboard also lets you log your daily food, activities, and weight, as well as set personal fitness goals. Fitbit bands also come in a variety of colors and styles besides the generic rubber wristband – they even partnered with Tory Burch to offer a more chic range of activity-tracking bracelets and pendants.

Fitbit’s website reads, “On the walk to work, at the weight room or in the last mile. Somewhere between first tries and finish lines. Pillow fights and pushing limits. That’s where your fitness is.” The company designed its eponymous device to fit seamlessly into the daily lives of its users – all you have to do is slip on the wristband and continue on with your regular routine. Log on to the dashboard at the end of each day to check your fitness progress and find out how close you are to reaching your goals. With a device this simple to use and navigate, Fitbit is the perfect experience for the busy, on-the-go person.

Fitocracy: for the gamer Fitocracy is an app that provides a self-described “personal trainer” for its users. A coach provides you with a personalized fitness assessment, for any level of training, and then creates workouts based on your needs. Its most prominent distinction is its focus on the gamification of exercise and building a social network of users. Users receive points for logging exercise activity and are presented with fitness quests to complete; once they’ve reached an accomplishment, they level up or receive achievement badges. Fitocracy also integrates a social network where users can follow each other, comment on workouts, or join groups of users with similar interests.

Fitocracy’s mission is to create a more entertaining and addictive fitness experience. By turning fitness into a game with extrinsic progress, levels, and rewards, this company aims to make going to the gym something to look forward to rather than dread. If you want to get fit but have a hard time finding the intrinsic motivation, try this app – soon you’ll be more addicted to it than you are to Candy Crush.

Fooducate: for the foodie Do you find yourself reaching for the same potato chips and triple fudge brownies every time you have a snack craving? Fooducate can help with that – this nutrition app scans product barcodes and displays their nutrition grades (on a letter scale from A to D) based on factors beyond calories. The app takes into account everything on the product nutrition panel, from high fructose corn syrup to GMOs. You can even personalize your profile with your weight loss and health goals to track how your eating improves over time. It also offers a community page for users to post questions, tips, and discussion topics.

Described in a user review as “a dietitian on speed dial,” the app is an easy and quick way to become more mindful of your diet – just the act of consciously pulling out your phone and logging your meal can make you pause before reaching for that donut. If you love to eat but want the same delicious taste with a better focus on how your food impacts your health and nutrition, try Fooducate.

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Activist Investors and Why They Matter

By Mo Luo

A

ctivist investing is all the rage these days and 2014 saw only an increase in activity. In October, activist firm Starboard Value managed to replace the entire board of Darden Restaurants, which runs chains such as Olive Garden and Red Lobster, while only holding 10% of the shares. Carl Icahn, though rebuffed in his attempt to push Apple to buy back $150 billion of shares, still managed to win big as Apple stock soared. Activist hedge funds grew by over $4 billion over 2014 as institutional investors piled in. With their increasing power, the rise of this new wave of activist investors will lead to great change in the American business and societal landscape.

A Brief History Activist investors are investors who buy stakes in firms to bring about some specific form of change that would not occur naturally. Some activists, such as the Wallace Global Fund, try to reform a corporation’s environmental and sustainability policies.

Other activist shareholders and governments have effectively used divestment to help end apartheid in South Africa. The recent wave of shareholder activism, however, focuses on a different breed of activist investors. These investors specifically target firms they believe are mismanaged and attempt to mobilize the board or management to fix these problems. In this sense, these activists are more similar to private equity firms than traditional investors.

The wake of the Great Depression saw the first major emergence of activist investors in the United States. Disillusioned by corporate management and the resulting new regulations, certain investors tried to

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leverage their position to reform businesses.

The Association of Independent Telephone Unions (AITU) bought shares in American Telephone and Telegraph as additional leverage in negotiations with the firm, but such activity was never widespread. By and large, activists failed to effect true change as other investors opted to divest or short sell poorly managed firms instead of push for reform.

In the early 1970s, the Securities and Exchange Commission (SEC) began to reinterpret Rule 14a-8 of the Securities Exchange Act of 1934, giving shareholders the power of shareholder proposals. Shareholders of public companies were now able to submit proposals corporations could no longer dismiss as easily. This coincided with the rise of institutional investors in the 1980s and 1990s, some of whom would become activist investors today. California Public Employees Retirement System (CalPERS), a major pension fund, emerged as an investor that actively seeks to mainBlackRock returns at an average of 15% year over year

tain the quality of corporate governance in its portfolio of companies.

