The Individual

p. 8 M U S K : H ow O n e M a n i s o n a MI SS I O N to C h a n g e t he Wo r ld Th rou g h B U S I N E SS

p.26 I n te r v i ew w i t h BRAD FREEMAN Co - Fo u n d e r o f FREEMAN SPOGLI & CO.

p.36 #selfie: A Discu ssion of NARC ISS IS M in t h e M IL L ENNIAL AG E

p.56 In ter v iew w ith L AU REN FL ESHMA N : Co- Fou n d er of P IC KY BARS

WORDS FROM THE

EDITOR T

he 19th century saw the emergence of the Great Man Theory, which explains history as the deeds of influential individuals. As with all theories, it inevitably met with criticism. One of its major critics was the Victorian scholar Herbert Spencer, who argued that these so-called ‘great men’ had to be seen in the context of the societies that shaped them. Despite disagreements with the theory, I believe that there is still much to be learnt by closely analyzing the role of the individual, both in history and today.

History is peppered with examples of ‘great’ individuals whose visions and ideas have left an indelible mark on the world as we know it. As college students, we spend a considerable amount of our time studying the ideas of influential individuals – artists, philosophers, politicians, historians – and continually challenge ourselves to engage with their works and contribute our own perspectives to the conversation surrounding them. As a society, we are still fascinated by idiosyncratic personalities, past and present. The popularity of biographies bears testament to this curiosity. In 2011, Walter Isaacson’s biography of Steve Jobs was Amazon’s Number 1 Best Seller; people were keen to learn more about the man behind Apple.

We are living in a world where the individual increasingly has the potential to make a significant impact, facilitated by innovations in technology and the growth of social media. The race for the White House, a relentless source of news and debate over the last several months, is a prime illustration of this phenomenon. It has brought the role of the individual to the forefront of the nation’s mind by demonstrating the widespread impact that the actions or words of one person can have.

Here at Business Today much of our work - whether through conferences, interviews or the seminar series - celebrates the achievements of remarkable individuals. In this issue, our writers analyze the concept of ‘the individual’ in a variety of ways. They first approach it by focusing on individual visions; for example, in an article that examines the work of one of the great visionaries of the 21st century: Elon Musk. Musk has aspirations that are, quite literally, out of this world and is someone whose personal ethos clearly manifests itself in his enterprises. We also interview Brad Freeman, co-founder of Freeman Spogli & Co., who tells us about founding his company and discusses the culture of his firm. In fact, everyone interviewed for this issue has had a role in successfully founding or co-founding a company. Values that they highlight as crucial to success are: effective leadership, patience, a constant desire to learn, and the ability to forge connections in order to innovate.

Our writers also explore the individual in the context of social media by looking, for instance, at the “selfie” and discussing how self-promotion hinders our ability to meaningfully connect with the world around us. Our issue ends by re-examining our role as the Millenial generation, looking at the inter-generational shifts in family owned businesses and the importance of creating forums in which Millenials are able to learn from older generations, who have the irreplaceable knowledge that is only acquired through time and experience.

I hope that this issue of Business Today, showcasing the potential impact that individuals can have, encourages us to continue our self-exploration, to focus on the causes we care about, to learn more about them, and to create unique ways in which to solve the problems that are associated with them. It goes without saying that the decisions we make and the thoughts and impulses we choose to act on collectively shape the world in which we live. Therefore, we must not underestimate the power of the individual.

AYESHA AHMED EDITOR-IN-CHIEF

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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.

KELLY ZHOU President CHANDLER STERLING Director of Strategy AYESHA AHMED Editor-in-Chief of Magazine JAMIE DOWNEY Editor-in-Chief of Online Journal PAUL KIGAWA International Conference Director PETER HOLT Startup Conference and Investments Director COLLEEN KANG Women in Business Conference Director EMILY SPEYER Seminar Series Director NATALIA PERINA Director of Membership & Outreach WAQARUL ISLAM Director of Web,Tech & Analytics MIHIKA KAPOOR Director of Design ANTIGONE VALEN Director of Finance & Corporate Contacts DAVID CRANE Director of Executive Relations SHEFALI JAIN Director of Operations

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 Nick Sexton

AYESHA AHMED Editor-in-Chief of Magazine ANNA POUSCHINE Executive Editor of Magazine JAMIE DOWNEY Editor-in-Chief of Online Journal ISABEL CASSERLEY Executive Editor of Online Journal MIHIKA KAPOOR Director of Design ELAINE FANG Executive Editor of Design SOPHIE HELMERS Magazine Business Manager MORGAN BREWTON-JOHNSON MELISSA FULENWIDER SOPHIE HELMERS MATTHEW LUCAS LUCA RADE Editorial Board

Editorial Grace Cordsen Ricardo Diaz Jarred Felix Rebecca Fleming Victoire Hayek William Liu Mo Luo Chance Melacon Liz Ostertag Audrey Ou Andrew Scott Isabel Shipman Christina Styer Gladys Teng Cara Yi

Design Jenna Barancik

Jackie Jones Anne Haque Annie Klosowitz Linda Luo Cover design by Mihika Kapoor

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#s el f i e: Narcissism in t h e

I nte r v iew w i t h G R A DY L E E : Co - Fo u n d e r & CO O o f RO CKCO R P S p.2 0

MI CR O F I N A N C E p. 24

I nte r v iew w i t h B RA D F R E E M A N : Co - Fo u n d e r o f F R E E MA N SP O G LI & CO. p.2 6

M IL L ENNIAL AG E p. 36

DEM YSTIFYING M on ey M akin g on S O C IAL M EDIA p. 42

The M od er n M ARKETING L a n d scap e p.44

I n ter v iew w it h C ARRIE S IM O NS : C EO & P resid en t of T RIP L E 7 P R p.48

IDENTITIES ATHLETIC

I nte r v iew wit h KE V I N KU R I A N & MOHAN RAO : Co-Founders o f KA N E & R AO GROUP p.14

Th e R i s e of SO LO P R ENEU RS p. 34

From G AM E DAY To P REM IERE NIG H T p.52 In ter v iew w it h L AU REN FL ES H MA N : Co- Fou n d er of P IC KY BARS p. 56

MILLENNIAL PERSPECTIVES

INDIVIDUAL

VISIONS

A M a n w it h a M I SSI O N p.8

F re e Tra d e: W h en S M A LL B U S INESS ES G e t to Th in k BIG p. 30

(SOCIAL) MEDIA

BT Bit s : STEP P I N G STO N E S to S u ccess p. 6

ENTERPRISES

OF CONTENTS

SMALL

TA B L E

RIS KY Busi ne ss p. 60 The M IL L E N N IA L’S G u id e to INVEST IN G p. 64 In d iv idua l i ty i n t h e M I LLE N N IA L G ENER ATION p. 68

Inspired by innovation.

Focused on the future.

That’s what it takes if you want to seize tomorrow’s opportunities. And with the right technology partner, you can innovate now and into the future. What matters today is how you prepare for it.

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BT BITS: Stepping Stones to Success

by Jamie Downey

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M

any of today’s most influential businesses are founded on the strength of individuals who successfully elevate the status of their brands using their personas. These individuals have often managed to construct successful brands, businesses, or products in large part using their own charisma or business acumen.

While many of these leaders have experienced great success and prosperity later on in their careers, they often faced serious challenges in the earlier stages. Here are a few of the mishaps that they had to deal with on their respective paths to success.

RICHARD BRANSON While internationally recognized today for his devil-may-care persona, Richard Branson’s whole career has not been kept afloat by his speaking skills or likeability. In 1994, Branson’s business group Virgin— which has holdings in media, airlines and a variety of other industries— attempted to launch a totally new product: Virgin Cola. After personally driving a tank through New York’s Times Square, and shooting down the Coca-Cola sign with the tank’s gun, Branson was confident that his knack for publicity and the strength of the Virgin name would catapult him, along with his beverage, past any other competitors. However, the company failed to even match competitors and the brand name changed owners a few times. As of 2012, the once grand Virgin Cola brand officially went flat.

WALT DISNEY It’s hard to believe that such a beloved personality—and the creator of collective touchstones for the childhoods of millions around the world—could have failed at any time during his career. Though there are many tales surrounding Disney, there is never any doubt about his abilities as an artist or his knack for finding a niche in the then-burgeoning animation market. However, early on in his career, Disney was fired from a job with the Kansas City Star, a small newspaper, for lacking ideas and creativity. When asked about failure, Disney said: “I think it’s important to have a good hard failure when you’re young. I learned a lot out of that. Because it makes you kind of aware of what can happen to you. Be cause of it I’ve never had any fear in my whole life, when we’ve been near collapse and all of that, I’ve never been afraid.”

Today, the company that bears Disney’s name is worth over $88 billion.

VERA WANG One of the most recognizable names in fashion—and perhaps the most recognizable name in bridal fashion—Wang was not always so successful at attracting attention. Her early career began promisingly with a job at Vogue magazine. Though she started as an assistant, she quickly rose through the ranks and was promoted to senior fashion editor. However, she was never awarded the elusive position of Editorin-Chief. After 15 years at Vogue, Wang decided to leave in order to begin her own line of dresses. Today, some of Wang’s designs have sold for over $100,000.

HENRY FORD The oft-quoted engineer’s early career began with failure. Though he is credited for making the automobile one of the most important inventions of the 20th century and has profoundly and permanently influenced our society, Ford’s first two automobile companies were extremely unsuccessful. With his reputation in ruins and with no financial prospects on the horizon, Ford had one more chance to create another company with a new financier: Alexander Malcomson. Freed from creative limitations and with a strong new budget, Ford’s third company is credited for pioneering the assembly line technique and his car company quickly met with immense success and fame. Despite failing twice, Ford managed to become one of the richest men in the world and ensured that he would be a household name for decades to come.

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MUS A

M A N

by Luca Rade

W I T H

A

SK

M I S S I O N

HOW ONE INDIVIDUA I

n 1908, Henry Ford revolutionized transportation with the release of the Ford Model T, the first mass-produced and affordable car. Over 100 years later, the car has become an integral feature of contemporary society. Henry Ford’s genius and business acumen led him to democratize a rare, upper-class good. The car became a cornerstone of society through the use of assembly lines and Ford continued to strongly influence the newly formed automotive industry for decades.

Henry Ford is a prime example of one of those rare individuals who have single-handedly managed to transform the world. Over 100 years later, Elon Musk is shaping up to be another such individual, perhaps to an even greater extent than Ford. Musk has a clear vision of what the future should be and he is using business to make this vision a reality. For Musk, profit is not an end in itself; he is using his companies as tools in order to achieve a greater purpose. And in the process, he is turning traditional business theory on its head and pioneering new business models. In a world driven by short-term profit, Musk serves as an inspiration and a shining example of how an individual can make a profound difference using business.

Do it for the end goal Musk is a man with a mission. As reported by Ashlee Vance in Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future, in Musk’s own words, he “would like to die thinking that humanity has a bright future.” Many profess to have such a goal, but what sets Musk apart is his specific vision of what the future could look like, and his single-minded dedication to building that future. According to the Wait But Why series, Musk thinks solving sustainable energy and becoming a “multi-planetary species with a self-sustaining civilization on another planet” are the two most important issues facing us, and he has made it his business, in every sense, to confront them head on.

Musk not only has a noble objective but is also willing to put in as much effort as is necessary to achieve it. Through Tesla and SpaceX, Musk is transforming the transportation industry, which is responsible for 27% of greenhouse gas emissions in the U.S., and revolutionizing space travel with the goal of creating a self-sustaining colony of a million people on Mars. The totality of control Musk exercises over his companies and the

THE WORLD THRO

How one individual is changing the world through business

AL IS CHANGING extent to which they are devoted to his goals is remarkable. Tesla’s mission is “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible;” SpaceX’s is “to revolutionize space technology, with the ultimate goal of enabling people to live on other planets.” These are almost exactly Musk’s words. On the About SpaceX page, Musk personally narrates one of the two videos, “The Case for Mars,” and explains why becoming multi-planetary represents a revolution of life akin to the development of multicellular organisms. According to an anonymous SpaceX employee, this mission is all pervasive; all employees are aware of how what they do is contributing to the bigger picture. These are not your average profit-seeking companies. And, as Matthew DeBord reported in Business Insider, as long as Musk is in control, the totality of dedication to these goals is non negotiable.

The intention…and the success A driven man with a mission and personal control over several companies is a phenomenon that is remarkable, but not unique. What truly sets Musk apart, is how

successful he has been thus far in making his vision a reality by throwing convention to the wind and taking a “from the ground up” approach.

When Musk helped found Tesla in 2002, no one understood what he was thinking. There had been no feasible examples of electric cars, and nobody considered them anywhere close to viable against gas-powered cars. In addition, the automobile industry has high barriers to entry and there had not been a successful startup car company in the U.S. since Chrysler in 1925. When, two years later, he also founded an aerospace company to work towards a Mars colony, he seemed to confirm his image as a delusional billionaire, squandering his fortune on doomed ventures.

Today, Tesla’s Model S is widely considered to be the best car on the market, ranking top in U.S. News for two consecutive years and receiving the highest score (99) ever in Consumer Reports, in addition to multiple awards. SpaceX also stood out when it became the first private company to carry out missions to the ISS. Not only are both companies in good shape and expanding rapidly, but the desired wider impact that Tesla’s mission declares is increasingly

OUGH BUSINESS

... MUSK IS ONLY JUS visible: most major car companies now have an EV model compared with no companies when Tesla was founded. There is a clear causation: the Chevrolet Volt, for example, was born when Bob Lutz, then chairman of GM, said to his board: “If a little company in California can do this, why can’t we?” We are still far from a world operating solely with electric cars and sustainable energy, and a colony on Mars remains a distant prospect, but Musk’s progress thus far in transforming two massive and entrenched industries, while striving for a greater purpose, is remarkable and the end goal is in sight.

How? This success is explained by Musk’s pioneering of new business models and his “from the ground up” approach. As Wait But Why reports, he began from scratch.

Rather than improving upon existing cars and rockets, Musk’s companies started with a blank slate and asked the question: what would the ideal car or rocket look like? This innovative attitude is present in all aspects of Musk’s companies, including their manner of conducting business: rather than adopt conventional business models, they do whatever will work best.

This has led to a unique physical and organizational structuring and new sales models. Both Tesla and SpaceX are almost entirely vertically integrated. At a time when manufacturing has largely been outsourced, almost everything is manufactured in-house, at two of the most expensive locations in the U.S. (LA and Silicon Valley).

This runs counter to conventional wisdom, but it has allowed Tesla and SpaceX to cut out the middlemen, design cars and rockets as a whole—with each component carefully thought out in the larger context, and provide far higher-quality products at lower prices. Tesla’s Model S, for example, is the only car in the world with a full aluminum body, and SpaceX’s rockets contain parts

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that can only be manufactured through 3D printing to ensure the necessary precision to fit with the rest of the rocket’s components.

Both of these feats would be impossible without full vertical integration.

Another important element that complements vertical integration is a unified workspace. Tesla and SpaceX are each concentrated in one large building. The engineering labs, design studios, and executive offices share space with the factory and with each other. This unconventional physical layout facilitates interaction to ensure designers and engineers remain in touch throughout the physical construction process. They can easily see how their design translates into manufacturing and receive feedback, while those on the factory floor can verify doubts with engineers and designers and suggest changes.

The physical set-up of Tesla and SpaceX enables, and is complemented by, certain elements of organizational structure. According to Wait But Why, Von Holzhauzen, chief designer at Tesla and previously at GM and Mazda, says that at Tesla, “design and engineering are assigned equal value,” unlike at other car companies where engineering generally comes first and design is intended to make the final product look good. As Ashlee Vance pointed out, Musk’s personal management style is also well suited to the physical layout: he is often referred to as a “nanomanager” by employees because he involves himself with a lot of low-level decisions and is an expert on everything occurring within the company. Furthermore, the physical integration blurs organizational boundaries between executives and employees.

This all flies in the face of conventional wisdom regarding delegation and organizational hierarchy, but it is an integral part of the unique formula that has made SpaceX and Tesla so successful despite incredible odds. The physical concentration of activities into one space and the related organizational elements enable Tesla and SpaceX

ST GETTING STARTED to truly innovate from the ground up. To reinvent the car or the rocket requires holistic consideration and a basic understanding of the big picture. This is also true of Tesla’s and SpaceX’s broader missions: to transform transportation and create a colony on Mars.

Sales and implementation Musk’s organizational innovation does not stop at the production process. In sales and implementation too, Tesla and SpaceX diverge from their industry’s standard and from wider business convention.

As Ashlee Vance reports, Tesla is the only major car company that sells its cars directly, shunning the traditional dealership model through which dealers earn profits as middlemen and from high maintenance fees.

Software updates are pushed out automatically and hardware improvements are incorporated into a model as they are designed, rather than through a yearly new model.

SpaceX sells its rockets as a service, not a physical product, and charges a flat fixed price in sharp contrast to the opaque pricing mechanisms of existing aerospace firms. All this serves to make Tesla’s and SpaceX’s sales and pricing more transparent, less complex, and ultimately preferable to the customer. It also cuts out unnecessary intermediaries who siphon off profits. In the case of SpaceX, the simplicity has the added advantage of highlighting the huge price differential between SpaceX and all of its competitors.

The long-term view Most notable, however, are the business practices employed by Musk that bring no clear benefit to Musk or his companies directly. Some provide long-term gain; some help further Musk’s mission without benefitting Musk’s companies; others simply stem from Musk’s personal morality. For example, Tesla is feverishly constructing a nationwide grid of Superchargers, provided free

of charge not only to Tesla customers but to all EVs, clearly a money-losing venture. But this will accelerate the adoption of electric cars, an industry Tesla currently dominates and so may benefit Tesla in the long-term.

Regardless of how it affects Tesla, it will further Musk’s mission to transform the transportation industry. Another striking example is Tesla’s total lack of advertising. According to Wait but Why, Musk considers advertising to be dishonest and Tesla relies on word of mouth and third-party promotion instead.

All of SpaceX’s spacecraft are fitted with windows, despite carrying only satellites, because they are intended to carry humans to Mars in the future. This is primarily a gesture to symbolize SpaceX’s dedication to its overarching goal.

Using business for a noble purpose It is this commitment to humanity’s long-term potential which makes Musk an incredible and inspirational figure. Musk’s unique business model, his success in disrupting two massive industries, and his reinvention of the car and the rocket are impressive and have had a large impact. However, what is most revolutionary is his use of business for the benefit of humanity’s long-term future, a project on which Musk is only just getting started.

As Tesla and SpaceX power forward in a quest to reach their interconnected goals, Musk is successfully demonstrating that it is possible to run a business to achieve a noble purpose, with profit as a secondary priority necessary to achieve the former, and simultaneously build a successful company. In a world dominated by quarterly results and the race to create the next selfie-sharing app, Musk’s long-term vision and dedication to the betterment of humanity and his commitment to realizing that vision through his companies should be an inspiration to us all.

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K

ane &

Rao Group Kevin Kurian & Mohan Rao Kevin K. Kurian (Kane), born and raised in Amsterdam, studied Mechanical Engineering at one of Holland’s top engineering universities, Delft University of Technology (TU Delft). After one and a half years and switching majors to Applied Physics, he took a gap year, wanting to make an impact. Mohan F. Rao, born in the UAE, lived in Singapore and Shanghai until he joined TU Delft at the age of 17 in 2012.

Kevin and Mohan met when they were assigned to work on a group project together at TU Delft. Several months later, in April 2015, Kevin and Mohan launched Quench Design, a graphical and web design company. They soon formed the Kane and Rao Group (KRG) with the addition of Kane and Rao Consultancy, which focuses on three departments: Sales & Marketing, Innovation, and Software as a Service. Today, KRG is rapidly expanding into new fields, with ventures in textiles, consumer goods and software.

Luca Rade: What was the process that led you from regular college students to the successful founders that you are today?

Initially you could say that we were uninformed optimists.

Kane and Rao Group: We started college in 2013. We were both doing mechanical engineering at Delft University of Technology in the Netherlands. We met each other halfway through the year and the moment we met, we basically understood that we had the same mindset. We were both eager to learn a lot outside of engineering school. The sad thing about our engineering school is that it only offered engineering courses, and people were very narrow-minded and very biased towards engineering. We were not; we were ready to learn a lot of stuff outside of engineering. We focused on entrepreneurship and that drove us. We wanted to create things and to leave a mark on everything we created. We tried out a lot before and during college. For example, we tried to sell lenses for your iPhone that you could snap on.

We tried to do affiliate marketing and a lot of other things, but when we realized there was not a product-market fit, we let them go.

Then, we went on a holiday and met our head of design in Goa, India. He was a graphical designer and we told him we could sell this in Holland and asked if he would be interested. He said yes, so we did an accelerated course in Photoshop and we started graphical designing as well. Quench Design was founded in April 2015 and a couple of months later we already had the consultancy going.

We signed big clients for Quench Design with design projects and then the design projects turned into other projects. They told us they really liked what we did with the design and we said that we thought we could improve this other idea as well. They agreed and gave us a shot, a trial run. We did, they were interested, and that’s how Kane & Rao Consultancy came to be. I wouldn’t call us successful yet, but I would say we’re in the process of getting there.

LR: You mentioned that there were some failures before your success with KRG, how did you deal with those failures?

KRG: There were a lot of failures, for sure. When we first started out, we barely got anywhere. We realized that you haven’t created anything of value until people are consistently willing to pay for it. If you have something that is good enough, then people will buy it from you. That is one of our mantras in the company as well, so we focus on product. If the product is amazing, people will come to buy it. Or if your service is amazing, people will come to you. This leaves less need for marketing; you won’t have to do marketing because the product will market itself. That’s the strategy that Tesla uses, for example. It

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sounds obvious, but it took us a while to figure that out. So when we thought we had a great product, we tried to sell it to people and they would say: this is too expensive, or we don’t like the product, it’s not that much better or I’m not willing to pay the difference in price for it.

Initially you could say that we were uninformed optimists. We pitched projects that were only marginally better than the status quo and expected them to gain traction. Nowadays we think of ourselves as informed optimists, and the key difference between the two is that the informed optimist has done his research and has run the numbers. He is optimistic and can back his optimism up with evidence.

This does not mean that we don’t make mistakes. We actually have a very lenient approach towards failure. If one of the ventures or any initiatives in our company fail, that’s fine with us, and we’ll just radically progress or do well on another project. That’s a great aspect of being part of a group; we have the diversity to do the things we like. We know it sounds cheesy, but failures truly are learning experiences.

We always thought that was cheesy until we failed miserably. That’s the moment you realize that all those clichés you read earlier are actually true.

LR: Now that you are more on the track towards success, what kind of projects have you been involved in?

KRG: Quench Design does a lot of web design and branding projects and each venture in the group also uses the other ventures as resources. For example, Kane & Rao Consultancy, or KRC as we like to call it, is doing a project with Ricoh, and some of the designers from Quench Design are working on the project. We have done web designs for professors, local companies, startups, and we have done a website for a local department within Ricoh. We’ve optimized the way their guests come into the building. The guests are informed about Wi-Fi, directions, rules and regulations before they even enter. We integrated a startup software and designed a room to maximize creativity. A lot of things are happening.

We were also in Poland last week for a fashion fair as we are trying to break into that industry as well. We learned everything there is to learn about the supply chain from raw cotton to t-shirt and now we’re ready to implement that locally.

LR: Another article in this magazine talks about Musk, and the long-term vision that he is implementing through his companies.

Do you have a long-term vision that you’re seeking to realize through KRG? KRG: Definitely, definitely. We’re actually huge fans of Musk, as every entrepreneur

We believe that the world we live in tomorrow should be the world you helped create. things are developed more quickly and the process accelerates. Something that took a long time to make a hundred years ago would only take a day to make today and we predict will take even less time in the future.

Ideally, we want to be at the forefront of this, driving and fostering the culture of innovation through society. Realistically, to achieve that magnitude of impact, we need to have 3 resources: network, financial wealth, and experience. These are resources we strive to acquire in the short term, between now and the next eight years. If we get those in check, we can focus on larger projects that can leave a radical impact. We would strategically look at what industries could use such an impact, and focus our time and resources on those. But we are definitely looking forward to larger-scale projects in the future.

There is no guarantee that they will be as successful as some of Musk’s ventures but Musk is an individual we look up to.

LR: Aside from the larger-scale future projects you look at, is there any way your vision manifests itself in your current management of KRG? KRG: Certainly. KRG doesn’t have a so-called “plan.” It is a free entity and it can grow in every direction that it wants, so it has a lot of freedom in that respect.

However, every venture within KRG, including Quench Design, KRC, and a lot of other exciting stuff that is happening, is strategically planned. Those could fail, as most of the startups do, and then we’ll shut them down and use those resources and our learning experience on another venture. We predict that in the near future, 20% of our ventures within

the group will be earning 80% of the revenue or more; it’s basically Pareto’s principle. We will use such insights and analytical tools as are available at the time to maximize our growth. We are planning on doing a review every couple of years; we are just looking at what companies are doing best and what ventures or initiatives are draining too many resources and are no longer worth it. We will reallocate to adjust and use our resources optimally.

LR: Given your experience at KRG, what advice would you give to students, currently in college, who are interested in starting their own businesses?

KRG: Learn as much as you can, in as many fields as you can. One of our core values at the firm is to always be learning.

The ability to keep up a conversation in multiple fields is of immeasurable value at any given point in time. You also start to interconnect everything you learn from different fields and that is actually how we, personally, like to innovate.

Internally we really promote this ‘alwaysbe-learning’ mantra. Upon joining us, the employees’ possibilities are endless. We also allow access to all our resources, which are language lessons, online courses, articles, interviews, media outlets, and books.

Anything we think is cool is collected in folder and whenever somebody joins us we allow them access to that folder. This keeps everybody motivated, driven, and up to date with the latest tech.

insights.

LR: What would be your parting words for a student currently in college, the major takeaway from your experiences?

KRG: We believe that the world we live in tomorrow should be the world you helped create; that is one of the things we really live by. Maximize your opportunities as you do so. If you feel as though your education isn’t providing the requisite depth of knowledge that will help you mold the future, then you should be proactive about it. We are the first generation to carry the knowledge of the world in our phones and we need to take advantage of the limitless information and access it. As I said earlier, we ourselves love to read. But you should also follow online lectures or courses and learn new languages. Having a leading expert in your field just a few clicks away is a blessing that you shouldn’t take for granted. So always be learning and never stop creating.

LR: Could you name some examples of the sorts of books and articles and interviews you have?

KRG: Within the firm, a lot of guys are fans of Nassim Nicholas Taleb; his book Antifragile is very popular among us.

Futuristic and big-picture books like Sapiens: A Brief History of Humankind and Superintelligence are also quite popular as well as biographies including Steve Jobs’ and Howard Hughes’ and self help books.

We also have a lot of book summaries, so instead of reading an entire book, we can just get the core

“

We really promote this ‘always-belearning’ mantra.

“

should be. Our long-term vision of the future is an automated, abundant world, thanks to technologies like 3D printing and the Law of Accelerating Returns.

Progress is accelerating at a rate that we seem to consistently underestimate. This is very hard for people to comprehend.

But as we move forward, as the days go by,

Deliver the information that matters, every day.

K NOWLEDGE AND INSIGHT FAC T IVA PE VC NE WS ALER T S AND DATA NE WSWIRES NE WSPLUS RISK AND COMPLIANCE RISKCEN T ER RISK FEEDS RISK REP OR T S D JX

CO N F E R E N C E S

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G

rady Lee

Co-Founder & COO

ROCKCORPS

Grady Lee is one of seven friends who founded RockCorps, a pro-social production company that uses the power of music to motivate young people to volunteer in order to earn their way into attending concerts. In addition to his role as COO at RockCorps, Lee is also the CEO of CorpsGiving, leveraging RockCorps’ expertise to help other companies involve their employees in volunteer work. He also serves as chair of the Executive Committee at Impact 2030, a global collaboration between the UN and the business sector. Lee has a degree in Romance Languages and Literatures from Princeton University.

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Grady Lee: In my view, the role of the COO is to make sure the company is producing what it is supposed to be producing, so I enjoy it. I enjoy making things real and I enjoy making something out of nothing, which is a lot of what an entrepreneurial experience involves. We are starting a new company from RockCorps called Give2Get (www.gv2gt. com), where I will be the CEO, so we are currently in the middle of a big transition. The CEO position is interesting because the CEO is out there getting resources, putting people on the right teams and making sure the right resources are on board. The COO makes sure that those resources are used properly, so it is a very symbiotic role for me with our team, and it has been a lot of fun.

CM: What was it about the aftermath of 9/11 that inspired you and the other six founders of RockCorps to start a social production company?

GL: We were in Los Angeles during 9/11 and there was a helpless feeling afterwards. In the days and weeks that followed, everybody wanted to do something and there was a lot of sitting around and musing about how we could help. I think 9/11 accelerated the CSR (corporate social responsibility) and I think that it caused arguing and fledgling movements that started in the U.S., because people wanted to find a way to make the world better, a way to give back and a way to connect with each other. We had been putting on these kinds of “concerts for tickets” in Colorado as

We were in Los Angeles during 9/11 and there was a helpless feeling afterwards. a non-profit. I brought it up to friends of mine out here and we ended up doing it. It was certainly a cool community-building activity and so we started thinking and seeing if we could find a better or different way to do it.

We talked about it in our spare time for a couple of years and then we finally got a brand to come on board and fund it, so we all quit our jobs and started RockCorps.

CM: How does RockCorps use music to motivate young people to volunteer more?

GL: The music does two things. People’s love of music is a very renewable resource. It cuts through and attracts a lot of attention. It makes people look. Getting to see their favorite artist

“

People’s love of music is a very renewable resource.

is a powe r f u l motivation.

There have been radio contests where people have put their hands into a bucket of ice water to win tickets to the big show.