Even as they became increasingly successful, activist investors gained a sordid reputation. Carl Icahn became known as a ruthless corporate raider for his hostile takeovers after which he left portfolio companies stripped of assets and laden with debt. Other activists, such as Nelson Peltz and T. Boone Pickens, were similarly feared and despised.

The New Wave To a certain extent, broad antipathy towards activist investors remains today.

Their critics range from powerful lawyers such as Martin Lipton of Wachtell, Lipton, Rosen & Katz to actor George Clooney.

The argument against activist activities, though more refined than ever, still hinges on the same concepts. Activists will tend to favor selling off long-term assets, cutting investment, and breaking apart corporations in pursuit of short-term profits. All of these short term boosts in investor value and stock price will supposedly fall apart soon after the activist leaves his or her position with a hefty profit.

Since the 1980s, however, the corporate environment has changed significantly to highlight the relevance and possible need for activist investors. Corporate management and investors have slightly different interests when it comes to corporate governance. Management tends to attempt to build up the firm and expand the business. Investors, on the other hand, tend to favor margins, profits, and key financials that increase the value of their equity or debt holdings. Having a healthy balance between these interests is what allows cor-

porations to continue to grow sustainably and protect shareholder value.

The past few decades have seen the shareholder’s power decrease relative to that of management as boardrooms became increasingly closed and dominated by executives. Since Google’s IPO in 2004, businesses started to keep the majority of their voting shares within employees’ and executives’ hands. The balance of power between management and investors was breaking down and activist investors offered a unique solution. They no longer acquired controlling stakes, often buying less than 10% of equity and attempting to form coalitions or partnerships within the board to push their reforms.

Another reason why activists have seen better public perception comes from the change in the firms they target. After the Great Recession, American corporations have seen record profits but have been slow to either grow or pay out this new cash to shareholders. This has led to a quick buildup of cash reserves, which are currently just costing the corporations in taxes.

Activists who target such firms can push for business overhauls with the safety of the cash reserve buffers. Even if these projects underperform, the activist can fall back on pushing for share buyback programs and special dividends. Either way, the post-recession period had left many low risk, high reward opportunities for the activists, so the Gordon Gekko-esque hostile takeovers and asset stripping of the 1980s became relatively less attractive.

The Strategy With the changing corporate climate, activists have also refined their approach. In a post summarizing his advice to fight against activist hedge funds, Mar-

ers by using share buybacks and special dividends, selling or spinning off divisions, changing executive compensation, or pushing for mergers and acquisitions in addition to a myriad of more complex business strategy changes.

Nelson Peltz of Trian Partners, one of the oldest and most successful activists, offers a countervailing view.

As he told Bloomberg, Trian’s approach of finding firms to invest in emerges from studying the firm’s income statement and understanding which changes help the firm reach its full potential. Often, he hopes his target corporations embrace his advice and generate long-term shareholder value. This doesn’t mean Trian or any of its peer activists are welcomed with open arms.

Peltz has received ample criticism for his (failed) targeting of PepsiCo and DuPont, two well performing businesses that shareholders ultimately believed Peltz’s strategy would harm more than help.

Like it or not, activist hedge funds are here to stay. With institutional investors such as BlackRock, the world’s largest asset manager, and returns averaging 15% year after year, it’s safe to say activist investors are in a new golden age. At the same time, researchers have found that activist investors on average generate significant long-term shareholder value. In an article published in March 2014, McKinsey & Co, a management consultancy, found that the median activist campaign on a $1 billion+ market cap firm will reverse downward performance trends and increase shareholder value that persists for at least 36 months. Instead of trying to fight off the activists, McKinsey advocates engaging them. Management and directors should form a response team to carefully evaluate options and generate a plan that implements the best suggestions of the activists and strikes a compromise executives can follow.

Besides financial gains, shareholders also have activist investors to thank for a much more open communication with management. In order to head off activist hedge funds, corporate executives and boards have placed heightened importance in clearly delivering their strategies for growth and performance. When Carl Icahn pushed for Apple to pay out an additional $150 billion in dividends, CalPERs and other institutional investors sided with Apple CEO Tim Cook and rebuffed the activist.