People will do a lot of things! I believe the music gets them to show up but the volunteer experience is the real meal of the program. Once they show up, they have an experience in volunteering that they were not expecting. It is empowering, fun and more engaging than they thought it would be. Then they receive a ticket to a show where everybody has done the same thing and when they get to the show, everybody celebrates the work they have accomplished with each other. Almost 80% of the people who go to the shows say that those shows make them feel how powerful volunteering can be because everyone is together, everyone is there for the same reason, and everyone did the same to get in. It is very much a celebration of a community coming together to help itself, and it is fun, irreverent and different. I think the music really makes people turn and look and want to know what is happening.

CM: How has RockCorps changed over the past 14 years?

GL: RockCorps started with one show. Our first show was in 2005, so it has been about ten years. We have gone to ten countries, engaged more than 150,000 volunteers and have put on 50-60 shows, celebrating more than half a million hours’ worth of time given to local communities. By taking it to different cultures and audiences, we have seen that this desire to engage with each other is a universal thing.

People are hungry to connect and hungry to help out.

CM: Could you elaborate on what the idea of “Making Volunteering Fashionable” means to you and to the company?

GL: The numbers in volunteer rates in the last ten years in the U.S. have been flat. There has not been a lot of growth in volunteering. For me, volunteering is a practice that suffers from a lack of imagination. I think there is a way to bring swagger back to spending time volunteering. The issue is that back in the late 90s we were making volunteering cool. I think volunteering as a conference has been cool, but I do not think it has necessarily been a good experience for most people between the ages of 16-24. We wanted to change that. We are

“

Chance Melancon: Could you tell us about your role as Chief Operating Officer and what you most enjoy about it?

irreverent about it.

We think it is a powerful tool to engage people in the community. I think the effect on people is as big as the effect on non-profits in the community. We are trying to create an engaged group of people who understand their power and what they can accomplish in their local communities. We are trying to do this in a way that is not tied to another message. There is no religious message to it. We are not trying to make anybody a good person. We are really just trying to get some work done and show people that they have some power in the world and that there are places that could use that power. Volunteering can be cool, it can be a fun and it can be a social experience. It does not have to be serious. It does not have to be drudgery. It can be something celebrated.

CM: Of all the community projects RockCorps has been a part of, is there a particular cause or project that means the most to you personally?

GL: That is really a hard one. We have done thousands, but a couple of things come to mind. We did a project in South Africa where we made it possible for high school students to volunteer their time at grandmothers’ homes that were becoming preschools, where grandmothers would take care of the neighborhood kids. In order to get federal funding from the government to be a preschool, they needed a certain amount of facilities such as bathrooms and shaded play areas. So we ran a contest where high school students would win a chance to volunteer with their friends to help a local grandmother qualify for federal funding.

Preschool education in South Africa is sorely

lacking and these grandmothers are doing great work. We were able to get other students out there to help the next generation become educated. That was what I was proud of.

Another one was in Miami, where we had brought in 150 kids from the local area to help out at the local food bank to earn tickets to a Rick Ross show. The executive director of the food bank got extremely nervous. She did not want to do this and was stressed out. We had to carefully keep her on track and throughout the day she saw 100-150 Rick Ross fans. She slowly realized that all of these people in the community where she works, people she had been afraid of her entire working life, were people who wanted to help and who came and did a lot of work for the food bank. She has changed how she operates in that community based off that project. As I have said, the effect on people can be just as huge as the effect of our non-profit work itself. We opened that woman’s eyes to the resources and the positive vibes in that troubled neighborhood.

There are many good things happening there and a lot of powerful forces that can be put to good use.

CM: How has your degree in Romance languages from Princeton helped you in your career?

from college. It’s a liberal arts education; it’s supposed to challenge you in different ways.

CM: What obstacles have you had to overcome in your career?

GL: Well, you have to learn how to work without a paycheck. You have to learn how to take a chance. There are obstacles involved in doing something for nothing in order to see, and then to create what is not there. Creating something is hard and it is also hard to convince people of your point of view. A lot of doubt creeps in and there is a lot of uncertainty that you have to deal with as an entrepreneur. I never quite saw myself as an entrepreneur but it is what I have been doing most of the time. I think it is a huge obstacle to continually overcome this uncertainty, but the satisfaction of creating something that was not there before is worth it for me.

CM: Do you have any advice for aspiring entrepreneurs still in college?

at business challenges and other challenges in the world that need a solution. My advice to entrepreneurs is almost the same as to anyone going to college. You have to deal with your major but you should take every class with the best professors that are there because you do not know where your inspiration will come from. Good professors and passionate teachers can open your eyes to new things. One of the best classes I took was ancient Chinese art. It made me think about civilization and culture in a way that I had not before and I only took it because of the professor. It was not part of my major; it was not part of anything. I think it is a mistake to become too narrow or focused on what you think you should be doing. That is not really what college is for; college is for taking chances. It is a place to challenge yourself without too many consequences and a place to take risks and to learn something you never have before. The more comfortable you are with taking risks, with being uncomfortable and with being uncertain, the better. That is the muscle that entrepreneurs need to exercise.

GL: I think good entrepreneurs have a wide aperture. They are inspired and view things from a lot of different angles. Seeing patterns and having a wide point of view helps to look

GL: It hasn’t helped specifically. I don’t think that is the job of the degree. The best thing I got out of Princeton was learning how to think and thinking in another language was something that I wanted to do. Italian got me exposed to architecture and music and politics and history and literature in a way that was different. After college I went to Colorado and worked on a ski resort for three or four years; that is where we started this whole RockCorps concept. I have a love of Italian culture, history and language but I cannot draw a straight line between my degree and my current work.

I think the same is true of most of my friends

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MICROFINANCE

by Rebecca Fleming

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M

icrofinance emerged as a fresh, socially conscious approach to finance in the early 2000s. Professor Muhammad Yunus won a 2006 Nobel Prize for his role as a pioneer of this new, philanthropic banking field. Since then, various organizations dedicated to microfinance have emerged. Small startups have taken on the practice as well as larger, brand name firms, such as Goldman Sachs and J.P. Morgan. With over $15 billion in assets devoted to microfinance by the World Bank alone, the approach is now as permanent as any other investment strategy.

At its core, microfinance is the process of providing banking services to those who otherwise would not typically have access to such services. Microfinance, as defined by Investopedia, provides the means for low-income individuals to save, borrow, and access money in order to promote their self-sufficiency. The loans can be under $100, sometimes just one or two dollars. Microfinance institutions (MFIs) often particularly focus on women and men in Africa, India, and other parts of the developing world. In his paper The Rise and Fall of Muhammad Yunus and the Microcredit Model, Milford Bateman presents microfinance as the final solution to global poverty, claiming, “poverty will be eradicated in a generation.� However, according to Investopedia, the practice of microfinance precedes Professor Yunus’s 2006 work and has roots that can be traced back to the 1700s, demonstrating that it has thus far been unable to solve global poverty.

The major involvement of large American firms has created skepticism of the philanthropic nature of microcredit. Would huge financial corporations really dedicate so many resources to philanthropic efforts?

Accion International, opened in 1963, is currently one of the most important micro-

finance institutions in the world. Accion International originated in Latin America and its network now expands throughout the U.S. and Africa. In addition, Professor Yunus opened Grameen Bank in 1983 through a program of action research with graduate students. This experiment proved successful as the majority of the loans were recovered.

The success of Grameen Bank inspired others to get involved in microfinance.

Thousands of NGOs and MFIs emerged, financed by private and public subsidies and grants. In the 1990s, the industry needed more financing to continue the pattern of growth. Seeing the potential for profit in the high recovery rate on loans, private and commercial firms took interest. This step was the beginning of a sustainable industry in which consumers who were otherwise economically marginalized could access financing and investors could see a reasonable return on investment.

This commercial success raised the question of whether these transactions should provide greater benefit to the loan lenders or recipients. The 90% return rate on loans makes microfinance appealing from the perspective of investors. Microloans also tend to have the highest interest rates as a consequence of the high risk level on paper.

These high interest rates have forced some, already impoverished, borrowers into piles of insurmountable debt. Is it fair for investors to earn profits from those already in need, driving some poverty-stricken individuals into debt they are not able to pay off?

One flaw of the lending system is that it does not control how recipients choose to spend the money. In order for the loan to help individuals improve their financial situation, they should be investing the money for future benefit, for example in profitable projects or higher education. Yet some will

borrow money to buy groceries or make ends meet in the short term. These are the typically people who are driven into debt they are unable to pay back.

No single metric exists to measure the success or failure of microfinance. Thus, it remains difficult to quantify short or long term improvements in a person’s life or the economic impact their business venture will have on their community. Nevertheless, microfinance succeeds in promoting a more inclusive financial system. Universal access to borrowing and savings is necessary as globalization continues in the context of a capitalist system, where anyone without access to financial resources is systematically removed from mainstream society and destined to struggle. Overall, microfinance is a philanthropic success because it gives a greater number of people access to financial institutions. What individuals do with the

Microfinance is a philanthropic success because it gives a greater number of people access to financial institutions. loan is their decision, and at times a profit is made from an individual’s setbacks, but the same is true of larger scale lending. Whether it is unjust to profit in this way is a matter of personal judgment.

The future of microfinance is bright as the industry is including a greater number of individuals as potential clients. Professor Yunus and other pioneers envisioned developing countries as recipients of these small-scale loans. However, since the 2008 financial crisis, the Grameen foundation, a U.S. based group inspired by the Grameen Bank model in Bangladesh, has increasingly loaned in the U.S., one of the wealthiest countries in the world. The increase in poverty and inequality in America caused by the crisis persists, creating a large market in the U.S. that fits the philanthropic and capitalist goals of MFIs. As the New York Times reported, according to Jonathan J. Morduch, the executive director of the Financial Access Initiative at New York University, “Families in rural Africa are more like U.S. families than everyone wants to believe.” There are large numbers of Americans in need of capital, and tighter restrictions on banks in the wake of the crisis have restricted the average American citizen’s access to loans.

The market for microfinance thus exists in the U.S. According to an article by Opportunity Fund (a Californian microfinance organization) for Microfinance Gateway, the nation-wide conference Microfinance USA was held in 2010 with the goal of promoting microfinance in America to create a more wide-reaching financial system.

Professor Yunus may have been right in believing that the microfinance model is the solution to global poverty. However, the U.S. must question why citizens of one of the wealthiest countries in the world, which is the self-proclaimed leader and protector of the Western Hemisphere, are suffering in the same way as citizens in nations that the U.S. perceives to be in need of protection.

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B

rad Freeman

Co-Founder

FREEMAN SPOGLI & CO. Brad Freeman is a co-founding partner of the private equity firm Freeman Spogli & Co. as well as a major conservative political fundraiser. Freeman graduated from Stanford University and received an MBA from Harvard Business School in 1966.

Prior to founding Freeman Spogli & Co. in 1983, Freeman spent many years at Dean Witter Reynolds. Freeman has also been a fundraiser for George W. Bush throughout his political career and served as chairman of the 2000 Presidential Inaugural Committee.

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Anna Pouschine: What are some lessons that you learned during your undergraduate and MBA experiences at Stanford and Harvard that stayed with you?

Leadership is an indefinable term, but it is probably the most important key to success

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Brad Freeman: Well, I suppose leadership is an indefinable term, but it is probably the most important key to success. In any business, particularly my own, you have to convince people to do things. People have to respect you, the people who work for you have to want to work for you and want to make these transactions with you. The people you deal with have to want to do business with you. So I would say it’s leadership.

AP: Could you provide a brief overview of your early career, especially in the years right after college?

BF: After Stanford I immediately went to Harvard Business School. I did not go to work in between, which is unusual. But at that time, the alternative to business schools was Vietnam and about half our class went directly from undergraduate to business school. Upon graduation, I joined Dean Witter Reynolds in Los Angeles. I stayed there for 17 years, with the exception of ‘75 and ’76 when I ran international operations in London. I then retuned to the States and in 1983 I started a firm with Richard Riordan and Ronald Spogli. Ron and I had very similar backgrounds; we both attended Stanford undergraduate on scholarships, we both went to a Stanford campus overseas and we both returned to Los Angeles.

After 17 years at Dean Witter, I was topped out and to advance further I would have had to move to New York. Ron and I had an opportunity to start a firm and we did so.

Like everything else in life and business, serendipity played a big role. Ron and I were at Dean Witter when we acquired our first company. Richard Riordan, a lawyer, asked me to meet with a man who wanted to buy out a division of Continental Can. He came in and luckily Spogli, who ran our M&A department, was available. 75 days later we closed the transaction with $2 million of equity. The seller took $6 million of a seller subordinated note and $24 million of asset based loans. After that successful transaction, we left Dean Witter and started our firm to invest in leveraged buyouts. We acquired two more companies and were then able to raise a private equity fund of $125 million. Last year we closed our 7th fund at $1.3 billion. It has been a great run.

AP: What is the inspiration that led you to create Freeman Spogli & Co.?

BF: Serendipity again. Opportunity came.

Part of the reason was that I was ready for a new challenge, as I was topped out at Dean Witter unless I was willing to move to New York, which I was not. I had been there for 17 years doing the same thing and it was becoming boring. So, our decision was highrisk and high-reward. We did it and we were lucky.

AP: What was the most surprising challenge

you faced when creating your own company?

BF: Well, I would say getting the first deal. We closed that first transaction when Ron and I were both at Dean Witter and then, when we were on our own, we had to find our next transaction. We were certainly unknown, so we were not being brought transactions or potential transactions by investment bankers. We were looking through reports done by business brokers and we just scrambled.

The next company we acquired, a supermarket chain in Arizona, did not end up being a great investment but it introduced us to the supermarket business, where we acquired 6 other chains. The result of all of this was that we came to specialize in retail and we then branched out and invested in distribution companies, and more recently in consumer products companies. We now have two offices: one in New York and one in Los Angeles. What I am most proud of in those 32 years in business is that only two people have left our firm voluntarily, which is unheard of in our business. Our turnover is virtually nil.

AP: As a co-founder, how, if at all, has your personality manifested itself at Freeman Spogli & Co.?

BF: That is a very good question and it is hard to say from my perspective. There is no question that the distinguishing factor of a firm is its culture. That is what differentiates firms in our business. When we opened our second office in New York, we wanted to

make sure we did not operate as two separate offices, with different relationships with bankers; we considered ourselves one firm.

When Ron and I were with Dean Witter in Los Angeles, the corporate finance department was headquartered in New York and we were, in a sense, a branch to the firm, although they did not refer to us as such. So it has been very important that all our transactions are staffed out of both offices. In our firm there are no individual deals, only firm deals. There are no compensations linked to who brought in what deal. Obviously some people are better at closing deals and other people are better at executing the transactions and serving as active directors after the transactions. There are over 8,000 firms investing in the private equity business and we are certainly not the biggest. However, we have been around for a long time and we have a good track record. We have a number of Limited Partners that have continued to invest with us through many, many funds.

They are a true testament to our firm’s culture because when we fundraise for our next fund many of our existing partners sign up again.

AP: What motivated you to become involved in political fundraising?

BF: Like anything else, it starts with having a basic interest in politics. The second motivator would be personal relationships.

The reason I became very close to George Bush is because he and my partner, Ron Spogli, were in the same section at Harvard

Business School and so I have known him for over 40 years. That is a big part of it, because you have to know and respect those for whom you work. Politics is a lot of work but it is a bit of fun too, although I have now retired from it. I was a fundraiser – I was not involved in policy – which is an important part of these races.

AP: How do you define impact?

BF: I would go back to the first question. It is in leadership. Some people are leaders and some people are followers. Some people may be extremely bright but may not be leaders.

Some people can be fantastic managers with no technical skills in the endeavor in which the business is engaged. In a big company, all sorts of expertise are needed and obviously the CEO cannot be an expert in every area.

I think it is all about leadership.

AP: What advice do you have for undergraduate students who are interested in entrepreneurship?

BF: Do what you enjoy doing. You have to be excited to come to work every day. I do not necessarily mean while you are a first year analyst right after school, working 100 hours a week. It is not the most exciting job, but you are doing it with a lot of other people who are all doing the same thing.

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FREE

TRADE WHEN SMALL BUSINESSES GET TO THINK BIG

by Mo Luo

A

s the Trans-Pacific Partnership—the largest free trade deal negotiated to date—awaits Congressional ratification, free trade is getting a bad rap. Fears abound that, due to higher labor costs, American businesses will be less competitive than foreign ones, the American worker will suffer, the trade deficit will worsen, and big business will take all the gains. However, these concerns have never become realities in the past and now more than ever, economic developments imply that small businesses, America’s most productive exporters, are the ones best poised to take advantage of free trade.

Trade agreements work best when they open new markets to businesses which are hungry for growth.

Indeed, when domestic markets mature, businesses look elsewhere to expand and meet shareholders’ growth expectations. However, there are many reasons why a business could have trouble penetrating a foreign market. Customers in different countries have varying standards and expectations. Therefore, branding and outreach needs can differ drastically from country to country, and some businesses’ brands are not able to adapt well to certain cultures. American businesses expanding abroad also face the challenge of navigating potentially hostile or unfamiliar political environments.

Businesses are legal entities. In order for a business to operate across national borders, it must work with foreign legal systems. Multinational firms spend millions of dollars on legal teams and local partners in order to avoid the problems that arise when laws between countries differ in critical areas and thus, associated costs rise precipitously. Even with these resources, hostile or unfamiliar regulations can still cause companies to give up on otherwise critical markets. For example, due to the country’s repressive political machine, American technology giants have little presence in China, where

When domestic markets mature, businesses look elsewhere to expand and meet shareholders’ growth expectations.

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various domestic titans battle for supremacy.

While the nature of business regulations has led to a thriving technology cottage industry in mainland China, these Chinese businesses face difficulties developing important relationships with foreign firms.

For example, while Chinese conglomerates have poured tens of billions of dollars into acquiring microchip manufacturers, many of their generous deals have been rebuffed due to political concerns. China’s aggression and intellectual property (IP) concerns also made the deal less attractive.

For a large enterprise, a trade agreement that aligns legal regulations while upholding consistent IP protection and arbitration schemes would provide at least as much benefit as lowering tariffs. Attempting to penetrate an international market is a highrisk, high-reward gamble with many moving parts. If everything falls into place, the enterprise could dominate a new market and edge out rivals, leading to years of unchallenged growth. However, both time and monetary costs are great, as the firm can end up spending billions of dollars over many years.

For a small or medium sized enterprise (SME), these benefits are less directly relevant. These enterprises are not usually looking to set up international offices and warehouses, do not have the capital to take over an entire country’s market, and are not looking to tangle with domestic IP laws, let alone complex international ones. However, they do benefit from much of the streamlined trade regulation because of their limited capital and resources. In fact, trade agreements tend to level the playing field between large and small enterprises by opening up more opportunities for the SME that were previously only primarily available to the megacorporation.

The unraveling of burdensome regulations is key. When foreign legal regulations are confusing and hinder business operations, a large firm can hire a legal team and establish a local partnership to help them work with authorities. In contrast, the average SME simply cannot afford lawyer fees and must give up the foreign market, cementing the supremacy of large corporations. Therefore, while onerous regulations can make many markets highly risky for the large enterprise, the enterprise may still choose to attempt an entrance or gather more resources and strengthen its brand for a better opportunity.

Meanwhile, the same regulations can com-

pletely close off the market to the small enterprise since it becomes increasingly difficult to break in as time goes on.

One critical area in which trade regulation hurts small businesses is customs. Moving products through customs is often a slow and complicated process, as goods must be classified, their origins verified, and their contents examined.

In countries with especially detailed customs checks or an inefficient customs department, goods may stay in port for over a week.

At the very least, perishable goods get much closer to expiration and small businesses struggle to transport them in or out of such a country. Furthermore, competition among enterprises has progressed beyond pure price competition. Customers increasingly care about service, delivery time, and responsiveness. Supply chains are pushed to the limit as shoppers place a premium on having their purchases delivered quickly. Amazon Prime has made two day shipping the standard, and few shoppers in Asia are willing to wait more than four days for delivery. While larger enterprises could invest in local warehouses and factories to hedge against finicky customs, a week or so of customs delays alone could spell a death sentence for the small enterprise.

One striking example of the power of streamlined trade regulations can be seen every Valentine’s Day and Mother’s Day. A large portion of the flowers sold for these two holidays comes from South America. As UPS reported on their longitudes blog, most of these come from flower farms around Colombia and Ecuador. From there, the flowers are immediately put into cooled and hydrated transportation containers and shipped to Miami International Airport.

Throughout this process, constant refrigeration and hydration of the flowers and quick and accommodating customs are critical.

The flower farmers are able to send the flowers to UPS and UPS is able to ship the flowers out of Bogota and Quito without needing to deal with officials. In the US, customs officials will examine the flowers in UPS’ own refrigerated chambers at Miami International Airport, often taking only a small random sample to verify contents and check for insects. The flowers only spend from 24 to 48 hours in transit and are able to remain fresh for several days afterwards.

This particular cont i nu o u s l y refrigerated supply chain, which UPS calls its ‘cold chain,’ is applied to the flower market, but similar techniques are also used for produce. The U.S. imports produce from South America especially when certain fruits and vegetables are out of season in the U.S. Once again, simplified trade regulations make the entire process possible. Without free trade agreements with Colombia and Chile, for example, many flower shops and specialty food stores in the U.S. would not be able to function.

Previous trade agreements have given small businesses valuable opportunities, and the Trans-Pacific Partnership (TPP) will help them fight to achieve international expansion. Asia has risen as the prominent emerging market, but more importantly, the rise of

e-commerce has made a streamlined supply chain absolutely critical for the SME. Before e-commerce, small enterprises had difficulty establishing a direct presence in foreign markets. It was necessary to establish some center of retail in a foreign country in order to directly sell one’s products—something a small business simply did not have the capital to do. Now, any farmer or artisan can sell their wares directly to the consumer and manage their own brand as long as their supply chains are robust. On the one hand, an SME can truly establish a presence in a new market. On the other hand, a supply chain error could seriously and publicly damage its image. In a region with many countries and unfamiliar legal traditions, establishing a robust supply chain is a daunting task.

However, with trade simplified, opportunities open up.

The combination of the TPP awaiting ratification in Congress and information technology and e-commerce improving ease of doing business across the globe, is paving the way for great potential expansion of small businesses. Barriers to entry in foreign markets are always intimidating for the small business, but free trade agreements will continue to lower them and bolster the competitiveness of the American SME.

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THE

F

ormally referred to as sole proprietorships, many one-person businesses have now adopted the nickname “solopreneurs,” especially those in tech-based fields. As entrepreneurs seek new means of establishing an improved work/life balance, managing a one-man company is emerging as a promising opportunity to craft a personalized position.

Successful solopreneurs have taken advantage of technological developments by outsourcing tasks and hiring contractors for duties such as billing and web design. Many virtual management firms have been established to serve exactly this purpose. Relying on contracted per-task help, rather than fulltime employees, significantly reduces costs and allows solopreneurs with greater time to focus their expertise in other fields.

From 2011 to 2013, over 1,000 new “non-employer” firms, or sole proprietorships, moved upward into the profit range of $1 million to $2.5 million. These earnings represent pre-tax data and business owners must pay overhead costs out of this revenue, making actual profits lower than these numbers. Nonetheless, startup business value per person is clearly on the rise.

The recent increase in individual proprietorships is indicative of a change in attitude about what it means for a company to “scale up.” Gone are the Henry Ford-era business models where upsizing meant hiring an army of employees to expand an enterprise.

Technological growth, especially given the wide reach of the Internet, has allowed for

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RISE

rapid and inexpensive access to a boundless global marketplace. Brand visibility has been able to reach unprecedented levels without the entrepreneur even having to leave home.

The growth in one-person businesses also represents a shift towards a more independent business mindset, as solopreneurs can choose which jobs to handle themselves and which to outsource. Though some solopreneurs can make quite a lot of money, the majority are drawn to the job for its flexible lifestyle. For most of these entrepreneurs, satisfaction comes through determining their own hours and crafting their own business

The recent increase in individual proprietorships is indicative of a change in attitude about what it means for a company to “scale up.” strategy. The company becomes a representation of the person behind its operations and, as such, is a statement of his or her values and character.

However, while traditional companies lack the flexible lifestyle choices, keeping

OF

SOLO

departments such as human resources, web-development, and marketing in-house proves more cost-effective. According to transaction cost theory, people systematize the production of goods within firms as the transaction costs of conducting business with outside parties through market exchange is greater than doing business within a firm.

Shared culture, trust, and the elimination of asymmetric information are some of the factors that provide efficiency to companies with many employees.

Technological innovation, however, is reducing the cost of transactions with third parties, while improving transparency and the quality of their services. In this context, all firms now have greater ability to streamline their focus on their core product or service without worrying as much about the other aspects of running the business.

Skeptics of non-employer firms argue that difficulties in making profit and production limitations due to lack of diversified skill in workers inhibit these enterprises. No matter how productive he or she is, one person can only work so many hours per week or be qualified for so many tasks. With overhead expenses, like rent and supplies, costs of maintaining the practice may exceed the productive capacity of a single worker. Moreover, as roles such as administration and sales are often difficult to outsource, solopreneurs bear a significant workload burden.

On the other hand, advocates of “solopreneurship” could point to real-world examples of success as evidence against such

PREN

EURS How Sole Proprietors Are Thriving in Today’s Business Climate

by Christina Styer

theoretical arguments. A 2014 CNBC Special Report by Elaine Pofeldt outlined the journey of the Joey Healy Eyebrow Studio, a one-man company with an annual revenue of over $1 million just five years after its inception. The business began in 2009 with Joey Healy walking door-to-door, 9 a.m. to 9 p.m. each day, to style the eyebrows of clients living in affluent Manhattan neighborhoods.

He eventually opened a private eyebrow studio and charged $115 for a brow styling and popularity grew. He arranged a profit-sharing deal with a spa in four New York locations and taught stylists his methodology.

He now generates over $1 million a year in revenue through his eyebrow studio and by manufacturing and selling brow-makeup products.

What differentiates one-man businesses that succeed, like Healy’s, from those that go under? Successful solopreneurs invest in public growth rather than company benefits. Healy, for example, never ran a swanky salon on the streets of New York; instead, he calls a room on the seventh floor of an office building in midtown Manhattan home to his studio. Effective branding, strategic marketing, and a highly demanded core service compensate for the humble space that allows Healy to cut costs. Some solopreneurs even work from home and perform their business functions over the Internet or by phone, cutting rent and transportation costs.

Certain solopreneurs find success by teaming up with other businesses to form mutually-beneficial partnerships by provid-

ing each other with more publicity through endorsements. Joint ventures allow solopreneurs to expand their networks and have other companies refer clients to them. Some solo practitioners also find a planning partner with whom they can meet with periodically in order to catch up on progress made, set goals, and offer advice. In addition to providing support in risky, one-man companies, these meetings also catalyze future development through shared ideas.

Like any entrepreneur, a solopreneur must be skilled in his or her trade and must also attain the necessary skills to run a business. These include tracking financial systems, bookkeeping effectively, minimizing risk, and marketing successfully. Emotional stress also plays a particularly pronounced role in a one-person business and addressing, rather than ignoring, the effects of emotion on business is especially necessary for an individual proprietorship to thrive.

While the traditional business model may be slowly declining in favor of sole proprietorships and alternative models, the use of increasingly efficient, outsourced transactions is on the rise. Working with these changes to become a solopreneur is certainly not for everyone, though an increasing number of individuals have found success in single-handedly running their own businesses.

However, this opportunity certainly does provide an intriguing new path towards alleviating the ongoing struggle to attain work/ life balance.

As roles such as administration and sales are often difficult to outsource, solopreneurs bear a significant workload burden.

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#selfie

by Anna Pouschine

The rapid rise of the “selfie� illustrates young people’s interest in looking to themselves and their friends for entertainment content. Consequently, companies have capitalized on the new opportunities for communication via social media. However, in these new interactions, the line between friendly communication and strategic advertising is becoming increasingly blurred.

O

“Selfie” was named Oxford English Dictionary’s 2013 word of the year.

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vid’s tale of Narcissus in the Metamorphoses tells the story of a proud young man who scorns the nymph, Echo, by rejecting her true and passionate love. The goddess of revenge retaliates and causes Narcissus to become enraptured by his own reflection as he drinks from a fountain. However, this love proves cruel and unsatisfying; Narcissus cries: “has anyone ever loved more cruelly than I? You must know, since you have been a chance hiding place for many people. Do you remember in your life that lasts so many centuries, in all the long ages past, anyone who pined away like this? I am enchanted and I see, but I cannot reach what I see and what enchants me’ – so deep in error is this lover – ‘and it increases my pain the more, that no wide sea separates us, no road, no mountains, no walls with locked doors.”

Today, self-obsession is exploding everywhere in pop culture. In 2013, “selfie” was named Oxford English Dictionary’s word of the year, given its sharp 17,000% increase in usage between October 2012 and 2013. The term originated on early social network sites, such as MySpace and Flickr, to describe photos taken by and of oneself. Thanks to the boom of aesthetically oriented social media - Facebook, Instagram, and Snapchat – these photos have become engrained in mass culture.

Moreover, as social media itself tends towards more visual-based platforms such as Snapchat, Instagram, and vsco, selfies will only become more prevalent.

The concept of recreating and admiring one’s own image has been established by the innumerable self-portraits that we see throughout history. However, technology has facilitated the self-portrait to such a great extent that society has distinguished these newer and ‘techier’ images with the snappy label, “selfie.” Selfies allow individuals to freely, visually express themselves, and then social media streamlines reproduction for sharing the images with others. However, these seemingly innocuous images encourage Millennials to use established brands as crutches rather than craft a unique identity.

People typically feel most compelled to depict themselves in their most enticing or glamorous moments – from meeting celebrities to visiting famous sites or participating in notable events – which begets a distorted self-identity, dividing personal from publically available. However, many companies are now capitalizing on this desire for attention by integrating the selfie in promotional platforms, synchronizing personal and brand promotion.

Snapchat has positioned itself at the forefront of social media companies which are linking personal and branded identities.