Superstar investors such as Carl Icahn, William Ackman, Nelson Peltz, and Daniel Loeb move from company to company seeking to apply their investment and management philosophies.

Management tends to attempt to build up the firm and expand the business. Investors, on the other hand, tend to favor margins, profits, and key financials. tin Lipton of Wachtell, Lipton, Rosen & Katz warned that activist hedge funds can do anything from aggressively and publicly criticizing management strategy and promoting their own to conducting proxy fights for board positions. Major institutional investors and fellow activist funds that seek a lower profile may quietly lend the main fund their support. Lipton further advises companies to prepare against activists’ promises to return capital to sharehold-

bly diminish. Firms flush with cash where activists as investors are better than management at solving current and impending difficulties, have become increasingly rare.

When Daniel Loeb of Third Point LLC targeted Sotheby’s last year, firms similarly ripe for activist intervention were few and far between. Activists have instead turned

Looking Forward As activist investing continues to grow, easy activist targets will inevita-

towards more successful corporations with more complicated cases. Apple, PepsiCo, DuPont, Procter & Gamble have all seen activist attention lately. Activists will soon need to demonstrate their ability to produce long-term value in a much tougher environment.

At the same time, the rise of activist investor funds concentrates more and more power into the hands of a few superstar managers and their protégés. Superstar investors such as Carl Icahn, William Ackman, Nelson Peltz, and Daniel Loeb move from company to company seeking to apply their investment and management philosophies. This means that some firms and CEOs will receive more undeserved attention than others. The New York Times’s Andrew Ross Sorkin notes that the highest profile female CEOs (Indra Nooyi of PepsiCo, Marissa Mayer of Yahoo, Ellen Kullman of DuPont, Irene Rosenfeld of Mondelez, Meg Whitman of HP, and Mary Barra of GM) have all recently faced challenges from activist investors. While men run the majority of firms that have faced activist scrutiny, men also run the majority of all firms. It’s difficult to identify whether the scrutiny faced by some companies and leaders is justified.

While the female CEOs and the activists targeting them all vehemently deny that gender should be a factor in the confrontations, the question remains as to why this imbalance exists. In the broader economy as the easy activist targets diminish and the field gets tougher, the ranks of activists will thin. At the same time, diversity in investment philosophy will decrease and the social impact of the confrontations of the powerful few will increase. Whether they win their battles or take a softer approach, the impact of activist investors will continue to grow.

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good

too

free?

to be

By Ayesha Ahmed

T

he phrase “nothing in life is ever free” is not a statement of pessimism, but rather one that captures the harsh reality of the world that we live in. The idea of finding useful items at no cost is largely alien to us. We may be able to “buy one and get one free,” but the concept of readily accessible, tangible freebies seems rather too good to be true. However, Brunel Business School graduate Deepak Tailor is attempting to revolutionize our access to free items with a process requiring minimal time and effort on the customer’s end.

In 2012, Tailor launched the website LatestFreeStuff in the UK. By 2014, the site was named one of the 100 best British business startups. The site lists an eclectic mix of hundreds of freebies that are available from a variety of companies. These freebies range from 3-day gym passes at LA fitness to Arm and Hammer toothpaste. Other brands whose items are listed on the website include L’Oreal, Nestle, Coca-Cola and St. Ives, to name but a few, and the website is updated daily with new products. The diverse nature of the available items means that the website appeals to a wide demographic and not simply to students who are on a budget.

The process of actually ordering the items is straightforward and thus does not exclude any less technologically savvy customers. The website details the quick and painless steps required to order an item.

You simply browse the site for any freebies that you may want to try and once you have found a desirable product, you are redirected to the company’s website where you fill in your name and address. The service is also completely free.

Unsurprisingly, the site has proved immensely popular in the UK. According to Forbes Magazine, it receives about 400,000 page views per month and has 75,000 email subscribers. LatestFreeStuff has also established a significant social media presence with over 75,000 likes on its Facebook page and about 9,000 followers on Twitter. Following the success of the UK site, a US site was launched recently aiming to be “the biggest source of freebies in the USA.” Yet questions still remain—why are

all these free products available, and what incentive do companies have for giving them away? Many are posing these questions on the website and LatestFreeStuff answers consistently: when people use and like samples, 70% of the time they will go on to purchase the product. Thus, the site explains, giving away free samples is an effective marketing strategy for companies.

However, marketing aside, it is fair to say that the actual website started as a labor of love on Tailor’s part. In an interview with Forbes Magazine, Tailor talked about his passion for living free or “Freeganism,” which is what prompted him to create the website. He describes how in the first stages of the website, he would be on the Internet for up to 18 hours, searching for the best freebies put on the website. He said, “I wanted to do something that helped people live better, more fulfilling lives.” The philosophy of living free is one that Tailor wanted to share with as many people as possible.

In 2014, he published a book entitled How to Live Free: The Definitive Guide, which became an Amazon bestseller within days of its release.

The popularity of the book and website arguably illustrates the appeal of a more “freegan” friendly way of life. The term “Freeganism,” stemming from the words “free” and “vegan,” began to appear in the 1990s and refers to a lifestyle that is wholly anti-consumerist. The term came to be popularly associated with reusing items such as clothes, furniture, and even food that other people no longer wanted. However, with sites such as LatestFreeStuff being described as “freegan,” participating in the “Freeganism” movement is no longer simply confined to reusing.

Tailor’s website has succeeded in making this type of “Freeganism” easily accessible to all. While bargain hunting has for a long time been an arduous and involved process, it is now possible to find completely free products that you need within a matter of minutes. The website has transformed access to freebies and it will be intriguing to see how it affects the US and how it will be developed in the future.

You simply browse the site for any freebies that you may want to try and once you have found a desirable product, you are redirected to the company’s website.

When people use samples, 70% of the time they will go on to purchase the product 400,00 page views a month

75,000 email subscribers 75,000 facebook likes 9,000 twitter followers

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Our Hidden Private Sector

How a grain storage warehouse turned into a thriving family business

By Jamie Downey

I

n 1865, just after the end of the Civil War, William W. Cargill opened his first grain storage warehouse in rural Iowa.

Fueled by the explosion of the railway system throughout Midwestern America, Cargill’s business quickly grew to cities throughout the Midwest and expanded into America’s developing western frontier.

Furthermore, the company branched out into a number of other industries, including railroad construction, farming, grain processing, and interestingly, insurance services. Sam and James, William Cargill’s two brothers, soon joined his venture and established the company’s headquarters in LaCrosse, Wisconsin.

Today, a more modern and complex version of the company born in 1865 continues to thrive. With a 2013 reported revenue of $136 billion dollars and net income of over $2.3 billion, Cargill currently employs roughly 143,000 employees in 67 countries and provides both agricultural and financial services to customers across the world. Perhaps most impressively, Cargill has remained a privately held, family controlled company since its inception. As of 2014, Cargill operates as the single largest privately held company in America, outpacing its nearest rivals Koch Industries ($115 billion in revenue) and Dell ($57.2 billion in revenue) by a significant margin.

Even though they tend to receive less attention than many publicly traded and therefore more publicly prominent companies, private companies make up nearly 50% of America’s GDP, as reported

by Sageworks in a 2014 study. According to the same study, private companies make up a disproportionate percentage of American job creation: over 65% at time of reporting.

This means that for anyone entering the workforce, we ought to dedicate more attention to these companies, as well as to the opportunities they present for employees and prospective hires.

But where exactly is the line drawn for privately held companies? The standard definition is that the company’s shares and thus control are not publicly available for purchase. Consequently, these companies are isolated from the public sphere and can be difficult to track. It also means that the swaying influence over leadership in these companies is consolidated into the control of the select few individuals who own stock in the company. Many of these private companies have remained within the control of their founding families, and are currently owned by the descendants of the company founders or original leaders.

Despite examples like Cargill, one of the largest companies in America, private firms tend to be quite small. These small businesses foster a tight-knit sense of community. Particularly amongst today’s start-ups, opportunities to join a small private business are more abundant than ever. There is a difference, though, between companies that intend to eventually go public and companies that intend to continue their private holding. The companies that intend to remain private often make an effort to honor their smallbusiness roots through community service.

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Businesses such as Koch Industries—the second largest private company in America as of 2014—present their sense of family value and community service through their public works, while actively supporting conservatism (among other ideas) in their political activities. With over 3 million dollars provided for scholarships and education so far in 2015, Koch Industries embodies the spirit of family business seeking to benefit the community. Many other private companies also embrace their family roots. The HEB chain of grocery stores in Texas, with over 15 billion in sales annually, describes, “for more than 100 years, our commitment and involvement in the community has been an important part of the way we do business.