USERS REWARD ARTISTIC

PHOTOS Particularly popular among young people, Snapchat offers advertisers a new opportunity to blend promotional graphics with friendly communication. In 2014, Snapchat introduced geofilters and decals, which can be applied to photos to indicate location, effectively and aesthetically merging selfies’ inherent self-promotion with company branding.

The geofilters provide Snapchat with a seamless way to monetize its 100 million monthly users. Geofilters were originally used to indicate geographic location, though they were soon also employed by various enterprises and were eventually expanded to include businesses, landmarks, and promotional events. To increase the legitimacy of this form of advertising, Snapchat partnered with Nielsen Holdings Plc, the TV rating tracker, to keep an audience count for its advertisements. This partnership indicates a shift in entertainment content, as individuals are now looking to themselves, rather than conventional TV, for entertainment.

However, Snapchat has distinguished itself from other forms of social media through its refusal to allow advertising that tracks its users online browsing. For a platform that focuses on sharing information between friends, Snapchat shares surprisingly little information about user demographics with its affiliated companies. In practice, the company has established a softer stance by providing certain demographics by which advertisers can target consumers: gender, age, device, location, and context (determined by organizational placement in the “discover” section). However, Snapchat’s model proves to be a risky choice for advertisers. First, Snapchat is

inherently brief, as the image is destroyed after a maximum of ten seconds of viewing.

Second, the platform presents limited information, as it lacks a means to further direct viewers with hyperlinks.

Snapchat masterfully uses visuals to enhance one’s image by linking it to public events promotions and brand logos. However, it proves to be only the most superficial way of conflating personal and brand promotion. Instagram and Facebook have also notably blurred the line between friends and businesses as users can now like, comment on, and tag companies, just as they would friends.

Instagram users reward the artistic photos. Large brands, as illustrated by Starbucks and Nike, professionally supply aesthetically striking images that generate a sense of awe in comparison to the standard posts from friends and relatives. In particular, these brands successfully communicate emotion through their images; Nike often promotes strength and adventure by depicting athletes in exotic locations, while Starbucks offers warmth by encapsulating the coffee shop community.

Even smaller companies, such as restaurants and coffee shops, accumulate social media presence by encouraging their customers to post photos, often by including social media handles and relevant hashtags on their menus and decor. The use of popular, omnipresent hashtags such as #latergram and #throwbackthursday allows brands to further act as friends by linking their posts. Thus, brands are able to have a relationship that mimics friendship with followers through the emotional and tagged connections.

Technology has facilitated the self portrait to such a great extent that society has distinguished these newer and ‘techier’ images with the snappy label “selfie.”

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The rise of the selfie has inevitably provoked new questions. To what extent is this means of self depiction truly revolutionary? Is the emergence of greater brand involvement actually changing the way individuals want to present themselves or they way they are perceived?

At the same time, individuals also heighten their own social media identity by tying their own names to reputable brands.

By adding locations, tags, hashtags, or even recognizable backgrounds, individuals can enhance personal identity with branded

One possible explanation for the vapidity of the images is their monetary cheapness. identity. Given the impressive presence of most brands on social media, these tags and other identifiers are often a means of social enhancement to increase perceived value. Individuals can show off personal relationships (through images and tagging of their friends) and experiences. Or, they can exhibit materialist status through geotagging popular or exclusive locations, highlighting brands displayed in images, or other associations with various forms of branding.

Moreover, given Instagram’s dedication to aesthetic pleasure, the pictures are considerably large, and prolonged captions are abbreviated with a shadowy “…more.”

This dedication to the visual thus encourages users to replicate advertising by maximizing aesthetic intrigue to attain attention and validation from their friends.

The rise of the selfie has inevitably provoked new questions. To what extent is this means of self-depiction truly revolutionary?

Is the emergence of greater brand involvement actually changing the way individuals want to present themselves or the way they are perceived? Jessie Wender of the New Yorker offers a practical explanation for the difference between a modern selfie and a traditional self portrait, “A smartphone and a Tinder account is the easy answer, but, in general, we ask more from a self-portrait than we do from a selfie: more consideration, more composition, more psychological insight and aesthetic care.” Indeed, the selfie captures today’s narcissistic zeitgeist by placing greater value on the self rather than the larger environment. The superficial nature of social media posts results in friends and brands often becoming a crutch for self-identity.

The ease of preserving moments encourages us to place increased value on our own presence. Adam Gopnik, also of the New Yorker, talks about this self-obsessed sentiment, saying: “what matters to the eye of the iPhone camera is not the place I am in but the fact that I am in it.” Individuals are thus inclined to place greater importance on their presence, primarily to affirm that they exist and are happy. As a result, they are less interested in and perceptive of the environment surrounding them. Gopnik

goes onto compare the sharing of selfies to a quasi-EKG that tracks happiness to constantly revalidate one’s own existence, all the while reducing the likelihood for deeper, emotional investigation.

One possible explanation for the vapidity of the images is their monetary cheapness. Selfies appear to be driven by a twofold desire. On the one hand, they indulge our narcissistic impulses: to be photographed, to look good, or to perpetuate our own likeness.

On the other hand, we have the ability to capture both remarkable and unremarkable moments, thus signifying importance – however feigned – throughout our lives. Moreover, as iPhones essentially provide limitless opportunities to take selfies, individuals have no motivation to snap selectively.

Through these selfies, individuals are poised to gain measured, extrinsic validation. While a memory manifests into an immaterial sense of personal and emotional experience, a photo offers a greater discernible benefit. The image attains a permanent existence and is readily spread to one’s social media followers, who provide validation with likes and comments. The goal of attaining measured praise thus differs from traditional self-portraits such as those in Van Gogh’s dark and complex works. These portraits required care, time, and commitment to self exploration and were not guaranteed to have public support.

However, is this dedication to self-promotion hindering our ability to meaningfully connect with the world around us? One instance of young people displaying extreme disrespect through their social media identity was the Facebook page, colloquially translated as, “With my Besties in Auschwitz” (the page was taken down Summer of 2014). This page gathered social media posts from various young visitors that displayed narcissistic behavior which did not respect the immense gravity of the location. Posts ranged from self-absorbed faux-seriousness, “meditating on the grounds of Auschwitz-Birkenau!” and misplaced humor, “hitching a ride by the train tracks!”, to implied sexuality with carefully posed faces and prominent makeup. While these posts are indeed exceptional – the page sparked substantial outcry and was shortly shut down – they do indicate the ability for individual narcissism beget contemptible behavior.

This desire for personal recognition is by no means inherently bad; rather, it appears to be a natural impulse. However, the increasing materialism of selfies only further encourages this self-centered behavior. As branding becomes more apparent, it will likely become engrained in self-identity more prominently. Given the streamlined nature of social media, yielding and contributing to the constant spread of superficial information has become expected of young people. However, given Narcissus’ suffering and the backlash against the young tourists, we ought to be more aware of the greater repercussions of our selfies.

This desire for personal recognition is by no means inherently bad; rather, it appears to be a natural impulse.

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Demystifying Money Making on Social Media

by Melissa Fulenwider

S

ocial media celebrities, such as the ubiquitous Kendall Jenner and Taylor Swift, often rake in over 1 million likes on their Instagram posts, where they not only display their lavish lifestyles but also seek to appear as individuals to whom their fans can relate. Frank Spadafora, founder and CEO of D’Marie Archive, a firm dedicated to monetizing social media presence, explained to CR Fashion Book that three of this generation’s most famous models — Kendall Jenner, Cara Delevingne, and Gigi Hadid — “are currently valued between $125,000 and $300,000 for a single post across their portfolio” of social media accounts. Acknowledging the notably high prices, Spadafora continued, “If you want to reach a model’s audience, you’re going to have to pay a hefty additional fee for that.”

While it is common knowledge that many celebrities, including these models, often generate revenue through social media, exactly how they monetize their posts is less clear. Aside from directly advertising certain products and brands, social media celebrities must constantly work to

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grow their following, seek out sponsors on their own, and establish themselves on new platforms.

Investopedia succinctly states the basic ground rule: “If you’re not paying for the product, the product is you. The real transaction is not you receiving enjoyment in the form of a free temporary distraction created by a media company at great expense, but rather, that media company renting your eyeballs to its advertisers.”

In other words, we—our views, our time, our attention—are the commodities. For instance, Facebook generates an impressive amount of revenue despite the fact that accounts are free. Facebook attracts a huge amount of viewers, then sells this publicity through promoted posts or sidebar advertisements. Facebook proves successful, as reflected by the fact that the company went public on May 18, 2012 at a price of $38 per share, and has since closed, on February 15, 2016, at a share price of $102.01.

According to The Wall Street Journal, famous Twitter users can bring in up to $100 for

each tweet mentioning a product from one of their sponsors, and popular bloggers can make six figures in annual income simply through advertising on their page.

While sponsors seek out established stars, such as the famed party-boy Brody Jenner, to advertise their nightclubs, and the style icon Blake Lively, to advertise clothing and accessories, the task of breaking into profitable social media stardom is daunting for the average individual. Thus, an article in The Wall Street Journal outlines several key strategies for transforming one’s social media account into a paid job. A large number of followers means little without active engagement, illustrated by likes or retweets, to back up the numbers. Advertisers are not looking for candidates who simply present their products blandly to a large audience—they want an ambassador who will motivate their followers to actually purchase the product; in other words, “personality is key.”

Moreover, account holders must take initiative in seeking out advertisers, rather than wasting time and money by waiting for a sponsor to take interest. The article goes on to recommend a number of other strategies that apply to social media accounts generally, such as getting involved in more than one social media outlet, making videos, and staying professional. In an article for Global News, Patricia Kozicka discusses the importance of being consistent with posts, creating one’s own voice or style, and establishing a connection with followers by replying to their comments, for instance. Transforming one’s social media engagement from a hobby to a full-time job requires persistent employment of these tactics.

As noted in another Wall Street Journal article by Deepa Seetharaman, American companies still have a lot to learn when it comes to advertising on social media. In this case, celebrities have become models to follow. Seetharaman outlines five key strategies for companies based on her analysis of celebrities’ branding. She says: “every platform is different,” “don’t disappear,” “keep tabs on your followers,” “don’t be overly promotional,” and “craft a narrative.” Seetharaman highlights the importance of having a social media presence on numerous platforms while using different styles and messages in each to avoid repetition. She also advocates posting frequently, responding to or “validating” followers, and employing subtle advertising by intermingling promotional posts with one’s everyday life.

The article references a case study undertaken by Harvard Business School in Fall 2014 which investigates Beyoncé’s risky decision to release a surprise album on December 13, 2013. By disregarding the traditional method of releasing an album single by single and releasing the album in its entirety, Beyoncé shocked the world and made a statement as an artist, which fit well into the narrative that she has woven over time as a trendsetter in the music industry.

Further analyzing the release of Beyoncé’s fifth album in 2013 provides better insight into her motivations as an artist and how this action tied into her social media brand. The Wall Street Journal recounts the release of Beyoncé’s album through a four minute Facebook video and ten second video on Instagram that shocked her followers.

Maintaining secrecy was no easy feat, but the release brought a wave of attention to Beyoncé’s social media accounts and proved to be a profitable decision. Anita Elberse, the Harvard Business School professor behind the 2014 case study, had the opportunity to speak with Beyoncé directly and noted: “Beyoncé is one of a very select group of superstars who could say ‘I’m doing it my way,’ turn the conventional model on its head, and get Facebook and Apple to help her make sure the whole world knows about this album and that the release goes off without a hitch.”

Beyoncé granted exclusive sales rights to iTunes for the first week after the album’s release, which prompted Target and Amazon to refuse to carry her album. While the payoff of this risky strategy has been much debated, Elberse categorizes this release as an example of a “blockbuster” marketing strategy: engaging the public and creating buzz around triumphant moments. In an article for Rolling Stone, on the day after the album’s release, Rob Sheffield commented: “The whole project is a celebration of the Beyoncé Philosophy, which basically boils down to the fact that Beyoncé can do anything the hell she wants to.” In other words, Beyoncé’s long-standing reputation and

broad fan base reduced the risk of her bold marketing strategy.

While certain companies may not have the same advantage as Beyoncé when they enter the social media realm, her example evidences the strong, cultural impact of celebrity social media accounts. Perhaps corporate America can learn a thing or two from social media stars, by molding their techniques to fit unique business models, industries, and target audiences. Though no single system is a universal fit, these celebrities set forth promising and creative strategies.

It is no secret that knowing how to effectively employ social media can be a major asset not only to individual entrepreneurs and celebrities, but also to companies. The difficulty arises when trying to distinguish between successful and unsuccessful strategies. Understanding the nuances behind having a profitable social media presence can be tricky. One needs to be subtle in brand advertising, use mixed strategies that uniquely cater to each social media platform, and know one’s audience well enough to keep them enticed. By using these rules, any social media actor can create a credible, innovative, and informed platform from which they can generate revenue.

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The Modern

Marketing Landscape DECLINE IN CLICKTHROUGH RATES

1994

44%

TODAY

0.04%

Percentage of users who click on banner advertisements they encounter

How advertising is adapting to an age of innovative and fresh content mediums

by Jamie Downey

A

dvertising is one of the oldest and most successful business practices around. Whether promoting the sales of a product, a specific company, or even a social trend, advertising has pervaded commerce since the beginnings of civilization. As far back as 3000 BC—in Ancient Babylon—simple advertisements have been used to promote products and services by directing the consumer’s attention to relevant providers. Other examples of advertising can be discovered in Ancient Egypt, where stone slabs were carved with advertisements and placed repeatedly along common roads and areas for people to see.

And since those beginnings, advertisers have been acutely aware of the habits of the consumers and the marketplaces they targeted. Babylonian advertisers, cognizant of that fact that few people were literate, used vocal advertisements, shouted by “criers” in public places. Egyptian advertisers employed a tactic called “saturation advertising”—still used today—in which potential consumers were inundated with information and reminders of the products they were being sold. Advertising has also pervaded print media since the time of Johannes Gutenberg’s printing press in the mid fifteenth century, and taken off to an even greater extent with the introduction of print newspapers in England in 1702 and America in 1704.

Throughout these eras, advertising was

one of the most rapidly evolving forms of business ever seen. In the sphere of advertising products with little or no differences to an increasingly skeptical public, the competition for better, more effective advertising has been fierce from day one. Modern media is no exception to this trend. In fact, competition in the age of the internet, cell phones, and well-informed consumers, has demanded even more strategic tactics. Along with modern media has come a trend of “native advertising” in which content creators produce ads that closely mimic the legitimate content that they put out. Sites such as Buzzfeed, made famous for their use of entertainment pieces to fund strongly researched journalism, have included native advertising on their sites from the very beginning. These articles operate under the assumption that consumers are more likely to read and appreciate advertising if it closely mimics the content they are already interested in. The statistics tracking this advertising seem to support the trend as well.

Buzzfeed currently has over 700 companies and firms advertising through its native advertising program. Similar social media sites, like Facebook, report click rates as high as 49 times greater than that of regular advertising, even when placed on the same screen. Moving forward, the prevalence of native advertising has huge implications.