Corporate philanthropy exists among publicly traded companies as well. Each of America’s largest public companies has programs for education and community Private companies make up a nearly 50% share of America’s GDP

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service and frequently mandates their employees to participate. These programs tend to exist as a way to garner positive public image and support for their respective companies. Since public companies receive funding from their public investors, they often serve their respective communities in order to grow respect among potential investors. Some public companies are even interested in a private company image Johnson & Johnson brands itself “a family company,” and advertises on the basis of community, despite being publicly traded.

Since private companies don’t have to answer to the general public, they would seem to have reduced incentive to perform such works. They do have pressure, however, from a much smaller group of investors and shareholders. It’s easy to see how the values of the founding family can continue to influence these companies.

Marketing isn’t the only way in which Private companies make up over 65% of American job creation

the business models of private companies can differ from those of public ones. As mentioned before, private companies do not have to answer to the wishes and needs of many varied investors. In contrast, public companies are accessible to the general public, including risk averse, less wealthy investors. Such investors are often more conscious to slight changes in company value and will monitor company decisions closely, resisting any ventures which may not immediately satisfy their interests.

Private companies, on the other hand, can have more leeway with their business decisions. Furthermore, the ownership of private companies is presumably more familiar with the intricacies of its business, and often has more experience in the particular sector in which the company operates.

Counterintuitively, it seems that managers within private companies often perceive their decisions as inherently more risky than their public counterparts.

According to a study performed by Paul C. Nutt at Ohio State University, “public sector managers saw the level of risk in the budget decisions as typical, but the private sector managers saw the same decisions as having considerable risk.” Although managers or leadership in private corporations may have fewer public shareholders to answer to, they are often more personally invested in their companies and therefore more risk averse. Additionally, the investors to whom they do have to answer are often more invested, some even having their own name branded in the company. Such individuals tend to value their stake in a company beyond simple profits. It would be naive to assume that the shareholders of the

Mars corporation are not interested in the profits of their family business (the Mars family is currently valued at over 60 billion dollars), but it would also be shortsighted to overlook the huge historical investment of said family in the company.

Although private company investors are interested in much more than profits from their investment, privately held companies often seek higher and more long term yields on their investments than many publicly traded companies do.

The controlling shareholders of private companies have the option at almost any time to take their corporations public.

Therefore, they expect higher returns on their investment than most public companies would hope to achieve in order to keep the private business model viable.

As a result, private companies are often more roundabout in their strategies, taking calculated risks in the present to ensure high future profitability.

For employees—prospective, current, or former—the differences between privately held and publicly traded companies are small but significant. For one, working for a private company is often rewarded by shares of privately held stock. Although this can be true for public companies as well, the stock of private companies ties and incorporates employees into all aspects of company decisions. In effect, private companies often employ entire workforces that concern themselves not just with their own role, but also with the company’s health and fiscal well-being.

This is taken to its full extent in companies like W. L. Gore & Associates, a leading polymers manufacturing company, which

distributes equity to all of its employees (“associates”) and uses a non-hierarchical “lattice” management structure.

Furthermore, privately held companies tend to place more emphasis on privacy and non-disclosure in their business practices, as opposed to the transparency demanded of a publicly traded company. In fact, one of the major advantages of a private business model is that private companies are not responsible for reporting their incomes and the specifics of their business to the Securities and Exchange Commission.

For employees, this can mean less insight into the practices of their own companies, despite their increased level of commitment and desire for such information. The Mars Corporation, for example, has fostered an entire culture of secrecy, limiting public access to aspects such as corporate culture, financial decisions and investments, and even the layouts of their various manufacturing plants.

Finally, private companies often have a ceiling for advancement, particularly among smaller firms. Although perhaps less of a consideration for entry level or starting employees, the close knit ownership of private companies often creates a barrier to upward mobility within the company.

While a public company may exhibit the characteristics of a meritocracy, most private companies have a succession of leadership already in place years before changeover would take place. Though there are many distinct advantages to employment with a private corporation, one barrier will always remain: family will always come first.

Private companies often employ entire workforces who concern themselves not just with their own role, but with the company’s health and fiscal wellbeing.

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... for you and our future.

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Attracting a diverse workforce is a key driver in PSEG’s ongoing success. We are committed to fostering pathways to success for individuals pursuing Science, Technology, Engineering and Math (STEM) fields. As one of New Jersey’s best and largest employers, we offer you the stability, resources, support and opportunities to take your career to its highest potential.

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INTERNATIONAL

NEW YORK Max Rietveld | Vanderbilt University 1) New York has nearly everything in terms of industries to possibly intern in. The biggest draws are probably the financial industry, tourism, and the arts, especially theatre.

2) The Central Park is definitely a hub for young people, especially in the summer by the Great Lawn. Beyond that, students can be found anywhere from the Upper East Side to the Financial District. Union Square is a popular place for visitors to live.

3) The city is full of amazing parks, museums, and galleries that are all worth a visit. Student discounted tickets are available at Lincoln Center and Broadway shows. The Bronx Zoo is always great, as well as the beast speedboat tour. The Daily Show is definitely worth seeing as is SNL if you can get a ticket.

To get a sense of what it’s like to work in some of the world’s most exciting cities, Business Today surveyed four students from around the globe, asking them the three following questions: 1) What are the dominant industries in your city?

2) Where do students tend to live and hang out?

3) What are three things that you’d recommend doing on an intern’s budget?

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OSLO Nora Stai | University of St. Andrew’s 1) Being a port-city, Oslo is renowned for its maritime industry, particularly for its large shipping and engineering companies. Similarly to the rest of the country, Oslo is also at the forefront of the oil and gas industry, as well a leading player within the energy & environment sectors.

2) For young people, particularly students, Grünerløkka is one of the more exciting places to live in Oslo. With cafés, bars and parks around every corner, Grünerløkka encapsulates the city’s buzzing atmosphere. Yet, for those who prefer a quieter, more intimate atmosphere, St. Hanshaugen is the perfect blend of both the city’s traditional and modern vibe.

3) As Norway is the home of the Nobel Peace Prize, the Nobel Peace Center (12$ entrance fee) is not to be missed when visiting Oslo. The Astrup Fearnley Museum of Modern Art (7$ entrance fee for students) is one of the city’s newer attractions, showcasing Norwegian and international contemporary art. Finally, the Vigeland Park is probably Oslo’s most popular attraction, being the world’s largest sculpture park (made by a single artist). Not only is the park perfect for art-lovers, but during the spring and summer months, all of Oslo gathers in the park to relax and socialize. The park is open 24/7 and entrance is completely free.

ROME Ana Simen | McGill University 1) The fashion industry is very prominent in Rome, more so than government and finance. Moreover, many of the most successful companies in the industry have headquarters in the city.

2) Local Italians actually mostly live at home with their parents, in many cases until they are married, because family is very important in their lives and housing is too expensive as a result of the current economic situation.

They often hangout in areas such as Trastevere, full of bars and cheap food, or more expensive “downtown areas” near the Spanish steps.

3) In the summer it’s great to visit Rome’s many ruins, such as the Colosseum, which often offer reduced student pricing. It’s also great to just walk and try the delicious gelato or pizza found at many local restaurants.

Finally, a perfect thing to do in the summer would be to buy a ticket to go to the seaside, less than an hour away, and spend a beautiful day at the beach.

PHNOM PENH Meghan O’Neil | Princeton University 1) NGOs are definitely the dominant group, especially for expats.

There are ones dealing with public health, environmental issues, public service, etc. Public health is definitely the biggest group of all. NGOs are literally everywhere.

2) Most young expats live in BKK 1! Some also live in Russian market but BKK 1 is more popular.

3) Dine in the dark is $18 for a 3 course meal and is the coolest dining experience ever!! Blind waiters and waitresses will bring you food from a set 3 course menu that you don’t know (you can choose either international, Khmer, or vegetarian cuisine) and you guess after eating the entire thing and it’s SO FUN.

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Net Neutrality Who won?

by Kai Lu

Comcast FCC decisions made without clear authorization by Congress (and who can honestly argue Congress intended this?) can be undone quickly

by Congress or the courts.

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O

n February 26th, the Internet celebrated the news of a historic FCC ruling: the 3-2 decision that reclassified Internet Service Providers (ISPs) as common carriers. In principle, this means that ISPs cannot discriminate Internet services, so that they may not speed up preferred data and services and/or slow down others. The historic ruling codifies the principles of net neutrality that Tim Berners-Lee imagined when he dreamed up the Internet.