Larger, more respected journalistic net-

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The generation dubbed “Millennials” has aged and matured, shedding the previous conception of an entitled generation with a short attention span, and quickly growing into the generation with the most buying power in the entire nation.

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works have also begun to take part in this trend. In the past few years, prestigious publications like the New York Times and the Wall Street Journal have incorporated native advertising to address a changing consumer landscape and decreasing marginal profits from their traditional advertisements. In fact, Forbes online touts that nearly 20% of their 2013 profits came as a result of BrandVoice, their specific and targeted native advertising platform. Their site, which calls native advertising “just as relevant, engaging and informative as other kinds of content” offers a lineup of products to advertisers and support for potential advertisers, to establish a mix of advertising and content that adapts to the changing marketplace.

But the reaction to this trend has not always been positive. Content creators, even those generally respected by their readers, have faced some backlash for their native advertising. While clickthrough rates—the percentage of users who follow through on advertising—may be higher for native advertising than for other traditional forms, Reuters reported in 2015 that nearly 40% of consumers who participated in native advertising were disappointed by the fact that they had unwittingly participated in advertising campaigns masked as regular content. Similarly, the New York Times faced a backlash in 2013 for printing an article, funded by Netflix, on female inmates in United States prisons. While the story featured legitimate journalism, researched and vetted by the editorial team, some content consumers seemed too invested in the journalism and legitimacy of the piece. While many praised the quality of the content and the depth of work put

in by the NYTimes’ own native advertising team, T Brand Studio, others voiced concerns over the consumer’s ability to discern this advertising from traditional news stories.

Overall, the growth of native advertising has reflected changes in the marketplace well. With an increasingly informed and connected population, advertisements are seeing decreased retention rates and increasing purpose. The nearly 5,000 year old industry has faced dramatic downturns in the last few decades, and advertisers have had to radically redefine their business in order to face these new developments. The generation dubbed “Millennials” has aged and matured, shedding the previous conception of an entitled generation with a short attention span, and quickly growing into the generation with the most buying power in the entire nation. This generation, which grew up with the internet on modern technology, has become increasingly adept at facing all sorts of advertising, and consequently has become more skeptical about all forms of advertising.

The first banner advertisement, posted on the internet in 1994, had a clickthrough rate of nearly 44% of all users who saw the advertisement. While certainly the internet audience in the mid 1990s was significantly smaller than that of today, it is hard to even compare the scale of clickthroughs today to that initial—and revolutionary— breakthrough. Modern banner ads, which still closely resemble those of the early days of the internet, have a clickthrough rate of 0.04% of all viewers. Put another way, even though the internet audience is significantly higher, a modern estimate of clickthrough

rates is only 0.09% of what it initially was.

This is especially important given the newfound prevalence of adblocking software and an especially computer-savvy consumer base.

The modern consumer is adopting more ways to avoid advertising, an option not traditionally given to consumers. While reception to advertising has not necessarily changed, it is important to note that new tech trends and modern consumption models have made skipping ads increasingly possible. Whether it is the use of DVR devices, which allow television viewers to fast forward previously recorded programs and their advertisements, or subscription services which allow users to pay to forgo advertisements altogether, ads have shrinking audiences and are reaching a smaller and smaller percentage of the population. That’s not to mention those who forgo legal media routes altogether. Some reports claim that nearly half of all Americans pirate their television content, traditionally one of the largest sources for conventional advertising.

Even modern and strategic attempts to successfully advertise to a new generation have faced problems. Podcasts, which have seen rapid growth in the past few years, especially with the advent of iTunes and the incredible popularity of work like Serial, have convinced advertisers that they deserve their attention. Indeed, some companies have capitalized on this content with inventive and efficient advertising. However, a common trend has shown that these companies are particularly homogenous. Firms like Squarespace, Audible, LegalZoom and others most frequently sponsor podcasts. This

makeup, which centers largely on startup companies who seek a consumer base of internet users, is drastically different to even the closest form of media—radio—whose main advertisers are firms like T-Mobile, Geico and Home Depot.

However, what these podcast-sponsoring companies lack in size, they make up for in clever, strategic marketing. In fact, some of these companies have been able to become the largest advertisers in podcasts by realizing early on that this new media would be popular among their desired user base.

A 2015 Atlantic article cites this ingenuity, noting that: “Most of them started buying advertising slots four or five years ago, and directed their efforts toward shows with devoted followings of web developers and programmers. At that time, podcasts were thought to draw the entrepreneurial, early-adapter types that these dotcoms were chasing. More often than not, companies had a specialized reason for advertising on podcasts: they were usually tech-first companies looking for tech-savvy listeners.

While this marketing strategy might demonstrate business acumen, advertisers are still plagued by ever-increasing limitations and technology increases. iTunes, which hosts nearly 60,000 active podcasts a month— most of which are ad supported and have no subscription fees—features a “15 second skip” feature that nearly cripples all advertising efforts by providing an easily accessible feature to speed through advertisements, usually placed at the beginning and middle of the podcasts.

Ultimately, advertising in the modern age lacks the efficacy and cutting edge nature

that it maintained throughout its storied history. One of the oldest and longest lasting business practices has faced one of the most dramatic makeovers in it’s nearly five millennia history. But, the outlook for the consumer is anything but bleak. In fact, the informed consumer seems to have wrestled back control of the advertisements and the media that they consume. Native advertising, as well as the increasing popularity of wellliked, funded advertisements during events such as the Super Bowl, has demonstrated that advertisers not only have to appeal to consumers, but also have to raise their standards to meet a newly informed and modern marketplace. It is difficult to predict the longterm impacts of the downturn of advertising in the modern age, but with consumers in control, this market can expect more revolutionary changes in the years to come.

40% of consumers were disappointed that they had unknowingly participated in native advertising in 2015.

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C

arrie Simons

CEO & President

TRIPLE 7 PR

Carrie Simons is the CEO and President of Triple 7 PR, the only boutique publicity firm with offices in New York, Los Angeles, and Nashville that handles corporate consulting, brand development, and entertainment publicity. Triple 7 PR works alongside clients for PR campaigns and endorsement opportunities. Prior to Triple 7 PR, Simons served as Senior Director of Corporate Entertainment at BWR Public Relations and held a longstanding tenure with NBC Entertainment.

Simons earned a spot on Nashville Business’s Journals Forty under 40 list and Triple 7 PR was awarded “Best in Business” recognition. She graduated from Princeton University.

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Anna Pouschine: Could you provide a brief overview of your professional experience and career development?

Carrie Simons: I am currently CEO and President of Triple 7 Public Relations, LLC (“Triple 7 PR”), the only boutique publicity firm with offices in New York, Los Angeles and Nashville that handles corporate consulting, brand development and entertainment publicity. Since launching Triple 7 PR in 2007, I have built a team of respected and experienced publicity experts and work alongside them on PR campaigns and endorsement opportunities for the company’s roster of clients. The Nashville Business Journal has honored Triple 7 Public Relations with the Best in Business Award.

Prior to launching Triple 7 PR, I served as senior director of corporate entertainment at B|W|R Public Relations where I led publicity campaigns for businesses, production companies, television series, and a multitude of music specials.

I segued to B|W|R following a longstanding tenure with NBC Entertainment. In this post I handled every genre of programming publicity including six years of late night for “The Tonight Show with Jay Leno,” reality and scripted series, movies and mini-series, music specials and award shows.

Throughout my career, the importance of working on projects which I’m passionate about has resonated and therefore Triple 7 PR has a policy t o

“

not sign a piece of business for which the team is not excited. By being selective with our clients, we start each day in the office excited about the work we do, the people we work with and we celebrate successes together.

AP: As Triple 7 PR works on the East Coast, West Coast, and American heartland, could you describe the difference between your objectives for each region?

CS: In 2007, I launched Triple 7 PR to create an agency with the relationships of a major firm but the attention of a boutique.

It was important to me that we spanned New York and Los Angeles but also had our pulse on the markets between the coasts. The emerging growth of Nashville made it the ideal location for our headquarters.

Our role in Nashville is to work in tandem with their existing team to ensure success in the arenas where our relationships might be best leveraged. For example, if a music artist is launching a book, we will work alongside their music publicist to curate an effective book launch campaign that does not impede plans for the release of their next album or single. Furthermore, we communicate with many markets in the “heartland” with a degree of authenticity because of our office in Nashville, rather than talking “at” people from New York or Los Angeles. This affords us great success as we build national grassroots efforts for our clients.

That said, we also realize that having a presence in New York and Los Angeles is essential to our corporate success. Our business is ever-changing with contacts moving from one place to another and media outlets launching or closing. With my team in Los Angeles and New York, we are able to interface on a daily basis with our contacts and to build strong relationships that transcend a particular client campaign or what media outlet they’re working for at that moment. We therefore have a shorthand with the media outlets when we are with clients for in-person media opportunities and we are well-versed in how to schedule a PR day to ensure the most efficient and effective schedule around traffic

The news cycle is now 24/7 and elicits a much more reactive environment for everyone.

and other challenges in each city.

AP: What is the most notable benefit and drawback of social media in public relations?

CS: Social media is an incredible tool for direct consumer interfacing and enables brands (celebrities, TV shows, corporate, etc.) to speak to an already engaged audience. However, the news cycle is now 24/7 and elicits a much more reactive environment for everyone. It’s forced us to be even more diligent in being proactive and to be

The key is to not panic if there is bad press but rather to view it as an opportunity to change the conversation adaptable to an ever-changing conversation.

AP: To what extent do you agree with the statement “any press is good press”?

CS: That’s a good question and one that depends on the type of client. Interviews and media stories now live on Google searches worldwide, rather than one time printed pieces, so the damage can be much more extensive for bad press. That said, there are instances where the bad press generates much greater awareness and, through strategic maneuvering, it can net to good press.

The key is to not panic if there is bad press but rather to view it as an opportunity to change the conversation and then to be strategic in the execution of a plan.

AP: What circumstances allow individuals to act naturally, and what situations call for a more manicured public image?

CS: Again, this depends on the person and what their eventual goal is for their career.

The bad behavior is often more exciting to capture but authenticity and credibility has much greater sustainability for those desiring a long term career in the business. In my opinion, you never want to change someone because their real self will always surface.

That said, by working together on what the goals are and the best way they can be achieved, we are able to make suggestions to clients on choices that can encourage the career path they are seeking in a more effective manner. We live in an era where many feel the need to put everything on social media and have lost the art of selective story tell-

“

ing. It’s much more interesting to peel back an onion and the same is true for people.

By planning what to share of yourself and when, you can be yourself in all situations but with a purpose.

AP: Is there a person, brand, or even that you’re particularly proud of your work with?

Why? CS: I am incredibly proud to have worked with my best friend for almost 20 years.

It is incredibly rare to have an opportunity to work with someone who is such a good friend, and to celebrate the successes together. When Ali (Alison Sweeney) and I started working together, I was in the PR department of NBC and we were both working incredibly hard to have our ages not define us as we pursued professional success.

Since then, we have celebrated her appearances on every major talk show, many magazine covers, lucrative endorsement deals and maintained an even closer friendship each step of the journey. The adage of “never mix business and personal” is often true but for us it has been the opposite. We are a team - we celebrate each other’s successes and accomplishments and work harder to ensure the journey never ends.

AP: What strategies do you use to differentiate clients’ public or professional image from their personal character?

CS: We are very fortunate to work with clients that we respect, admire and enjoy.

Therefore, we do not want to deviate from their personal character but rather enhance awareness of who they are, why they are special and what value they bring to every media opportunity. Whether it is a leading bio-hacker, entrepreneur, celebrity or expert, our focus is on telling their story, sharing their success and forging longstanding relationships between them and the media that transcend a particular project.

That said, things happen and there are times when an interview needs to be cancelled last minute or unexpected news breaks. We believe that the best way to manage those situations is to not lie to the press or avoid them. We count on the many years of working together to protect the relationship for the client but also to protect our relationship with the media outlets. By having mutual respect, trust, and understanding we find that this is more easily achieved.

AP: What advice would you give to young adults beginning to craft their professional

identity?

CS: Be patient. There is a tremendous desire to excel quickly, to get beyond the administrative work and to be promoted at a record pace. What young adults fail to realize is the value of the basics in teaching the baseline for eventual career success. The patient employee that excels with the current responsibilities and understands its importance will excel at a much faster pace than the impatient one. If you learn the basics, really learn them, and pay attention to the details (spell check, grammar check, presentation, etc.), you’ll have a much greater path to advancement. Remember that with advancement comes greater responsibility and the repercussions from mistakes are exponentially greater as well. One wrong mistake can end in termination but daily hard work and success will only beget further success.

Also, hard work does matter. Take the time to put in the work, make it your best every day, work the extra hour to help the team, read an extra hour at night to learn faster and strive to exceed expectations. The young adults who clock in and out to just get the job done while in the office will never have the “IT” factor. Instead, always go that extra mile. It pays off in the long run!

From

Game Day

to Premiere Night

From athletics to entertainment, professional athletes are poised to fit the Hollywood standard

by Isabel Shipman

A

thlete-celebrities often fit seamlessly into mainstream culture.

Star athletes and actors earn comparable salaries, are featured in a variety of publications, and attain similar levels of name recognition. For many athlete-celebrities, building a personal brand is equally as important as maintaining a strong athletic performance.

However, achieving this secondary, personal fame often becomes the more lucrative achievement. While athletes’ stardom originates from their talent in sport, many have expanded their identity by crossing over into the entertainment industry, where they can establish new roles as celebrities.

Athletes to Actors: Big Misses and Bigger Hits Our cultural obsession with examining the personal lives of the famous has come to include the lives of our favorite athletes, as demonstrated by reality shows including Basketball Wives and Total Divas. The blurred line between

athletes and celebrities is further illustrated by competitions such as Dancing With the Stars, a show which includes both athlete and celebrity contestants.

Even the popular Keeping Up with the Kardashians has featured athletes Lamar Odom and Kris Humphries. The success of such shows proves that people are interested in watching athletes outside the context of their sport and offer the same attention to the behind-thescenes lives of their favorite athletes as they do to their favorite actors or singers.

Kris Humphries’ appearances on Keeping Up with the Kardashians, during his 2011 relationship with star Kim Kardashian, illustrates the ease with which athletes can float between varying levels of fame. At the time, Humphries was playing for the Brooklyn Nets. While on the show his name recognition and popularity skyrocketed.

His wedding to Kim, featured on E! as the finale of the sixth season of the show, received record viewership for the network at 10.5 million viewers. Humphries’ fleeting stint on the show is a

reminder that athletes can easily become celebrities in their own right and use celebrity connections as a means of broadening their fan base. After his divorce from Kardashian, Humphries smoothly transitioned back to a stable basketball career, rather than continuing to seek opportunities to further establish his celebrity image.

LeBron James, one of the most famous athletes of our time, has achieved incredible success both on and off the court in terms of sponsorships, appearances, and product endorsements. Currently earning $24 million a season on the Cleveland Cavaliers and even more in sponsorships—an estimated $44 million in 2015—his financial success is linked to strong admiration from his fans.