The ruling was quickly followed by the threat of lawsuits from the traditional opponents of net neutrality, such as AT&T, which said, “FCC decisions made without clear authorization by Congress (and who can honestly argue Congress intended this?) can be undone quickly by Congress or the courts.” This was seconded by Comcast, which said, “After today, the only ‘certainty’...is that we all face inevitable litigation and years of regulatory uncertainty.”

As two of the largest cable providers in America, both companies have a significant stake in the fight for the Internet.

Although it may appear that Comcast and AT&T have suffered a major setback, both need to reconsider whether it is worth com-

AT&T After today, the only ‘certainty’...is that we all face inevitable litigation and years of regulatory uncertainty.

ing to blows over the new set of rules because upon closer inspection, the FCC ruling looks more like a reinforcement of the status quo.

The FCC ruling does not affect cable companies’ current operations The FCC ruling set into effect only three strict laws with absolutely no interpretation left to companies. The three “bright line” regulations were no blocking, no throttling (the intentional slowdown of Internet speeds), and no paid prioritization (the principle of allowing companies to pay for higher speeds).

All Internet traffic must be treated equally.

However, over the last several years, the only instances of any of these three rules coming into play have involved torrenting and piracy.

Most Internet piracy, the illegal downloading of digital goods, occurs through a popular peer-to-peer (P2P) service called BitTorrent. Essentially, individuals who already own the goods subscribe to provide uploads, and individuals who do not own the goods can request downloads. When downloading, any particular uploader only uploads a small fraction of content at low speed; however, tens or hundreds of aggregated users can easily provide the full content at high speed.

In the past, Comcast has attempted to block torrenting services in an effort to prevent piracy. The FCC ruled against Comcast, claiming torrenting had legitimate uses.

While this is true, the illegitimate users far outweigh the legitimate ones, especially in developed countries. Although the Supreme Court later struck down the FCC ruling, Comcast had already stopped blocking torrenting services anyways. In no other case has any of the three rules come into play.

While the FCC’s ruling codifies de facto standards and thus prevents any future occurrences, no service provider is being forced to stop what they’re currently doing on the consumer side – mostly because no service provider wants the PR disaster that comes from consumer outrage over blocking, throttling, or paid prioritizing. In effect, the FCC has drawn a line in the sand, but it is several yards from the nearest ISP. The FCC ruling remains just as vague as ever regarding interconnection While the FCC made three “bright line” regulations, when it came to a principle known as interconnection, the FCC remained silent, and continued with vague statements about “just and reasonable” management.

Interconnection, or peering, is the principle of two networks having a mutual connection. This differs from the entirety of the Internet in that without interconnection, while Internet access is sufficient to reach any other connected destination, it may be routed through many different networks managed by many different companies with many different infrastructures. Interconnection reduces the connection to a single, direct one.

Earlier in 2014, Netflix made waves with its plans to pay both Comcast and Verizon for faster Internet service – seemingly a violation of the third of the “bright line” regulations.

However, Netflix had actually been suf-

fering slow Internet traffic mainly due to basic latency and connection issues; it was working through other companies which had a direct connection to Comcast and Verizon, and its traffic was simply too much for these other companies to handle. The payment was a negotiation to pay for a direct interconnection with Comcast and Verizon.

Under the FCC’s ruling, Comcast and Verizon are still able to force Netflix to pay for direct interconnection on the basis of “reasonable network management.” As one of the most widely used services, cable company servers generate a massive percentage of traffic. Cable companies have essentially required Netflix to pay for the right to use such an abnormally high amount of their bandwidth, and under new rulings, can continue to do so.

In the only real question at stake, the telecommunications companies actually won a major victory.

The FCC ruling actually makes oligopoly more likely Telecommunications, also known as telecom, has traditionally been a fantastic example of a natural monopoly in economics: to get more customers, you need more extensive infrastructure, and to get that, you need more money, which means you need more customers. It’s a vicious cycle, and it’s the main reason why, like many other federally regulated industries, there are only a small number of main players.

What the FCC ruling failed to address was “last-mile-unbundling,” the principle of forcing ISPs to lease out their bandwidth and infrastructure to other companies. This allows smaller companies to have a chance at competing against the well-established telecom giants and prevents the collusion of power into a small number of hands - an essential element of free market competition.