For example, he created a namesake line of tennis shoes with Nike, which he promoted through the cartoon mini-series The LeB-

As more attention is directed towards men’s sports, male athletes have greater attention to gain widespread recognition for their achievements. rons, which tells the story of his various personal and professional pursuits. Nike sold $340 million in LeBron shoes from January 2014 to January 2015; LeBron’s line generated double the revenue than the second leading athlete partnership.

Beyond the cartoon mini-series, LeBron’s appearance in Judd Apatow’s Trainwreck, alongside comedians Amy Schumer and Bill Hader, marked a successful transition onto the big screen for the basketball star. According to director Judd Apatow, LeBron’s skill in acting exceeded expectations; he was originally included in the project because of his name recognition and popularity. Amy Schumer even admitted that he was written into the script because he was the only basketball player she could name. However, his ease on camera and ability to deliver Apatow’s distinct sense of humor transformed the token cameo into an opportunity to showcase his legitimate comedic talents.

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LeBron’s ability to perform on the court and entertain in Trainwreck encapsulates what makes certain athletes so successful outside of their sport. The most successful athletes in entertainment have used their physical achievements as the basis for respect and likeability in the celebrity world.

Michael Strahan, glorified during his career on the New York Giants, used exactly this skill to go from defensive end to morning talk show host. Strahan, currently a host on Good Morning America and Live With Kelly and Michael, moved into media after a 15 year football career in which he reached the Pro Football Hall of Fame for his career defensive sacks record. Beyond this ferocity on the field, Strahan’s media potential was realized in 2012 when he auditioned for the co-host role with Kelly Ripa and captivated the audience with his humor alongside guest star Channing Tatum. His comfort in front of the camera won Strahan the co-host spot, as well as an appearance in Tatum’s Magic Mike sequel, Magic Mike XXL. Strahan’s ability to speak eloquently as an individual TV persona while still being remembered for his athletic accomplishments is a subtle mix that only the most successful transitional athletes have attained.

What Does Gender Have To Do With It? Tennis player Maria Sharapova has been the highest paid female athlete for the past 11 years, earning $23 million in endorsements in 2015 and $6.7milllion in tennis prize money. Sharapova gives interviews and appears on talk shows; her product sponsorships have become her primary source of income. While she has little reason to break off from her partnerships with Nike, Avon, Porsche, Tag Heuer, some have criticized the factors contributing Sharapova’s status as the highest paid athlete. She has won only five Grand Slam titles, whereas competitor Serena Williams has won a whopping 21. The main difference between the two, according to many, is Sharapova’s more mainstream appearance which has allowed her to easily transition into highly lucrative sponsorship deals that capitalize on her personal brand.

Williams, who has spoken out against criticisms of her race, musculature, and gruffness on the court (which some cite as the reason for her fewer and less lucrative sponsorships), is one of few athletes with a legitimate acting career. Most recently, Williams voiced a character in the animated movie Pixels. She has also guest starred on about a dozen television shows since 2002.

While some productions have been wary of her in the past, her consistent record of suc-

cess establishes a secure role for her in the entertainment industry.

Other female athletes have also forayed into entertainment through talk or reality shows. Gymnasts Shawn Johnson and Nastia Liukin both competed on Dancing With the Stars, and Liukin also made a cameo on the popular TV drama Gossip Girl. However, few female athletes have been able to move past cameos and talk show appearances.

In contrast, their male counterparts have attained more substantial roles in the entertainment industry.

This disparity could be part of the overall bias towards men in sports. While media portrayal of female athletes has been widely criticized for focusing on the most feminine and traditionally attractive athletes rather than the most skilled, a few female athletes have managed to gain fame both within and outside of their sport. Moreover, as greater attention is generally directed towards men’s sports, male athletes have greater opportunities to gain widespread recognition for their achievements.

Reconsidering Athletics to Entertainment Patterns emerge when analyzing the successes and failures of the transition from the court to the limelight. Recently, the basic ‘formula’ for male athletes has been to combine success in their sport with a strong public persona. Of course, this strategy is not universally applicable: many successful athletes-turned-actors built a brand in entertainment without the same level of athletic success as LeBron James and Michael Strahan. For example, Dwayne “The Rock” Johnson was a fairly successful athlete in WWE wrestling, but with his distinct appearance and the natural talent for acting, his acting career has eclipsed the fame he won in the boxing ring.

However, the same pattern does not seem to hold true for female athletes. While female athletes—primarily those who fit conventional standards of beauty—may appear in reality television or act as guests on sports announcing or talk shows, they do not tend to segue athletic success into entertainment celebrity in the same way as their male counterparts. Instead, they tend towards greater separation of their athletic and celebrity identities. Though personality and ability are large factors of success in entertainment, women are often treated with less regard inside and outside the athletic world. If females are to achieve the same level of success as males when transitioning from athletics to entertainment, this double standard must be overcome.

“

The most successful athletes in entertainment have used their physical achievements as the basis for respect and likeability in the celebrity world.

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L

auren Fleshman Co-Founder

PICKY BARS

Lauren Fleshman is a track and field athlete as well as a co-founder of Picky Bars.

Fleshman’s athletic achievements include: 7th place in the 2011 World Championships 5k (highest American finish in history at the time), 6 World Championship Teams, 5-time NCAA Champion, and 15-time All-American. In addition to her ongoing athletic career, Fleshman launched Picky Bars in 2009. The company produces combined performance and real food bars developed by athletes, for athletes. Fleshman received a BA in Human Biology and MA in Education, both from Stanford University.

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Ayesha Ahmed: How did you balance your academic life with athletics while you were at Stanford?

I realized I had something really special in running beyond honed physical ability.

Lauren Fleshman: Freshman year I came in swinging hard in the classroom, feeling like I had something to prove as a student-athlete.

I managed A’s fall quarter and it nearly killed me, stacked on top of the training/travel/ expectations that came with training and competing at the highest level. Once I knew what I was capable of in running, I just made a logical decision to aim for B’s unless it was a subject I was extremely passionate about. The difference between aiming for an A and a B was 3 times the work, with no guarantee of payoff (similar to athletics, really). That was the only way it was possible for me to have the athletic successes and the out-of-the-classroom learning opportunities with my friends that I had. And I realize that probably sounds terrible to some, but the fact is, I learned a valuable lesson early about having to make choices. Perfection was impossible, and I accepted that earlier than many of my other peers. As a mom, entrepreneur, writer, and athlete, every day is about choices.

AA: What is it about running that made you want to compete professionally?

LF: Over the course of my college experience, I realized I had something really special in running beyond honed physical ability. I was developing an integrative approach to running that used all my faculties. I felt like a magician when I competed. I could summon all of myself onto the track and it resulted in a toughness and a finishing kick that proved nearly impossible to beat. I found a way to race with full expression, the way I had seen master musicians perform, and at that point running became a craft and I wanted the opportunity to achieve mastery or redefine it in some way.

AA: On your website you mention that placing 7th in the World Championships 5k in 2011 is one of your favorite achievements.

Could you tell us more about the obstacles you had to overcome to reach this point and

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what made this particular achievement so meaningful to you?

LF: In 2006 I learned the perils of perfectionism after becoming obsessed with finding the perfect coach, the perfect training system, the ideal everything. It became nearly impossible to finish a race or workout that wasn’t on track to be perfect, which was highly destructive to my running. It was miserable, but it led to a breakthrough. I became a more coachable athlete and took ownership for my strengths and shortcomings without as much judgement. In 2007 I suffered from extreme race anxiety that had me in tears at the prospect of racing and I completely lost the joy of competition. That led to me working with a sports psychologist, which opened the door to my ultimate potential and personal bests in every event. In 2008 I missed the Olympic Team by one spot, and had a near career-ending injury.

The combination of those two things nearly destroyed me and I was ready to walk away from the sport. The fallout from that showed me what happens when you allow your entire identity and sense of self-worth become defined by running. Those three years created the most growth. In 2009 I re-chose running.

I made it my own, set my own standards for success, and did it on my terms. I started Picky Bars, and began writing my blog, things that gave me balance and confidence. That’s also when I started working with Coach Mark Rowland, primed for the right balance of trust and ownership that made our relationship so synergistic. That foundation led to a USA Championship, a Diamond League 5k victory, and 7th at the 2011 World Champs.

My World Champs finish was meaningful because I finally felt I had achieved personal mastery. And even though six women finished ahead of me, it was the best I could do on the day, it was the best an American had ever done at the time, and I was mature enough to allow myself to feel satisfaction and pride in the moment without the need for a medal to give me permission.

AA: What was the inspiration behind Picky Bars?

As co –founder, how has your athletic experience and personality shaped the company?

LF: I started Picky Bars in 2009 as an act of rebellion in a way. Pro athletes aren’t supposed to start businesses until they retire. Similar to having children, there is an unspoken assumption that you don’t take your career seriously. I craved balance in my life; I needed a challenge for my mind outside of running.

Starting Picky Bars was a way to get that. I didn’t really care if it succeeded as a business or not at the time. I expected it to fail. But the purpose for me was diversification: giving myself another arena to learn and gain confidence from outside of running. It also gave me another way to connect with endurance athletes around the country that felt deeper than medals and records. I genuinely wanted to make a difference for people who share the love of running, and Picky Bars allowed me to do that through nutrition.

AA: What are the greatest challenges female athletes face today?

LF: Women and girls in sport face the same problems women and girls do everywhere else. For most women around the world the main challenge is still access. Right now in some countries we have elite women athletes expected to clean the muddy shoes of their male counterparts after training. Here in the USA, we’ve come a long way with access.

But most women’s athletic experiences are designed to be duplicates of the male experience. The vast majority of coaches are men.

The vast majority of research guiding training and performance is based on men. The second wave of feminism in sports should be about bringing the unique power of women to women’s sports to make sports more powerful for women. I believe if we do that we will decrease the number of women who leave sports, decrease eating disorders and injuries, and amplify the potential positive effects promised to us through sports participation.

AA: What is a common drive that motivates you both in your athletic career and in your entrepreneurial endeavors?

what my capabilities are, and I am no longer daunted by the fact that exploring those capabilities involves discovering your limitations.

I really love getting to know my edges. I am also fascinated by the parts of us that extend beyond our edges; the material that impacts others. The work that I’m most excited about right now does both.

AA:How would you compare the challenges you face as a runner, such as injury, to those you face as co- founder, CMO and product developer at Picky Bars as well as a business partner in Oiselle?

LF: The challenges I face as a runner are much more difficult right now. In my roles in business currently, passion and hard work are the most valuable currency, and when I spend them, more often than not I see a return.

In my running right now, those things are worth nothing. I’m recovering from a complicated Achilles surgery, recovery isn’t going as expected, and my future as a runner isn’t really in my control right now. I can’t “try” my way through this one. In my running, I’m faced with the challenge a business owner might have when deciding whether or not to hang in there for one more year for a breakthrough, or cut her losses. Or what a writer might face when submitting a manuscript to publishers and just having wait to see if anyone wants it. I’m learning the difference between surrendering and giving up, which previously felt like the same thing. They are not.

AA: What advice do you have for young college students and athletes who are about to start their careers? How can they go about making an impact in their chosen field?

I started Picky Bars in 2009 as an act of rebellion in a way.

LF: Learn what your core competencies are. Burrow down and find out how deep they run, where their branches lead. Build on them. Pay attention to where the ripples go. Refine. Redirect. That is the work. Never expect to be done.

LF: I am driven by an intense curiosity of

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Risky Business

by Sophie Helmers

How family businesses are bracing for arrival of Millennials, who are driven by their desire for innovation and independence

M

illennials—like the Me Generation that spawned them—do not all want to follow in their parents’ footsteps, even if this means walking away from a profitable family business. Joseph Blasi, a professor at Rutger’s School of Management and Labor Relations, notes an “increasing emphasis on self-realization among this generation, a predisposition towards thinking that they want to do what is their personal calling.” A survey recently conducted

by Peking University revealed that 80% of Chinese heirs do not want to inherit their family businesses. According to Blasi, this mindset poses a substantial challenge for family-owned businesses (FOBs) as a huge number of these Baby Boomers’ companies face succession crises as their founders retire.

Even when Millennials do join FOBs, there is typically a clash of mindsets and priorities that result in tense or non-cohesive leadership dynamics. This struggle has spawned a plethora of business consultants, psychologists, and academic programs for aid. Structured support would have been very helpful to Jim Klaus, a fourth-generation family business owner in Richmond, when he joined the company as partial owner and heir apparent 20 years ago. “When I was at Stanford Business School in the 90s, we talked a lot about entrepreneurship and small business,” he recalls. “We really didn’t talk a lot about family business dynamics.”

Today, most leading business schools, both in the US and abroad, have programs

catering to this market. Harvard Business School, for example, has multiple offerings through its executive education arm related to family businesses. Harvard’s 2016 programs include “Families in Business: From Generation to Generation” and “Leading and Transforming Family Business in China.” PwC, one of the world’s largest tax and professional services companies, tapped into this niche when it published an extensive report in 2012 titled Family Business Survey and followed it up in 2014 with Next Generation Survey. These reports, designed to help the firm’s clients and expand its footprint in the family business consulting market, reveal the conflict between the generations. As one respondent noted, “it’s a challenge to bring in new ideas and get them accepted.”

Many firms that are focused exclusively on FOBs provide consulting services that include everything from estate planning to family governance to leadership development. Klaus’ advice to Millennials considering joining family businesses is: “counseling should start before you come into the business. It should not come after there is a problem. You may feel like you don’t need a formal contract because it’s ‘family’ but you do.” Dr. William Bellet, a Nashville-based business psychologist, organizes annual shareholder meetings, family retreats, and classes in communication and finance for his global list of clients. “As a clinical psychologist, I also end up with the other messy issues, like marriage problems and alcohol

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Percentage of surviving FOBs

addiction, that can affect a family-owned enterprise. These are issues that infringe on the business.”

For most young people today, stepping into a successful FOB and handling the generational transition can be a rocky road and lead to intense family conflict. One major problem faced by many heirs is something known as the “sticky baton syndrome,” where the parent generation struggles with handing the reins down to successors. This inability or unwillingness of patriarchs and matriarchs to give up control of their lives’ work makes it challenging for Millennials to gain leadership experience within the company. According to Dr. Bellet, “the generational transition creates awkwardness and

can often be threatening to employees who have worked in the business for many years.

The idea that a child with a silver spoon in his mouth could replace them is terrifying.” The perception among FOB founders, according to surveys cited by Blasi, is that the Millennials will not put in the necessary hours, causing more awkwardness and potential conflict.

When the Old Guard actually does retire, the new generation may be subjected to endless “backseat driving.” For Klaus, the father-son aspect of his professional career was extremely difficult to navigate. “The parent-child relationship is such a major influence on how the decisions are made and what eventually happens. You can’t separate

Only 30% of FOBs survive to the second generation, only 12% survive to the third generation, and only 3% survive to the fourth generation.

30% 12% 3%

1st

3rd

2nd Generation

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4th

your business relationship and your personal one. It’s a complex conflict, and in the end the parent ultimately thinks of you as the child and therefore your ability to contradict them is limited. If the child is going to make a stand, it can cause waves.”

These types of challenges typically only get worse as the family business is passed down to the third and fourth generation.

“The bigger the family gets, the more likely it is that there will be people who have never worked in the business and do not understand it or its issues, but are still expecting to receive their dividends,” remarked one respondent to PwC’s survey. “That’s bound to cause tension, especially when people react emotionally rather than rationally.”

PwC’s report also found that the problem of the sticky baton is especially prominent now because, as previously noted, many businesses set up in Europe and North America in the second half of the last century are currently facing their first significant transition. PwC suggests that the ‘generation gap’ is widening literally as well, with people having children later. This means that the periods between transitions are lengthening, thereby putting even more strain on a rite of passage that is already fraught with potential problems.

Despite the obvious potential succession crisis faced by each FOB, most companies do surprisingly little preparation for the succession transition. This same survey presents the following, concerning statistics: 40.3% of business owners expect to retire within 10 years and 45.5% of those expect to retire within five years. Only 16% of those expecting to retire between 6 and 11 years, however, have “a robust succession process.”

Heirs are also at risk of becoming complacent about their future inheritance, and languishing without developing and refining the skill sets necessary to run and grow a

successful FOB. According to Blasi, “Sometimes, the more successful a family business, the less interested family members are in running it and the more interested they are in cashing out the ownership of the business.

That presents a real dilemma to the matriarch or patriarch because it suggests to them that maybe it can’t be passed on.”

What is more, according to John A. Davis, in an article for the Harvard Business School publication from February 2014, FOBs are particularly prone to facing difficulty in the realms of governance and leadership. One of the major difficulties is that FOBs often lack established guiding principles. This difficulty is compounded when they lack a proper forum for conflict resolution. As far as leadership goes, FOBs have a tendency to become complacent and may lack the motivation to adapt to a changing business climate. Many young Millennials are seeking to overcome this complacency by integrating new technology and ideas into the business.

80% of Chinese heirs do not want to inherit their family businesses.

As the mounting crisis of FOBs has materialized, experts have taken note.

Despite the American cultural identity of an economy dominated by FOBs, FOBs currently account for only a third of the S&P 500. Even more distressing is the pitiful success rates of FOBs over multiple generations.

In an article for Entrepreneur magazine, Dan Scouler Sr., a man with more than 40 years of experience consulting financially strained businesses, revealed that only 30% of FOBs survive to the second generation, only 12% survive to the third generation, and only 3% survive to the fourth generation.

So what are the benefits of the rise of this new consulting niche? PwC’s 2014 Family Business Survey did indeed find some areas of improvement. According to their report, “an increasing number of family businesses have mechanisms in place to deal with potential conflict, and the survey results show that there has been further progress in this area since 2012. 83% of FOBs have at least one procedure in place, up from 79% two years ago, and larger firms with sales of over $100 million are more likely to have done this (85%). The procedure in question includes shareholder agreements, family councils, provision for third-party dedication, and family constitution. All of these scores have risen since 2012, and only 17% now have nothing at all.”

So is stepping into a family business risky business? Clearly the answer is yes. However, there are now services and research available to help Millennials succeed. As more FOBs take advantage of counseling and other resources, transitions across generational gaps are becoming easier. As Dr. Bellet wryly notes about the FOB experience for all generations: “the beautiful thing is you get to work with your family and the worst thing is you get to work with your family.”

One major problem faced by many heirs is something known as the ‘sticky baton syndrome,’ where the paent generation struggles with handing the reins down to successors.

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The

illennial’s Guide to

Investing

by Chance Melancon

I How can a university student, with little disposable cash, grow a sizeable enough nest egg to look forward to a comfortable retirement?

n The Wolf of Wall Street, Mark Hanna (Matthew McConaughey) enlightens a young, ambitious, and impressionable Jordan Belfort (Leonardo DiCaprio) with the tenet: “nobody knows if the stock [market] is going to go up, down, sideways or in…circles.

It’s all a fugazi.” Though the stock market is volatile, maddening, unpredictable, irrational and even emotional at times, value investing is still a tried-and-true way of growing wealth through a disciplined approach to investing.

Much has been made of the investing philosophy championed by Warren Buffett, known as the Oracle of Omaha, and his mentor Benjamin Graham. Financial pundits and critics of the value investing style argue that it is outdated and cannot possibly yield adequate returns in today’s fast-paced markets. However, these beliefs are largely unfounded, and in fact there exist more value opportunities today than when Buffett used to scour through financial reports half a century ago.

However, the question remains: how does a Millennial outperform today’s markets? If Wall Street attracts the best and brightest, how can a layman beat the underwhelming returns that the highly-paid money managers are only barely able to produce? Most importantly, how can a university student, with little disposable cash, grow a sizeable enough nest egg to look forward to a comfortable retirement?

The best way to approach the stock market is to think of it as “Mr. Market.”

This anthropomorphized characterization

has been touted as the greatest metaphor for the complex set of financial transactions that is the stock market. Graham coined the term in his seminal classic The Intelligent Investor, where any proper understanding of investing begins.

In the book, Graham states that Mr. Market is prone to mood swings that oscillate between greed and fear. The understanding that the stock market is liable to inefficiencies in the short term but will revert to proper valuations in the long term, provides the proper context to assess any financial landscape, whether it is stormy (panicky), cloudy (fearful), sweltering (greedy), or fair (in equilibrium). By analyzing fundamentals, the investor can recognize these opportunities when a gap emerges between market and intrinsic valuations. Consequently, the intelligent investor’s resolve should be unshaken and unperturbed once she has made an investment in a stock, regardless of whether this particular stock is falling, rising, or hovering around the purchase price because of how strong her convictions are in the longterm health of the business that underlies the stock. This level of confidence and mental fortitude is surprisingly absent in an industry that prides itself on having the best employees. The prudent investor has to be willing to perform due diligence if she wants to ensure the original principal is safe and also grow her capital with market-beating returns.

There are no consistent get-rich-quick schemes in investing. This means if the decision is made to invest money saved from a

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Future returns at a 10% yearly growth rate

$400,000

$300,000

$200,000

$100,000

0

10

20

30

40

Years Invested

job, an inheritance, celebrations, government transfers, or gifts, one should be willing to wait to see a return. Otherwise, when the market moves in a direction that is unfavorable, it becomes all-too easy to make an emotional decision. Additionally, investing for the short term may mean (a) the research conducted on a stock may not have enough time to bear fruit; (b) you subscribe to a competition with hedge funds like Citadel and Renaissance Technologies that pride themselves on being able to successfully predict the markets better than anyone else because of the sheer brainpower behind their algorithms and quantitative strategies; and (c) that you have an emotional breakdown if you see the money you have worked so hard to save lose half of its value overnight. A long-term approach to investing remedies these problems because it means that you are playing a different game from many investors in the market.

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Playing the long-term game

Here are some strategies you can adopt: 1. Invest in stable, predictable companies with large market capitalizations and easily understandable business models. Easily understandable means you can explain what the company does to a 13-year old in less than a minute. Small and mid-cap companies should be avoided until you have developed a superior understanding of business, because they are inherently riskier.

2. Invest in brand-name, franchise companies that will continue to do well in the future. For example, McDonald’s is a tough buy because people are disillusioned with the quality of its food whereas Chipotle and Apple are here to stay. Additionally, do not invest in commodity businesses like oil and semiconductor companies because, due to increasing competition, it is difficult to predict with accuracy where the price of their goods will be in five years.

3. Invest in companies with honest management that have a proven track record of success. You can easily look up CEOs and other high-ranking executives, and analyze the performance of other companies they tenured.

4. Large, stable companies that have recently suffered huge sell-offs, like Chipotle and Volkswagen, represent an investing opportunity. This is because, although they will lose money in the near future, consumers will continue to buy their products over time due to brand loyalty. The size and stability of the company also means a high likelihood of a bounce-back. Just remember Sir John Templeton’s maxim: be fearful when other investors are greedy, and greedy when others are fearful.

5. Buy the stock of companies after other successful investors purchase them such as Warren Buffett, Bill Ackman, and Carl Icahn.

Analyzing a company Stocks are pieces of ownership in a company, and should be treated as such. In practice this means that in the same way you would not buy a house without first conducting research on it, analysis of a company should always begin with its annual report (also known as the 10-K), which is accessible on the company’s website. It would serve you well to learn basic accounting, which is the language of business, but it is not entirely necessary.

Follow these guidelines to find great companies: 1. On the income statement you should look for: growing sales and net income over the last five years of about ten percent or more, high gross margins, high operating margins, and selling, general, and administrative costs that are consistent with

the industry norm. Industry averages can be found on the Factiva database or in industry surveys provided by S&P Capital IQ NetAdvantage.

2. On the balance sheet you should look for: a high return on assets (around 25%), low debt-to-equity ratio, an increasing rate of retained earnings, and a current ratio (which measures ability to pay back current liabilities) greater than 1.

3. On the cash flow statement, look for a growing cash position.

Timing it right All of this information has no practical use without knowing the right time to buy or sell a stock. You can never time the market perfectly nor consistently, but you can look at the historical price-to-earnings (P/E) ratio in relation to the company’s present P/E ratio.

Robert Shiller, the Nobel-prize winning economist from Yale, has proven a time-tested method that value investors have employed since the first half of the 20th century. Since valuations tend to oscillate around a historical average, if a stock retreats to, for example, a P/E of 10 and its 5-year historical P/E is 15, then this potentially presents a value opportunity. Most skeptics would argue that if a company has a P/E of 10, the reason for this “opportunity” is because the company is in dire straits. These critics would normally be right as there are hundreds of poor companies out there and only a few actually worth an investment. However, a company’s valuation may also drop because of factors unrelated to their business operations, i.e. the fundamentals of the business, such as a broader market decline or temporary legal issues. These instances present an opportunity to profit from unfounded reactions in the market. Moreover, even the best compa-

nies experience temporary stumbles and this is when opportunity comes knocking.

Finally, you should never invest more than you are prepared to lose. Jim Cramer, a former hedge fund manager and host of CNBC’s Mad Money, would be the first to say you need $10,000 to invest, but it is unlikely that very many university students have that sitting in a bank account. However, there’s nothing wrong with investing $1,000 or even $100 because of compound interest.

Time is the most powerful tool in investing, and college students have plenty of it. The reason there is no need to invest in risky companies is because you only need about a ten-percent yearly rate of return to do really well. This is hard to do if you invest in the short term because of commission costs and the temptation to trade in and out of stocks on a whim, but it is fully possible with a long term investing strategy. This graph on the left illustrates this idea by denoting the future returns for different time intervals at a 10% yearly growth rate.

If all else fails, you can simply buy a low-cost exchange traded fund that mimics the S&P 500. In fact, if Donald Trump had invested his inheritance from his father into the S&P 500, he would have the same amount of money he has now. As Mr. Bernstein tells us in Citizen Kane, “it’s no trick to make a lot of money if all you want is to make a lot of money.”

For a college student with limited funds and limited knowledge, personal investing can seem daunting. How can one possibly compete with the brain power and resources of Wall Street? Value investing offers a solution. By following these guidelines, any college student can successfully grow his or her wealth in the long-term.

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T H E

M I L L E N I A L

G E N E R A T I O N

Dear Reader, When I first heard stories of legendary college students starting companies, curing diseases, or amassing millions of “followers” from within the confines of their dorm rooms, I was in awe. As a bumbling and optimistic high school student, I struggled to grasp how Mark Zuckerberg and similarly ambitious 20-somethings seemed to create their own empires.

Perhaps one or two revolutionaries like that might exist, I thought dismissively; but does a whole generation of people have this capacity? Not a chance.

As I soon learned, I could not have been more wrong. My blinders of comfortable ignorance soon fell away when I met my college roommate in the fall. He was friendly, ambitious, and curious—much like the rest of our classmates. But more than that, he was eager to effect change in the real world. He wanted to build something of his own—not in a lab or classroom—but something that could have a greater impact.

The budding startup world quickly drew him in. On one of my first nights at Princeton, I saw how his ambition manifested itself. A light sleeper, I found myself woken by the soft but persistent click-clacking of keyboard strokes in the early hours of the morning. I scanned our double room for the source of the noise, and saw my roommate typing away dutifully.

Blinking back sleep and surprise, I squinted at my alarm clock. In glaring red letters, it read 4:53 AM. The anecdotal evidence of my roommate combined with larger-than-life figures like Mark Zuckerberg illustrates a new generation of thinkers, entrepreneurs, and social and political activists. Their unfettered achievements across all industries have caught much attention in recent years, and for good reason. We have been dubbed the Millennial Generation, Gen Y, “the new Greatest Generation” and our rise has caught the attention of many. Comprising 80 million young adults—those born between 1980 and 2000—the Millennial Generation is the most populated age grouping in US history. Moreover, according to Jeff Green, writing in Bloomberg, as of 2015 it has dominated the largest share of the American workforce.

But these numbers fall short in describing the radical difference that Millennials are enacting in society. As Joel Stein described in his TIME cover feature, Millennials are the generation most open to new things—from equal rights for women and the LGBTQ community, to radical innovation and disruption in the marketplace. They have revolutionized technology, and through the empowering ubiquity of social media, have championed individuality. From Tumblr to YouTube to Instagram, Millennials have carved distinct media personalities for themselves by cultivating and curating their online presence. As a result, they have emerged as unique and open-minded individuals with a solid grasp on technology.

Their ability to self-start, to respond to problems with solutions, to adapt, and to evolve shows great promise for a future that can appear increasingly bleak. However, this generation—our generation—has a lot to learn first.

Jeff Green’s article pinpointed the disconnect between Generations X and Y. Quoting Vikram Ravinder, a senior consultant at the consulting firm Deloitte, the article asserted that “Millennials bring data and analytics, but [baby] boomers have experience they can rely on when the data isn’t sufficient.” I find this statement resoundingly true. With the constant deluge of data and information, one can be easily overwhelmed as a young person. While our peers may not be able to advise us on self-improvement, the leaders of today—those with the irreplaceable years of experience—have a lot to share with us. Perhaps it is ironic that the catalyst for change lies, not in simply the individual, but in the power that comes from combining unique personalities and experiences for a greater cause.

Providing Millennials with this kind of venue for collaboration with and exposure to experienced executives is the mission of the Business Today Conferences team. Through its International Conference, Start @ Start Up Conference, and Women in Business Conference, Business Today connects smart, motivated, and unique students with experienced executives to enable the transfer of knowledge. Although some of these conferences are in their fourth decade, I strongly believe that the Millennial Generation has made such interactions more intriguing than ever.

Whether or not you apply to one of these conferences—and I hope you do—you should nevertheless consider the potential that lies in the hands of this emerging generation. The tools of technology and social media should not be underestimated and, with them comes an obligation to collaborate, communicate, and learn. The Millennial Generation has a daunting challenge ahead. Fortunately, it faces this challenge with the heartening presence of both mentors and peers. Here at Business Today, we aspire to facilitate this exchange by creating a forum through which students and executives can connect and learn.

Warm regards,

Paul Kigawa Director of the 2016 International Conference Princeton University Please visit businesstoday.org for more information about Business Today’s Conferences and their application processes.

2014

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Business Today’s 42nd Annual International Conference | Fall 2016 Apply at businesstoday.org