Unfortunately, the FCC explicitly denied the possibility of last mile unbundling being included in the ruling, and as a result, only large, well established companies attempting to make a foray into telecommunications (such as Google) stand any chance of competing with Comcast, TWC, and the like.

It’s been clear that competition is absolutely the only way to force telecom companies to upgrade their policies; AT&T was recently forced to significantly upgrade their broadband service in Kansas City to compete with Google Fiber’s 1Gbps service. But as a result of the FCC ruling, telecom companies know they have nothing to fear from startups – another win if you’re a billionaire CEO in the industry.

It’s likely that Comcast and AT&T will go ahead and sue anyways, and the debate over net neutrality will not find a definitive answer for many years. But given their critical victories and the slow movement of Google Fiber, telecom has not lost anything from the FCC’s ruling. They have stymied major Internet companies and stifled their competition, so maybe it’s time to sit back and find other, more lucrative business opportunities.

No service provider is being forced to stop what they’re currently doing on the consumer side.

It’s been clear that competition is absolutely the only way to force telecom companies to upgrade their policies.

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C O N F E R E N C E Start @ a Startup Conference 2014

HENRY DORNIER | HARVARD UNIVERSITY “The conference was an incredible opportunity to interact with some of thw world’s most innovative startups and inspiring students. Through engaging dicussion groups, phenomenal keynotes, and recruiting opportunities, the event gave me a new perspective on the startup world that I’m extremely grateful for.”

AKASH JAIN | PRINCETON UNIVERSITY “BT’s Startup Conference is the closest you’ll get to Silicon Valley on this side of the country. It is a magnificent confluence of enthusiastic students and enterprising entrepreneurs, and the resulting atmosphere is electric. My own preconceptions on entrepreneurship completely changed there, and I cannot recommend it highly enough”

CATHERINE DENNIG | PRINCETON UNIVERSITY “I was blown away by how well executed the conference was. People get exposed to all the other students attending the conference, but also all of these amazing speakers. It was really incredible.”

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T E S T I M O N I A L S International Conference 2014

ABISHEK KUMAR | MICHIGAN UNIVERSITY “Attending the BTIC over the past three years has been one of the most rewarding collegiate experiences. In each iteraton of this amazing conference I was able to meet, engage, and create synergy with some of the most brilliant students and emerging business leaders from across the globe. The International Conference opened doors for me like no other conference has, and has helped me develop a truly global network.”

VARUN PURI | CLAREMONT MCKENNA COLEGE “From hearing Steven Schwartzman talk about ethical dilemmas that he faced while founding Blackstone, to chatting with Mehmood Khan about how Pepsi uses NASA’s technology in its distribution channel, I was inspired by the way firms are engaging in rapid innovation rooted in stakeholder morality, even in this day and age where newspapers are flooded with images of business scandals and corruption. The lessons we learned in just three days are amazingly applicable not only to my personal life, but also to my professional life.”

ROBERT BOUSCHERY | UNIVERSITY OF COLOGNE “One of my favorite things about Business Today is the quality of the attendees…you guys do a great job of bringing a large number of people together from all over the world.”

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SO, WHAT DID YOU THINK? As a magazine written for students by students, we care about hearing what you have to say. Join the debate by writing to our Editor-in-Chief with any comments about what you’ve seen in this issue. Compelling commentary will be printed in the next issue.

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Invemed Associates PATRONS

SPONSORS Bodman, Willa & Taylor Brown Brothers Harriman Centerview Partners Chealsea Hotels Cinemax Holdings

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Rosemark Capital Spencer Stuart Stupp Company T Rowe Price The Lending Tree West Pharmaceutical Services Whitney University

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Chartboost Chicago Growth Partners Clever CME Group Continental Grain Co. Cravath, Swaine, & Moore LLP Crown Holdings, Inc. Dex Media Drawbridge Emerge Energy Services Eventbrite Exelixis Farmer & Co. Federated Investors FelCor Lodging Trust Inc. Fiji Water

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Liquidnet Holdings Inc. Magellan Health McGladrey LLP Medallia Mitsubishi Corporation Morehouse College NBC Universal Nextdoor NOVEC Oceaneering International Okta Percolate PlanGrid Qualtrics Quizlet Regulus Therapeutics Related Beal Company Rent the Runway

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